European Banks: What's Going On?

[KukriKhan]

German Chancellor Angela Merkel has reportedly set her government behind all savings deposits (following Ireland and Greece). The UK wants to do something less (if I read correctly)?

Guardian Article (http://www.guardian.co.uk/politics/2008/oct/06/gordonbrown.economy)

Have European banks bought US "bad paper" (so-called "credit default swaps") too?

There seems to be quite a bit of scrambling around among banks, governments, and insurance companies over there. Is it directly attributable to US financial policy, or merely a slight ripple effect that will settle, after a few tweaks to your system(s)?

Finally, would a unified "European Solution" help or hurt individual nation's economies, in your opinion?

[Fragony]

Well we just bough Belgium hehe

[Ser Clegane]

Have European banks bought US "bad paper" (so-called "credit default swaps") too?


That's exactly what they did. Greed again - at some banks people apparently thought that this was a great way to play with the big guys and make some quick money. Interestingly, in Germany it was not the necessarily the "big guys" that fell for it but often rather regional public banks.

[Banquo's Ghost]

Once again, Ireland sets the agenda for the EU and watches the so-called great powers scramble to keep up.

To be sure, we'll be buying anything ye have to hand. After all, we have all those leprechauns and their pots of gold underpinning our fiscal policy - which is more than can be said for Sarkozy's Grand Unified European Policy - which doesn't exist, unlike the leprechauns. ~;p

To answer your question Kukri, what you are seeing is the equivalent of the panic on the Titanic post-iceberg - everyone for themselves, and women and children be damned, whilst a couple of leaders are still trying to conduct the orchestra.

[InsaneApache]

Aye, the EU comes up trumps once again. :shame:

[KukriKhan]

Once again, Ireland sets the agenda for the EU and watches the so-called great powers scramble to keep up.

To be sure, we'll be buying anything ye have to hand. After all, we have all those leprechauns and their pots of gold underpinning our fiscal policy - which is more than can be said for Sarkozy's Grand Unified European Policy - which doesn't exist, unlike the leprechauns. ~;p

To answer your question Kukri, what you are seeing is the equivalent of the panic on the Titanic post-iceberg - everyone for themselves, and women and children be damned, whilst a couple of leaders are still trying to conduct the orchestra.

OK. So: there was/is an iceberg, though? I'd got the impression previously, that Europe (+UK & Ireland) were pretty-well insulated.

[Banquo's Ghost]

OK. So: there was/is an iceberg, though? I'd got the impression previously, that Europe (+UK & Ireland) were pretty-well insulated.

Oh no. Believe me, we can be just as avaricious as you guys; we just smile politely when picking your pockets.

Just watch Iceland sink.

[Oleander Ardens]

Many European Banks are too overleveraged (35:1 is not unusual), but fortunatly for them most are universal banks. Fortis, Hypo Real Estate are somewhat different and with a great need for short-term credit to refinance they have been in big trouble. The TED spread (the difference between 3M LIBOR and 3M US TB) rose from 0,5% around 2006 to nothing short of 5% in the last days. I think this shows us how riskaverse every bank has become now - after forgetting completely about riskmanagement in the last 4 years.

Still the European economy is overall in far better shape than the American. Given stocks here lost even more than the DJ things look a little bit crazy here. Europeans have usually far higher savings than their US counterparts and have cut back spending not as heavily.

[Ironside]

There seems to be quite a bit of scrambling around among banks, governments, and insurance companies over there. Is it directly attributable to US financial policy, or merely a slight ripple effect that will settle, after a few tweaks to your system(s)?


There's a considerble ripple effect aswell, afaik it's only one bank here that even got some serious direct loss by the economic situation in the US (had a big trading with Lehman), but the banks have basically stopped borrow from eachother (something they seem to do a lot), causing an economic grinding halt.

[Louis VI the Fat]

This banking crisis is also about trust and confidence. If these fail, everything fails. European Banks are too overleveraged indeed, 35:1 as compared to typical 20:1 for US banks. But when confidence fails, even 2:1 is too much.

What we need, are clear heads, stable governments, and European co-operation. Like the current financial summit in Paris between France, the UK, Germany and Italy. :2thumbsup:

All's well.


Then, enter Ireland. :shame:

This is the second time in a few months that Ireland explodes the system of civilised European states. Ireland was cute in the eighties and nineties, when it needed to catch up.. This they did by forever lowering corporate taxes a wee bit more than the continent, outcompeting the others by lower standards, less regulation, more tax incentives. Playing Liechtenstein or Bermuda as it were. But Ireland is a mature economy now.

Ireland was the first to guarantee bank deposits last week. Which led to a rush to Irish accounts. With one Irish blow, European financial policy imploded, sabotaged. Germany, dissapointingly, followed suit. Then Austria, Greece and lord knows who else. The UK and France are furious.


Once again, Ireland sets the agenda for the EU and watches the so-called great powers scramble to keep up.

To be sure, we'll be buying anything ye have to hand. After all, we have all those leprechauns and their pots of gold underpinning our fiscal policy - which is more than can be said for Sarkozy's Grand Unified European Policy - which doesn't exist, unlike the leprechauns. ~;pI'll get you green pests for this. In the middle of a crisis, Ireland decides that now would be a good time for round two of Ireland v Europe. ~:mecry:

Just wait 'till I'm president, then you're all in for a real Banquing crisis. http://smileys.sur-la-toile.com/repository/M%E9chant/0003.gif

[Banquo's Ghost]

What we need, are clear heads, stable governments, and European co-operation. Like the current financial summit in Paris between France, the UK, Germany and Italy. :2thumbsup:

Because that went well, didn't it. :no:


I'll get you green pests for this. In the middle of a crisis, Ireland decides that now would be a good time for round two of Ireland v Europe. ~:mecry:

Hah. Better Empires than yours have tried, mon chou. :viking:

~;p

[gaelic cowboy]

This banking crisis is also about trust and confidence. If these fail, everything fails. European Banks are too overleveraged indeed, 35:1 as compared to typical 20:1 for US banks. But when confidence fails, even 2:1 is too much.

What we need, are clear heads, stable governments, and European co-operation. Like the current financial summit in Paris between France, the UK, Germany and Italy. :2thumbsup:

All's well.


Then, enter Ireland. :shame:

This is the second time in a few months that Ireland explodes the system of civilised European states. Ireland was cute in the eighties and nineties, when it needed to catch up.. This they did by forever lowering corporate taxes a wee bit more than the continent, outcompeting the others by lower standards, less regulation, more tax incentives. Playing Liechtenstein or Bermuda as it were. But Ireland is a mature economy now.

Ireland was the first to guarantee bank deposits last week. Which led to a rush to Irish accounts. With one Irish blow, European financial policy imploded, sabotaged. Germany, dissapointingly, followed suit. Then Austria, Greece and lord knows who else. The UK and France are furious.

I'll get you green pests for this. In the middle of a crisis, Ireland decides that now would be a good time for round two of Ireland v Europe. ~:mecry:

Just wait 'till I'm president, then you're all in for a real Banquing crisis. http://smileys.sur-la-toile.com/repository/M%E9chant/0003.gif

Monday night last almost definately Anglo Irish was ready to give up the ghost with one swoop we cut the throats of the speculators who tried to dine on the carcass of or busted property bubble.

You should be appulading us for sticking it to evil capitalists by your frame of reference.

Truth is there was no grand strategy for this crisis because you yourself on this very board claimed it hadnt affected your country our piddling little Banks dont register on your scale but in a small economy like Ireland it would really hurt.

One question for you if Irelands banks had failed how long before the vultures decided the Euro was a vulnerable currency because of the fact europe is not a country and the ECB is only concerned with inflation good for stability but useless in a crisis like we have.

The lack of a political union not a lisbon fake one but actual head of state and goverment for the currency means it is in danger of not reacting like it did cos each member state believes itself okay but the whole is weak.

Oh and get over yourself on the tax issue your goverment could either cut tax or enact summit that discouraged tax holidays but it wont why its not our fault you dont do anything.

Shame on France for engaging in Schadenfreude (google gotta love it for the spelling) instead of actually ensuring Europe and itself was safe from the choppy waters were all in.

[Evil_Maniac From Mars]

I'll get you green pests for this. In the middle of a crisis, Ireland decides that now would be a good time for round two of Ireland v Europe. ~:mecry:

Oh, please. The Irish people voted no to Lisbon, that doesn't give the rest of Europe the right to whine and cry. I wish we were given the ability to exercise some democratic rights here.

[gaelic cowboy]

Oh, please. The Irish people voted no to Lisbon, that doesn't give the rest of Europe the right to whine and cry. I wish we were given the ability to exercise some democratic rights here.

Sure thats all they do nowadays in France.

[Louis VI the Fat]

:furious3:My recent Ireland posts were a bit more tongue in cheek than they might appear. :embarassed:
I shall cease taking out my frustrations on Ireland on the .org

Instead, I'll just wait until I get satisfaction from thoroughly whooping your arse in the next Six Nations:

Brilliant try! (http://fr.youtube.com/watch?v=dl3q6Jy4iKk)

Oops. I meant this one (http://fr.youtube.com/watch?v=WKlKCqwKit0). :sweatdrop:

~~~~~

Schadenfreude is taking delight in the misery of others. No such thing here.

