England’s difficulty is…

David McWilliams sees an opportunity to expand the IFSC

Last Wednesday, the British chancellor, yielding to popular pressure for revenge, announced he would tax the bonuses of high-flying investment bankers. He announced a 50 per cent tax on any bonus over £25,000.This, for most mere mortals, would seem nothing to grumble about until you see what the reality is for those bankers.

When you consider that for the 5,000-odd Goldman Sachs employees in London, the average pay – of which bonuses are the most significant proportion – is »500,000 a year, you can see how this ‘super-tax’ will make them nervous.

While FF & the Greens cut social welfare Labour are targeting the investment bankers, perhaps creating an opportunity to attract some big fish to Ireland..

The Minister for Finance should seize the opportunity and get on the phone to the head of Goldman Sachs and JP Morgan and tell them that Dublin welcomes them and is open for their business. God knows we need a bit of luck and now is our chance to grab it.

He highlights the advantages for them – English speaking, same time zone, lower tax both income and corporation, good schools, new transport infrastructure in the IFSC and the mobile nature of workers in the financial sector. So what’s in it for us?

Let’s look at this from our side of the deal. For us, it looks like a ‘win-win’ outcome. Think about tax alone. In Britain, financial services companies constitute 25 per cent of total corporation tax. This is a figure of £11 billion.

This obviously doesn’t include the huge amount of tax the employees of these companies pay in income tax, Vat and stamp duty.

For Ireland, even if we were to poach one of the giant investment banks, the contribution to our faltering tax revenue would be enormous. Equally, as we have seen with pharmaceuticals in Cork, once one big name comes to Ireland, others tend to follow. This is know as clustering in economics and it is easy to see how attracting a huge name like Goldman Sachs to Ireland could begin a process where others copy and move some, if not all, of their operation here.

So what do you think UK, our shoppers for your investment bankers, good deal?

Update: Telegraph reports on investment bankers planning to leave the city.

  • DC

    Last Wednesday, the British chancellor, yielding to popular pressure for revenge, announced he would tax the bonuses of high-flying investment bankers. He announced a 50 per cent tax on any bonus over £25,000.

    I know how terrible, a tax of 50%.

    Let’s face it, if it were the public sector that blew an accumulated total of £850 billion worth of cash the Tories would be calling for outright systemic change.

    Oh, hang on. We had that in the 70/80s.

    Now what do we have?

    We have the private sector blowing foolishly more money than the once corseted-balance-sheet banks in the 70s.

    Voila, we have flipped public sector banking-styles (which at least had some compass) for private banking (which individuals have clearly taken the profits from) but created of itself massive private debt which it actually couldn’t sustain. Ergo, it is now back to being public debt!

    So – 50% TAX. They should be very lucky that their little( but massively disproportionate) private enrichment system is still in place. Ireland can take take on these guys if needs be, hopefully she can take Guido Fawkes too – Mr Stains – aka international capitalism and its journalism.

    Bertie ever find his bank account yet? (Not likely much will be done about him either.) Imagine a taoiseach with no bank account, perhaps if such new bankers will come at least they will be able to create one for the new upcoming taoiseach!?

  • Shallow, nothing more nothing less and about what one comes to expect from much of the Irish media etc.

    Now you lot have successfully hoodwinked the Irish public into ‘half’ believing this economic crises is down to those who work in public services and claim benefits, (yes you to mack if the cap fits) you now wish to cross the Irish sea rod and line in hand.

    What a pitiful short sighted bunch you are.

  • Greenflag

    Mack ,

    I think the UK is thinking more like President Obama these days as the below BBC excerpts show.

    Obama criticises ‘fat cat’ bankers

    President Barack Obama has criticised “fat cat” bankers who pay themselves large bonuses.
    In an interview with CBS’s “60 Minutes” programme, he said he did not run for office to be “helping out a bunch of fat cat bankers on Wall Street”.
    Later on Monday, the president will meet some of the US’s top bankers face-to-face.

    He is scheduled to hold a meeting with executives from Goldman Sachs, JP Morgan Chase and Citigroup.
    He is planning to tell them to step up lending to small businesses and get behind legislation to overhaul Wall Street regulations.

    His economic adviser, Larry Summers, also went on television on Sunday. He told ABC’s “This Week” programme that the president was aiming to have a “serious talk” with the industry representatives.
    As well as asking them to lend more money, President Obama is expected to call on them to take responsibility for helping the economy after benefiting from taxpayer-funded bail-outs of the financial sector.

    President Obama also criticised bankers who were resisting tighter industry rules.
    “What’s really frustrating me right now is that you’ve got these same banks who benefited from taxpayer assistance who are fighting tooth and nail with their lobbyists up on Capitol Hill, fighting against financial regulatory control,” he said.

