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Comment by flexie | Hacker News Reader

Yes, it is Apple's problem and no, Apple is not a victim in this thing.

The EU treaty is Irish law as well and lawyers from all over the union (myself included) have been looking on at this blatant violation of EU rules for years wondering how long multinational companies would be able to keep the schemes alive.

The Irish people have voted for politicians who adopted the EU treaty which bans subsidies to large corporations. The Irish people benefits when subsidies to French, British or German corporations are curbed. Under EU law, Apple has been obliged to pay ordinary Irish taxes all along. The whole arrangement has clearly been illegal and it is hardly a surprise to Apple and its army of lawyers and accountants that sooner or later justice would catch up.

Competitors that cannot secure such individual tax agreements are hurt by this. I sincerely hope that other multinationals with similar schemes will be next.

Apple will likely bring this ruling before the European Court of Justice but it is very unlikely that they will succeed in changing the outcome. From a legal point of view this is a very simple matter and it is an embarrassment to the whole EU system that it took so long to do something about it and that other multinationals still enjoy tax subsidies in Ireland (and likely elsewhere in the union).

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The issue is not that Apple did not pay tax, nor is it Ireland giving Apple a good deal. Ireland charged tax based on reported earnings in Ireland, not world wide, for a child company of Apple that says it is based in Ireland but has revenue income from around the world.

The EU has decided that all revenue income for that company should be charged in Ireland, although the US say they have also paid tax in the US.

Fundamentally Ireland is saying it did not give a "deal", the EU is saying it calculated the tax incorrectly and the US is saying that the EU's findings are based on no tax being paid elsewhere which was not the case.

As was also pointed oout, Ireland seems to be the scape-goat for all EU decisions. The Irish bail out has already been mentioned in this thread, but for those who are unaware of what happened here is a simple break down.

German companies bought binds in banks (like shares). When the banks started to fail, Germany told Ireland that the tax payer had to pay the bond holders all the investment money and the interest. However if the tax payer had purchased these bonds, they would have never received anything back. They also told Ireland that if they tried to burn the bond holders they would incur trade embargo's to stop Ireland trading in the common market (Ireland makes a loot of money from exports to Europe). So basically it was pay the bond holders or you will have no income.

> Ireland makes a loot of money from exports to Europe

That's the crux of the overall matter, from a political point of view. Ireland benefits from the European market disproportionately more than the EU benefits from Ireland. This is why Ireland ends up being "a scapegoat" - because nobody is particularly happy about their status as the onshore tax-haven of choice for healthy US multinationals, so every time they end in a pickle, they have very few friends (and with Brexit, they effectively lost their biggest one).

The word scapegoat implies being blamed for something they are innocent of.

Here Ireland is clearly complicit with Apple in the tax evasion scheme and thus isn't a "scapegoat".

Ireland is hardly a scape-goat. The commission has dealt in a similar manner with Amazon in Luxembourg, Starbucks in the Netherlands, and Anheuser-Busch InBev in Belgium.

Whether or not there is an agreement between Apple and Ireland or just an understanding that Ireland would not tax them on almost any income is irrelevant. The point of the matter is that the effect of the scheme has been that Apple has paid next to nothing in tax on all European profits in more than a decade, spanning from the sale of your first iPod to your newest iPhone. That income has been channeled through the Irish companies and Ireland has not taxed it with it's usual corporate tax (which, by the way is now merely 12.5 percent). It is appalling.

Sure, there was some news that EC has dealt with Amazon, Starbucks, InBev but did they actually pay anything back? Did they appeal? Last I heard for InBev the Belgian Finance minister said: "the consequences for the companies concerned would be considerable and the reimbursement itself would be particularly complex" aka will take forever and we will probably not really do it.

It has taken a number of years for the investigation of Apple to reach this point, and the investigations of Starbucks, Amazon, and InBev are ongoing. I don't believe your "aka" summary is accurate.

I believe the Starbucks case is "over" and they're to pay 30m in owed taxes.

