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Shane Ross: Reduce Corporation Tax to 9.9%
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Am I missing something or are people infering that the Euro was a kind of printing press of money to get poorer nations to get into debt but by German goods.
It benefited them and France greatly.
It backfired.
It should have benefited us, I suppose it's just easier to blame the Germans, the banks and the ECB than take responsibility for it ourselves.Mad Men's Don Draper : What you call love was invented by guys like me, to sell nylons.
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I'd argue that high taxes ( and Ireland is a high tax country) actually act to depress economic activity. Why are most African countries economically depressed? We are all led to believe its down to failed harvests and post colonial legacy, when in fact if you check most African countries have very high taxes.
Highly taxed countries are doing okay, the likes of Germany, Norway etc.
Our problem is that we are raising taxes at the wrong time, basically just to pay extra interest repayments, so it isn't going on anything useful. If we had kept taxes a little higher, tax credits anyway, the tax receipts would be higher and the situation not as bad. In fairness, FF probably would just increased PS pay, welfare rates and Child Benefit and it would have been wasted anyway.Mad Men's Don Draper : What you call love was invented by guys like me, to sell nylons.
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I'd argue that high taxes ( and Ireland is a high tax country) actually act to depress economic activity. Why are most African countries economically depressed? We are all led to believe its down to failed harvests and post colonial legacy, when in fact if you check most African countries have very high taxes.
AS the vast majority of the countries you refer don't have any income to tax, is that not a slightly moot point?0 -
Am I missing something or are people infering that the Euro was a kind of printing press of money to get poorer nations to get into debt but by German goods.
It benefited them and France greatly.
It backfired.
If people are implying that, they're being very silly, because such a plan would inevitably have the effect of reducing the ability of the poorer nations to buy German goods.
No, the euro is exactly what it says on the tin - a common currency. The option was there to behave sensibly with it, and unfortunately the option was also there not to behave sensibly with it.
cordially,
Scofflaw0 -
The option was there to behave sensibly with it, and unfortunately the option was also there not to behave sensibly with it.
Just like Germany was ignoring the treaties they signed up to and breaching the agreed limits, while Ireland wasnt up to about 2007 :rolleyes:If people are implying that, they're being very silly, because such a plan would inevitably have the effect of reducing the ability of the poorer nations to buy German goods.
By pushing on Ireland to give away its corporation tax Germany are reducing the ability of Ireland to pay back its debt.0 -
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whiteonion wrote: »Why is it that normal countries are able to have normal corporation tax rates without suffering from mass unemployment? The corp tax should be raised. The MMC:s are not going to leave the country because we jack up the corrp tax to 20% such a move would be very costly.
Average EU unemployment is north of 10% for many years now. You don't find this mass structural unemployment?0 -
Just like Germany was ignoring the treaties they signed up to and breaching the agreed limits, while Ireland wasnt up to about 2007 :rolleyes:
By pushing on Ireland to give away its corporation tax Germany are reducing the ability of Ireland to pay back its debt.
And McCreevey putting his fingers up at certain Germans in 02.
Anyway, I think it's just negotiating and PR stuff ahead of the German elections. The Irish are too fond of our CT rate to give it up, even SF agree on that, even if it means paying higher interest.Mad Men's Don Draper : What you call love was invented by guys like me, to sell nylons.
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And McCreevey putting his fingers up at certain Germans in 02.
Talk is cheap. Actions speak louder than words. The Germans didn't stick to the rules in 07. All McCreevey did (in Europe that is) was mouth off.Anyway, I think it's just negotiating and PR stuff ahead of the German elections. The Irish are too fond of our CT rate to give it up, even SF agree on that, even if it means paying higher interest.
There will be a fudge as there always is, and everyone will claim to have won. however I must say I am impressed so far with Kenny and Noonan's handling of this delicate situation. Noonan in particular - he is the master of speaking softly but carrying a big stick. Going for some sort of longer term deal is the best way forward here. Failing that, default of some sort on the banking portion of the debt is inevitable, so in that case the sooner the better.
We are the mad guy in the room surrounded by the EU with 100 KG of TNT strapped to us - our only card is "if you don't give me what I want we all die". A pretty strong hand IMHO - considering we are already dying a slow death.0 -
Anyway, I think it's just negotiating and PR stuff ahead of the German elections.