~~~~~

I do, however, think that European countries should not compete with each other in deregulation, tax excempts, social standards and the like. Nor should we compete with each other in this crisis. We should'nt use the crisis for our own gain.
Even the British were not amused (http://www.independent.co.uk/news/business/news/ec-to-investigate-irelands-euro400bn-bank-safety-net-948728.html):

The European Commission is investigating whether Ireland's decision to guarantee €400bn of deposits, bonds and debts at its six biggest banks is a breach of EU law. Neelie Kroes, the EU's Competition Commissioner, said yesterday that she was "in close contact with Irish authorities" after British banks complained about the Irish policy.

A spokesman for Gordon Brown, who is facing increasing pressure to offer a similar pledge to UK lenders, said he backed the inquiry, adding: "Where there is a policy of one of the member states that impacts on single market rules, it is to be looked at by the EC."

[Alexanderofmacedon]

I think it's the way European banks do things. In general the people in Europe just put money in the bank instead of investing with a 3% gain for example. The bank puts it in bonds (many of them are US bonds) yielding the banks 6% (so profit 3% for example). The US bonds = worthless so basically we've screwed the world over.

According to a stock broker and loan officer family friend of mine that I spoke to on the phone for two hours or so.

[gaelic cowboy]

I do, however, think that European countries should not compete with each other in deregulation, tax excempts, social standards and the like. Nor should we compete with each other in this crisis. We should'nt use the crisis for our own gain.
Even the British were not amused (http://www.independent.co.uk/news/business/news/ec-to-investigate-irelands-euro400bn-bank-safety-net-948728.html):

I dissagree we should be allowed to compete on tax you want high tax go have it for yourselves were fine as we are on that score.

Now most everyone is in or wants to be in the EURO, as the ECB does not have a political master like the FED tax is one of the last ways a country is able to have a measure of control over economic policy.

Were not trying to gain we almost lost our six banks of course not only do we have a credit crunch in Ireland but we have a busted flush as regards property.

We had to do something doing nothing and hoping we could wait 2 or 3 weeks for the Commision to get its act together was just not going to cut it.

I just had a brainwave Sakozy should pretend that LISBON is required to pass a bank deal for Ireland Biffo(Cowen) can pretend that if we vote for LISBON 2 we get to keep the bank deal and save the Irish banks.

Horse trading thats what the EU is all about and we are well used to that.

Somehow I think when all is said and done the amounts moved will hardly be that large and will flow out as quick as they came in.

With all thats going on it will be soon forgetten as the next finacial crisis grips us by tomorrow morning.

Bring on Les Bleus it will be so sweet when we catch you on the hop.

[gaelic cowboy]

I think it's the way European banks do things. In general the people in Europe just put money in the bank instead of investing with a 3% gain for example. The bank puts it in bonds (many of them are US bonds) yielding the banks 6% (so profit 3% for example). The US bonds = worthless so basically we've screwed the world over.

According to a stock broker and loan officer family friend of mine that I spoke to on the phone for two hours or so.

There is a kernal of truth here for the big 4 of the EU as we know UK is of course a major financial hub and so it has suffered bigtime.

The continental economies are almost definately affected by having useless financial products they bought in the good times.

They may not have been speculating as much but thats like claiming an Elephant is not big because a blue whale is larger still does a lot of damage when angered.


I believe one problem for the EURO economies is the lack of a real politiccal union when we have a currency union. Failure of one of the Eurozone banking sectors would have collapsed the whole thing because the speculators would have rightly concluded the ECB could do nothing to stop them because the EU would not be able to do something quick enough to stop them.

[JR-]

there is no EU treasury, so it is going to be very ugly on the continent.

of course this is exactly what some of the federalists want, as it provides the excuse for that ever deeper integration to move into matters economic.

[gaelic cowboy]

there is no EU treasury, so it is going to be very ugly on the continent.

of course this is exactly what some of the federalists want, as it provides the excuse for that ever deeper integration to move into matters economic.

Somehow I dont actually believe there are actual EU federalists there are however 4 big countries who would prefer to rule the Eu by diktat but thats not the same thing because even then they still would not trust eachother enough to hand over full economic policy to a common base.

The ECB will need to be given clear rules on something like this at the moment it is the national goverments remit this disconnect between the allegded power of the EU and its actual powerlessness in a real crisis will sink the EURO in maybe twenty yrs or even less.

[Incongruous]

Wait, wait wait. I am in no way actually able to keep up with economics, however there is always a tinge of politics to these things. Is Louis infering that Ireland, despite its massive gains at being a member of the EU is giving us the middle finger and some think that this is a good thing? That they have as Louis put it, sabotaged the talks in Paris?

[JAG]

Aye, the EU comes up trumps once again. :shame:

Actually the problem has been that the whole crisis HAS NOT been answered by a single EU voice - and because of people like you arguing against deeper links and progression, there has been nothing the EU has been able to do to force govts to work together. If we had a proper EU with close ties and further integration you can bet this situation across the EU wouldn't have been handled so badly by some of the govts - like Ireland and their CRAZY deposit guarantee that screwed us all.

[Crazed Rabbit]

I do, however, think that European countries should not compete with each other in deregulation, tax excempts, social standards and the like. Nor should we compete with each other in this crisis. We should'nt use the crisis for our own gain.
Even the British were not amused (http://www.independent.co.uk/news/business/news/ec-to-investigate-irelands-euro400bn-bank-safety-net-948728.html):

Only the losers don't want to compete. ~;p

Any article on how the Irish guaranteeing deposits set off something?

CR

[ICantSpellDawg]

hilarious. welcome to our nightmare, euro-weenies.

[Incongruous]

hilarious. welcome to our nightmare, euro-weenies.

Welcome to life after global leadership, Yankee-hicks.

[JR-]

Actually the problem has been that the whole crisis HAS NOT been answered by a single EU voice - and because of people like you arguing against deeper links and progression, there has been nothing the EU has been able to do to force govts to work together. If we had a proper EU with close ties and further integration you can bet this situation across the EU wouldn't have been handled so badly by some of the govts - like Ireland and their CRAZY deposit guarantee that screwed us all.

but i don't want more integration towards a federal EU for britain, we were sold the project as a free trade area as we still are now, maybe we would be better off out?

[JR-]

of course this is exactly what some of the federalists want, as it provides the excuse for that ever deeper integration to move into matters economic.


Actually the problem has been that the whole crisis HAS NOT been answered by a single EU voice - and because of people like you arguing against deeper links and progression, there has been nothing the EU has been able to do to force govts to work together. If we had a proper EU with close ties and further integration you can bet this situation across the EU wouldn't have been handled so badly by some of the govts - like Ireland and their CRAZY deposit guarantee that screwed us all.
not saying you are happy to use the crisis to further integration, but you are a perfect example of the mindset that certain federalists have said they are happy to exploit in order to push for further integration.

i agree its necessary if the euro is going to work, but i want no part of it for Britain.

[InsaneApache]

Actually the problem has been that the whole crisis HAS NOT been answered by a single EU voice - and because of people like you arguing against deeper links and progression, there has been nothing the EU has been able to do to force govts to work together. If we had a proper EU with close ties and further integration you can bet this situation across the EU wouldn't have been handled so badly by some of the govts - like Ireland and their CRAZY deposit guarantee that screwed us all.

Not really. It's a perfect example of how the members of the EU really think. All for one and none for all.

[Louis VI the Fat]

I dissagree we should be allowed to compete on tax you want high tax go have it for yourselves were fine as we are on that score.I am sure Ireland is quite fine with it indeed. I, however, am not. And since Europe foots the bill for your low corporate taxes, my problem is your problem.

How do we pay? By granting full access to our internal market. So if most countries have a corporate tax rate of 25%, and Ireland has one of 10%, corporations set up their European headquarters in Ireland, conducting their business with the entire internal market from there, while the other countries voluntarily foreit these corporate taxes. This is the real transfer of funds to Ireland, dwarfing direct payments.

This is the problem with an internal market and no means of tax harmonisation. This is the stage where the EU is now, and where Ireland would be happy to keep it indefinately. EU pays, Ireland feasts.
This was great in the 80s and 90s when Ireland needed to be put on track. It is not fine with me now that Ireland is one of Europe's wealthiest counties.




Only the losers don't want to compete.Competition is good for everybody. This, however, has got nothing to do with competition. This is assymetrical competition. The EU foots the bill for it. One is competing, the other is subsidising.
If we wanted to compete, we'd pull the plug by denying Ireland entry to the market, or raising tariffs to nullify the difference in corporate taxes. How long before Microsoft would move from Dublin to London then?


What's more, competing who is willing to lower his pants and bend over furthest for high finance is only good for finance itself. This only serves international finance at the expense of national sovereignity. The EU is also about maintaining national sovereignity against global finance.

This case, incidentally, shows what JAG and I have constantly argued over the last few months: the EU does not diminish national sovereignity, it increases it.