The investigation for those three companies mentioned is complete and they have to pay the taxes. Now if they finally will do after years of appeals that's a different question. That was my "aka" summary.

Boy, it sure seems weird that the EU has only gone after American companies for this...

InBev is not American, and it could be you're only hearing about the cases relevant to American news companies' customers.

>The Irish people benefits when subsidies to French, British or German corporations are curbed.

Are you serious? Subsidies to German and French corporations were not curbed they were replaced by the ludicrous loans that the Germans and the French give out to the "poorer" and "less industrious" EU member states so they in term can go around and buy German goodies.

And when this Ponzi scheme blows up because of a financial crisis they force you to take on even more loans to pay back the debt you own all while preventing you from writing off debt or going bankrupt with threats of shutting off your banks because you do not control your own currency.

They forced Ireland to 'take one for the team' and prevent contagion by repaying bad commercial bank loans from overseas banks to the failed Irish banks. In other words they prevented Ireland from doing an Iceland. They hinted that new, shared burden, measures, to be put in place, to cover such eventualities in the future, would be applied retrospectively to Ireland but they weren't.

During the bailout term the EU/ECB adopted a far harder stance against the country than the IMF advocated.

And doubtless on the back of this case there will be a legal action in Europe and a resulting large fine on Ireland.

You just don't get the feeling that this sort of treatment would be given to Germany or France.

Yeah it wasn't pretty. Ireland was not allowed to default on its loans which was what they should have done.

It did not control its currency or banks which are effectively controlled by the ECB.

It could not repay some or all of its loans with its own currency by simply printing more of it and the only way of getting more currency was taking on more loans.

What people also don't understand is that the laws preventing incentives aren't protecting the weak they are protecting the strong.

Germany can set its corporate tax rate at 40-50% and while people would bitch and moan it would do nothing. It's a huge market, it has a huge and highly developed workforce and it's one of the most industrialized nations on the planet with a highly developed and diverse industry.

It doesn't need incentives to lure corporations to set up shop and it doesn't need incentives to grow its own indigenous corporations and businesses.

If everything would be equal as far as cost of setting shop, employment and taxation between Germany and Ireland. Neither Apple not anyone else would give 2 cents about Ireland when they have countries like Germany available to them.

Many of these laws aren't protecting the smaller nations they are restricting them and preventing them from being competitive forcing them to be effectively dependent on the bigger nations for loans/credit which they give out to allow their industry to keep producing in excess.

Anyone who thinks that Germany loaning money to Ireland so they can go around and buy Volkswagen and BMWs isn't a subsidy are blind or clueless.

> the laws preventing incentives aren't protecting the weak they are protecting the strong.

That's not entirely correct. These norms were introduced to open up nationalised markets like telecoms, mail etc, which would otherwise remain forever locked on national boundaries. This allowed an equal field for businesses across the Union. Of course, established markets tend to favor the richest players.

This approach is supposed to be complemented by infrastructural funds, where German and French taxpayers effectively pick up the bill for rebuilding Ireland or Romania to a state where they can compete on an equal foot.

> Neither Apple not anyone else would give 2 cents about Ireland

That's very unfair to Ireland. Ireland has a natural advantage nobody can take away: sharing a language with the richest and most powerful nation on the planet. That's worth a lot, in this day and age.

>That's not entirely correct. These norms were introduced to open up nationalised markets like telecoms, mail etc, which would otherwise remain forever locked on national boundaries. This allowed an equal field for businesses across the Union. Of course, established markets tend to favor the richest players.

Well it sure helped Deutsche Telecom and PostNL(TNT), everyone else is mostly still locked within their own countries, setting up the same rules isn't allowing an equal field of opportunity where you are at a disadvantage out of the gate and you can't adjust the rules you want to play by you will always lose. Established markets tend to favor the richest players, but to compete against them you have to be able to set up a competitive advantage and that requires you to be able to set you own policies under the current EU law you can't set up policies which are "disadvantageous" to other member states which means you will constantly get run over there is simply no way of competing. There is a reason why we split boxing into weight categories going up against a 300 lbs gorilla as a featherweight won't end up well for you.

