It's really the German banks that are getting this bailout, why aren't they paying?

Hayte

gizmo555 wrote: »

"We", i.e., the ordinary citizens who borrowed the money are already paying the price. The European banks who provided the torrent of cheap money are equally at fault and should be made equally liable.

What do you think happens when you lend me money and I don't pay it back? You talk of German banks being liable but they have a pretty big liability in this already i.e. their money just disappeared and we had it last. We should give it back but we don't have it anymore because it got lost in some bad investments.

I'm trying to figure out a way in which anyone could possibly find you at fault in this scenario.

View

Amhran Nua wrote: »

Surely you mean, to the profit of their banks.

If the German banks in the IFSC are paying taxes in Ireland - rather than in Germany or elsewhere - then, from a taxation perspective, the Irish tax-payers have unquestionably profited from their presence. Conversely, the German tax-payers have suffered a loss from the absence of their IFSC business (although that assumes they would done business in Germany in the absence of the IFSC).

Personally, I suspect the IFSC and low corporate tax rate may have hindered us as much as helped us. They are a bit like the property tax-breaks - they may seem very clever initially but, ultimately, they distort the "true" business environment to the detriment of more sustainable businesses.

Amhran Nua

Scofflaw wrote: »

Sure - but also to our profit, that is, the Irish state and taxpayer.

So we had a mutually profitable arrangement, which those now baying for repayment entered into willingly. I have no difficulty with public debts and obligations which existed before the guarantee, but they have no right to be crying for the repayment of private debt turned public in a serious feat of financial lycanthropy. Nobody forced them to come here to do business, and nobody forced them to put money into Irish banks when they knew full well what was going on here. The responsibility for those debts lies entirely with those who handed out the money. There is no moral justification for a blanket guarantee.

Scofflaw wrote: »

One rule of being a tax haven, though, is that you don't burn the bondholders...and what's our government fighting not to do?

Eh the rule is don't burn the direct investors in your country, like the MNCs and those who bring FDI. If you run out of money and you need to borrow to keep the lights on, that's when you don't burn the bondholders, a rule which holds right up until the day when you have the books balanced.

Bob_Latchford

Scofflaw wrote: »

Sure - but also to our profit, that is, the Irish state and taxpayer. We set up a cosy tax regime here so that MNCs and other people's banks would come here, along with their employment and tax. That was why CJH set up the IFSC, and it worked like a charm - providing Ireland with highly paid jobs and corporate taxes as a "financial hub". That, in turn, helped Fianna Fáil buy elections by taking lots of voters out of the tax net.

One rule of being a tax haven, though, is that you don't burn the bondholders...and what's our government fighting not to do?

cordially,
Scofflaw

Sound to me that it was to the benefit FF not Ireland. I dont know enough to say if 12.5% benefits Ireland as a whole, but as long as there is no tax and regulation harmony.

Someone will be lowest tax and be least regulated and be seen as semi-tax haven rightly or wrongly. Malta, Andorra, Jersey, Lichtenstein, Monaco, Isle of Man the list is pretty long.

Amhran Nua

View wrote: »

Conversely, the German tax-payers have suffered a loss from the absence of their IFSC business (although that assumes they would done business in Germany in the absence of the IFSC).

But those German banks that did business in Germany would have had increased profits, leading to higher investment in Germany, and so on. As Bob_Latchford points out, it goes around and around. At the end of the day though, the money that was loaned to Irish banks was loaned with the knowledge of where it was going, and into what environment. If it wasn't, then due diligence was not done, and someone needs to be held responsible for that. But that someone isn't the Irish citizenry.

View wrote: »

They are a bit like the property tax-breaks - they may seem very clever initially but, ultimately, they distort the "true" business environment to the detriment of more sustainable businesses.

There are about half a million gainfully employed people in Ireland who would disagree with you quite vehemently.

neilster

gizmo555 wrote: »

No doubt, but the operative word above is "primarily". The German (and other) bankers who loaned massively to Irish banks are big boys and girls who are paid to understand the risks they take with their banks' money.

Look again at the caption on the above chart, which is taken from the website of German news magazine Der Spiegel. They understand that these loans from their banks to ours were an investment. The reason these loans pay a higher rate than government bonds is because they are higher risk. A very small risk, in ordinary circumstances, but not no risk. We should send them a few copies of Nassim Taleb's The Black Swan along with their new shares in AIB and Bank of Ireland if they have trouble with the concept.