So much for Ireland in general. On to the more recent developments.

[Louis VI the Fat]

Is Louis infering that Ireland, despite its massive gains at being a member of the EU is giving us the middle finger and some think that this is a good thing?Indeed I am.



Any article on how the Irish guaranteeing deposits set off something?

Let's try some Game Theory:

Scenario:
There's a room with 27 people. If nobody moves, the whole has a 50% chance to win 100 each, and the whole has a 50% chance to win 50 each. However, the first one to move, will be guaranteed 100, while all the others will then be guaranteed 50.

If nobody moves, there's a 50% chance of 2700, and 50% of 1350. If one moves, the whole group ends up with 1400.

Three questions:
What do you do? Be the first to move?
And what do you do when you have pledged economic solidarity?
And what do you do when your economic prosperity is been based on and paid for by this solidarity?

Leaving this Game again, what would be your reaction if you are one of the 26 who didn't move first?


A giant forest fire rages outside a village with 27 huts. A spark falls on the hut of Ireland. What does Ireland do? It takes the spark and tosses it right over to their neighbours, the financial powder keg of London, with the grave danger of igniting it, setting ablaze the entire village.


All for one and none for all ? Perhaps. Gah! :shame:


~~~~

Not, of course, that Ireland is responsible for the crisis. I am simply dismayed at their unilateral behaviour.
The crisis is beyond the scale of Ireland or even the EU.

[Louis VI the Fat]

Debilitating policies and internal bickering has destroyed Europe (http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/3141428/Germany-takes-hot-seat-as-Europe-falls-into-the-abyss.html).

Germany takes hot seat as Europe falls into the abyss

We face extreme danger. Unless there is immediate intervention on every front by all the major powers acting in concert, we risk a disintegration of global finance within days. Nobody will be spared, unless they own gold bars.


The Americans win again.

The crisis engulfing Europe, Asia and emerging markets, makes life easier for Washington. The United States is becoming a safe-haven again.

[Louis VI the Fat]

Oh well, at least we are merely collapsing. Iceland (http://www.guardian.co.uk/world/2008/oct/05/iceland.creditcrunch) is sinking altogether:



Iceland is on the brink of collapse. Inflation and interest rates are raging upwards. The krona, Iceland's currency, is in freefall and is rated just above those of Zimbabwe and Turkmenistan. One of the country's three independent banks has been nationalised, another is asking customers for money, and the discredited government and officials from the central bank have been huddled behind closed doors for three days with still no sign of a plan. International banks won't send any more money and supplies of foreign currency are running out.


The nation's celebrated rags-to-riches story began in the Nineties when free market reforms, fish quota cash and a stock market based on stable pension funds allowed Icelandic entrepreneurs to go out and sweep up international credit. Britain and Denmark were favourite shopping haunts, and in 2004 alone Icelanders spent £894m on shares in British companies. In just five years, the average Icelandic family saw its wealth increase by 45 per cent.

But, as a result of the international banking crisis, the billionaires who own everything from West Ham United football club to the Somerfield supermarket chain, Hamleys toy shops and the House of Fraser, are in trouble and the country is drowning in debt.

Iceland's cheap labour force, the Poles and Lithuanians, have left already - there's little point in sending home such a worthless currency, and the tourist season is over.

Iceland is on its own.I say we fasttrack Iceland's EU membership. Get them on board.



Edit: In retrospect, after reading the first few posts of this thread again it suddenly dawns on me that I needed four confusing posts merely to repeat what Banquo said in four concise sentences on page 1 already.
Owned by the Irish again? I'm getting used to it. :shame:

[gaelic cowboy]

Actually the problem has been that the whole crisis HAS NOT been answered by a single EU voice - and because of people like you arguing against deeper links and progression, there has been nothing the EU has been able to do to force govts to work together. If we had a proper EU with close ties and further integration you can bet this situation across the EU wouldn't have been handled so badly by some of the govts - like Ireland and their CRAZY deposit guarantee that screwed us all.

Yeah right when Ireland starts taking lessons on co-operation between big and small members of a union from England the most Euro sceptic member of all I say :laugh4:

[Louis VI the Fat]

Huh? How did my post end up here?

Deleted and tried again.

[gaelic cowboy]

I am sure Ireland is quite fine with it indeed. I, however, am not. And since Europe foots the bill for your low corporate taxes, my problem is your problem.

How do we pay? By granting full access to our internal market. So if most countries have a corporate tax rate of 25%, and Ireland has one of 10%, corporations set up their European headquarters in Ireland, conducting their business with the entire internal market from there, while the other countries voluntarily foreit these corporate taxes. This is the real transfer of funds to Ireland, dwarfing direct payments.

This is the problem with an internal market and no means of tax harmonisation. This is the stage where the EU is now, and where Ireland would be happy to keep it indefinately. EU pays, Ireland feasts.
This was great in the 80s and 90s when Ireland needed to be put on track. It is not fine with me now that Ireland is one of Europe's wealthiest counties.



Competition is good for everybody. This, however, has got nothing to do with competition. This is assymetrical competition. The EU foots the bill for it. One is competing, the other is subsidising.
If we wanted to compete, we'd pull the plug by denying Ireland entry to the market, or raising tariffs to nullify the difference in corporate taxes. How long before Microsoft would move from Dublin to London then?


What's more, competing who is willing to lower his pants and bend over furthest for high finance is only good for finance itself. This only serves international finance at the expense of national sovereignity. The EU is also about maintaining national sovereignity against global finance.

This case, incidentally, shows what JAG and I have constantly argued over the last few months: the EU does not diminish national sovereignity, it increases it.


So much for Ireland in general. On to the more recent developments.

All this is just a load of Big countries afraid cos the EU is not doing what they thought it would do which was perpetuate there power and influence since you only just woke up to it all you want someone to blame enter Ireland and the newer eastern members for any problem you can think of.

If your so annoyed about our low taxes cut your own taxes or else cut your cost simple maths.

We have low tax but in other area we may suffer as regards infastructure we will never be able to satisfy 100% of a prospective companies needs which is why companies do not just base everything on tax rates.

We have a high worker cost but low tax it evens out go cool of your socialist dogma on co-operation which is really code for hey thats not fair give me my ball back.

[Husar]

Ah great, it's everyboedy for themselves now according to the Irish.

how about we expulse Ireland and Britain from the EU and start our own continental socialist free-trade unified project without them?
It's what they want, isn't it? So they can start their own little empires again with their almost nonexistant fleets. :laugh4:
And then we can throw Merkel out of office and watch Hypo Real Estate go bankrupt please, thank you.
Those people who are proud to play with fire, no risk, no gain, should realize what the risk part means and that the saying leaves out the negative side of that risk, which is loss. :thumbsdown:
But no, when it comes to loss, the trickle down actually works as all the loss is trickled down to the taxpayer. :wall:

[Fragony]

I hear about europe and america, why am I not hearing anything from Australia and Canada? Just not affected?

[Louis VI the Fat]

Ah great, it's everybody for themselves now according to the Irish.

how about we expulse Ireland and Britain from the EU and start our own continental socialist free-trade unified project without them?Nah, we need both countries on board. Also, it is everybody for themselves according to everybody now. No sooner had Merkel condemned Ireland's move or she did exactly the same herself. And we need not have any illusions about France. As ever, the Stability Pact only exists when it benefits France.

The problem has been quite predictable to everyone (except to that imbecile Louis who lambasted Furunculu when he posted it last week): there is an economic union, but not a political union. Each country is responsible for its own. The EU needed to have moved on to more political union, or less economical union. As it is, we have no real answer to the crisis.

The housing crisis, and the credit crisis were not of European origin, and we could weather the storm easily. Both were an American affair.
But not the banking crisis and the current complete collapse of financial confidence. These are international, and the EU is not politically equipped to deal with this conflagration. I guess neo-liberal market fundamentalism has managed to destroy its adversary, the EU, after all. Before Europe had been able to fully implement an alternative in the guise of an economy based on human dignity a more social model.

[Louis VI the Fat]

If your so annoyed about our low taxes cut your own taxes or else cut your cost simple mathsHah! Now you're in for it. Like everybody else, I am frustrated about the crisis, and this gives me an excellent opportunity to take out my frustration by lecturing Ireland over a completely unrelated subject.


As an aside, Ireland has high income taxes, and low corporate taxes. To the point:

Ireland does not have low corporate taxes. What Ireland has, is lower corporate taxes than its competitors within the same, shared market. This is crucial. Without Irish access to EU markets, we wouldn't be having this conversation.

Why does Ireland have lower taxes than the big EU countries:


There is small country X, ten inhabitants. There is big country Y, one hundred inhabitants. There are one hundred companies who have to choose where to settle.

Small country X has 25% corporate taxes. Big country Y has 25% corporate taxes. Now, like you suggested we do, they are competing on costs, quality of workforce, innovention etc.
Ten corporations in X pay 25% of 100 profit = 250. Ninety corporations in Y pay 25% of 100 = 2250.


But, the small country profits from lowering corporate taxes, the big one does not! Like this:


Small country X has 10% taxes. Big country Y 25%.
Thirty corporations in X pay 10% of 100 = 300. Seventy corporations in Y pay 25% of 100 = 1750.

However, the reverse:
Two corporations in X pay 25% of 100 = 50. Ninety-eight corporations in Y pay 20% of 100 = 1960.

So even a small decrease in taxes lowers overall tax income for big country Y, while even a very big decrease in taxes still raises income for small country X.


See? Bigger countries don't have an incentive to lower taxes within a shared market. Smaller countries, however, do. This is why in europe, the smaller the country, the more lax the tax regime. At the bottom, there are tax parasites like Monaco, Liechtenstein, Luxembourg. As of yet, Ireland is the biggest tax parasite economy. This was fine back when Ireland was a developing economy. It is getting a bit much now that Ireland is both the EU's second richest country after Luxembourg, and, to top it all off, still one of the main beeneficiaries of EU funds. It is time for Ireland to move away from the likes of the Channel Islands, Bermuda and the Caymans, and move towards countries like Denmark or Finland.

Big countries do, however, have an incentive not to open their market to small countries. This is the assymetry I mentioned earlier. If the UK, France or Germany really wanted to compete with Ireland, instead of subsidising its development, we do not enter a tax race, we simply pull the plug. If Britain raises import tariffs that nullify the difference in tax rates, then companies would flee Ireland for Britain faster than you can say 'How's business today, mr. Gates?'. Small countries outwit bigger ones with lower taxes, big countries outwit small countries by using their weight.

The opposite of taxes, subsidies, reverses the mechanism between the small and the big country.


Small country X has GDP of 10. Big country Y GDP of 100.
Subsidies of X are 20% of GDP. Total subsidy is 2. Subsidies of Y are a mere 10% of GDP. Total subsidy: 10.
Where do companies seeking subsidies set up shop now?

This is even funnier with developing countries. It is remarkably easy for the US, Europe, or Japan and China, to cripple the market of small developing countries.
These two, subsidies and access to the internal market, are the instruments the EU, including Ireland!, uses against the Third World. We do not use them against each other within the EU. However, small countries somehow feel justified in using the reverse mechanism, taxes, against the big countries. And then whine about 'imperialist tendencies' when the big countries complain.

I don't mind, but taxes ought to be an instrument to support developing regions. If Hungary needs lower taxes at the moment, then fine with me. Ireland, not so much anymore. Ireland made good use of it in the eighties and nineties. Now it should move beyond it.
If only, because what an internal market is not suppossed to do, is to create a fantastic instrument for international capital to pit governments against each other and see which one will bend over the furthest.


As a fun fact, did you know that Ireland at one point had two tax regimes? One for Irish companies, and one, with lower taxes, for non-Irish companies. This was abolished after the EU kindly explained to Ireland that this was perhaps pushing it a bit much.

As for practical purposes, Ireland's lax tax regime has been very succesful in luring non-EU, especially American, companies to operate their European business from Ireland. One could say that the Americans enjoy near tax exempt status in Europe to stimulate the Irish economy. To put it differently, whenever I push the 'on' button on my computer, I pay Ireland to subsidise Bill Gates.
The main losers are however the British. American companies tend to prefer either Britain or Ireland, and Ireland simply out-taxes Britain. It is a massive transfer of wealth from Britain to Ireland.