>This approach is supposed to be complemented by infrastructural funds, where German and French taxpayers effectively pick up the bill for rebuilding Ireland or Romania to a state where they can compete on an equal foot.

The German taxpayer isn't really picking up the bill (although the Irish taxpayer kinda does, since the ECB forced the Irish taxpayer to take on the debt of private bondholders and investment banks, this is pretty darn unprecedented. This would be analogous to if Capital One would go under and the Fed/USG would not bail it out, and would not allow it to declare bankruptcy and then they would go and force Virginia and it's residents alone to take on all of Capital One's debts as their own) and many of the policies that Germany leads are also causing these cycles. Germany operates at a pretty big trade surplus, many if not all of the EU members are at a trade deficit with Germany to the German policy makers the policy of allocating loans and credit to countries that would not otherwise be able to afford german goods to keep the german people working is a no-brainer.

The problem is that it's effectively a pseudo ponzi scheme when it works it works extremely well (the US employed a similar policy with Europe to keep it's post WW2 level of production at high levels, the Marshall plan helped Europe a lot but it also helped the US even more) but like all of them when it starts to slow down it tends to break apart into a mess.

Now this wouldn't be bad if Ireland could set up it's own monetary policy, control it's own currency, restructure its debt but it couldn't and it wasn't allowed too. Because of how the Euroblock/ECB is structured most of the normal debt relief tools that would be available to a "normal" country are not available to Ireland, the few that are are not under their own control. You can't come to some one in debt and say - you aren't allowed to declare bankruptcy, you can't restructure your debt, you can't repay it in your own currency like every other nation, and you can't adjust the interest rates because the ECB controls the price stability within the Eurozone.

The overall problem with this isn't that the EU/Euroblock is bad is that they are trying to have the cake and eat it, they are intentionally structured as a non-Federated entity, they do not share the pain, this isn't the US. And on the other hand they have a shared currency and a monetary policy that is dictated by an external body the ECB which to be fair no one really elects and the individual governments of the member states do not have any control over (if the head of the Fed goes to I don't know Alabama and says If you don't take loans from Cali I'm shutting your fed and all your banks and payment systems come monday morning Obama can fire him (or well her now since it's Janet Yellen), the Irish government can't do squat to the ECB and that's just what it did to them and Greece).

The EU/Euroblock will soon figure out that they'll have to go either to a fully or at least much more federated system with which they would share in each other's wealth and misery or step it down to the point of where individual countries get the power back to control their own monetary policy, inflation, interest rates and taxation at the same level as every other sovereign nation state does today.

>That's very unfair to Ireland. Ireland has a natural advantage nobody can take away: sharing a language with the richest and most powerful nation on the planet. That's worth a lot, in this day and age.

India... South Africa...

English is important but you overestimate it's worth by several orders of magnitude, if Ireland was as expensive as Germany to operate in, or even if it was almost as nearly as expensive as Germany tax wise Germany would be considerably better and cheaper to operate in, even if you have to bring a few 1000's Irish people to do tech support. Before Ireland "whored itself out" India was and to some extent still is the call center and the remote dev shop of the world simply because it's cheap and people can learn English, you can't learn paying only 15% corporate tax and have incentives for every engineer you hire that bring that figure to 0 instead of 30%.

South Africa now is also doing the same thing, they are on GMT, speak English and now are a pretty lucrative alternative to Ireland, and this thing with Apple will only make it worse.

Dude, can I politely ask you to increase the amount of commas and periods you use? Otherwise you're really hard to follow :)

> everyone else is mostly still locked within their own countries

That's not really the case. In fact, in a lot of sectors purely-national players are now the exception, not the rule. You have Portuguese building companies winning UK contracts, and French companies outsourcing to Czech companies. All that wouldn't be possible if richer countries could just lock down their markets with state subsidies. In fact, the only market where this does not happen is agriculture, which is heavily regulated and planned at the EU level.