The monies involved are nearly as high on the UK side ...It now appears due to the government and EU being led a merry dance in regards to bank debt , exposure , security etc the bondholder , senior subordinated debt are going to be burn , just a matter of when

neilster

Hayte wrote: »

What do you think happens when you lend me money and I don't pay it back? You talk of German banks being liable but they have a pretty big liability in this already i.e. their money just disappeared and we had it last. We should give it back but we don't have it anymore because it got lost in some bad investments.

I'm trying to figure out a way in which anyone could possibly find you at fault in this scenario.

i think we are all being too black and white about this ....we couldnt possibly burn bondholders whilst we needed to borrow from them

Now that the EU/IMF are in town , its all change , we have Angela Merkel openly wooing german voters with talk of burning bondholders and the EU is offering us credit in placeof bondholders

its now a new political reality and frankly talk of sovereign reputation is old news

gizmo555

Hayte wrote: »

What do you think happens when you lend me money and I don't pay it back?

I do what happens all the time in the real world, I write it off in full or in part as a bad debt.

Scofflaw

Bob_Latchford wrote: »

Sound to me that it was to the benefit FF not Ireland. I dont know enough to say if 12.5% benefits Ireland as a whole, but as long as there is no tax and regulation harmony.

Someone will be lowest tax and be least regulated and be seen as semi-tax haven rightly or wrongly. Malta, Andorra, Jersey, Lichtenstein, Monaco, Isle of Man the list is pretty long.

It is, and what you've written out includes those other jurisdictions that act as tax havens - you'll note that they're all small jurisdictions with limited domestic markets. Being a tax haven is simply a case of gearing your tax regime for foreign companies so that they can avail of minimal tax, which is exactly what we did - structures like the "Double Irish" aren't there by accident.

Think about all the various things we're sensitive about or known for - low corporation tax, CCCTB, data retention, passports for sale, excessively large banks, surprisingly large offices of the big consultancy firms like PWC - and the red lines for the government in dealing with a crisis bailout - corporation tax rate, bondholder protection. All of those are tax haven flags.

cordially,
Scofflaw

Hayte

swampgas wrote: »

David Malone has posted what is alleged to be the list of Anglo's bond-holders.

http://golemxiv-credo.blogspot.com/2010/10/who-are-bond-holders-we-are-bailing-out.html

Interesting reading. Don't know enough myself to know how much to trust it though.

It makes sense. They are all investment banks, asset management agencies, pension funds. etc. or money 'growers'.

It makes sense that these guys are trading bonds trying to make their client's money grow and shifting deals around so they can get lots of cash when they need it and when they don't they invest it elsewhere. It also shows how interconnected Irish banking is with the rest of the world. If Anglo were to default on those guys, it puts all of their clients at risk too and they come from all over the world.

gizmo555 wrote: »

I do what happens all the time in the real world, I write it off in full or in part as a bad debt.

Yeah. And you got screwed in the process. You will live, learn and not lend money to me again. And you will tell everyone you know not to lend money to me.

neilster

Hayte wrote: »

Because guess what? If someone makes you a bad offer, you don't have to accept it. Germany is looking out for its own taxpayers and does what it needs to do to protect itself. Ireland should do the same but our options are vastly more limited because we have no leverage. We've been gaming the Euro for years and poaching foreign investment with low corporate tax for a long time. In the end, what we are experiencing now is all of the excesses that we ever indulged in over the past decade come to smack us in the nuts all in one go.

As disappointed as I am to find that we cannot seem to manage our own financial affairs, I am more disappointed that Irish citizens are so quick now to turn on Germany. 5 years ago you didn't care but now we can't pay them the money we owe them and so we are trying to find creative ways of not doing so to avoid getting what we deserve. There are different levels of complicity and responsibility in all this mess but we voted FF in. We were happy to make commission on the property market when the going was good. We were happy to buy houses, renovate and flip them for profit. As long as we get a buck who cares about the people who are buying houses to live in them? Who cares if they have skyhigh mortgage repayments? Now the consequences of the way we live are confronting us and its frankly pathetic to see so many people try to wriggle out.