~~~~~~


The above does not have anything directly to do with the current crisis. There may be a more indirect connection:
I think Ireland understands perfectly well that it benefits from the EU's current limbo. Stuck halfway in between. A functioning internal market without political integration and tax harmonisation. I think this mindset, this readiness to employ governmental measures to support the Irish economy at the expense of the other EU members, might have been a factor in Ireland's decision to unilaterally guarantee bank accounts.


:sweatdrop:

[Banquo's Ghost]

My esteemed colleagues, let us desist from such rancour. Not in front of the Americans, what?

I am ashamed that my little teasing of Louis - meant good-naturedly - has sparked such sharp words. Please accept my apologies. :embarassed:

Nonetheless, some good points have been made, but I fear Ireland's place in all this has been a little misrepresented. Important though we are made to feel by the blame cascading down upon our shoulders, the truth is that the Republic's actions were forced upon her by the United Kingdom. By nationalising the Northern Rock, the British created a rock-solid, government backed savings institution on our doorstep - in essence guaranteeing deposits months before we did. It was therefore rather rich to hear Gordon Brown bemoan our necessary response as capital outflows increased.

As to the wider point, I agree in principle with Louis. The failure here has been the lack of a political leadership of Europe to match the financial integration. The European Central Bank cannot provide the budgetary clout that the US government has been able to command. Inevitably then, the individual soveriegn states will do what is best for their own nations, and in some cases, act quickly rather than in concert.

The reason this political union does not exist is not because of Ireland's referendum, but because such a union has to have democratic accountability. This is why the Lisbon Treaty was rejected as a bureaucrat's charter.

Look at the outrage enflamed in the United States by citizens distrustful of the elected politicians, and tremble. This is democracy, and held, for a time their Congress to account - but Congress still delivered considered leadership against the purely populist.

A government of Europe constituted by the Lisbon Treaty would have been made up of appointees with no direct mandate, answerable only to the big powers. Such disenfranchised anger from the governed then would have utterly wrecked the union, for all time.

Until the elite recognise this, and all the future fault lines that lie with disenfranchising the people of Europe, there will be, there can be, no Union.

[Oleander Ardens]

Stocks in every corner of the world get hammered, some less some more deeply into oblivion. I can consider myself lucky and unlucky because I reduced the % of stocks my portfolio close to 0 in mid 2007. Sadly I bough stocks with 1/3 of the available cash two months ago in European stocks and some commodities. Nothing you can do about it right now. Everything seems to be the selling list, even the most profitable companies with P/Es around 5 and a very high cash-flow per stock and not too grim outlooks. If you read that the average investment fond has almost 40% still in stocks go figure how much they lost.

Credit markets are frozen deserts now with a almost no movement to be spotted. Cut your spending drastically because you will get only money with good credentials and at high expense. Americans ready yourself for a deep recession, Europeans, be prepared to confront a recession and Asians, be assured that growth will be slow.

[gaelic cowboy]

Hah! Now you're in for it. Like everybody else, I am frustrated about the crisis, and this gives me an excellent opportunity to take out my frustration by lecturing Ireland over a completely unrelated subject.


As an aside, Ireland has high income taxes, and low corporate taxes. To the point:

Ireland does not have low corporate taxes. What Ireland has, is lower corporate taxes than its competitors within the same, shared market. This is crucial. Without Irish access to EU markets, we wouldn't be having this conversation.

Why does Ireland have lower taxes than the big EU countries:


There is small country X, ten inhabitants. There is big country Y, one hundred inhabitants. There are one hundred companies who have to choose where to settle.

Small country X has 25% corporate taxes. Big country Y has 25% corporate taxes. Now, like you suggested we do, they are competing on costs, quality of workforce, innovention etc.
Ten corporations in X pay 25% of 100 profit = 250. Ninety corporations in Y pay 25% of 100 = 2250.


But, the small country profits from lowering corporate taxes, the big one does not! Like this:


Small country X has 10% taxes. Big country Y 25%.
Thirty corporations in X pay 10% of 100 = 300. Seventy corporations in Y pay 25% of 100 = 1750.

However, the reverse:
Two corporations in X pay 25% of 100 = 50. Ninety-eight corporations in Y pay 20% of 100 = 1960.

So even a small decrease in taxes lowers overall tax income for big country Y, while even a very big decrease in taxes still raises income for small country X.


See? Bigger countries don't have an incentive to lower taxes within a shared market. Smaller countries, however, do. This is why in europe, the smaller the country, the more lax the tax regime. At the bottom, there are tax parasites like Monaco, Liechtenstein, Luxembourg. As of yet, Ireland is the biggest tax parasite economy. This was fine back when Ireland was a developing economy. It is getting a bit much now that Ireland is both the EU's second richest country after Luxembourg, and, to top it all off, still one of the main beeneficiaries of EU funds. It is time for Ireland to move away from the likes of the Channel Islands, Bermuda and the Caymans, and move towards countries like Denmark or Finland.

Big countries do, however, have an incentive not to open their market to small countries. This is the assymetry I mentioned earlier. If the UK, France or Germany really wanted to compete with Ireland, instead of subsidising its development, we do not enter a tax race, we simply pull the plug. If Britain raises import tariffs that nullify the difference in tax rates, then companies would flee Ireland for Britain faster than you can say 'How's business today, mr. Gates?'. Small countries outwit bigger ones with lower taxes, big countries outwit small countries by using their weight.

The opposite of taxes, subsidies, reverses the mechanism between the small and the big country.


Small country X has GDP of 10. Big country Y GDP of 100.
Subsidies of X are 20% of GDP. Total subsidy is 2. Subsidies of Y are a mere 10% of GDP. Total subsidy: 10.
Where do companies seeking subsidies set up shop now?