    Many US citizens are angry that the banking industry was granted a $700bn bail-out.
    The Obama administration has said the rescue programme was needed to stem the worst financial crisis since the Great Depression of the 1930s and head off a potentially greater calamity in the broader economy.

    Last week, the US House of Representatives approved its version of the financial regulatory reform legislation. But before the bill can become law, it will also need approval from the Senate.
    Banks are resisting the new legislation which is designed to prevent a repeat of the events that sparked the turmoil.

    end of excerpt

    Gordon Brown is on the right track at least politically to judge from the below link which relates to societal attitudes re ‘value added’ by various ‘professions ‘ in UK society . I don’t believe there is any substantial difference between American , British or Irish attitudes to the ‘banking ‘ and financial services sector at this point in time . Politicians ignore that at their ‘electoral’ peril . Our lot in Ireland are probably a bit more ‘scared’ of the banks than the Brits or Americans but that’s because of issues of ‘economic’ scale rather than principle .

    If we were living in the Middle Ages (we might be on our way back anyway ) the chief executives of Goldman Sachs and other bankers and financiers of the ilk would long since have been flayed alive and their skins nailed to west facing church doors. Now who in the 21 st century would have thought of the Middle Ages as being ‘progressive’ ;)?

    http://news.bbc.co.uk/2/hi/business/8410489.stm

  • Mack

    Mick H.

    Now you lot have successfully hoodwinked the Irish public into ‘half’ believing this economic crises is down to those who work in public services and claim benefits

    That’s a gross misrepresentation. No-one is blaming welfare claimants or public sector workers for the crises (although mandarins at the top do bear heavy responsibility). Faced with huge and ballooning fiscal deficit _and_ a banking crises _and_ a ridiculous guarantee that put the Irish tax payer on the hook for maybe 700-800% of GDP the government had to make some attempt to deal with the structural deficit now (during the recession).

    They raised taxes last year, they mostly cut spending this year (in a deflationary environment), they signalled they’ll raise taxes again soon.

    If we’re lucky, once the guarantee runs out, next September, alternative and less painful adjustments could be made (if the spread on bonds falls back significantly). Perhaps they might be able to try reflation then.

    Btw, on the same logic – are you blaming all workers who took a pay cut / lost their job for the crises?

  • Wilde Rover

    Why not? Gangsters and cowboys have had the run of the place for quite some time and such a move would just be bringing it upmarket.

    DC,

    “Imagine a taoiseach with no bank account”

    An Taoiseach could be some distant patriarch, quasi luddite type and still do the job. Bertie as Minister for Finance without a bank account brings it to a whole other level.

  • “That’s a gross misrepresentation. No-one is blaming claimants or public sector workers for the crises ”

    mack,

    Please treat me with a certain amount of respect, what the hell do you believe, leading in to the budget, all those countless media powder puffs about the public service gravy train were all about, if not to put the black spot on those who worked in the public sector.

    If this was such a major problem how come, bar the odd cranks who hate the public sector, it was hardly ever raised before the government and it’s banking pals made the country go bellow up.

    If this were not bad enough your blog suggest more of the same, ie give large tax breaks [I presume] to finance carpetbaggers to cross the Irish sea, what happens when they have bleed the public purse for all it is worth, well I can tell you, they will be off to sponge off the next country who has politicians daft enough to allow it to happen.

    As I wrote shallow and pitiful.

  • OC

    Take all the bastards if you like.

  • Greenflag

    Out of the mouth of David McWilliams himself eh;)

    ‘Because of the stupidity of their top brass, Irish banks expanded rapidly’

    David should know that it was the top brass of not just the Irish banks but of governments and financial institutions in the USA and UK which precipitated the current mess . Not that we did’nt make things worse for ourselves but then we Irish were never known as party poopers .

    In retro it might also have eased matters had the British PM sold off that chunk of gold reserves some time ago not at 300 dollars an ounce but at the current 1200 dollars 😉

    I think we all need to see the ‘new regulations’ about to be foisted on the ‘financial sector ‘ in the USA and their UK and international equivalents .

    As for Goldman Sachs ? If they can /could bring the USA economy to the brink of destruction what chance has our Lenihan or Cowan or our mandarins of stopping them from doing the same here ?

    They already have in fact -not alone of course but in tandem with our own locally produced ‘voodoo’ merchants of arcane financial tools and paper wealth .

    Goldman Sachs may not have bargianed for Obama’s increased political leverage accrued because of the widespread public perception of ‘thieves international ‘ While he’s unlikely to nationalise them he may ‘break them up’

  • Mack

    Mick –

    I am treating you with respect, I presume you mean you don’t find my argument credible?

    But let’s take your points

    If this was such a major problem how come, bar the odd cranks who hate the public sector, it was hardly ever raised before the government and it’s banking pals made the country go bellow up.