Even talk of it is doing damage to the economy, all they have to do is plant a seed of doubt about our tax system and we loose out on investment, investment that we badly need for jobs and to payback their money.
without it this country would have no advantages left for doing business in, we already pissed away all other cardsThe Irish are too fond of our CT rate to give it up
tell me, if both Ireland and rest of EU have same rates, then why would an investing company setup in Ireland as opposed to Germany?
why should we be paying a high interest in first place? it wasnt the corporation tax that got this country into a mess.even if it means paying higher interest.0 -
@professore, agreed, one thing is sure, everybody likes giving out about other countries, in fairness to Germany, they had huge costs after reunification and there are still problems not solved there. I think McCreevey had time to do a bit of damage though, I can remember criticism on some of the appointments he made while there.Even talk of it is doing damage to the economy, all they have to do is plant a seed of doubt about our tax system and we loose out on investment, investment that we badly need for jobs and to payback their money.
without it this country would have no advantages left for doing business in, we already pissed away all other cards
tell me, if both Ireland and rest of EU have same rates, then why would an investing company setup in Ireland as opposed to Germany?
why should we be paying a high interest in first place? it wasnt the corporation tax that got this country into a mess.
I think it's a bit unrealistic to expect Germany or France not to talk about it, or indeed Britain. We do enough talking about it ourselves!
As for the rest, don't know where you got that from. I'm just saying it will be fought at all costs, even if that means no deal. Kenny would be hammered at the next election on that alone.Mad Men's Don Draper : What you call love was invented by guys like me, to sell nylons.
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If people are implying that, they're being very silly, because such a plan would inevitably have the effect of reducing the ability of the poorer nations to buy German goods.
No, the euro is exactly what it says on the tin - a common currency. The option was there to behave sensibly with it, and unfortunately the option was also there not to behave sensibly with it.
cordially,
Scofflaw
Ceteris paribus - all things being equal -but they aren't
Our corporation tax rate compensates us for being geographically isolated from europe.
You would need an underground railway for free all the way to berlin to overcome that.
Who would have been worst off by the lack of the bailout.
The Euro would have folded and we probably would have had a currency backed by sterling for a while.
Did we do that - no0 -
As for the rest, don't know where you got that from. I'm just saying it will be fought at all costs, even if that means no deal. Kenny would be hammered at the next election on that alone.
Hammered for wanting to get a deal for the country
If he doesnt get a deal, nothing stopping him coming on national TV and pointing out that our EU partners are not willing to help and want the country to go down a road that will endup in complete destruction of economy and no chance of paying back the debt.
If anything this will increase support for himself.
At least hes trying, more than could be said of FF who got us here and when the time came rolled over (after lying and denying that IMF are in town)0 -
Just like Germany was ignoring the treaties they signed up to and breaching the agreed limits, while Ireland wasnt up to about 2007 :rolleyes:
Eh, here we are again in mythology territory. The Commission began excessive deficit procedures against France and Germany in 2003:Despite an apparent rapprochement between the French government and the European Commission on the French budget following a meeting between Finance Minister Francois Mer and Economics Commissioner Pedro Solbes on Monday, the Commission has decided to call France's bluff by commencing an excessive deficit procedure in defence of the Growth and Stability Pact.
In a statement issued on Wednesday, the Commission revealed that it has recommended to the European Council that France has taken "no effective action" in response to a previous recommendation in June this year that measures be implemented by the government to rein in its budget deficit.
The announcement came two days after an apparent thaw in relations between the EU and France, after Solbes concluded that the French budget was a "a step forward and better than expected" following discussion with Mer on Monday.
Nevertheless, by France's own admission, its budget deficit will be at least 3.5% of GDP next year (the third successive year it has breached the mandatory 3% ceiling) provided, that is, the government's 1.7% growth forecast is met.
Whilst Mer pointed out that the budget contains a number of revenue raising measures such as tax increases on fuel, cigarettes and alcohol, it is predominantly a tax cutting budget with a further 3% being trimmed off income tax, following last year's 6% cut.
and suspended the process when they got their economies back on track:BRUSSELS, Dec. 14 (Xinhua) - European Commission, the executive arm of the European Union (EU) announced on Tuesday that it would suspend the excessive deficit procedure against Germany and France.
"Based on an assessment of the budgetary situation of France and Germany showing that the two countries are on track to bring their budget deficits to or below 3 percent of GDP in 2005, the Commission today concluded that no further steps are necessary at this point," said the Commission in a statement.