This is even funnier with developing countries. It is remarkably easy for the US, Europe, or Japan and China, to cripple the market of small developing countries.
These two, subsidies and access to the internal market, are the instruments the EU, including Ireland!, uses against the Third World. We do not use them against each other within the EU. However, small countries somehow feel justified in using the reverse mechanism, taxes, against the big countries. And then whine about 'imperialist tendencies' when the big countries complain.

I don't mind, but taxes ought to be an instrument to support developing regions. If Hungary needs lower taxes at the moment, then fine with me. Ireland, not so much anymore. Ireland made good use of it in the eighties and nineties. Now it should move beyond it.
If only, because what an internal market is not suppossed to do, is to create a fantastic instrument for international capital to pit governments against each other and see which one will bend over the furthest.


As a fun fact, did you know that Ireland at one point had two tax regimes? One for Irish companies, and one, with lower taxes, for non-Irish companies. This was abolished after the EU kindly explained to Ireland that this was perhaps pushing it a bit much.

As for practical purposes, Ireland's lax tax regime has been very succesful in luring non-EU, especially American, companies to operate their European business from Ireland. One could say that the Americans enjoy near tax exempt status in Europe to stimulate the Irish economy. To put it differently, whenever I push the 'on' button on my computer, I pay Ireland to subsidise Bill Gates.
The main losers are however the British. American companies tend to prefer either Britain or Ireland, and Ireland simply out-taxes Britain. It is a massive transfer of wealth from Britain to Ireland.


~~~~~~


The above does not have anything directly to do with the current crisis. There may be a more indirect connection:
I think Ireland understands perfectly well that it benefits from the EU's current limbo. Stuck halfway in between. A functioning internal market without political integration and tax harmonisation. I think this mindset, this readiness to employ governmental measures to support the Irish economy at the expense of the other EU members, might have been a factor in Ireland's decision to unilaterally guarantee bank accounts.


:sweatdrop:

The majority of Irish companies do little or or no business within the Eurozone at least the continental side at the moment.
We trade mainly with US and UK both of these are as much an historical accident as they are a concious policy.

Correct UK suffers but interestingly UK has moved up the ladder of jobs its a main hub of finance and aerospace tech it has a car industry in short UK has very high value wealth creating industries what little is lost is gained by the strong services bent of the UK economy in short selling things we built for them. We sell to them but they sell far more to us I can watch BBC tv read the Sun eat english baked beans wear UK clothes all products that have counterparts here in Ireland but which I can buy at the smallest shop in Ireland. This is good for the consumer and I do not wish to reverse this trend.

How does our low corporate tax affect your business if these companies come here and trade with US/UK you in France lost no business only jobs and if the company was unwilling to pay your rates what would you prefer that the jobs be completely lost to Europe.

Dont even bother spinning that old protection racket either that was got rid of because of the EU in the first place now you want to bring it back.

When jobs wages etc etc were protected France or Ireland did not have some kind of nirvana where we all had jobs and our economies were strong quite the reverse we in Ireland were on the front of the economist as the poorest of the rich.

Interestingly you wish to reverse the open market we all enjoy which of course would affect you more than me Ireland buys lots of French products but they tend to be high value luxury ones precisely the very products that suffer under protectionism.

How many times have we seen the US talking economic patriotism in relation to French wine and cheese when US/EU has a trade duspute.

You claims that we undercut you and then sell to the shared market are not correct we as I already stated sell more to Anglo Saxon world and also we suffer in that one of the products we can produce cheaper than anyone which is beef its opened to any and all comers including France

If the EU does go to a super state with a president etc etc a Fed like ECB why should the tax be at Frances rate who said your tax rates are the norm in the EU or even Euro why should any country raise it to your level to allow you to keep your high costs safegaurded.

I already see you claiming that it hollows out your economy well if a tax break in Ireland hurts France a country of many millions it can hardly be a very robust economy to start with.

France would hardly need the high tax if it didnt pay itself so well in its social programmes.
We dont pay high tax but we still pay huge ammounts into social programmes anymore would just be gobbled up with no discernable improvement in services.

Incidently our taxes on actual goods are high we spend far more on the same bag of groceries than you this is how we pay for those inefficient social provisions we have.

If as you claim big countries use their weight against small then only the UK/US exhibit this France has weight but its not muscle its flab

[gaelic cowboy]

Were all getting sidetracked here or at least I am so I will refrain from commentating more on our tax regime unless a topic is opened at some time in future.

So returning to the actual topic news today is the Irish bank deal may now exclude foreign Irish banks. Which is bad for any squaddies in UK as they have some deal with the post office I believe and this in turn has a deal with Bank of Ireland so our deal safeguarded English soldiers deposits:beam:

The claim Louis that we purposely chose a blanket deal is a bit too conspiratorial for me the reality is a fire broke out and someone quickly grabbed a bucket of water.

The government is going to charge for this deal by the way its not free you know but so far no one has actually applied yet I believe but I could be wrong.

Foreign banks with a high street presence in Ireland can also avail so Halifax is covered here even though it crashed and burned in the UK.

Now that all countries seem to be doing either variations on a theme we could be lucky and avert a Eurowide collapse.

[Louis VI the Fat]

Aye, too much focus on Ireland. It was altogether not that important, and the tax issue is distracting this thread.


More importantly, a common policy (http://news.bbc.co.uk/2/hi/business/7656064.stm) has been agreed upon. How long will it last and will it be at all sufficient to quench fears and panic?

European Union finance ministers have agreed to increase the guarantee for customers' bank savings accounts to at least 50,000 euros ($68,250; £38,900).

The ministers reached agreement at emergency talks on the financial crisis in Luxembourg. They also agreed to support big banks in trouble in order to protect the financial system. "We have agreed to support systemic financial institutions," deputy German finance minister Joerg Asmussen said.

Until the outbreak of the turmoil in the financial sector, most EU governments guaranteed consumer savings of up to 25,000 euros. However, several countries wanted to raise the minimum guarantee even higher than 50,000 euros - to 100,000 euros. Countries such as Greece and Ireland have already issued blanket guarantees for savers.


French finance minister, Christine Lagarde, who chaired the meeting, said: "We wanted to find a common position to strengthen our coordination - we have succeeded." "We have reiterated our determination to guarantee the stability and solidity of the banking system, " she added. The ministers from the 27 member states hope their measures will bolster money markets after a day of panic on Monday saw huge share index losses in Germany, France and the UK.

A $700bn US bank bail-out and moves by several EU states to help their banks have not quelled fears. European and Asian markets were volatile on Tuesday as investors worried global government action may not resolve the crisis. Banking stocks dragged European share markets lower initially, but by early afternoon most indices had reversed earlier falls to edge ahead slightly - the UK's main FTSE 100 index was up 1.2%, while France's Cac 40 was 1.5% higher.


Since late last week, Ireland, Germany, Greece, Austria and Denmark have declared separately that money held by ailing banks will be safe. Analysts say the move had angered fellow EU member states who feared it could prompt savers to transfer their money into guaranteed institutions.

Europe's fragmented response to the crisis has so far has done little to reassure investors, correspondents say.

~~~~~

Meanwhile, Iceland is not looking to the EU. not to America either. But...to Russia (http://news.bbc.co.uk/2/hi/business/7657012.stm).

[JR-]

blah..............................................


:sweatdrop:

ireland is not a parasite, it is a sovereign nation with a representative gov't that makes its own choices on how it taxes its citizens and other economic activity.

if other nations don't like that then quite frankly, screw them!

petulant continental nations that feel hard done by because little paddy can run faster in the race should realise he gets that advantage because he didn't waste his time and money eating sweaties.

one of the reasons why i want nothing to do with political integration with the continent is because i don't want anyone telling us how to do things, so i'll be damned if i'll stand by and watch it happen to ireland either.

none. of. the. continents. effing. business.

[Louis VI the Fat]

ireland is not a parasite, it is a sovereign nation with a representative gov't that makes its own choices on how it taxes its citizens and other economic activity.

if other nations don't like that then quite frankly, screw them!

petulant continental nations that feel hard done by because little paddy can run faster in the race should realise he gets that advantage because he didn't waste his time and money eating sweaties.

one of the reasons why i want nothing to do with political integration with the continent is because i don't want anyone telling us how to do things, so i'll be damned if i'll stand by and watch it happen to ireland either.

none. of. the. continents. effing. business.Yes it's my business because I share the bill. :book:


Sharing a house with people and trying to decide on rules is fine.
Not sharing a house is fine too.
Sharing a house with others only to curse at them that it's none of their :daisy: business what you do 'in your own house' is not fine.

[Crazed Rabbit]

Louis, you act like Ireland got invited to a club and then started breaking the rules to get ahead.

It's called free trade. Ireland is working you guys over with a competitive advantage. Protectionist pouting will advance humanity nowhere. I puzzle why France skulks when seeing what lowering taxes has done for Ireland, and demands that Ireland raise its taxes and thus be cast back into the pit of misery with France and the rest, instead of trying to lower taxes themselves.

CR

[PanzerJaeger]

It's called free trade. Ireland is working you guys over with a competitive advantage. Protectionist pouting will advance humanity nowhere. I puzzle why France skulks when seeing what lowering taxes has done for Ireland, and demands that Ireland raise its taxes and thus be cast back into the pit of misery with France and the rest, instead of trying to lower taxes themselves.