You keep reasoning on national terms, whereas the point of the EU is to overcome those terms.

> The German taxpayer isn't really picking up the bill

The numbers respectfully disagree: http://news.bbc.co.uk/1/hi/world/europe/8036097.stm#start

> Because of how the Euroblock/ECB is structured most of the normal debt relief tools that would be available to a "normal" country are not available to Ireland

Not just to Ireland, to anyone. Which is really the main problem with the Euro, to be honest. There are solutions, but they need a coordinated effort by Eurozone countries to overcome German diffidence towards potentially weakening the currency. This effort is slowly building, now that France and Italy have nothing left to lose.

> they are trying to have the cake and eat it

Well, it's what everyone wants, isn't it? :)

> they have a shared currency and a monetary policy that is dictated by an external body the ECB which to be fair no one really elects

FED heads are also not elected but rather nominated; and historically they are pretty independent as well. Politically, the ECB is under a similar amount of pressure; the Governing Board is nominated by the European Council, aka national governments, and include representatives from all countries; on top of that sits a restricted Executive team which traditionally includes at least one German, one French and one Italian, recognising the larger role of their economies.

> the Irish government can't do squat

The Irish government can apply political pressure much like the governor of Alabama; the difference is that, lacking an electoral lighting rod, nobody cares too much about Alabama here. If there were such a lighting rod (a powerful elected EU President with executive powers), countries would cry about loss of sovereignty. EU economists are not the only ones wanting to eat cake, it appears :)

> The EU/Euroblock will soon figure out that they'll have to go either to a fully or at least much more federated system

Absolutely. Fiscal harmonisation is the next step on that path, and this decision is coherent with that endgame.

> India... South Africa...

Neither of those has unfettered access to the largest market on the planet. I should have probably qualified my previous statement with something like "in the EU".

> Germany would be considerably better and cheaper to operate in

You're selling Ireland short, here. Tax is one element of policy, but not the only one. I'm pretty sure US companies would rather work with Irish unions than German ones, for example. Germany is also another hour away in timezone terms, two hours in flight terms, and more uncomfortable to access by sea. And of course, everyone suffers from competition from up-and-coming countries in the same way.

>Dude, can I politely ask you to increase the amount of commas and periods you use? Otherwise you're really hard to follow :)

My english teacher flashback: Long sentence -3 pt.

>That's not really the case. In fact, in a lot of sectors purely-national players are now the exception, not the rule. You have Portuguese building companies winning UK contracts, and French companies outsourcing to Czech companies. All that wouldn't be possible if richer countries could just lock down their markets with state subsidies. In fact, the only market where this does not happen is agriculture, which is heavily regulated and planned at the EU level.

I think we were talking about slightly different things, you have more Chinese construction companies winning contracts in the UK than portuguese I was talking about the competitiveness of specific traditionally "national" companies in the grander EU scheme and this is set pretty darn poorly against the smaller countries, Ireland big problem is that it's small (<5M pop), It never had any real huge industry, it had a pretty bad conflict in Northern Ireland for decades and it's tied to the Euro. Poland, Denmark, and the Eastern/Baltic states are really lucky that they held their currency.

>You keep reasoning on national terms, whereas the point of the EU is to overcome those terms.

Well problem is that it isn't the EU is explicitly "anti-federation" at least on paper, if the EU was structured like the US it would be a considerably more fairer place but the nation states within it are sticking to their national terms, borders, and sovereignty I only attempt represents the reality not an ideal some might hold.

> The German taxpayer isn't really picking up the bill; The numbers respectfully disagree: http://news.bbc.co.uk/1/hi/world/europe/8036097.stm#start

I thought that we were talking about the Euro Debt crisis which went pretty bad as far as the Irish taxpayer goes and pretty good for the German one.

But if this is pan-EU economics then while Germany does pay more it also receives more.