And apparently also unbeknownst to some, Germany is currently the target of an excessive deficit procedure, as are several other countries:EU finance ministers meeting in the ECOFIN Council on 2 December opened excessive deficit procedures for Austria, Belgium, the Czech Republic, Germany, Italy, Slovakia, Slovenia, the Netherlands and Portugal, on the basis of a Commission recommendation. They set the deadline for correction of the excessive deficits at 2013, except for Belgium and Italy, where the existence of high debt ratios called for an earlier deadline of 2012. They also extended by one year the existing deadlines for Spain, France, Ireland and the UK. All 13 countries, along with Greece, whose response was deemed insufficient, have deficits above the 3%-of-GDP threshold specified in the Stability and Growth Pact. In all, 18 EU Member States had excessive deficit procedures opened against them in 2009, bringing the total to 20.By pushing on Ireland to give away its corporation tax Germany are reducing the ability of Ireland to pay back its debt.
I still haven't really seen anything bar Ireland being asked to "make a reference" to its CT rate, plus some unofficial comments. There's a huge song and dance being made about the valiant defence being mounted against raising the rate, but the matching huge onslaught on the rate seems to be largely absent.
cordially,
Scofflaw0 -
Ceteris paribus - all things being equal -but they aren't
Our corporation tax rate compensates us for being geographically isolated from europe.
You would need an underground railway for free all the way to berlin to overcome that.
And? What relevance does that have to our lack of fiscal discipline after joining the euro? Or that the way you make it possible for a country to buy more of your goods is to invest in the country and make them wealthier?Who would have been worst off by the lack of the bailout.
Us, I'm afraid.The Euro would have folded and we probably would have had a currency backed by sterling for a while.
Did we do that - no
Except that the euro wouldn't have folded if we hadn't had a bailout. We certainly would have done, but as long as there's political will to keep the euro going, then a political way to keep the euro going will always be found.
We're not systemic - we're more like Anglo.
cordially,
Scofflaw0 -
Hammered for wanting to get a deal for the country
If he doesnt get a deal, nothing stopping him coming on national TV and pointing out that our EU partners are not willing to help and want the country to go down a road that will endup in complete destruction of economy and no chance of paying back the debt.
If anything this will increase support for himself.
At least hes trying, more than could be said of FF who got us here and when the time came rolled over (after lying and denying that IMF are in town)
I must be in the wrong thread or something. He'd be hammered if he comes back and is known as the Taoiseach that gave away our Corporation Tax rate.
Sometimes I really do wonder.Mad Men's Don Draper : What you call love was invented by guys like me, to sell nylons.
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professore wrote: »Talk is cheap. Actions speak louder than words. The Germans didn't stick to the rules in 07. All McCreevey did (in Europe that is) was mouth off.
Actually, he created pro-cyclic budgets, which was what the warning was about. And for the other, see above.professore wrote: »There will be a fudge as there always is, and everyone will claim to have won. however I must say I am impressed so far with Kenny and Noonan's handling of this delicate situation. Noonan in particular - he is the master of speaking softly but carrying a big stick. Going for some sort of longer term deal is the best way forward here. Failing that, default of some sort on the banking portion of the debt is inevitable, so in that case the sooner the better.
We are the mad guy in the room surrounded by the EU with 100 KG of TNT strapped to us - our only card is "if you don't give me what I want we all die". A pretty strong hand IMHO - considering we are already dying a slow death.
Eh, no, we're not - we don't have the capacity to take them all with us. We have the capacity to hurt the rest of Europe a bit at the expense of hurting ourselves very badly. And even to hurt them a bit requires actions nobody has agreed to here - essentially, sovereign default. Reneging on what remains of the bank debt that's not sovereign-backed won't hurt anybody - it's just not big enough, and we're holding too much of it ourselves.
I have to say I feel somewhat sorry for Kenny et al, because people believe that our bargaining position is much stronger than it is - but they'll have to work with the reality.
cordially,
Scofflaw0 -
I still haven't really seen anything bar Ireland being asked to "make a reference" to its CT rate, plus some unofficial comments. There's a huge song and dance being made about the valiant defence being mounted against raising the rate, but the matching huge onslaught on the rate seems to be largely absent.
cordially,
Scofflaw
These "references" or open threats in case of Sarcozy
are already doing damage by seeding doubts about Irelands future.