If there is going to be any real reform in all this it has to start with we the electorate. We have to understand what went wrong and not vote in people who will let this happen again. We cant demand services and a standard of living that we can't afford. We cant go borrowing half again as much as we sell as a nation. We can't screw our eurozone neighbors and expect them to forgive what we owe them when our deals go bad but take them for a ride when the going is good.

i think we are seeing that this is a multi-faceted argument ...since 2001 low interest rates have fanned our economy when it needed brakes applied exacerbating the credit bubble ...this happened because of a sleepy German economy among other issues like 9-11

But because it was out of cycle with our needs it has been a disastrous contributing factor. We had no control over our currency valuation either . In crisis times there is no bailout idea only prayer and really a number of chickens are coming home to roost

For instance the EU is not large enough to swallow a Spanish bailout which appears likely so it is a disaster but partyly an EU one

swampgas

Hayte wrote: »

It makes sense. They are all investment banks, asset management agencies, pension funds. etc. or money 'growers'.

It makes sense that these guys are trading bonds trying to make their client's money grow and shifting deals around so they can get lots of cash when they need it and when they don't they invest it elsewhere. It also shows how interconnected Irish banking is with the rest of the world.

If Anglo were to default on those guys, it puts all of their clients at risk too and they come from all over the world.

I think the main point being made by David Malone is that the bond-holders control huge portfolios - 100 times the size of our GDP - and should be able to cope with being burned.

The other point he was making is that the argument that widows and pensions will suffer if Anglo goes under doesn't match the facts.

Hayte

Amhran Nua wrote: »

You keep using that word. I think it does not mean what you think it means. Can you provide more details on this mysterious "we", because it's not representative of the majority of the Irish population, unless you think "we" all have a massive double mortgage topped up with a loan for the SUV, and every single one of us voted for a FF candidate (it is impossible to vote for FF since the STV system does not allow voting for parties). I'd also be interested to know how "we" should be liable for the debts of Anglo or those debts accepted by the sovereign since Lenihan's blanket guarantee?

Playing some sort of self flagellating collective punishment card doesn't stand up to the harsh light of reality.

"We" shouldn't be liable for the debts of Anglo but the fact remains that "we" are. I already said that there are different levels of complicity and responsibility. I worked for less than 25k a year for 5 years and now have no prospect that things are going to get any better. And I'm from the UK too. In the scale of things I don't feel as if I had much to do with the meltdown and didn't gain anything from it. Still, I feel a certain...kinship with others who are getting screwed by the austerity measures and would like to understand how and why this happened. I'd like everyone to know how and why it happened so it can't happen again.

Now I'm paying for it this time around like you and I acknowledge its not right but I try to stay rational, to stay informed and to inform others. I'm not interested in passing the buck. You can play the blame game if you want but its not going to get you anywhere and its certainly not going to get you out of this hole that has already been dug for you. Feel free to join the debate and attempt to impose a consensus where things are and should be different. I'd probably agree your end goal if not how to get there.

swampgas wrote: »

I think the main point being made by David Malone is that the bond-holders control huge portfolios - 100 times the size of our GDP - and should be able to cope with being burned.

The other point he was making is that the argument that widows and pensions will suffer if Anglo goes under doesn't match the facts.

Yes, they do have ways of protecting themselves against losses. i.e. hedging. Some are evidently better at it than others.

Bob_Latchford

I dont think many are playing the blame game. Most just want to understand what went on, who was responsable and from there decide who is to carry what burden. For me the bonders have to shoulder some of this as they are private companies investing and making big return for little risk.

I would let them burn if it was in any way possible and still have an economy capable of growth. Since that doesnt seem possible, I will accept burning them as much as we can and them accepting it. We want a deal were they feel shafted but accept its the best offer available.

Unfortunately I have know confidence in this crowd getting a decent deal

gizmo555

Hayte wrote: »

Yeah. And you got screwed in the process. You will live, learn and not lend money to me again. And you will tell everyone you know not to lend money to me.

Nobody is willing to lend to the Irish state or banks as it stands, bar the EU/IMF - that's why they're here. There is no practical way our international credit rating could get worse.

And if burning the bondholders discourages them from fuelling future credit/asset bubbles and returns them to more prudent banking standards, that will be no harm at all.

Amhran Nua

Hayte wrote: »

You can play the blame game if you want but its not going to get you anywhere and its certainly not going to get you out of this hole that has already been dug for you.

You are making no sense. Your last lengthy post was pointing the finger squarely at the Irish citizenry. Now you don't want to "play the blame game", has something changed in the interim?

Bob_Latchford

Never really understood these, but wont stop me trying .