CR

:2thumbsup:

Competitive taxation among European nations would benefit them all. Refusing to compete seems to only be benefitting Ireland. :beam:

Note the US. Although we're federalized, states have control over many business taxes and regulations which keeps them low and spurs developement. A single tax rate, as Louis seems to want for Europe, would have less beneficial effects.

[Kralizec]

Yes it's my business because I share the bill. :book:

With its net contribution France is the last European country that should raise a clamour about financial solidarity.

[Incongruous]

Louis, you act like Ireland got invited to a club and then started breaking the rules to get ahead.

It's called free trade. Ireland is working you guys over with a competitive advantage. Protectionist pouting will advance humanity nowhere. I puzzle why France skulks when seeing what lowering taxes has done for Ireland, and demands that Ireland raise its taxes and thus be cast back into the pit of misery with France and the rest, instead of trying to lower taxes themselves.

CR



Real competition would only be possible without the EU, without which Ireland would be a nothing, so yeah lets do that!

[HoreTore]

Well, even if my bank fails, all of my savings are still protected ~:)

Gotta love Big Government... :beam:

[gaelic cowboy]

Well, even if my bank fails, all of my savings are still protected ~:)

Gotta love Big Government... :beam:

:help: big goverment save me please :idea2: lets all go for couple of beers like I did tonight gotta love those first year college girls credit crunch is that a new type of mars bar.

[gaelic cowboy]

Uhuh, another great example of prime bollocks!:2thumbsup:

Real competition would only be possible without the EU, without which Ireland would be a nothing, so yeah lets do that!
I'm sick and tired of Americans posting blatantly anti-European crap based on...

Let them post what they like it keeps us all on our toes.

[Crazed Rabbit]

Uhuh, another great example of prime bollocks!:2thumbsup:

Real competition would only be possible without the EU, without which Ireland would be a nothing, so yeah lets do that!
I'm sick and tired of Americans posting blatantly anti-European crap based on...

:rolleyes:

Right...you know, something that nonsensical defies rational answers. Kindly restate whatever point you were attempting to make..

CR

[Koga No Goshi]

I am here to officially state, for the record, that I know almost nothing about the European banking system or its current state. But it's good family fun watching you all discuss it. :book:

[InsaneApache]

With its net contribution France is the last European country that should raise a clamour about financial solidarity.

:laugh4: Gotcha Louis! :laugh4:

[Louis VI the Fat]

With its net contribution France is the LAST European country that should raise a clamour about financial solidarity. Perennial myth. I'll just never understand where this comes from. ~:confused:

A simple look at the actual numbers (http://en.wikipedia.org/wiki/Eu_budget) proves otherwise.


The French / German political project of creating the world's largest internal market benefits the trading countries economically more than these two big continental countries. Let's call it enlightened self-interest. Trade and service economies such as the UK, and countries like Belgium and the Netherlands, benefit economically much more from the EU than France or Germany. As do tax havens like Luxembourg and Ireland.

Even when disregarding that and limiting ourselves to a shopkeeper's mindset, ie, direct payments and benefits, the final bill is remarkably evenly distributed between the UK and France:

UK pays 103, receives 46, net benefit -57.
France pays 140, receives 89, net benefit - 51.

I shall not complicate matters by putting a monetary value here on France's financial, intellectual, diplomatic and political expenditure on supporting the EU versus Britain's expenditure on perennial obstruction.

By comparison:
Germany pays 164, receives 78, net benefit -86.
(Tip to InsaneApache: careful lad, the UK belongs in the exact same category as France, not with the absolute top tier of net contributors. ~;) )

The biggest net contributors are Germany, the Netherlands, and the Nordic countries. These countries pay more to the EU than Britain or France. But they, in turn, pay far less, by several degrees, in military expenditure than the UK or France do for the EU's Common Foreign and Security Policy (http://en.wikipedia.org/wiki/Common_Foreign_and_Security_Policy). Depending on one's political stance - does military safety have a net positive economic benefit on the EU or not - this more than balances the difference.

So: France is within the top tier of net contributors to the EU, in absolute and relative numbers. The net amount France expends annually on building a democratic Europe is simply astonishing. But I won't sulk about it: continent wide democracy is worth any price to me.

[Kralizec]

The reason why the UK is "down there" with France is because Thatcher's rebate. This rebate is smaler in size than the amount of CAP subsidies that French farmers get and the UK is a larger net contributor than France, pleas of French politicians to lift the rebate for reasons of solidarity notwithstanding. Maybe the rebate should be smaller, but I'm more comfortable with money flowing back to taxpayers than pork barrel spending for farmers regardless of nationality.

Of course France is not actually costing Dutch or English taxpayers anything as they're still a net contributor. And I don't have a problem with helping impoverished eastbloc countries out to a degree. But France isn't pulling the full load that other wealthy western European countries do, yet still feel entitled to lecture others on how to behave.

I agree that France put a lot of effort in making the EC look from within and from outside as a French project foremost, for better or worse. I think its actual influence is generally overstated though; historically western Germany had just as much input but they don't seize every opportunity to advertise the fact. The UK might have had a larger role in shaping the community if France hadn't blocked their entry for a decade for petty political reasons.

[Tribesman]

It's called free trade. Ireland is working you guys over with a competitive advantage. Protectionist pouting will advance humanity nowhere. I puzzle why France skulks when seeing what lowering taxes has done for Ireland, and demands that Ireland raise its taxes and thus be cast back into the pit of misery with France and the rest, instead of trying to lower taxes themselves.

:laugh4::laugh4::laugh4::laugh4::laugh4::laugh4:
Ireland is buggered rabbit , thats what those "wonderful" policies Ireland tried did .

But anyway back to the bail out plan , the guarantees and all that . Biffo spoke today , there is no plan and no guarantee , they just made an announcement that there was and now they are starting to think about it

[Papewaio]

I hear about europe and america, why am I not hearing anything from Australia and Canada? Just not affected?

We have been affected. Just we had the economic brakes on for awhile now because of the huge mining boom... a kind of economic counter balance in the form of raised interest rates.

Consumer confidence is down.
The stock market is down.
Dollar is spiraling down compared with the US dollar.
Housing market is down.
Job market is ok.
ALL our major banks are making record profits and the interest rate is deregulated. Sure our Reserve Bank can set the rate, but the banks are free to ignore it. Only thing that spurs them to raise or lower is competition.

I'm sure someone with a better understanding of the Aussie economy can give a better synopsis.

[Evil_Maniac From Mars]

I hear about europe and america, why am I not hearing anything from Australia and Canada? Just not affected?

The Canadian economy is down, and it is everywhere in the Canadian news, but it is not nearly as bad as people make it out to be.

http://network.nationalpost.com/np/blogs/fullcomment/archive/2008/10/08/kelly-mcparland-give-me-the-bailout-i-ll-supply-the-crisis.aspx

[Incongruous]

:rolleyes:

Right...you know, something that nonsensical defies rational answers. Kindly restate whatever point you were attempting to make..

CR

I don't reply to your posts and expect rational answers CR...:idea2:

[Louis VI the Fat]

No more talk of the financial crisis. Might as well return to the topic of wealth re-distribution through government means within the EU, the use and the flow of subsidies and tax incentives.

I am not going to write another hefty post about tax havens. Instead, I'll reverse the subject and you all get to show what's wrong with the bit below. :idea2:


The whole of the EU is simply envious of France's phenomenally succesful agriculture. This succes is not based on a use of government incentives, i.e. taxes and subsidies, but on clever French farmers who outcompete their competitors. The phenomenally clever French farmer and government have simply outwitted their competitors by seizing upon the possibilities the EU market offers. You are all simply resentful of this competitive edge. And rather than being true to your national character of incessant whiners, you should simply work as just hard as the French farmer if you wish to reduce the gap.
Furthermore, you should all mind your own daisy business and not interfere with French sovereign affairs like our use of the Common Agricultural Policy.


Is the above meaningful? If not, what, exactly, is wrong with it? ~;)

[JR-]

it is quite easy to believe that the french consider CAP to be a soveriegn french affair. ;)

[Strike For The South]

See France is like The TEXAS of the EU. Others are jealous of what she can produce and then gang up on her. France is a beautiful flower wilting under rage filled continentals and stuffy Brits. So that is why I propose a Texan-France union. The best food the best women the best of everything. We would be the pinnacle of human development.

Think of the ego:whip:

[Husar]

*puts France on list of countries to throw out of the EU because they mention that "sovereignity" pipe dream*

[gaelic cowboy]

No more talk of the financial crisis. Might as well return to the topic of wealth re-distribution through government means within the EU, the use and the flow of subsidies and tax incentives.

I am not going to write another hefty post about tax havens. Instead, I'll reverse the subject and you all get to show what's wrong with the bit below. :idea2:


The whole of the EU is simply envious of France's phenomenally succesful agriculture. This succes is not based on a use of government incentives, i.e. taxes and subsidies, but on clever French farmers who outcompete their competitors. The phenomenally clever French farmer and government have simply outwitted their competitors by seizing upon the possibilities the EU market offers. You are all simply resentful of this competitive edge. And rather than being true to your national character of incessant whiners, you should simply work as just hard as the French farmer if you wish to reduce the gap.
Furthermore, you should all mind your own daisy business and not interfere with French sovereign affairs like our use of the Common Agricultural Policy.