The EU are hurting Ireland via their comments at a time when the only positive left in the economy are exports from a mainly MNC led export sector whose only reason remaining to stay here to quote Intel chief is corporation tax.
How do you think the meetings in the likes of Intel would go when the Irish director opens his mouth and asks for more investment, when all the financial media are covering the attack on the corporation tax? Here is an article from less than 2 hours ago.
An please Scofflaw stop being so dismissive towards my comments, I think I have earned some EU related cred after last Lisbon. The EU have really let the ball down this time.
I want an EU of equals not a Franco/German dominated EU. Hell them combined dont even constitute majority of EU, yet both leaders are acting like children as if they run the place.
Yes Ireland has ****ed up big time, but kicking us in the balls while we are on the ground is disgusting.0 -
These "references" or open threats in case of Sarcozy
are already doing damage by seeding doubts about Irelands future.
The EU are hurting Ireland via their comments at a time when the only positive left in the economy are exports from a mainly MNC led export sector whose only reason remaining to stay here to quote Intel chief is corporation tax.
Sarkozy's comments aren't representative of the EU, though, any more than they were during Lisbon - they represent the position of France, if that.How do you think the meetings in the likes of Intel would go when the Irish director opens his mouth and asks for more investment, when all the financial media are covering the attack on the corporation tax? Here is an article from less than 2 hours ago.
Sigh - yes, but that article is on the tax base, not the tax rate. Sarkozy is criticising the tax rate:French president Nicolas Sarkozy has said today that he does not think it is “right” that Ireland should maintain its 12.5pc corporation tax in light of the large financial aid package it has received.
Sarkozy said that since Ireland received a bailout from its European partners, it should not still have a competitive advantage over its counterparts because of the corporation tax.
"I deeply respect the independence of our Irish friends and we have done everything to help them. But they cannot continue to ask us to come and help them while keeping a tax on company profits that is half (what other countries have)," he said.
and the article is about today's announcement of a CCCTB proposal:European Union regulators revived a push to create a common base for calculating the taxable profits of companies, recommending a system that would be optional for businesses in a bid to win over opponents including Ireland.
The European Commission proposed a single method for calculating income to save companies the cost of complying with different rules in each EU country where they file a return. Tax rates would remain in national hands under the draft law on a common consolidated corporate tax base, or CCCTB, which the commission says would save companies 700 million euros ($977 million) a year in compliance costs.An please Scofflaw stop being so dismissive towards my comments, I think I have earned some EU related cred after last Lisbon. The EU have really let the ball down this time.
I'm dismissive of inaccuracy, and you're being inaccurate - more or less constantly, I'm afraid. You're recycling virtually every myth going in this debate - confusing the tax rate and the tax base, confusing what Sarkozy says with the official EU position. It's as inaccurate for you to do it now as it was for the No side to do it during Lisbon - it's not about the attitude to the EU, it's about accuracy.I want an EU of equals not a Franco/German dominated EU. Hell they combined dont even constitute majority of EU, yet both leaders are acting like children.
Yes Ireland has ****ed up big time, but kicking us in the balls while we are on the ground is disgusting.
The problem is that it takes a good deal of viewing matters through a distorting prism to make it seem like we're being "kicked in the balls". We're not getting our usual extra-special "everybody loves the Irish" treatment this time, that's all, because this time our screw-up is too large for that.
cordially,
Scofflaw0 -
Sarkozy's comments aren't representative of the EU, though, any more than they were during Lisbon - they represent the position of France, if that.
France are one of the countries who we seeking help from.
How does he expect Ireland to pay them back when most of the exporting industry leaves?
Why doesnt he keep his mouth shut, with his words he is hurting any chances of recovery.I'm dismissive of inaccuracy, and you're being inaccurate - more or less constantly, I'm afraid. You're recycling virtually every myth going in this debate - confusing the tax rate and the tax base, confusing what Sarkozy says with the official EU position. It's as inaccurate for you to do it now as it was for the No side to do it during Lisbon - it's not about the attitude to the EU, it's about accuracy.