    Prior to this, public sector pay was hiked up massively by the government and it’s social partners – the Unions and the bankers through IBEC. In 2000 and again in 2001, a single Union CPSU secured more gains for it’s members (over €1bn & €1.2bn) than were present in these cuts. There were two rounds of benchmarking which pushed public sector workers from underpaid to overpaid relative to their private sector peers. The scale of these increases was a mistake.

    The average starting salary for a graduate in Ireland is around €24,000, for a nurse, garda & teacher it is closer to €40k with a job life and gold plated pension. For a graduate lecturer in a regional institute of technology it is north of €60k. Do you think raising taxes on lower paid workers in the private sector to pay these high wages is fair?

    Even, if we were to follow a path of reflation – something bond market allowing, I support, there would need to be corrections wrt public sector pay. In a growing economy this could be achieved by awarding pay rises below those achieved by similar private sector workers. Unfortunately we have a severely contracting economy not a growing one.

    If this were not bad enough your blog suggest more of the same, ie give large tax breaks [I presume] to finance carpetbaggers to cross the Irish sea

    No tax breaks. It points out a differential in taxation rates.

  • Mack

    Mick –

    , what happens when they have bleed the public purse for all it is worth, well I can tell you, they will be off to sponge off the next country who has politicians daft enough to allow it to happen.

    What David McWilliam’s is proposing is that the state tax them and benefit from their income rather than vice versa. I’m certainly not suggesting the Irish public provide them with funds, rather that we might benefit from the jobs created and tax revenues gleaned..

  • Coll Ciotach

    No one of them has a clue. They are looking no further than their noses. The real future Ireland has is in data.

    Cloud computing is a buzz word nowadays but this is because people are only now approaching the communications to make it workable. It has been there for ages. Now we have great links to America, a cable running from Dublin and the cable which is part of Project Kelvin. This gives us links to America that others are jealous of. We also have superb links to Europe and Africa.

    This means that we are geographically a prime site to service the coming data revolution.

    In the morning we service Russia and Europe, in the afternoon we service America.

    We are in, or at least the South is, a very stable country politically and socially. We have well educated people, and we have great comms.

    They govts must start looking at this now. Roads and railways and airports are fair enough, but data transport is were it is going to be.

    For once we are not peripheral, we are the centre. Lets exploit this.

  • bollix

    so, the irish economy collapsed (partly) due to greedy bankers lending more than was sensible. same problem caused in UK by UK bankers. The solution is … get the crap UK bankers over to Ireland.

    is Ireland now going to be the “safe haven” for the poor put-upon bankers who are actually being held to account for their mistakes? Would ireland like to add a dollop of international ignominy to go with its economic collapse?

  • Mack – the only thing about teachers is that they often have a problem getting a job in the first place and are condemned to years of temp contracts. If you have no pull with a Principal that is…

    As for the bankers – the only people this article might benefit is the existing banker class in Ireland, who are being threatened with a similar tax if Labour in Ireland ever got half a chance to impose one. Now Inda will ring Gilmore and say “listen put that oul supertax idea SIPTU put in your head away so we can snag a banker or two from London”.

  • Bob Sycamore

    The problem with this Slugger OToole place is that everyone is very political and nobody is at all ecomonically minded.

    In the last 5 years the economy of Northern Ireland was subjected to a property bubble followed by a crash and then a bull trap and nothing was mentioned here.

    Let David McWilliams talk about economics and you lot can talk about sectarian scuffles in that economic backwater called NI.

  • Mack

    Mark –

    the only thing about teachers is that they often have a problem getting a job in the first place and are condemned to years of temp contracts. If you have no pull with a Principal that is…

    True, and unfortunately true for the other groups now too..

  • Greenflag

    bob sycamore,

    ‘In the last 5 years the economy of Northern Ireland was subjected to a property bubble followed by a crash and then a bull trap and nothing was mentioned here.’

    People in NI tend to accept that there is bugger all they can about their local economy .The purse and policy strings /chains are firmly held in London .

    In the republic we like to think we have a fair degree of fiscal autonomy and ‘sovereignty’ . Many have become disabused of that notion recently given the ‘fall out’ from Wall St.

  • kensei

    Mack the UK tax is short term, doesn’t raise that much cash and is basically a populist move that deflects from any real structual change. I don’t think its enough for people to move.

    A Tobin Tax is a good idea coming out of the UK government though, but the chances of getting wide enough international support are slim.

  • Mack
  • John East Belfast

    Greenflag

    “People in NI tend to accept that there is bugger all they can about their local economy .The purse and policy strings /chains are firmly held in London” .

    and a fat lot of good holdng its own policy and fiscal strings has done the Republic !

    We dont need to hold ours anymore than the people of Manchester do – we stand and fall with the rest of the UK – indeed at the minute we are standing more than most.

    We dont want and never asked for Ourselves Alone – it is bloody cold and lonely where you are

  • Mack

    JEB –

    and a fat lot of good holdng its own policy and fiscal strings has done the Republic !