Seems if markets like to trade they like to be able to do the opposite and hedge like they do. So thinking this should be a starting point or indication of the haircut the bond holders will take??

from Oct 2010

http://thepressnet.com/2010/10/25/anglo-irish-credit-default-swaps-so-they-do-exist/

Credit-default swaps insuring 10 million euros of Anglo Irish’s junior debt for five years cost 7 million euros in advance and 500,000 euros annually, BNP Paribas prices show. Contracts on the bank’s senior debt cost 1.35 million euros in advance and 500,000 euros annually.

Juniors looked like they were going to be burned, 70% write down straight away and if you hold them for 6years your a 100% burnt.

This was settled the other day for 80%

http://www.ft.com/cms/s/0/8b1dae02-f804-11df-8d91-00144feab49a.html?ftcamp=rss#axzz16Pef54B1

Now Seniors, there was risk here even in October it was 13.5% and 0.5% a year. that must have risen since cant find prices.

Now if there is a market for Anglo CDS then these guys knew there was a risk they even had a way of hedging that risk. As soon as that risk rose they would be hedging the extra risk with extra CDS. They are not some granny being mis sold a pension.

Also why should we pay out more than market value for senior debt? It costs senior bond holders millions a year to insure these things. Ireland giving face value is ridiculous in this situation

Thats before they take any extra burden. I dont know what the current values of these things are in AIB BOI etc.

swampgas

Amhran Nua wrote: »

You are making no sense. Your last lengthy post was pointing the finger squarely at the Irish citizenry. Now you don't want to "play the blame game", has something changed in the interim?

He made perfect sense to me. Forgive me for saying so, but you appear to be trying to score political points by creating "us and them" groups - "them" are the current political parties, "us" are the blameless punters that have been shafted by them. I don't buy it.

When I say "we", I simply mean the citizens of the country - no more, no less.

What are your definitions?

Amhran Nua

swampgas wrote: »

you appear to be trying to score political points by creating "us and them" groups - "them" are the current political parties, "us" are the blameless punters that have been shafted by them.

Is pointing out any inconvenient fact scoring political points now? I asked earlier for specific details about why the Irish citizenry collectively should be punished, a question which is being asked, loudly, by economists around the world. Have you got an answer?

swampgas wrote: »

I don't buy it.

I'm not selling it. It's a fact.

swampgas

Amhran Nua wrote: »

You are making no sense. Your last lengthy post was pointing the finger squarely at the Irish citizenry. Now you don't want to "play the blame game", has something changed in the interim?

Amhran Nua wrote: »

Is pointing out any inconvenient fact scoring political points now? I asked earlier for specific details about why the Irish citizenry collectively should be punished, a question which is being asked, loudly, by economists around the world. Have you got an answer?


I'm not selling it. It's a fact.

I think this is just a simple mis-understanding: when I say that "we are all in this hole together", for example, I simply mean that we are collectively stuck with the current problems. I certainly do not mean to imply, nor do I think anyone else is trying to imply, that that means we are all completely "to blame".

However, to answer your question: the Irish Citizenry elected the people who caused some of the current problems. Do you think that because we have a flawed political system we are all absolved of responsibility for our governments actions? I don't. How much "blame" we should collectively accept for FFs actions over the last decade is an interesting question.

As for how much of the financial hit we should be forced to take - that is what is being discussed here, and part of that discussion involves teasing out just how much responsibility "we" had in creating that situation in the first place.

Amhran Nua

swampgas wrote: »

I think this is just a simple mis-understanding: when I say that "we are all in this hole together", for example, I simply mean that we are collectively stuck with the current problems.

That first comment you quote wasn't directed at you.

swampgas wrote: »

Do you think that because we have a flawed political system we are all absolved of responsibility for our governments actions?

I think, and so do a lot of well respected economists, that it's completely insane for Irish citizens to be held collectively accountable for massive private debt. Its not a question of sharing the pain, or that bondholders need to share the losses of their investments. Bondholders need to take the losses of their investments.

Cannibal Ox

swampgas wrote: »

David Malone has posted what is alleged to be the list of Anglo's bond-holders.

http://golemxiv-credo.blogspot.com/2010/10/who-are-bond-holders-we-are-bailing-out.html

Interesting reading. Don't know enough myself to know how much to trust it though.

His piece on who bankrupted Ireland is worth reading too, particularly as it has to do with German culpability.