What is stopping Sarcozy and Merkel coming out and saying there will be no attack on our rate? They did it during Lisbon, by staying quiet and feeding the media with comments they are hurting this economy.The problem is that it takes a good deal of viewing matters through a distorting prism to make it seem like we're being "kicked in the balls". We're not getting our usual extra-special "everybody loves the Irish" treatment this time, that's all, because this time our screw-up is too large for that.
cordially,
Scofflaw
Our screw up is as much their problem as ours, the sooner they realise that the better. There is no need to pretend that Ireland going under will not hurt their economies.
And finally do I need to remind everyone yet again that you have repeatedly supported continuing "screw ups" such as Guarantee, NAMA and Anglo?
Our problems are two fold, the actions of the banks prior to 2008 and the actions of the government past 2008 (which you broadly supported), the last thing we need are bad actions from EU now.0 -
France are one of the countries who we seeking help from.
How does he expect Ireland to pay them back when most of the exporting industry leaves?
Why doesnt he keep his mouth shut, with his words he is hurting any chances of recovery.
Why doesn't Sarkozy keep his mouth shut? Gods, I don't know - I only know he never does. The sun rises, the Pope is Catholic, Sarkozy mouths off.What is stopping Sarcozy and Merkel coming out and saying there will be no attack on our rate? They did it during Lisbon, by staying quiet and feeding the media with comments they are hurting this economy.
At least partly because there's quite a bit of discontent in Germany and France that we haven't increased our rate, while taking a bailout from their taxpayers.
It's worth bearing in mind that while nearly everyone in Ireland subscribes to the "lower taxes -> more money" school of economic thought - to the point where we find it hard to conceive of there being any other reasonable viewpoint - that's not the general consensus on mainland Europe. From their perspective, our low CT rate means we're not getting full taxable value out of the companies based here, and getting their taxpayers to subsidise the difference.Our screw up is as much their problem as ours, the sooner they realise that the better. There is no need to pretend that Ireland going under will not hurt their economies.
And finally do I need to remind everyone yet again that you have repeatedly supported continuing "screw ups" such as Guarantee, NAMA and Anglo?
Our problems are two fold, the actions of the banks prior to 2008 and the actions of the government past 2008 (which you broadly supported), the last thing we need are bad actions from EU now.
Meh - I've criticised the "it's all evil, all the worst, there is nothing good here at all" meme, as usual - and as usual, for some people that equate to 'support'. The Guarantee did what it said on the tin, but the lack of bank restructuring made it pointless - so much is obvious from the way things stabilised for the duration of the Guarantee, and nose-dived when it expired. NAMA may or may not work out - we don't know yet, and it's not an intrinsically bad idea. Anglo shouldn't have been included in the Guarantee at all, but that wasn't immediately clear unless you're prepared to jump to conclusions without evidence.
I'm not a great fan of the "guilty until proven innocent" school of judging government actions, and I have what one might describe as a cordial dislike of people jumping to judgement without evidence, or swallowing myths because they accord with a judgement already made. Unfortunately, there's a lot of it about.
cordially,
Scofflaw0 -
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OK -so the ECB is the hub and it issues currency thru associates the CB's yet it does not care what they do.
They could have gone of and printed money like Gaddaffi is doing .
So the ECB did not give regulatory guidance to ourselves, the Greeks , Spain or Portugal.
The Germans view was that we were purchasing product as if it was the Deutchmark.
So it is an old fashioned banking crisis which if it had happened in the 19th Century the Banks would have gone bang, so there has to be participation or we the Spanish, Portugeese , Greeks and everyone else have been sold a pup.0 -
OK -so the ECB is the hub and it issues currency thru associates the CB's yet it does not care what they do.
They could have gone of and printed money like Gaddaffi is doing .
So the ECB did not give regulatory guidance to ourselves, the Greeks , Spain or Portugal.
It cares what the CBs do in terms of monetary policy, but it has no role regulating private banks, if that's what you mean?The Germans view was that we were purchasing product as if it was the Deutchmark.
So it is an old fashioned banking crisis which if it had happened in the 19th Century the Banks would have gone bang, so there has to be participation or we the Spanish, Portugeese , Greeks and everyone else have been sold a pup.
Any time since the 19th century the banks would have been bailed out. Bailing out banks isn't something that's some kind of ECB innovation - no country happily lets banks crash and burn once they're over a certain size and systemic nature. Iceland couldn't save its banks, and had no option but to let them go - everybody else, worldwide, has opted to try to bail them out. That's been the way since banking became an ordinary part of the day to day economy, rather than a facility for the rich.
cordially,
Scofflaw0 -
It cares what the CBs do in terms of monetary policy, but it has no role regulating private banks, if that's what you mean?