    Do you think we’d be wealthier in the UK? I strongly suspect not..

  • John East Belfast

    Mack

    In your almost 80 years of existance I think you would have had much better times than the 15 years or so gifted to you by the mirage of the Celtic Tiger.
    I also think that the burden you are now carrying would have been better shared across broader shoulders.

    Basically the history of the ROI is one of lost generations – unless they migrate – and I think you are approaching another one.

    I also think the UK would have been better for it as well and the UK would have long since had an Irish Prime Minister.

    The Republic may even just have been spared the worst excesses of the state interference by the Roman Catholic Church.

    All in all from where I am standing Irish Independence has been a disaster.

    Indeed when you consider the Monetary and other Policy strings that you have conceded to the EU I would ask what was the point of it all ?

    Indeed when you are eventually bailed out by the EU then it will come with even greater strings – indeed they might not even do it and leave you to the mercy of the IMF instead.

    All for a “Nation once again” ??

  • Tochais Siorai

    And yet, JEB, virtually no-one in the Republic would vote to (re)join the UK.

  • Peter Fyfe

    JEB

    Do you really see the ECB leaving a eurozone country to the IMF? A country that, although it is currently suffering, does not appear to be going bankrupt. What an advertisment that would be for the Euro. Where was the protection of children in Northern Ireland at the hands of priests and church ministers? You claim that the burden is better shared across more shoulders, how about those eurozone countries now out of recession unlike the UK? Has the single currency been a failure to you? What policy has Ireland surrendered to the EU that they would not have surrendered remaining part of the UK? Of course except for monetary policy but that is irrelevant as the eurozone is performing better than the UK. Nice pointless rant though.

    Back to the issue, didn’t seem to find it in JEB’s post. It will be interesting to see how effective this tax is, I imagine it will be quite easy to avoid and of course its only temporary. I wonder would Goldman Sachs headquarters rather be in the City or the IFSC? I imagine the former it has a ring to it afterall, the big banks know about the IFSC, they have a lot of offices in the area as I am sure they will continue to do so thanks to the benefits highlighted. This is because the Irish are well educated, english-speaking and have the same time zone as London. The hint is in the final sentence.

  • Dave

    It’s a good idea from David McWilliams but most London bankers would be smart enough to figure out that the ECB will tie via the EC any backdoor that circumvents the Maastricht Treaty no bail-out rule into reform of the Irish tax system to bring it into line with the rest of the EU, so higher corporation taxes and removal of special tax designation along with support for the common consolidated corporate tax base proposals will be the price that Ireland has to pay for that.

    The IMF imposes conditions that have nothing to do with EU harmonisation and that, unlike the EU’s conditions, do not involve an irreversible transfer of sovereignty to a supranational authority. So while the government trotting off to the IMF would not undermine Ireland’s low tax regime, bankers will look at a country run by rapid europhiles and would think it more likely that the Irish will go cap in hand to the EC rather than to the IMF. Therefore they will not migrate to Ireland based on its low tax policy when that policy is very temporary.

  • John East Belfast

    Peter

    “Do you really see the ECB leaving a eurozone country to the IMF?”

    Have you not been following Greece then ?
    Perhaps they wont but if they do it will come at a cost – as Dave has touched on they dont like your anti competitive Corporation Tax – do you think France and Germany are going to sell to their industry a subsidy to a country that is undermining their own international competitiveness ?

    Any bail out will require you to tow the line.

    “Where was the protection of children in Northern Ireland at the hands of priests and church ministers”

    I wasnt just talking about the perverts but about the unbelievable deferrence of the State and legal system to the RC Church. Such deference has clearly been shown to be unhealthy. Stormont wasnt deferent but it was hands off – the impact of that on child welfare in NI is something I now think needs a full enquiry and I will reserve judgement until such an enquiry (if it ever gets off the ground) reports

    “Has the single currency been a failure to you?”

    Thankfully it hasnt because I am not in it – you wont find anyone in NI arguing now for the Euro – and I remember the pressure of the early decade trying to do it – even idiots arguing for NI to go it alone without the rest of the UK

    “What policy has Ireland surrendered to the EU that they would not have surrendered remaining part of the UK”

    That was the point I was making – what is Irish independence all about ? Would you not have been better spending the last 90 years in Union with your nearest neighbours and Celtic cousins ?

    “pointless rant” ?

    I dont think so – the thread is about England’s loss being Ireland’s gain – I was highlighting my belief that there has always been far more gain than pain and that is especially true now.

    As for McWilliams proposition I didnt comment because it was daft – he is clutching at straws

    Dublin is not London – Dublin isnt even Frankfurt – wise up. If they go anywhere it will be Switzerland but even then it will take a lot to dislodge London’s financial primacy.

