So why is the US government bailing out Greece?

So if a country wastefully spends money on all sorts of wealth transfer projects, it will be rewarded with below interest rate loans.

US taxpayers will be helping to foot the bill for the Greek bailout, via the Interna tional Monetary Fund. And if the Obama administration doesn't draw a clear line, Uncle Sam may soon be on the line for even more and larger European "rescues."

The Greek government, with its high taxes and profligate spending to support large bureaucracies and social programs, is bankrupt. Its bonds have been downgraded to junk status. . . .

The Congressional Budget Office predicts that America's debt held by the public will reach 90 percent of gross domestic product within 10 years under President Obama's budget. Without dramatic spending restraints, America is on a path like the one that led to Greece's financial catastrophe. . . .

There are two ways that the US is bailing out Greece. What is being missed here is that these are below market interest rates. After all, why aren't the European Central banks just making these loans are their own? Why aren't other banks making loans to these banks?

The Fed is assisting in this effort by reopening its temporary U.S. dollar liquidity swap facility with the European Central Bank and the central banks of Canada, England, Japan and Switzerland.

Under this program, a foreign central bank can sell a specific amount of its currency to the Fed and receive dollars, which it can then lend to commercial banks in its jurisdiction. The foreign central bank promises to buy back its currency from the Fed at the same exchange rate at a certain date, so the Fed doesn't make or lose money on currency fluctuations. The foreign central bank pays interest to the Fed.

The foreign central bank must repay the dollars, even if the commercial bank it loaned them to defaults. The only way the Fed would lose money is if the foreign central bank defaults. The risk of that "is remote," Reinhart says. . . .

As to the IMF role.

The U.S. role in the IMF loan package is harder to quantify.

The United States is the largest IMF member, with a 17 percent share.

The United States "usually provides 20 percent or more of IMF financing," but its participation in any one deal depends on a variety of factors, says a Treasury Department official.

Over the weekend, the IMF agreed to loan Greece about $39 billion over three years. The loan was part of a joint package of financing with the EU totaling about $140 billion over three years. . . .

Money to Canada?

WASHINGTON – The Federal Reserve late Sunday opened a program to ship U.S. dollars to Europe in a move to head off a broader financial crisis on the continent. . . .

A so-called "swap" line with the Bank of Canada provides up to $30 billion. Figures weren't provided for the other central banks. The arrangements are authorized through January 2011. . . .

It also had begun to lay out a plan to reel in the unprecedented stimulus money pumped out during the crisis. The Fed's balance sheet ballooned to $2.3 trillion, more than double where it stood before the crisis struck. The program reopened on Sunday will expand the Fed's balance sheet, economists say. However, the program poses little credit risk to the Fed because the arrangements are with other central banks, they added.

Americans oppose more bail out money for American banks last year by a 56 to 20 percent margin. So now we are subsidizing Canadian and European banks?