Any time since the 19th century the banks would have been bailed out. Bailing out banks isn't something that's some kind of ECB innovation - no country happily lets banks crash and burn once they're over a certain size and systemic nature. Iceland couldn't save its banks, and had no option but to let them go - everybody else, worldwide, has opted to try to bail them out. That's been the way since banking became an ordinary part of the day to day economy, rather than a facility for the rich.
cordially,
Scofflaw
Well that's grand, but what about the very tenet that capitalism is apparently meant to be based upon, which is that success is rewarded and failure is punished???
We should never I think countenance a situation that we now have here, whereby greed and the profits of sheer greed are privatised in good times and the inevitable losses that are fully predictible are publicised in bad times... That's the bit I find sickening, that these banks have been creaming it in the good times, and when they lose the run of themselves during those times, the rest of us get the bill for it.
No other business gets to be perveived as "too big to fail", how come BoSI could pull out of the Irish market without a big mad crisis??? All they did was appoint another business entity to manage out their loan book until the last loan expired, and they are out of here, and the same can be done for any deliquent bank here in this state that is not fit to trade.0 -
Any time since the 19th century the banks would have been bailed out. Bailing out banks isn't something that's some kind of ECB innovation - no country happily lets banks crash and burn once they're over a certain size and systemic nature. Iceland couldn't save its banks, and had no option but to let them go - everybody else, worldwide, has opted to try to bail them out. That's been the way since banking became an ordinary part of the day to day economy, rather than a facility for the rich.
Who is being inaccurate now?
After the Great Depression laws where brought in to ensure banks don't become "systemic" and "too large to fail", these where repealed not so long ago by Keynesians who then proceeded to create more and more fiat money. And all of that let to where the world is today.
And yes banks do fail and are allowed to fail, few hundred of the in US last year.
Now where is the EU equivalent of FDIC? or legislation to prevent any bank from becoming "systematic" yet again??
We have EU monopoly laws to prevent companies becoming to big and being a danger to economies, yet banks are somehow "special".
It is a failure of EU policy for letting banks become "too big to fail", in a common currency zone.
The consequence of branding Anglo as systematic (when it was not) and not allowing it to fail is directly what is responsible for pushing Ireland to the brink of default.
While our welfare/public expenditure is crazy it was the banks that pushed us over the edge.0 -
HellFireClub wrote: »Well that's grand, but what about the very tenet that capitalism is apparently meant to be based upon, which is that success is rewarded and failure is punished???
We should never I think countenance a situation that we now have here, whereby greed and the profits of sheer greed are privatised in good times and the inevitable losses that are fully predictible are publicised in bad times... That's the bit I find sickening, that these banks have been creaming it in the good times, and when they lose the run of themselves during those times, the rest of us get the bill for it.
No other business gets to be perveived as "too big to fail", how come BoSI could pull out of the Irish market without a big mad crisis??? All they did was appoint another business entity to manage out their loan book until the last loan expired, and they are out of here, and the same can be done for any deliquent bank here in this state that is not fit to trade.
The essential answer is that the capitalist "law of the jungle" doesn't apply to vital utilities, like electricity, water, and money. BoSI wasn't systemic - it didn't provide money services to any significant proportion of the economy - whereas BOI and AIB between them handle 70% of day to day transactions in the country.
The crisis is not an argument for treating banks like private companies and letting them go to the wall like a sandwich shop - on the contrary, it's an argument for not letting them be private companies in the first place, because at every banking crisis, the majority of banks are bailed out - every time, everywhere.
cordially,
Scofflaw0 -
The essential answer is that the capitalist "law of the jungle" doesn't apply to vital utilities, like electricity, water, and money. BoSI wasn't systemic - it didn't provide money services to any significant proportion of the economy - whereas BOI and AIB between them handle 70% of day to day transactions in the country.
The crisis is not an argument for treating banks like private companies and letting them go to the wall like a sandwich shop - on the contrary, it's an argument for not letting them be private companies in the first place, because at every banking crisis, the majority of banks are bailed out - every time, everywhere.
cordially,
Scofflaw
Having companies that are "too big to fail" is no different from having companies that are a monopolies, they all distort the market.
