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Thread: European Banks: What's Going On?
Debilitating policies and internal bickering has destroyed Europe.
The Americans win again.
Originally Posted by :
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.
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.
Originally Posted by :
The crisis engulfing Europe, Asia and emerging markets, makes life easier for Washington. The United States is becoming a safe-haven again.
The crisis engulfing Europe, Asia and emerging markets, makes life easier for Washington. The United States is becoming a safe-haven again.
Oh well, at least we are merely collapsing. Iceland is sinking altogether:
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.
Originally Posted by :
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.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.
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.
Originally Posted by JAG:
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 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.
Huh? How did my post end up here?
Deleted and tried again.
Deleted and tried again.
Originally Posted by Louis VI the Fat:
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.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.
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.
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.
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.
But no, when it comes to loss, the trickle down actually works as all the loss is trickled down to the taxpayer.
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.
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.
But no, when it comes to loss, the trickle down actually works as all the loss is trickled down to the taxpayer.
I hear about europe and america, why am I not hearing anything from Australia and Canada? Just not affected?
Originally Posted by Husar:
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.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?
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
Originally Posted by Gaelic Cowboy:
If your so annoyed about our low taxes cut your own taxes or else cut your cost simple maths
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. If your so annoyed about our low taxes cut your own taxes or else cut your cost simple maths
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.
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.
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?
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.
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.
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.
I am ashamed that my little teasing of Louis - meant good-naturedly - has sparked such sharp words. Please accept my apologies.
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.
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.
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.
Originally Posted by Louis VI the Fat:
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:
But, the small country profits from lowering corporate taxes, the big one does not! Like this:
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.
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.
The majority of Irish companies do little or or no business within the Eurozone at least the continental side at the moment.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.
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.
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?
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.
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
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
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.
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
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.
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 has been agreed upon. How long will it last and will it be at all sufficient to quench fears and panic?
Meanwhile, Iceland is not looking to the EU. not to America either. But...to Russia.
More importantly, a common policy has been agreed upon. How long will it last and will it be at all sufficient to quench fears and panic?
Originally Posted by :
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.
~~~~~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.
Originally Posted by Louis VI the Fat:
blah..............................................
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.blah..............................................
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.
Originally Posted by Furunculu5:
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. 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.
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
business what you do 'in your own house' is not fine.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
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
Originally Posted by Crazed Rabbit:
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
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
Competitive taxation among European nations would benefit them all. Refusing to compete seems to only be benefitting Ireland.
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.
Originally Posted by Louis VI the Fat:
Yes it's my business because I share the bill.
With its net contribution France is the last European country that should raise a clamour about financial solidarity.Yes it's my business because I share the bill.
Originally Posted by 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
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!
Well, even if my bank fails, all of my savings are still protected 
Gotta love Big Government...
Gotta love Big Government...
Originally Posted by HoreTore:
Well, even if my bank fails, all of my savings are still protected
Gotta love Big Government...
Well, even if my bank fails, all of my savings are still protected
Gotta love Big Government...
big goverment save me please 
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.Originally Posted by Bopa the Magyar:
Uhuh, another great example of prime bollocks!
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.Uhuh, another great example of prime bollocks!
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...
Originally Posted by Bopa the Magyar:
Uhuh, another great example of prime bollocks!
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...
Uhuh, another great example of prime bollocks!
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...
Right...you know, something that nonsensical defies rational answers. Kindly restate whatever point you were attempting to make..
CR
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.
Originally Posted by Fenring:
With its net contribution France is the last European country that should raise a clamour about financial solidarity.
With its net contribution France is the last European country that should raise a clamour about financial solidarity.
Gotcha Louis! Originally Posted by Fenrig:
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. With its net contribution France is the LAST European country that should raise a clamour about financial solidarity.
A simple look at the actual numbers 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. 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.
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.
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.
Originally Posted by :
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.
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.
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
Originally Posted by Fragony:
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.I hear about europe and america, why am I not hearing anything from Australia and Canada? Just not affected?
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.
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