I think his argument comes down to bad practice in Ireland and the willingness of German bankers to escape German regulations here, putting the the blame on bankers rather then German or Irish people.

I'm not sure, but I'd assume that the much vaunted corporation tax, and the failure of the regulating bodies, had a role to play by making Ireland such a nice place for foreign bankers to set up and engage in practices that other countries, like Germany, wouldn't allow.

K-9

Cannibal Ox wrote: »

His piece on who bankrupted Ireland is worth reading too, particularly as it has to do with German culpability.

I think his argument comes down to bad practice in Ireland and the willingness of German bankers to escape German regulations here, putting the the blame on bankers rather then German or Irish people.

I'm not sure, but I'd assume that the much vaunted corporation tax, and the failure of the regulating bodies, had a role to play by making Ireland such a nice place for foreign bankers to set up and engage in practices that other countries, like Germany, wouldn't allow.

In a roundabout way, people are making a very good case for standard tax rules across the EU! The very thing everybody was up in arms about defending.

I wouldn't blame a German or French person saying fine, let the bondholders pay, but, take away the incentives that caused the problem!

A case of throwing the baby out with the bathwater, if ever I seen one!

Scofflaw

Amhran Nua wrote:

You are making no sense. Your last lengthy post was pointing the finger squarely at the Irish citizenry. Now you don't want to "play the blame game", has something changed in the interim?

Amhran Nua wrote: »

Is pointing out any inconvenient fact scoring political points now? I asked earlier for specific details about why the Irish citizenry collectively should be punished, a question which is being asked, loudly, by economists around the world. Have you got an answer?


I'm not selling it. It's a fact.

Is this a handbag which I see before me, the handle towards your hand? Calm down a bit, please.

moderately,
Scofflaw

Hayte

Bob_Latchford wrote: »

Never really understood these, but wont stop me trying .

Seems if markets like to trade they like to be able to do the opposite and hedge like they do. So thinking this should be a starting point or indication of the haircut the bond holders will take??

from Oct 2010

http://thepressnet.com/2010/10/25/anglo-irish-credit-default-swaps-so-they-do-exist/



Juniors looked like they were going to be burned, 70% write down straight away and if you hold them for 6years your a 100% burnt.

This was settled the other day for 80%

http://www.ft.com/cms/s/0/8b1dae02-f804-11df-8d91-00144feab49a.html?ftcamp=rss#axzz16Pef54B1

Now Seniors, there was risk here even in October it was 13.5% and 0.5% a year. that must have risen since cant find prices.

Now if there is a market for Anglo CDS then these guys knew there was a risk they even had a way of hedging that risk. As soon as that risk rose they would be hedging the extra risk with extra CDS. They are not some granny being mis sold a pension.

Also why should we pay out more than market value for senior debt? It costs senior bond holders millions a year to insure these things. Ireland giving face value is ridiculous in this situation

Thats before they take any extra burden. I dont know what the current values of these things are in AIB BOI etc.

Thats how CDS works because its a swap contract. The insured gets the face value of the bond in exchange for the bond. Well the bonds are packages of loans backed by commercial property which are worthless now after the property bubble burst so good call by the insured. Bad news for the insurer. At this point we should really look to Argentina for what to expect over here. They defaulted on their bank bondholders and they still can't enter international markets because nobody trusts their financial institutions with money. Not even monopoly money.

Good call on senior bondholders looking like they might have to eat some writedowns. The mere suggestion of this has started to make investors literally wet themselves with panic and you can tell because the price of Irish subordinated debt has been plummeting. If there can be a legal way to share Irish bank debt with senior bondholders, it is consensual and agreed upon and it won't turn us into a cold, wet and windy version of Argentina then great. If not then its a horrible idea.

swampgas wrote:

How much "blame" we should collectively accept for FFs actions over the last decade is an interesting question.

The taxpayer should never be expected to pay the bill of a corporation. A corporation's interests lie with its shareholders and investors not with the Irish public. In that respect I am in complete agreement with Amhran Nua. Where we disagree is on what to do when the taxpayer is nevertheless paying the bill anyway, like we are.

The taxpayer has been left with the hot potato on this one when the music stopped. Now we can foist it off to someone else and let it become their problem but when you owe (lots of) money, that debt doesn't just go away. We can demand our government and our banks default on their debts but we will still pay a price for it, if not now then later. If not us then it will be someone else (probably the younger generation under us who have to live in this country too, god help them). The Irish government has zero leverage with the EU, the ECB or the IMF so the Irish government is not in a good position to dictate terms. Any justification for the way our country was being run became irrelevant when our national debt started to massively outpace our gdp per capita as this charming graph of Irish government spending illustrates:



Thanks Anglo Irish Bank, Irish Nationwide and AIB!