Is the above meaningful? If not, what, exactly, is wrong with it? ~;)

I have no problem at all with the CAP come on the French Farmers:beam:

[Incongruous]

No more talk of the financial crisis. Might as well return to the topic of wealth re-distribution through government means within the EU, the use and the flow of subsidies and tax incentives.

I am not going to write another hefty post about tax havens. Instead, I'll reverse the subject and you all get to show what's wrong with the bit below. :idea2:


The whole of the EU is simply envious of France's phenomenally succesful agriculture. This succes is not based on a use of government incentives, i.e. taxes and subsidies, but on clever French farmers who outcompete their competitors. The phenomenally clever French farmer and government have simply outwitted their competitors by seizing upon the possibilities the EU market offers. You are all simply resentful of this competitive edge. And rather than being true to your national character of incessant whiners, you should simply work as just hard as the French farmer if you wish to reduce the gap.
Furthermore, you should all mind your own daisy business and not interfere with French sovereign affairs like our use of the Common Agricultural Policy.


Is the above meaningful? If not, what, exactly, is wrong with it? ~;)

I point to:
"as just hard", there are some structural flaws.

[Kralizec]

daisy business?

[InsaneApache]

daisy business?

:laugh4:

[Tristuskhan]

(.....) but on clever French farmers who outcompete their competitors.

:laugh4: Louis, you really know nothing about french farmers, my friend!

ps: and before you whip me for not having understood your sense of humour, I must tell you I understood your joke, uh! Still, you don't know much about our ploucs

[Kralizec]

I'm not sure if I get the joke, other than that it's got sarcasm written all over it?

While I can see that threatening supermarkets into stocking native products only, commandeering trucks with foreign products at the border and intimidating import companies could be seen as means of competing with others, they're technically illegal even if they usually go unpunished by the French justice system.

[Crazed Rabbit]

I don't reply to your posts and expect rational answers CR...:idea2:

So in other words, you can formulate no argument whatsoever against my post?

@Tribesy - links or you're lying.

CR

[Banquo's Ghost]

Furthermore, you should all mind your own daisy business and not interfere with French sovereign affairs like our use of the Common Agricultural Policy.


I'm not sure if I get the joke, other than that it's got sarcasm written all over it?

I believe Louis was using the word daisy as a profanity, as in " :daisy: business ":

"Furthermore, you should all mind your own damn business and not interfere with French sovereign affairs like our use of the Common Agricultural Policy." :wink:

I hope that this helps, and was what you were asking. Apologies if I have seemed patronising by getting the wrong end of the stick. :bow:

[gaelic cowboy]

At last two explanations of this mess I can understand.

https://www.youtube.com/watch?v=mzJmTCYmo9g&feature=related

https://www.youtube.com/watch?v=hXBcmqwTV9s&feature=related

[Husar]

LMAO!

Those were great! :laugh4:

[Incongruous]

At last two explanations of this mess I can understand.

https://www.youtube.com/watch?v=mzJmTCYmo9g&feature=related

https://www.youtube.com/watch?v=hXBcmqwTV9s&feature=related

Hahaha:laugh4:

Thanks for that GC, needed a turn up!:laugh4:

[KarlXII]

hilarious. welcome to our nightmare, euro-weenies.

Fail troll is fail.

[gaelic cowboy]

LMAO!

Those were great! :laugh4:



Hahaha:laugh4:

Thanks for that GC, needed a turn up!:laugh4:

I live to serve :beam:

[InsaneApache]

I love Bird and Fortune, they've been going for years and always make me laugh.

"So, it's a black man wearing a string vest, sitting on his rotting porch in Alabama who started the financial meltdown?"

"Yes!"

:laugh4:

[Louis VI the Fat]

'Daisy' is my gentle euphemism for :daisy:. The flower picture has become an obscene gesture by now.

The point of my post was that seemingly internal business can only be properly understood within the context of the workings of the EU. The Irish model as much as the French agricultural model. Both policies can only be properly understood within the framework of the EU. Neither would exist without the EU.



The reason why the UK is "down there" with France is because Thatcher's rebate. This rebate is smaler in size than the amount of CAP subsidies that French farmers get And the rebate is larger than the distance between Paris and London in measured in Visigoth feet. In other words, what is the relevance?
I'll go out on a limb and guess that you read mostly English language foreign news. In the British press, there exists a persistant image of France as forever living off EU funds, with Britain bravely resisting this. That it is only owing to Thatcher that the UK is somewhat shielded from this French thievery. Reality, of course, does not usually correspond with what the British tabloids (from the Daily Mail to the Telegraph) write. Here's the real deal:

The actual numbers.
France is with the top tier of net contributors. Within a margin of a few percent of the UK contribution. To put it differently: the difference is approximately 1/3000th of either GDP.

As importantly, the followinf mechanism:
France is the second largest absolute contributor to the EU. Very closely behind Germany.
Hence there is no financial gain for anybody outside of France from abolishing the CAP. Because, if the CAP is abolished, France will have to get compensated for it's very large absolute contribution through other means. As for Britain, a simple French rebate will be put in place of the CAP payouts.
From this follows that the EU’s agricultural contribution to France is entirely French funded. What’s more, France pays a hefty share of agricultural support for the other countries on top.



EU policy is a result of domestic forces in the member states. For France, this means placating the peasants with handouts. They will only confirm to France paying tens of billions to the EU if there's some immediate financial benefit for them.

The CAP is the price the ideal pays to the pitchfork to become reality.

The CAP lads, is what Paris pays to French peasants in return for their not obstructing France fullfil her vocation: to enslave you all into submission to Paris to turn Europe in a continent wide democracy; with liberty, equality and fraternity from the Atlantic to the Ural.



Still, you don't know much about our ploucsI wouldn't dream of writing anything about my Bertaèyn friends again. My behind is stil aching from the spanking you gave it last time. ~:mecry:

[InsaneApache]

The CAP lads, is what Paris pays to French peasants in return for their not obstructing France fullfil her vocation: to enslave you all into submission to Paris to turn Europe in a continent wide democracy; with liberty, equality and fraternity from the Atlantic to the Urinal.

There, that's more like it.

[KukriKhan]

So, InsaneApache, when you went to the bank to pull out your pension, was there a long line, did you get your money, and did they try to dissuade you? Or did you change your mind?

[InsaneApache]

It's still there. Also my wife changed my mind for me. I know my place. :sweatdrop::shame:
















:laugh4:

[Louis VI the Fat]

While medium-sized former Great Powers pour pocket change into the world economy, like wee $700 billion bailout packages, the world's real power gathered in Paris (http://www.guardian.co.uk/business/2008/oct/14/europe-europeanbanks) yesterday and announced a plan worth €2 trillion. Or four times the size of the puny American package.

The plan seems to have had immediate effect.


The governments of Europe yesterday embarked on their biggest financial gamble since the launch of the euro single currency with the boldest financial rescue scheme ever seen. They are pledging to buy up tottering banks, underwrite their lending, and flood the markets with liquidity in a package that could run to a staggering €2tn in total across the EU.

The scale, ambition and potential costs of the programmes announced yesterday suggested that European leaders such as Gordon Brown, President Nicolas Sarkozy of France and Germany's chancellor, Angela Merkel, were determined to rise to the challenge of the financial crisis through concerted action, displaying a degree of leadership that put Washington, the global economic leader, in the shade.

The banking sectors in Spain and France are believed to be the healthiest in Europe at the moment, requiring less intervention. Nonetheless, Sarkozy proposed legislation to be pushed through parliament this week allocating €360bn, €40bn of which could be used to buy up bits of ailing banks.

[KukriKhan]

Nice to know the official abbreviation for trillion will be 'tn' - I've wondered about that a few weeks now since the money amounts mentioned/reported have reached beyond the stratosphere.

My only advice to Europe: be wary of the details, mates. Over here, our Congress, in grand post9-11 style, gave our Executive Branch a blank check, to use as they see fit. Not a penny is spent yet, as far as we know, but what they say they'll spend it on changes daily. And all thay have to do is report twice a year.

I recommend putting a few more strings on your bailouts rescue plans.

[Fragony]

Good news is that it seems to be working for now, and that the EU is actually capable of organising something greater then a birthday party, impressive. We will see.

[Husar]

What I heard on the news here is that for german banks the money is tied to conditions and they will have to ask for it.

Basically if they take money from the state they will have to limit manager payments to 500,000 € a year, no bonuses, no extras, dividends go to the government and not the shareholders etc etc.
They said a bank would have to be pretty desperate to ask for that money. I think it sounds good and really works like that.

[Tribesman]

@Tribesy - links or you're lying.

CR

Perhaps you may eventually find that it is a good idea to learn about something before you decide comment on it .