    This tax – which is not levied on the Bankers but on the Banks – is ultimately a one off populist wrist slapping – it has earned Labour a few % points in the polls. The Banks have had a good year – they will get over it and move on – they know the game.

    London is still one of the best cities to live on the planet and UK Personal Income Tax levies (even after 50% top rate) remain one of the lowest in the West and way below the ROI which is one of the highest.

    Taxes are going one way granted – both in the UK and the ROI – and Britain’s Debt is a national disgrace. However sharing it across 60 million people along with the industrial and commercial powerhorse that the UK remains is still a better proposition to me than what is facing the Dublin Govt.

  • Glencoppagagh

    Even if they were completely exempt from tax, I just can’t see the ‘Masters of the Universe’ settling down in Dublin. It’s just too small and, dare I say it, provincial.
    It’s possible that they could shift some of the lower ranks and their functions there, the ones who only collect six figure salaries and tend to live in the suburbs rather than Notting Hill or Kensington.

  • Mack

    JEB –

    London is still one of the best cities to live on the planet and UK Personal Income Tax levies (even after 50% top rate) remain one of the lowest in the West and way below the ROI which is one of the highest.

    Eh? Ireland levies much lower personal income tax than the UK, in the aggregate & for most workers. For minority tax rates are higher in the south, but for the vast majority the reverse is true.

    The top marginal rate was 51% in the UK (income tax + NI) compared to around 53% in Ireland. Presumably with this new 50% rate it is now 61% in the UK.

    Next year 50% of Irish workers will pay _no_ income tax (unless the new Universal Social Insurance contribution comes into effect in 2010, most likely it will be 2011 – but even with it – the median worker will be taxed much more lightly in Ireland than in the UK).

    See –

    http://www.ronanlyons.com/2009/04/27/are-irish-workers-undertaxed/

    http://www.ronanlyons.com/2009/07/28/a-little-quiz-on-irelands-income-tax/

  • Mack

    Glencoppagh –

    Even if they were completely exempt from tax, I just can’t see the ‘Masters of the Universe’ settling down in Dublin. It’s just too small and, dare I say it, provincial.

    It’s possibly too small, but certainly not provincial! It’s certainly the second city in these islands, although it may not have the same draw as New York, London, Paris for those who love big bright city lights..

  • Dave

    “It’s certainly the second city in these islands…”

    Living in Dublin 4 are we? Fecking West-Brit. 😉

  • Wilde Rover

    Dave,

    “It’s a good idea from David McWilliams”

    I find it strange that someone who argues so strongly for sovereign control would want London bankers established in Ireland, the same bankers that own the US Federal Reserve/Central Bank and have undermined the sovereignty of the USA by driving it to the edge of hyperinflation.

  • Dave

    There isn’t any contradiction. Sovereignty means ownership of the state by the nation, not ownership of everything within that state by the nation. Private property rights apply to corporations too – and they are subject to the sovereign laws of this state. But maybe you are making some other point? It seems odd to think that sovereignty mandates public ownership of everything.

    In regard to your second point: private corporations can’t undermine anything unless the state (and de jure the nation) allows them too. Who broke the golden rule that no bank was too big to fail? The US state did when it de facto nationalised the GSEs Freddie Mac and Fannie Mae (these were puppets of the Democrats) and bailed out private banking businesses such as Bear Stearns etc. It should have let them fail. Likewise, now that it is conventional “wisdom” that some banks are too big to fail, why isn’t the state acting to break them up?

    How does capitalism move on from that? It can’t, can it? Now that these banks know that the state will bail them out (and even know what the terms and conditions), the state has given them a guarantee that it will underwrite all loses for businesses that are so badly managed that they bankrupt their shareholders. Who thought that was a good idea? The state. Sorry, but you voted for them. If you didn’t elect muppets the shareholders would be more careful with their money and well-managed banks would take over the business of banks run by the reckless. It isn’t capitalism that has failed at all; it is the state that has failed capitalism – and the nation. You should look at the state social policies that the Federal Reserve was supporting to see why it kept interest rates so low and why it promoted sub-prime mortgages and loans to people who were high risk. The myth of Greenspan’s purity was just that.

    Likewise, look at whose policies the ECB was supporting when it followed the same expansionist monetary policies as the Fed (the economic growth targets of the EC).

    Now rather than insisting that I share your communist views (no chance), why don’t you ask Mack if he knows that a second city cannot be a capital city and that a capital city is the city wherein the sovereign parliament resides? Ask why he think that Irish sovereignty resides with the United Kingdom.

  • kensei

    Mack

    Bankers complain about taxes abnd threaten to move. Shock news at ten!

    That’s a bit differnet from actually doing it, though. Plus if it’s good PR to sound like you are really hurting at the moment.

