China and Brazil in Talks to Bailout Europe through IMF

Will the U. S. Stand for Not Being Included?

The International Monetary Fund was set up to provide an international institution with support from the advanced economies of Europe and America to help out lesser developed nations that get into economic and fiscal difficulties.  For most of its life the IMF worked this way, imposing austerity on countries in return for financial assistance.

Recently though things are not working out quite that way.  The IMF, along with the European Union and the European Central Bank, the so-called Troika are now engaged in a massive bailout operation of Greece and other weak European economies.  But the IMF needs more funding.  Normally they would call upon the world’s biggest economy, the United States and the U. S. being a helpful nation would respond with an infusion into the IMF.

The IMF is not looking to the U.S. this time.  Instead it is looking to Brazil and China.

A European official said: “We’re increasingly coming to the view that the eurozone crisis is too big a problem for Europe to solve on its own. If you want to sort it out properly you need American and Chinese money, which means the IMF.”

which sounds very much like they want the U.S. to get involved.  But no, America in this case seems to mean Brazil, you know, the country in that other part of the Americas.

In practice, the US may have difficulty contributing significantly but people familiar with the talks say that China and Brazil – one of the driving forces behind the plan – have already shown interest. Guido Mantega, the Brazilian finance minister, spoke of assistance from the Bric countries at last month’s IMF meetings in Washington.

So the good news is that U. S. taxpayers may not be called upon to help bailout Europe.  But before being caught up in the euphoria of the moment, consider what this says about how the world is starting to view the U. S., Brazil and China.  This view says the U. S. is too weak, too poor, too politically divided and too indebted to help very much, and that formerly moribund economies like Brazil and China are the ones to look to in order to provide assistance.

There may be people that are upset that the U. S. is being brushed aside and that U.S. taxpayers are not going to be called upon to bailout Europe.  Those who believe in American Exceptionalism, that the U. S. is superior to all other countries may not want to let American taxpayers off the hook. But for the rest of us, letting someone else bear this burden is just fine.