:laugh4::laugh4::laugh4::laugh4::laugh4::laugh4::laugh4::laugh4::laugh4::laugh4:

[Kralizec]

France is the second largest absolute contributor to the EU. Very closely behind Germany.

if you paid attention to earlier years, you'll notice that France's net contribution used to be tiny until a few years ago. In 2003 the Netherlands, a country with 1/4 of the population of France, made a larger absolute contrubition to the EU budget than France. Click (http://www.junepress.com/PDF/Vol%2010%20No%2020%20and%2021%20-%20Data%20Sheet%20No%2010.pdf)
The budget is a lot more reasonable now due to long-overdue CAP and budget reforms wich France has always resisted.

If France likes to run a subsidy program to support farmers who can't make the sort of living they feel entitled to financially viable, be my guest - but don't use it as a backdoor reduction of your contribution to the rest of the EU's activities.

[Louis VI the Fat]

if you paid attention to earlier years, you'll notice that France's net contribution used to be tiny until a few years ago. In 2003 the Netherlands, a country with 1/4 of the population of France, made a larger absolute contrubition to the EU budget than France. Click (http://www.junepress.com/PDF/Vol%2010%20No%2020%20and%2021%20-%20Data%20Sheet%20No%2010.pdf)I'm afraid your link mentions net contributions. I meant simply total contribution itself. Sorry, I used the confusing term absolute contribution.
My point was, that France will either use its EU funds for income support of farmers, or she will have to get compensation from other EU funds, or there needs to be a drastic reduction of French payments. As is, France is already one of the largest net contributors, and without the CAP she will become a singularly large net contributor. This is...'unlikely' to happen.
So, one can dislike the CAP - I do too - but even scrapping it altogether will not make much of a difference to France's net contribution in the long run.

Furthermore, not to be a pest, but your link strikes me as decidedly unreliable. I mean, it's newest publication (http://www.junepress.com/coverpic.asp?BID=732) is 'The EU - Germany's Fourth Reich!!1!' :inquisitive:


I'm sorry, but British books and sites like this are exactly what I meant in my previous post:

I'll go out on a limb and guess that you read mostly English language foreign news. In the British press, there exists a persistant image of France as forever living off EU funds

Reality, of course, does not usually correspond with what the British tabloids (from the Daily Mail to the Telegraph) write.


~~~~~


To be fair to the British press, some journalists are paying attention (http://www.telegraph.co.uk/finance/2918072/Blair-exaggerates-EU-contribution.html):

Blair 'exaggerates EU contribution'

Britain has been exaggerating its net contribution to Brussels by over £500m during its row with France about how to finance the EU.

The exaggeration was revealed in the Treasury's delayed but definitive assessment of Britain's annual contribution, an obscure official document entitled Statement on the 2005 EC Budget, which has finally been released after a request under the Freedom of Information Act.

In their negotiations with the EU, both Tony Blair and Gordon Brown have said that Britain's net contribution to the EU in 2003, the latest year for which complete numbers are available, was £3.7billion, considerably more than the £2.6billion the EU itself claims.I want my money back! Labour has lying and spinning in Europe too! :furious3:
*slams handbag on table*

[Louis VI the Fat]

if you paid attention to earlier years, you'll notice that France's net contribution used to be tiny until a few years ago.Okay, so I checked the internet for reliable links for earlier years. I am having trouble finding online sources prior to the mid-90's.

Here is what I found, though. 1994 (http://hansard.millbanksystems.com/written_answers/1995/nov/29/eu-contributions), the last year of twelve EU members.

Some selected countries and figures:

Total contribution:
France 12,550.9
United Kingdom 6,417.4
Netherlands 4,245.9
Denmark 1,296.2
Italy 7,759.6

Net contribution
France -2,626.4
United Kingdom -1,158.8
Netherlands -1,829.9
Denmark 198.9
Italy -2,540.4

France was second in absolute contribution, directly behind behemoth Germany. And third in per capita net contribution, after The Netherlands and Germany. France paid well over twice as much as the UK, in both absolute and relative amount (per capita).
Worthy of note is that The Netherlands were very hard done by, and that wealthy Denmark actually received money.


I'm sorry. There is a perennial myth abroad that France lives off of EU funds. It is simply not true.


Furthermore, I knew I had struck sheer comedy gold when I stumbled upon this weird link. The numbers are directly from the lion's den: the written proceedings of the UK's House of Commons....a response to worried questions about foreign EU contributions. :beam:
Shall I call it 'What Every British Politician Secretly Knows But Is Too Scared Too Tell Britain?'

[Husar]

Keep in mind that since 1990 we have our little retarded(as in backwards) eastern soviet brother to drag along with us, yes we love him but he cost(s) a lot of money to get to western standards. :sweatdrop:

[Kralizec]

Okay, anyone can dig up an article on the web to support their viewpoint. So we'll have to find a source we both can agree on. How about europa.eu (http://europa.eu/rapid/pressReleasesAction.do?reference=DOC/00/24&format=HTML&aged=0&language=EN&guiLanguage=en)?
(apparently they didn't know how to put together a proper table back than, see the dates on top of the collumns)
Here you can see that the Dutch absolute (by wich I meant and still mean: as opposed to per capita) net contribution overtook the French one in 1998, wich took a dive and became a third of the Dutch one in 1999. I'm not sure what happened back then, but the UK went from being a small contributor in 1997 to net-outcontributing the French more than twice in 1998.

Here (http://europa.eu/rapid/pressReleasesAction.do?reference=IP/03/1269&format=HTML&aged=0&language=EN&guiLanguage=en) you can see that over the period 2000-2002, the Dutch was first twice that of France while in 2001 and 2002 they were roughly the same. I'm wondering how the UK came to be a net receiver in 2001 :inquisitive:

There's a lot of variations from year-to-year, and the general trend is that France started net-contributing more and more because of CAP reforms. In 2008 it's still nothing to be proud of though, and none of the traditional excuses fly: it's not an eastbloc country, it wasn't fascist dictatorship until recently and there aren't that many Irish people in France either.

I know the picture looks rosier for France if we focus only on the gross contribution to EU coffers, but as I've said, I consider the CAP a pork program and a huge slice of it's clientele lives in France. Since these leeches farmers are more likely to spend their bounty income in their own country, the French economy has an economic incentive to keep the CAP in addition to the fact that few politicians are willing to piss off their farmers. France de facto contributes less to other EU projects (most of wich serve some useful purpose) because a lot of French money that goes to Brussels is spent on French farmers first.

Regarding the British conspiracy, I rarely watch foreign telly (occasionally BBC, or Belgian or German news) and never read foreign newspapers. The truth is that France's financial contribution to the EU, compared to what they get back, is tiny for a first world economy of 60 million people. Anyone who can't see that is ignorant of the situation or French.

[Louis VI the Fat]

I shall accept the numbers from your source. I shall also accept your definition - the least favourable way for France of calculating EU contribution - of monetary per capita direct net contribution. Here's what we get then so far:

1990 - France 3rd of twelve.
1994 - France 3rd of twelve.
2000-2002 - France sixth of fifteen.
2006-2013 - France sixth of 27.

Is that 'tiny'? Or is that, like I argue, 'just below the absolute top tier'?

I would say that we simply differ in our definition of 'tiny'. But I won't. Our conversation started over the claim that 'With its net contribution France is the LAST European country that should raise a clamour about financial solidarity'.
I really do think this is the result of persistant myth, of standard anti-EU lore: that France is using the EU as a money making racket. This is simply not true. France is usually just behind the top tier of contributors.

(And I'll spare us all calculations - some quite reasonable in fact - that show why France is the largest EU contributor. ~;))

[Louis VI the Fat]

Actually, I am not going to spare you all other means of calculations. How about comparing the contribution of member states with GDP per capita:

Countries with a higher GDP per capita who pay less per capita in net contribution than France:
Luxembourg, Ireland, Finland, Belgium.
Countries with a lower GDP per capita who pay more per capita in net contribution than France:
Germany.

France actually pays more per capita than four richer countries. And except for the hard-done by Germans - always paying too much for Europe - nobody who pays more than France has a lower income per capita. Or, apart from the Germans:
Everybody who is poorer than France pays less. Not everybody who pays less is poorer. Or:
Everybody who pays more than France is richer. Not everybody who is richer pays more.

France is three places higher than she ought to be according to GDP ranking. Why? Because France picks up her fair share of the bill and a little bit more on top.

[InsaneApache]

Sounds to me Louis like you're administering corporel punishment to a recently deceased equine. You almost convinced me. :wall:

[Kralizec]

To be Frank, I never knew the Belgians and Luxembourgers were such profiteers. But to be fair; Germany has its ossies and Belgians have the Walloons. As for Luxembourg, we should enslave these bandits and return them to the Dutch crown.

...

Let's keep two things in mind here:
1) I never said that France was living off EU funds. I specifically criticised Frances net contribution for being too small for such a stable and large economy.
2) nor did I say that there weren't other countries wich should cough up more money for the bill

Nevertheless, this at best average contribution to EU development is entirely at odds with the fact that France likes to monopolise all credit for EC achievements and its occasional petulant lecturing to other countries.