  • Mack

    Wilde Rover

    I find it strange that someone who argues so strongly for sovereign control would want London bankers established in Ireland, the same bankers that own the US Federal Reserve/Central Bank and have undermined the sovereignty of the USA by driving it to the edge of hyperinflation.

    They’re not London bankers, they are bankers from all over the world mostly working for US banks, the location just happens to be London.

  • Wilde Rover

    Dave,

    “There isn’t any contradiction. Sovereignty means ownership of the state by the nation, not ownership of everything within that state by the nation.”

    Who said anything about ownership of everything within the state by the nation?

    “Private property rights apply to corporations too – and they are subject to the sovereign laws of this state.”

    Yes, because, legally, corporations are considered to be people, and while they may be subject to law, are they really subjected to law, given their transnational elements?

    “It seems odd to think that sovereignty mandates public ownership of everything.”

    That would seem odd to me too.

    “In regard to your second point: private corporations can’t undermine anything unless the state (and de jure the nation) allows them too.”

    I agree. The nation, citing my original example of the U.S. Federal Reserve, did not allow a central plank of the Communist Manifesto, aka Central Bank, during the administration of Andrew Jackson. The nation did not allow the same London banks to undermine the integrity of the republic when civil war came, thanks in large part to Russia. Abraham Lincoln did not allow the integrity of the republic to be undermined when he issued greenbacks to avoid going to the loan sharks with their extortion rates of interest. But the nation did allow a central bank to be created in 1913, and the fractional reserve scam that followed. The nation has allowed a revolving door policy between prominent private banks and the Federal Reserve banks where employees come and go between the banks that own the Federal Reserve and the Federal Reserve itself. The nation has allowed these employees to occupy high positions in various administrations. The nation has allowed itself to be undermined to such an extent that the republic may not long endure. Personally, I think this is a bad thing, both for the particular republic in question and republics in general.

    “Likewise, now that it is conventional “wisdom” that some banks are too big to fail, why isn’t the state acting to break them up?”

    Because the representatives of the state are whores, pure and simple.

    “Now rather than insisting that I share your communist views”

    That’s a hell of a straw man argument there.

    In conclusion, scam artist banks cause more harm than good in the long run.

  • Wilde Rover

    Mack,

    “They’re not London bankers, they are bankers from all over the world mostly working for US banks, the location just happens to be London.”

    Would you rather I refer to them as octopus banks?

  • DC

    They’re not London bankers, they are bankers from all over the world mostly working for US banks, the location just happens to be London.

    Regardless they are prone to privately wetting the bed and needing big countries to publicly supply safety blankets.

  • Mack

    DC –

    That’s true, it’s unlikely Ireland would be able to afford them, so it would be up to the US to bail them out..

  • Ulster McNulty

    “…This is because the Irish are well educated, english-speaking and have the same time zone as London….”

    This is the problem with the irish, they spend far too much time congratulating themselves, in a rapidly changing globalised world.

  • Babylon AD

    “we stand and fall with the rest of the UK – indeed at the minute we are standing more than most.”

    Easy when GB is paying a £7billion above the line subvention and an uncalculated below the line subvention.

  • DC

    The reason the bond market wants the government to pay down debt is so that the markets can go back on the tear again, safe in knowing that the public funds are there to bail them out.

    At the minute and indeed over the year or so they know that big restrictions are on them to play safe and not too big a risk.

    Nothing wrong with paying these billions down over 8 years or so.

  • Greenflag

    DC

    ‘At the minute and indeed over the year or so they know that big restrictions are on them to play safe and not too big a risk.
    Nothing wrong with paying these billions down over 8 years or so.’

    Somewhat naive DC . Some of the USA banks BOA and Citi among others are paying back the government /tax payer bailout as fast as they can not for any ‘societal ‘ benefit but so they can escape the federal Government’s restrictions on their bonus payouts and salaries for their top executives .

    This ‘fast ‘payback is coming at a time when the credit lines for millions of small businesses have been cut or dried up entirely .

    I was of the opinion that breaking up the big banks would be the best policy longer term now I’ve come around to the view that full nationalization is the only way that an entire generation of executive ‘banking ‘ thieves and financial services gangsters can be brought to book .

    These people care not about the society from which they draw their enormous profits . Obama needs to throw the book at them including a windfall profits tax -trade transactions taxes and foreign transfers taxes . It needs to be an international effort by the USA , UK , Japan , Germany etc and if Switzer;and wants to be odd man out then the EU can impose an embargo on trade with Switzerland -deny them overflight rights or make them pay through their fat noses for the privilige and squeeze the Zurich gnomes till their belly buttons pop out of their arseholes 😉

  • John East Belfast

    Mack

    “Eh? Ireland levies much lower personal income tax than the UK, in the aggregate & for most workers. For minority tax rates are higher in the south, but for the vast majority the reverse is true.