Somehow the EU and regulator found time to breakup ESB for being "too big" but the banks are somehow special? why??
What do you call 2 companies having 70% of market? a duopoly??
What do you call all banks being owned by state? a disaster!
The role of regulation is to ensure a fair and competitive playing field, since competition produces results for customers. We ended up with no regulation whatsoever.
Anyways what exactly made Anglo systemic, I never heard an answer for that.0 -
Who is being inaccurate now?
After the Great Depression laws where brought in to ensure banks don't become "systemic" and "too large to fail", these where repealed not so long ago by Keynesians who then proceeded to create more and more fiat money. And all of that let to where the world is today.
Oh, bosh. The Act was repealed by pro-market Republicans in the pockets of the money boys, and supported by people who thought that caution and regulation in banking was old hat.And yes banks do fail and are allowed to fail, few hundred of the in US last year.
Small banks fail all the time - which doesn't change the picture.Now where is the EU equivalent of FDIC? or legislation to prevent any bank from becoming "systematic" yet again??
We have EU monopoly laws to prevent companies becoming to big and being a danger to economies, yet banks are somehow "special".
It is a failure of EU policy for letting banks become "too big to fail", in a common currency zone.
There has never been any agreement to allow regulation of banks at the EU level before now - it's been very much a national competence. That may be the wrong place for it to be, but it's the reason why there's no EU level laws on it.The consequence of branding Anglo as systematic (when it was not) and not allowing it to fail is directly what is responsible for pushing Ireland to the brink of default.
While our welfare/public expenditure is crazy it was the banks that pushed us over the edge.
Sure. I'm not sure what that's supposed to have to do with the EU, though. They didn't make us guarantee our banks, they haven't required us to keep guaranteeing our banks, they've only required that we stick to what we said we'd do, and loaned us the money to do so.
Yes, our government couldn't have done what they did if Europe wasn't there to tap for cash, and they might not have been able to make such a mess of the boom if it hadn't been for the euro - but neither of those makes the mess Europe's fault, and Europe doesn't (or didn't) have the power to stop them doing it. Irish people voted for Irish governments that did this to the Irish people.
cordially,
Scofflaw0 -
Who is being inaccurate now?
After the Great Depression laws where brought in to ensure banks don't become "systemic" and "too large to fail", these where repealed not so long ago by Keynesians who then proceeded to create more and more fiat money. And all of that let to where the world is today.
And yes banks do fail and are allowed to fail, few hundred of the in US last year.
Now where is the EU equivalent of FDIC? or legislation to prevent any bank from becoming "systematic" yet again??
We have EU monopoly laws to prevent companies becoming to big and being a danger to economies, yet banks are somehow "special".
It is a failure of EU policy for letting banks become "too big to fail", in a common currency zone.
The consequence of branding Anglo as systematic (when it was not) and not allowing it to fail is directly what is responsible for pushing Ireland to the brink of default.
While our welfare/public expenditure is crazy it was the banks that pushed us over the edge.
Well AIB and BOI wouldn't be that big in an EU sense, but big to Ireland obviously. I suppose we could restrict our banks to a certain size.
I asked this before, what size were the banks that failed in the US?Mad Men's Don Draper : What you call love was invented by guys like me, to sell nylons.
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Having companies that are "too big to fail" is no different from having companies that are a monopolies, they all distort the market.
Somehow the EU and regulator found time to breakup ESB for being "too big" but the banks are somehow special? why??
What do you call 2 companies having 70% of market? a duopoly??
Sure - if we had, instead of two large structural banks, a whole series of inter-compatible small banks (Bank of Cootehill, Bank of Tubbercurry), then they could be allowed to fail.What do you call all banks being owned by state? a disaster!
Maybe - doesn't seem likely to be a worse disaster than has been visited on us by private banks, though.The role of regulation is to ensure a fair and competitive playing field, since competition produces results for customers. We ended up with no regulation whatsoever.
Anyways what exactly made Anglo systemic, I never heard an answer for that.
Neither did I!
cordially,
Scofflaw0 -
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Many felt that the euro was dangerous from the begining. This article explains it in simple terms. Its by Gilles Saint-Paul the French Economist.
And here is why it continues to be a problemIs the euro a failure?