2007-2013 Germany's net contribution was negative meaning it got more money than it paid out (same goes for all the other big contributors into the EU).

https://en.wikipedia.org/wiki/Budget_of_the_European_Union#E...

Yes, Germany and the rest of the large economies do pay out more, but they also get considerably more and while we can all find a few years in which they are paying considerably more than they are getting if you look at the overall figures it's more or less a zero sum game, and if you look at economic crisis periods it tends to be negative.

The smaller EU member states on the other hand have positive net contribution to the EU, they can't afford not to have that, they don't have the political capital for that and the EU laws and regulations are not set up in their favor.

>Not just to Ireland, to anyone. Which is really the main problem with the Euro, to be honest. There are solutions, but they need a coordinated effort by Eurozone countries to overcome German diffidence towards potentially weakening the currency. This effort is slowly building, now that France and Italy have nothing left to lose.

Aye this is a pretty big issue, Germany treats the Euro like it was the Dutchmark (I don't fault them for that ;)) as they are the "biggest" economy in the EU (by a substantial margin) and if we are talking old-school industry only that margin is probably even bigger they are very keen on keeping their production surplus and they are doing everything they can to make sure that still is the case.

Germany is at a pretty tough spot since they are the factory of Europe and their economy is still set up around its Industry (they are post WW2 50's America).

The services sector is nearly 80% of the economy of the next 2 largest economies in the EU - France and the UK, while their industry share is 20% or lower (UK 20.4%, France 18.3%).

Unlike the UK, France and even the US (20.8%) Germany's industry is 30% of its GDP it produces tangible goods at a high surplus, this means that much more of its GDP isn't not only tied to the purchasing powers of its trading partners but is also considerably less "flexible" than a services oriented economy and Germany would resist any major financial policy changes with very very fierce opposition.

Simply because it's easier and quicker to shift the focus of retail jobs or even retrain them than it is to figure out what to do now with an automotive factory and the 30,000 people it employed.

>Well, it's what everyone wants, isn't it? :)

The cake is a lie ;)

>FED heads are also not elected but rather nominated; and historically they are pretty independent as well. Politically, the ECB is under a similar amount of pressure; the Governing Board is nominated by the European Council, aka national governments, and include representatives from all countries; on top of that sits a restricted Executive team which traditionally includes at least one German, one French and one Italian, recognising the larger role of their economies.

Yes but any US state will have more political pull over the the Federal government or any of its institutions (even tho the Fed is technically a separate entity but the head of the Fed is appointed by the President) than nearly any EU member state has within the EU parliament, EC, and various other institutions.

If Janet Yellen would say to Alabama what the ECB said to Ireland or Greece, the Congress would be up in arms calling for impeachment and she would be without a job before sundown, it seems that while the EU is very paranoid about national sovereignty it doesn't really act to protect it(mainly because it's structured against it, the EUP is very "anti-national" for the most part and is also hardly representative of the actual elected governments of the various member states, and the EC and other institutions that their members are appointed by the governments of the member states have different responsibilities and agendas).

>Absolutely. Fiscal harmonisation is the next step on that path, and this decision is coherent with that endgame.

Fiscal harmonisation is a "big no-no" most EU states do not want federalization they want to keep their national identity and sovereignty at least in this point in time. This decision isn't really coherent with this, it's strong arming without the reach around and with no cuddles.

>Neither of those has unfettered access to the largest market on the planet. I should have probably qualified my previous statement with something like "in the EU".

Nowhere was it stated that it was, but it doesn't makes English the reason why Ireland is preferable to Germany, if English was an issue they would import Irish to Germany if it wasn't more lucrative for them to set up shop in Ireland.

>You're selling Ireland short, here. Tax is one element of policy, but not the only one. I'm pretty sure US companies would rather work with Irish unions than German ones, for example. Germany is also another hour away in timezone terms, two hours in flight terms, and more uncomfortable to access by sea. And of course, everyone suffers from competition from up-and-coming countries in the same way.