    The top marginal rate was 51% in the UK (income tax + NI) compared to around 53% in Ireland. Presumably with this new 50% rate it is now 61% in the UK.

    Next year 50% of Irish workers will pay _no_ income tax (unless the new Universal Social Insurance contribution comes into effect in 2010, most likely it will be 2011 – but even with it – the median worker will be taxed much more lightly in Ireland than in the UK).”

    You cant just look at Headline Top rates.

    The PWC Report on the UK & Irish Budgets shows that for a single person earning Eur 120k the Effective rate of Income Tax post Budget in the ROI is 41.06%. In the UK it is 37.19%.

    For Eur 200k Salary it is 44.92% and 37.19%

    The ROI is second highest out of 10 and the UK is second lowest in the same 10.

    If you add the lower CGT regime – 18% v 25% – then with Bankers taking capital rather than income going forward then it is better still.

    Of course post election I think the UK will be moving up that table as well but it still has some catching up to do to persuade Bankers to jump on a personal tax basis only

  • Mack

    JEB –

    Have you got a link for that report?

    The Irish income tax system is much more progressive than the UK’s (most earners pay nothing or very low rates of tax in Ireland). I think the PWC report would be a useful addition to the argument on Irish taxes which seems skewed that they should go up – but up only on high earners..

  • Greenflag

    Dave

    ‘It should have let them fail.’

    And risked a USA economy with 50 million unemployed and a non existent social safety net apart from 40 million private firearms ?

    Nobody liked the bailout then and even less now but when the US Congress and Senate looked into the collapse of american society . ‘

    ‘Likewise, now that it is conventional “wisdom” that some banks are too big to fail, why isn’t the state acting to break them up?’

    Probably because Governments are scared shitless given the current state of economies worldwide . It will take the major governments of the western world working together to ‘nationalise ‘ these institutions and to keep them in state control for the foreseeable future. That and an effective re regulation of banking and financial services including insurance would be a good start . The introduction of capital punishment for capital crimes that ‘steal’ public monies or pension funds etc for errant bankers and politicians along the line of the Chinese Authoritarian Capitalist model would restore some semblance of ‘justice ‘ to a system which was and remains to a great degree ‘rotten’ to the core !!

    It’s obvious from their behaviour since the crisis began that the banks have learnt nothing and simply want to return to business as usual i.e Carry on Stealing.

  • John East Belfast

    Mack

    I am afraid I dont have a link – but trust me it is true.

    Remember we are talking higher paid Bankers here – and as you point out a Progressive Tax system is not going to help them.

    However I think that is a danger of the ROI tax system – too many people are let off the hook and instead you screw the wealth creators.

    A 12.5% CT may sound a good idea but somebody else has to pay higher taxes. Taking 50% of Irish workers out of tax altogether is not a good idea for two reasons.

    1. The wealth creators will pay more
    2. The non tax payers will vote in high spending left wing wealth squanderers.

    Paying up to Eur 200 per week plus benefits is another bad idea for the same reasons plus it reduces the incentive to work

    Therefore people on Eur 100k plus – usually the professional and able end up paying more than their fair share. They then get into Tax avoidance or even evasion schemes or just pack up and go.

    In other words you wont be tempting High earning bankers to Ireland but you may be encouraging a few to go – albeit considering the mess they ahve made not too many will miss them – although in the long term you need them.

    What Ireland needs to do is still further drastically cut Govt expenditure and broaden the tax base not narrow it

  • Mack

    Irish workers are being pushed out of the tax net by redundancies and falling wages, despite deflation the tax bands remain were they were last year. I think this will be remedied by the USC (universal social contribution) which will bring everyone back into the tax net albeit at a low level.

    The increase in the marginal tax rates to 53% was a relatively recent phenonemem (last 12 months).

    Paying up to Eur 200 per week plus benefits is another bad idea for the same reasons plus it reduces the incentive to work

    This is true when there are jobs, but paying good benefits means that workers can feel a little safer working in the unprotected, competitive, internationally traded centre.

    I’d be in favour of reducing benefits over time, although perhaps not to the extremes of Italy and Greece that cut them off entirely after 5 years of no economic activity!

    The other thing we really need to do, to encourage people into the workplace is reform the litigation system wrt accidents. We should switch to a government funded menu of compensations (like New Zealand). This would greatly reduce insurance costs and hence the cost of childcare (which makes it difficult for some parents to work).

  • DC

    ‘At the minute and indeed over the year or so they know that big restrictions are on them to play safe and not too big a risk.
    Nothing wrong with paying these billions down over 8 years or so.’

    Somewhat naive DC .

    No your point proves mine in that the banks are paying their cash back so as to move on but the government is selling debt on the bond markets, and generally the markets prefer government debt to be paid back safely and quickly. This also means generally that when the markets go out of kilter the operators there know that the government as lender of last resort is there for them. At the moment just like people, the governments are strapped.

