8 ms·

They forced Ireland to 'take one for the team' and prevent contagion by repaying bad commercial bank loans from overseas banks to the failed Irish banks. In oth

by barking 10y ago

They forced Ireland to 'take one for the team' and prevent contagion by repaying bad commercial bank loans from overseas banks to the failed Irish banks. In other words they prevented Ireland from doing an Iceland. They hinted that new, shared burden, measures, to be put in place, to cover such eventualities in the future, would be applied retrospectively to Ireland but they weren't. During the bailout term the EU/ECB adopted a far harder stance against the country than the IMF advocated. And doubtless on the back of this case there will be a legal action in Europe and a resulting large fine on Ireland. You just don't get the feeling that this sort of treatment would be given to Germany or France.

deleted 10y ago
[deleted]
dogma1138 10y ago
Yeah it wasn't pretty. Ireland was not allowed to default on its loans which was what they should have done. It did not control its currency or banks which are effectively controlled by the ECB. It could not repay some or all of its loans with its own currency by simply printing more of it and the only way of getting more currency was taking on more loans. What people also don't understand is that the laws preventing incentives aren't protecting the weak they are protecting the strong. Germany can set its corporate tax rate at 40-50% and while people would bitch and moan it would do nothing. It's a huge market, it has a huge and highly developed workforce and it's one of the most industrialized nations on the planet with a highly developed and diverse industry. It doesn't need incentives to lure corporations to set up shop and it doesn't need incentives to grow its own indigenous corporations and businesses. If everything would be equal as far as cost of setting shop, employment and taxation between Germany and Ireland. Neither Apple not anyone else would give 2 cents about Ireland when they have countries like Germany available to them. Many of these laws aren't protecting the smaller nations they are restricting them and preventing them from being competitive forcing them to be effectively dependent on the bigger nations for loans/credit which they give out to allow their industry to keep producing in excess. Anyone who thinks that Germany loaning money to Ireland so they can go around and buy Volkswagen and BMWs isn't a subsidy are blind or clueless.
- toyg 10y ago
  > the laws preventing incentives aren't protecting the weak they are protecting the strong. That's not entirely correct. These norms were introduced to open up nationalised markets like telecoms, mail etc, which would otherwise remain forever locked on national boundaries. This allowed an equal field for businesses across the Union. Of course, established markets tend to favor the richest players. This approach is supposed to be complemented by infrastructural funds, where German and French taxpayers effectively pick up the bill for rebuilding Ireland or Romania to a state where they can compete on an equal foot. > Neither Apple not anyone else would give 2 cents about Ireland That's very unfair to Ireland. Ireland has a natural advantage nobody can take away: sharing a language with the richest and most powerful nation on the planet. That's worth a lot, in this day and age.
  - dogma1138 10y ago
    >That's not entirely correct. These norms were introduced to open up nationalised markets like telecoms, mail etc, which would otherwise remain forever locked on national boundaries. This allowed an equal field for businesses across the Union. Of course, established markets tend to favor the richest players. Well it sure helped Deutsche Telecom and PostNL(TNT), everyone else is mostly still locked within their own countries, setting up the same rules isn't allowing an equal field of opportunity where you are at a disadvantage out of the gate and you can't adjust the rules you want to play by you will always lose. Established markets tend to favor the richest players, but to compete against them you have to be able to set up a competitive advantage and that requires you to be able to set you own policies under the current EU law you can't set up policies which are "disadvantageous" to other member states which means you will constantly get run over there is simply no way of competing. There is a reason why we split boxing into weight categories going up against a 300 lbs gorilla as a featherweight won't end up well for you. >This approach is supposed to be complemented by infrastructural funds, where German and French taxpayers effectively pick up the bill for rebuilding Ireland or Romania to a state where they can compete on an equal foot. The German taxpayer isn't really picking up the bill (although the Irish taxpayer kinda does, since the ECB forced the Irish taxpayer to take on the debt of private bondholders and investment banks, this is pretty darn unprecedented. This would be analogous to if Capital One would go under and the Fed/USG would not bail it out, and would not allow it to declare bankruptcy and then they would go and force Virginia and it's residents alone to take on all of Capital One's debts as their own) and many of the policies that Germany leads are also causing these cycles. Germany operates at a pretty big trade surplus, many if not all of the EU members are at a trade deficit with Germany to the German policy makers the policy of allocating loans and credit to countries that would not otherwise be able to afford german goods to keep the german people working is a no-brainer. The problem is that it's effectively a pseudo ponzi scheme when it works it works extremely well (the US employed a similar policy with Europe to keep it's post WW2 level of production at high levels, the Marshall plan helped Europe a lot but it also helped the US even more) but like all of them when it starts to slow down it tends to break apart into a mess. Now this wouldn't be bad if Ireland could set up it's own monetary policy, control it's own currency, restructure its debt but it couldn't and it wasn't allowed too. Because of how the Euroblock/ECB is structured most of the normal debt relief tools that would be available to a "normal" country are not available to Ireland, the few that are are not under their own control. You can't come to some one in debt and say - you aren't allowed to declare bankruptcy, you can't restructure your debt, you can't repay it in your own currency like every other nation, and you can't adjust the interest rates because the ECB controls the price stability within the Eurozone. The overall problem with this isn't that the EU/Euroblock is bad is that they are trying to have the cake and eat it, they are intentionally structured as a non-Federated entity, they do not share the pain, this isn't the US. And on the other hand they have a shared currency and a monetary policy that is dictated by an external body the ECB which to be fair no one really elects and the individual governments of the member states do not have any control over (if the head of the Fed goes to I don't know Alabama and says If you don't take loans from Cali I'm shutting your fed and all your banks and payment systems come monday morning Obama can fire him (or well her now since it's Janet Yellen), the Irish government can't do squat to the ECB and that's just what it did to them and Greece). The EU/Euroblock will soon figure out that they'll have to go either to a fully or at least much more federated system with which they would share in each other's wealth and misery or step it down to the point of where individual countries get the power back to control their own monetary policy, inflation, interest rates and taxation at the same level as every other sovereign nation state does today. >That's very unfair to Ireland. Ireland has a natural advantage nobody can take away: sharing a language with the richest and most powerful nation on the planet. That's worth a lot, in this day and age. India... South Africa... English is important but you overestimate it's worth by several orders of magnitude, if Ireland was as expensive as Germany to operate in, or even if it was almost as nearly as expensive as Germany tax wise Germany would be considerably better and cheaper to operate in, even if you have to bring a few 1000's Irish people to do tech support. Before Ireland "whored itself out" India was and to some extent still is the call center and the remote dev shop of the world simply because it's cheap and people can learn English, you can't learn paying only 15% corporate tax and have incentives for every engineer you hire that bring that figure to 0 instead of 30%. South Africa now is also doing the same thing, they are on GMT, speak English and now are a pretty lucrative alternative to Ireland, and this thing with Apple will only make it worse.
atmosx 10y ago
As a European, I don't have the feeling that contagion (of any kind) was contained (at any level). So it didn't work and no, I won't take your word for "if we didn't had done XYZ it would be a lot worst"... It's already as bad as it gets.
- barking 10y ago
  It was at Europe's insistence that bank debts were converted into taxpayers' debts. Ireland didn't do it willingly. Whether or not it resulted in any good for Europe, who knows. One known outcome is that the banks in question were protected from the downside of their commercial decisions and Irish taxpayers will be paying for it for decades to come.