Taxes are only one aspect of the incentives Apple and the likes received in Ireland and that's the problem, if Ireland was setup as a tax haven like Luxembourg the EU wouldn't give a damn, but it set up specific preferential policies that didn't make Apple want to setup a shell holding company in Ireland they made Apple want to put 30% of it's employees in Ireland.

And I'm not selling Ireland short, it's an island with 5M people with a tiny local market an underdeveloped industrial and services sectors with all the logistical issues of being an island including having higher consumer prices than Germany.

And I don't understand what does naval access have to do with this argument, Ireland didn't went after MERSC, ZIM, GE or Shell, it went after the likes of Apple, Facebook, Google and Microsoft.

But even then last time I've checked the largest port in Europe and one of the largest in the world is in Rotterdam which is pretty well connected to Germany.

>Poland, Denmark, and the Eastern/Baltic states are really lucky that they held their currency.

Poland will have to join the Euro or leave, eventually - that's what the treaties they signed force them to do. Considering their relationship with the UK, I think the "leave" option is pretty realistic at this point.

> the EU is explicitly "anti-federation" at least on paper

No, the EU is about "ever closer union". The maintenance of individual national identities is clearly a "necessary evil". The long-term objective is to have a permanent, harmonised union where countries can resolve their differences without ever resorting to war - in other words, a federation. Chances are that this federation will never be as culturally cohesive as the US are, that it will actually be smaller than it is today (possibly even smaller than the current Eurozone), and that it will be less centrally-manageable than the US... but it will be a federation regardless.

Otherwise we'd have kept the Common Market we had in the '80s, with all the instability that the multi-currency setup brought. For all its faults, the Euro kept inflation and borrowing rates extremely low and stable for almost 20 years now. The minute we manage to disentangle public-debt markets from nationalistic sensibilities, we are golden.

> Yes but any US state will have more political pull over the the Federal government or any of its institutions

No, I don't think so. States do suffer a lot even in the US setup. As I said, the difference is that at the top you have someone who cares deeply about electoral colleges, especially in marginal states. In the EU there is nothing of the sort, so all pressure has to come from coordinated alliances between member states in the Council.

> If Janet Yellen would say to Alabama what the ECB said to Ireland or Greece

California, one of the most powerful states in the US, has been on the verge of bankruptcy for several years now. The FED certainly won't alter their monetary policies to suit Californian public debt, it's totally out of the question. You don't see in the US what you see in EU because they don't even entertain the idea that California should have its own currency. The FED looks at the US economy as a whole and does what it needs to do to keep the overall system afloat; if that means Alabama gets screwed, so be it. That's also what the ECB does, more or less.

In fact, EU states have a nuclear option that US states don't: they can leave. Greece could (and IMHO should) have left, but they came to the duel underprepared and eventually blinked first. Ireland is not in that position because it relies too much on its status as "tax haven cum operational base" for companies entering the EU market. So you can't leave and you can't keep being a tax haven, but if you play fair you can keep all you got and keep building from there.

> is also hardly representative of the actual elected governments of the various member states

I disagree there, I personally think the opposite is true. National governments hold too much sway on EU policies. The Council (i.e. governments) sets the agenda and then hides behind the Commission tasked to implement it. Some Commissioners are little more than puppets doing their governments' bidding (one McCreevy comes to mind, as well as one Dijsselbloem more recently...). EC governments nominate ECB figures then hide behind them when they have to make unpopular choices. They vote for directives in political contexts ("I give you this so you give me that") then feign ignorance when obligations come due.

I think EU institutions represent EU governments all too well. EU people, that's a different story - they have EuroParliament, and a fairly sane justice system, but could do with more representation.

> most EU states do not want federalization

Most EU states say they don't, but in practice they do. It makes life easier for everyone, keeps the peace, and protects the block from US/Russian/Chinese power. There will always be critics, but hey, that's life.