Gilles Saint-Paul
5 May 2010
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As world markets continue to raise concerns about Eurozone countries, this column argues that the euro has been a failure. Why should money be poured into Greece to "save the euro"? Besides the moral hazard effects of the intervention, it makes little sense to prolong a monetary regime which is actually one of the reasons why these Eurozone countries are in trouble.
During the run-up to the monetary union, many economists were sceptical and warned that it would not work. Their argument was simple. Europe was not an optimal monetary union because it lacked both labour mobility and the fiscal mutual insurance schemes that exist in the US. Also, nominal price formation was rigid so that we could not expect it to offset imbalances and competitiveness differences quickly. Despite those shortcomings, the sceptics considered that the costs of monetary union were not too large after all, because asymmetric shocks are not that important quantitatively.
The Eurozone was formed and it was largely accepted as an irreversible fact. The sceptics refrained from questioning its soundness as an institution for fear of being perceived as unrealistic or extreme. Mentioning that a member country might leave the monetary union some day was considered a political non-starter, so that pragmatic economists who insisted on making a difference in the policy arena did not see the point in ruining their credibility by making such suggestions.
With the Greek crisis, we are brutally reminded that such a prospect is far more real than it was assumed. In order to keep Greece in the Eurozone, other countries must foot the bill, while imposing harsh conditions that – in my view – will be fulfilled only hypothetically. So why do we want to keep Greece in the Eurozone, especially given that membership plays no small role in its current troubles?
The mechanism was intended to provide stability and convergence and instead it provides instability and divergence.
Before the Euro you had a floating exchange mechanismAsymmetric trends not asymmetric shocks
The reason why the Eurozone does not work is not asymmetric shocks – their cost is constant over time and therefore unlikely to lead to the single currency's eventual demise – but asymmetric trends. Over the last decade, countries in the Eurozone have quietly but stubbornly diverged in terms of inflation, growth, fiscal performance and competitiveness.
- Some have had 2% inflation on average, others 4%.
- Some have built up trade surpluses, others are increasingly indebted with respect to the rest of the world.
- Some have kept their government budget in check, others have let debt grow.
In the Euro - the market does not provide adjustment until you have defaultUnder a flexible exchange rate, a government which has trouble imposing fiscal discipline on itself faces a dilemma. If it borrows in its own currency, and eventually resorts to inflation to make up for its incapacity to balance the budget, markets will anticipate that and ask for a substantial risk premium on its debt. This was the case for the southern European countries before the European monetary union. This risk premium in turn makes the country more vulnerable to an exploding public debt and it should therefore keep a check on its public expenditure and aim for a primary surplus soon. If it borrows in foreign currency, a depreciation of its currency will bring about severe trouble, so that there is a big incentive to avoid inflation
The benefit to Germany was economic growth without the currency exchange risk.
Are we blameless no.In a monetary union, markets will start worrying about the state of the public finances only when actual default is in sight. Meanwhile, the monetary union allows a country to borrow at low interest rates regardless of its actual economic situation. This may be a blessing insofar as the risk premium on the exchange rate risk no longer has to be paid, and the same level of expenditure may be financed at a lower cost in terms of debt. But, depending on the political context, the government is also tempted to take advantage of the low rates to further increase its expenditures. This is what has been happening in Greece to such an extent that public debt is now arguably even higher than if it had stayed out of the Eurozone.
A bond is a traded security that has a repayment date and a coupon from a private investor to an institution.
You invests and takes a risk.
Foreign bondholders channeled money to be lent out again and created the "money supply".
There is no such thing as burning a bondholder because they had a risk and the institution the invested into failed.
Germany does quite nicely from the Euro mechanism - whereas it has failed Ireland,Greece, Spain & Portugal.
Our growth was based on property which is not a traded good. German export demand was in part fuelled by the flaws in the system.
They primed the pump via the money supply and traded goods for their money - so they benefited.
So bailing out the banks is benefiting German Capitalist Bankers and Industrialists.
They get to get the bun & the penny. They are not blameless -they caused the ****er.
The bailout etc is essentially us supporting and subsidising the German economy for a system that has been a bloody nightmare for us.
They are blaming us for the structural failure of the Euro.
Neat trick.
http://www.voxeu.org/index.php?q=node/4999
Were our politicians and regulators blamesless. No.A politician - will always take growth as being the attractive option - they will try to defy the laws of economics. He will go for growth.
Should we have a go - yes we should.
We have behaved as if we have a moral responsibility that in fact we do not have.0
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