Bailout
in sentence
528 examples of Bailout in a sentence
The euro crisis is not truly over, despite the completion of Greece’s
bailout
program, with Italy, in particular, representing a major source of risk.
The Fund is seeking to create an emergency rescue mechanism in case the weak European economies need another financial bailout, and has turned to major emerging economies – Brazil, China, India, the Gulf oil exporters, and others – to help provide the necessary resources.
The US, characteristically these days, insists that it will not join any new IMF
bailout
fund.
It might have gained more support just a few days later – after senators witnessed the
bailout
of the giant eurozone banks.
Most important, while state subsidies in all other sectors are forbidden, they are commonly accepted in banking – not only explicit subsidies, such as Germany’s
bailout
of several Landesbanks after the American subprime-mortgage crisis, but implicit subsidies as well.
After a bank’s shareholders are wiped out and its creditors take an 8% “haircut,” the European Fund transforms itself into a
bailout
fund, justifying some of Germany’s fears.
And there is no explicit prohibition of some form of national government
bailout.
Belarus set a high price, demanding a
bailout
of no less than $20 billion last year, while geography condemns Kazakhstan to get along with Russia.
A full-blown official
bailout
of Greece’s public sector (by the International Monetary Fund, the European Central Bank, and the European Financial Stability Facility) would be the mother of all moral-hazard plays: extremely expensive and politically near-impossible, owing to resistance from core eurozone voters – starting with the Germans.
This comes despite the combined
bailout
package that the European Union, International Monetary Fund, and European Central Bank created for Greece in May, and despite the ECB’s continuing program of buying peripheral EU countries’ bonds.
The ensuing massive bank bailout, plus continued budget deficits and declining nominal GNP, means that Ireland’s debt is ballooning, while its capacity to pay has collapsed.
And there is no guarantee that Greece’s newly elected center-right New Democracy party, which favors honoring the country’s
bailout
terms, will be able to form a majority government.
In the former case, current German policies toward the eurozone crisis will not change, despite austerity fatigue in the eurozone’s periphery and
bailout
fatigue in its core.
Although projections by the IMF and others have been persistently optimistic, each setback has been treated as a temporary deviation, associated with its own unique cause: the Greek bailout, the tragic tsunami in Japan, the spike in volatility following Standard & Poor’s downgrade of US debt, and so on.
The government that was returned on September 20 has the opposite mandate: to implement an “extend-and-pretend”
bailout
program – indeed, the most toxic variant ever.
One clue recently emerged in an article in the Financial Times in which Klaus Regling, the head of Europe’s
bailout
fund, the European Stability Mechanism, returned to the troika’s mantra that Greece does not need substantial debt relief.
From the perspective of the European Union, the latest US security
bailout
raises the possibility that after more than two decades of growing prominence, Europe will lose its agenda-setting power.
But, as the recession hit, and the cost of the
bailout
became apparent, he indicated that he might have to postpone implementing this commitment.
The EU and the European Central Bank predicted that the first
bailout
program would drive Greek GDP down by another 3% below 2010 levels, before the economy began to recover in 2012.
But in the end, Merkel agreed to a permanent
bailout
fund for the eurozone.
Such institutional reforms would go a long way toward eliminating default (or bailout) risk and creating a market-oriented financial system of balanced incentives that supports growth and innovation.
Thus, when a large financial firm runs into problems that require a government bailout, the government should be prepared to provide a safety net to depositors and depositor-like creditors, but not to bondholders.
Governments should not only avoid protecting bondholders after the fact, when the details of a
bailout
are worked out; but should also make their commitment to this approach clear in advance.
Some of the benefits of a government policy that induces bondholders to insist on stricter terms when financial firms take larger risks would not be fully realized if bondholders believed that the government might protect their interests in the event of a
bailout.
In other words, governments should establish
bailout
policies before the need to intervene arises, rather than make ad hoc decisions when financial firms get into trouble.
As one experienced diplomat put it, “if you’re trying to negotiate an exchange-rate deal with 20 countries or a
bailout
of Mexico, as in the early Clinton days, with 20 countries, that’s not easy.
But it should be clear that this was not a sui generis monetary policy; it was a
bailout.
This view is embodied in the “no bailout” clause in the euro’s founding document, which stipulates that each country is responsible for its own public debt.
The US government is now insuring, lending or spending over $10 trillion from guaranteeing money market funds to the AIG
bailout
to the Fed’s swap lines supporting foreign central banks.
Greece’s initial €110 billion
bailout
package, in 2010, went to pay government debts to German and French banks.
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