If the government and banks foment the idea that it is acceptable to not pay debt due to its own inability to regulate, Irish bank's inability to trade and speculate properly and Irish assessor's inability to determine the value of houses accurately then Irish taxpayers get off the austerity hook right now but us taxpayers risk turning our country into a barren wasteland for foreign investment, at least for a time until investors don't feel that Irish investments are such a terrible risk.

We still have the corporate tax card but when you deal with other countries and rely on them for trade and investment, theres only so many "screw yous" you can pull off before everyone else just wants nothing to do with you. The rest of the EU is already against us on this issue and they are right because our corporate tax rate is so low its "predatory" (quote).

There are problems with taking the austerity cuts too. I'm not saying all our problems will be solved if the taxpayer takes the punch so I'll say this right now so that there is no misunderstanding: all of the options facing this country are bad - its just a matter of whether we want to get punched in the nuts or punched in the face or whether we want to get punched now or tommorow. We are going to get punched either way so forget about trying to avoid it. If we eat the cuts the most fragile of our society (the lowest paid, the least able to exercise their rights as citizens) get another step closer to living in poverty. The standard of living and one of the highest minimum wages in Europe was a major attraction and the source of a major influx of foreign working class labour that Irish people don't want to do. Well, in future its looking more likely that Irish people are going to have to do those jobs now.

Our best and brightest don't have much opportunity in this country in the next few years so they will do what my dad did during the bad old days if they can - they will try to immigrate and then that talent will go to making the US or the UK or Germany more prosperous. Wherever they can go to and use their skills. Thats a problem we can look forward to in the next 10 to 30 years but the prevailing logic I think is: "fix our problems today and we'll worry about tomorrow when we get there" in a manner of speaking.

Somewhat related. All of you should read this article:

http://www.newyorker.com/reporting/2010/11/29/101129fa_fact_cassidy?currentPage=all

The financial sector is globally rather too big and in parts does have some rather perverse incentive. The article is extremely long but also extremely informative and boils down many of the core issues and the technical terms in a readable way. Much of it is relevant to Ireland and Irish banks too. Financial services is very attractive for our most talented young people. People who would otherwise go on to produce great things in medicine, engineering, software design etc. Why do those things if you can make so much more money in trading and investment banking? This article points towards a growing problem of herding our most talented workers into an industry that essentially produces nothing.

It also shows some of the trading practices and zero sum games that some banks play that really have no societal worth and in some cases are massively detrimental to society. The problem with banks that have trading desks that are too big and under regulated is that the bank is supposed to provide a fundamental service to society at the same time - they need move capital where it is needed quickly and safely and they can't do that when they are insolvent due to a series of bad trades, or when they are doing things like issuing bonds and then issuing 20 times the value of the bond in swaps and other speculative bets, hedges etc. that protect the interests of the bank and its client only. Its creating a vast market of nothing that somebody somewhere has to pay for.

Scofflaw wrote: »

Now, if Merkel is beating the drum of 'massive exposure' by the German banks to Irish debt, when the exposure is not that much, why? The only obvious explanation I can immediately see is that she's trying to persuade the German taxpayer to swallow the Irish bailout by telling them they're at risk and blaming it on the bankers.

Yeeah this is really interesting. If we assume that the previous statement is true, that the vast majority of Irish debt risking default is to German banks in Ireland who are here dodging German taxes then wouldn't it be in Merkel's interest to suggest a default? The mere suggestion of it will turn the market upside down and she need not commit policy wise to anything which lets her keep voters on side. We'll get hit hard anyway but it sends a message that if you try to game another country's tax system for personal profit and fail, then you are on your own. You are not only on your own but the German government will use its position of strength in the eurozone and seize any opportunity to sink you for it. And they wouldn't be wrong. Bankers still look like the public enemy.

In a perverse sort of way thats a good thing for German taxpayers. It sort of incentivizes German businesses keeping their money at home, paying taxes to the state and availing of state protection when things go bad. This is all wild speculation but the more I watch Merkel, the more I think she is incredibly saavy and we could do with politicians of that calibre over here.