by barking 10y ago

deleted 10y ago

[deleted]

dogma1138 10y ago

Yeah it wasn't pretty. Ireland was not allowed to default on its loans which was what they should have done. It did not control its currency or banks which are effectively controlled by the ECB. It could not repay some or all of its loans with its own currency by simply printing more of it and the only way of getting more currency was taking on more loans. What people also don't understand is that the laws preventing incentives aren't protecting the weak they are protecting the strong. Germany can set its corporate tax rate at 40-50% and while people would bitch and moan it would do nothing. It's a huge market, it has a huge and highly developed workforce and it's one of the most industrialized nations on the planet with a highly developed and diverse industry. It doesn't need incentives to lure corporations to set up shop and it doesn't need incentives to grow its own indigenous corporations and businesses. If everything would be equal as far as cost of setting shop, employment and taxation between Germany and Ireland. Neither Apple not anyone else would give 2 cents about Ireland when they have countries like Germany available to them. Many of these laws aren't protecting the smaller nations they are restricting them and preventing them from being competitive forcing them to be effectively dependent on the bigger nations for loans/credit which they give out to allow their industry to keep producing in excess. Anyone who thinks that Germany loaning money to Ireland so they can go around and buy Volkswagen and BMWs isn't a subsidy are blind or clueless.