    I agree with you about nationalisation, legal tender is legal tender and should have more control over it so that the nations reap the rewards in bonuses than private individuals who get out when the markets backfire. And the markets do backfire, again and again.

  • Greenflagt

    ‘At the moment just like people, the governments are strapped.’

    True but in the meantime the banks have the perfect excuse that it’s difficult to find ‘credit worthy applicants for loans ‘ and they can’t risk their ‘investors ‘ money like in the good old days? . Meanwhile the Government is telling them they’re not lending enough but the banks reply that the new ‘controls’ won’t let them and anyway business is so bad out there that more bank losses would weaken their position.
    So the banks have now found a better way to make money for themselves by using current very low interest rates to borrow the money for short term trading, currency speculation -hedging etc , knowing that they’ll probably make a quicker ‘profit ‘ on such dealings as on longer term loans to strapped small businessmen or house buyers .

    Heads I win tails you lose is an expression I always thought was coined by a banker ;(?

  • Dave

    “And risked a USA economy with 50 million unemployed and a non existent social safety net apart from 40 million private firearms ?” – Greenflag

    Chicken Little, is that you? Most American banks are well-run and in no danger of collapse, and would not have been endangered by systemic risk exposure. That is just the cover story provided by wealthy elites so that their friends in government can give your money to them.

    “A 12.5% CT may sound a good idea but somebody else has to pay higher taxes.” – John East Belfast

    It doesn’t just sound like a good idea, it is a good idea. That’s why the EU and particularly the Krauts hate it:

    As the Irish Examiner reported:

    [i]THE German finance minister has threatened to go after Ireland’s low corporation tax system that he says leads to unfair competition with Germany and other EU countries.

    His unprecedented attack on Ireland coincides with corporation tax becoming a major issue in the General Election as the European Commission works on a plan to harmonise the tax base.

    Ireland has the second-lowest corporation tax rate in the EU at 12.5%, which is credited for creating the celtic tiger, attracting massive foreign investment and jobs. Germany has the highest at 38.6%. [b]In 2004 over €33 billion flooded into the country, almost the same as went to Germany. [/b]

    German minister Peer Steinbruck warned that Ireland and other low tax countries in Eastern Europe were involved in what he called cutthroat competition that was not sustainable in the long run.

    “Corporate tax laws such as those in Ireland are being exploited by German companies that set up subsidiaries there, borrow money from them and then write off the interest against their profits in Germany,” he complained.

    The German government is adopting a two pronged attack — first in pushing the European Commission to develop an EU-wide harmonised tax base and secondly by reopening the EU’s Code of Conduct on unfair tax competition.

    Mr Steinbruck’s deputy, Axel Nawrath, said they would push the finance ministers of the other member states for a new code of conduct once the German presidency ended at the end of June.

    “This is something that must be addressed by the group dealing with the code of conduct. Germany is very adamant about this,” he said.

    Politicians from all parties, Internal Markets Commissioner Charlie McCreevy and business interests have all warned that the plan to harmonise the corporate tax base must be killed.

    Taoiseach Bertie Ahern has said that harmonizing the tax base across the EU could seriously affect the country’s ability to compete for investment and jobs in the global economy. [/i]

    Instead of attacking Ireland, the Krauts and their henchmen in the EU should learn from the Irish and cut tax rates. While the EU claims that Ireland’s tax policy is anti-competitive, the opposite is true. The EU wants to eliminate competition by harmonising tax policies. It is the EU’s tax policy that is anti-competitive and Ireland’s tax policy that is pro-competitive. The rabid europhiles that the Irish muppets elected to government will be forced to comply with the CCCTB if they want a bail-out from the ECB.

  • Dave

    Wilde Rover, I’d need some time to think that argument over and to look at the extent to which any conflict of interest might be relevant. There are different layers of authority within the Fed with the the president appointing Board of Governors and directing policy. I don’t know if you read the link I posted to Greenspan but if you did you’ll see that the Fed’s policies about using access to money to smooth social mobility and affordable housing objectives of the Democrats in Congress (and indeed the of Bush in the Executive) show that political policies played a large part in it.

  • Peter Fyfe

    Your line about the, “thankfully it hasn’t because I am not it.” Where does this come from? You may be suprised many economists when considering the success of the European monetary union do not exactly consider the views of Northern Ireland as a deciding matter. The Euro does not appear to have hampered the rest of the EMU in recovering from recession while the UK’s cost of servicing it’s debt continues to rise. World credit market’s do not appear to be abandoning countries that adopted the euro, maybe you know more than them.

    How twisted do you have to be to compare european cooperation with an occupation against the wishes of the irish people?

    Is the top income rate of tax not only 41% in the south?

    Do you really believe the RUC were that incompetent they were never able to act on allegations? I don’t think it was only a southern government that gave churches a free hand do deal with themselves.