toyg 10y ago
> the laws preventing incentives aren't protecting the weak they are protecting the strong. That's not entirely correct. These norms were introduced to open up nationalised markets like telecoms, mail etc, which would otherwise remain forever locked on national boundaries. This allowed an equal field for businesses across the Union. Of course, established markets tend to favor the richest players. This approach is supposed to be complemented by infrastructural funds, where German and French taxpayers effectively pick up the bill for rebuilding Ireland or Romania to a state where they can compete on an equal foot. > Neither Apple not anyone else would give 2 cents about Ireland That's very unfair to Ireland. Ireland has a natural advantage nobody can take away: sharing a language with the richest and most powerful nation on the planet. That's worth a lot, in this day and age.
- dogma1138 10y ago
  >That's not entirely correct. These norms were introduced to open up nationalised markets like telecoms, mail etc, which would otherwise remain forever locked on national boundaries. This allowed an equal field for businesses across the Union. Of course, established markets tend to favor the richest players. Well it sure helped Deutsche Telecom and PostNL(TNT), everyone else is mostly still locked within their own countries, setting up the same rules isn't allowing an equal field of opportunity where you are at a disadvantage out of the gate and you can't adjust the rules you want to play by you will always lose. Established markets tend to favor the richest players, but to compete against them you have to be able to set up a competitive advantage and that requires you to be able to set you own policies under the current EU law you can't set up policies which are "disadvantageous" to other member states which means you will constantly get run over there is simply no way of competing. There is a reason why we split boxing into weight categories going up against a 300 lbs gorilla as a featherweight won't end up well for you. >This approach is supposed to be complemented by infrastructural funds, where German and French taxpayers effectively pick up the bill for rebuilding Ireland or Romania to a state where they can compete on an equal foot. The German taxpayer isn't really picking up the bill (although the Irish taxpayer kinda does, since the ECB forced the Irish taxpayer to take on the debt of private bondholders and investment banks, this is pretty darn unprecedented. This would be analogous to if Capital One would go under and the Fed/USG would not bail it out, and would not allow it to declare bankruptcy and then they would go and force Virginia and it's residents alone to take on all of Capital One's debts as their own) and many of the policies that Germany leads are also causing these cycles. Germany operates at a pretty big trade surplus, many if not all of the EU members are at a trade deficit with Germany to the German policy makers the policy of allocating loans and credit to countries that would not otherwise be able to afford german goods to keep the german people working is a no-brainer. The problem is that it's effectively a pseudo ponzi scheme when it works it works extremely well (the US employed a similar policy with Europe to keep it's post WW2 level of production at high levels, the Marshall plan helped Europe a lot but it also helped the US even more) but like all of them when it starts to slow down it tends to break apart into a mess. Now this wouldn't be bad if Ireland could set up it's own monetary policy, control it's own currency, restructure its debt but it couldn't and it wasn't allowed too. Because of how the Euroblock/ECB is structured most of the normal debt relief tools that would be available to a "normal" country are not available to Ireland, the few that are are not under their own control. You can't come to some one in debt and say - you aren't allowed to declare bankruptcy, you can't restructure your debt, you can't repay it in your own currency like every other nation, and you can't adjust the interest rates because the ECB controls the price stability within the Eurozone. The overall problem with this isn't that the EU/Euroblock is bad is that they are trying to have the cake and eat it, they are intentionally structured as a non-Federated entity, they do not share the pain, this isn't the US. And on the other hand they have a shared currency and a monetary policy that is dictated by an external body the ECB which to be fair no one really elects and the individual governments of the member states do not have any control over (if the head of the Fed goes to I don't know Alabama and says If you don't take loans from Cali I'm shutting your fed and all your banks and payment systems come monday morning Obama can fire him (or well her now since it's Janet Yellen), the Irish government can't do squat to the ECB and that's just what it did to them and Greece). The EU/Euroblock will soon figure out that they'll have to go either to a fully or at least much more federated system with which they would share in each other's wealth and misery or step it down to the point of where individual countries get the power back to control their own monetary policy, inflation, interest rates and taxation at the same level as every other sovereign nation state does today. >That's very unfair to Ireland. Ireland has a natural advantage nobody can take away: sharing a language with the richest and most powerful nation on the planet. That's worth a lot, in this day and age. India... South Africa... English is important but you overestimate it's worth by several orders of magnitude, if Ireland was as expensive as Germany to operate in, or even if it was almost as nearly as expensive as Germany tax wise Germany would be considerably better and cheaper to operate in, even if you have to bring a few 1000's Irish people to do tech support. Before Ireland "whored itself out" India was and to some extent still is the call center and the remote dev shop of the world simply because it's cheap and people can learn English, you can't learn paying only 15% corporate tax and have incentives for every engineer you hire that bring that figure to 0 instead of 30%. South Africa now is also doing the same thing, they are on GMT, speak English and now are a pretty lucrative alternative to Ireland, and this thing with Apple will only make it worse.

atmosx 10y ago

As a European, I don't have the feeling that contagion (of any kind) was contained (at any level). So it didn't work and no, I won't take your word for "if we didn't had done XYZ it would be a lot worst"... It's already as bad as it gets.

barking 10y ago
It was at Europe's insistence that bank debts were converted into taxpayers' debts. Ireland didn't do it willingly. Whether or not it resulted in any good for Europe, who knows. One known outcome is that the banks in question were protected from the downside of their commercial decisions and Irish taxpayers will be paying for it for decades to come.