> if Ireland was setup as a tax haven like Luxembourg the EU wouldn't give a damn

Actually Luxembourg was in a pickle not long ago, because of their tax affairs. The difference is that Luxembourg will never be a competitor to large countries "where it matters", so it's given a bit of leeway; plus, its representatives are first-class and know how to play the game. The Netherlands is the other country with iffy tax arrangements, and they compensate again by playing the game (which means, they take the hit for France or Germany when there are hard decisions to make).

> it's an island with 5M people

Norway has the same population. Actually, Norway has 5M and Ireland 6+M.

> I don't understand what does naval access have to do with this argument

I'm just saying there are many ways to attract business.

> California, one of the most powerful states in the US, has been on the verge of bankruptcy for several years now.

No, it hasn't. It was, until the supermajority budget requirement was removed, in perpetual legislative budget crises engineered by the legislative minority which had sufficient clout to prevent a supermajority, but it has never been "close to bankruptcy".

Fair enough, I don't keep up with Californian affairs that much. Still, I don't believe the FED ever considered substantially altering its monetary policies to suit a given state budget. Am I wrong?

> Still, I don't believe the FED ever considered substantially altering its monetary policies to suit a given state budget.

Not only doesn't it, but monetary policy isn't a suitable tool for that anyway. Even for the federal budget; in fact, one of the major reasons for independent central banking is to provide assurances to the private economy, currency users, and, particularly, those financing government debt that monetary policy will not be used to address the currency-issuing-government's fiscal condition (a trend that was distressingly common even in large, basically stable governments before independent central banking, and produced distrust in both government securities and currency.)

OTOH, the federal government's fiscal policy often directly addresses issues that may be particular pressures on state fiscal condition (and, indeed, many government programs -- including the big social benefit programs like Medicaid -- have regular adjustments to federal/state sharing ratios based on relative state economic conditions that are entirely designed around the premise that state economic conditions will drive state fiscal conditions and ability to participate.)

Which is exactly my point, the FED would not have gotten into this mess, and the ECB also shouldn't have.

The ECB was out of line not only in regards to common sense but in it's essence in regards to it's mandate.

The FED would not have have messed with the state notes, and it would surely not have threatened to shut down it's banks by saying it would not guarantee their liquidity and cut Cali banks out of the dollar payment system if Cali dares to allow it's private investment banks and bond issuers to declare bankruptcy.

>Otherwise we'd have kept the Common Market we had in the '80s, with all the instability that the multi-currency setup brought. For all its faults, the Euro kept inflation and borrowing rates extremely low and stable for almost 20 years now. The minute we manage to disentangle public-debt markets from nationalistic sensibilities, we are golden.

Again that's your "opinion" or ideal to be more exact, the facts on the ground that the EU was established on the grounds that the sovereignty of it's member states will be maintained at virtually every cost. This is why there is so much contradiction for example each member state has it's own foreign policy but the EU as a whole also has one, on many occasions especially in regards to polarizing subjects the EU foreign policy and statements contradict the ones of individual member states.

>No, I don't think so. States do suffer a lot even in the US setup. As I said, the difference is that at the top you have someone who cares deeply about electoral colleges, especially in marginal states. In the EU there is nothing of the sort, so all pressure has to come from coordinated alliances between member states in the Council.

The states in the US are the legislative body which also holds the federal budget, oddly enough if you take the US federal model then states have more "sovereignty" in many aspects as well as more support and political influence over the federal government.

>The FED looks at the US economy as a whole and does what it needs to do to keep the overall system afloat; if that means Alabama gets screwed, so be it. That's also what the ECB does, more or less.

You are taking my analogy into the wrong direction. The FED would not intervene in the case of California which is exactly what the ECB should have done in the case of Ireland, but it didn't it threatened to shut down their banks and cut them off from the payment system, the same threat was also issued to Greece. This is no more in the mandate of the ECB than it is the mandate of the FED and that was exactly my point if the FED would act like the ECB, Congress would've have burned it to the ground, and if would not stop there.

>In fact, EU states have a nuclear option that US states don't: they can leave. Greece could (and IMHO should) have left, but they came to the duel underprepared and eventually blinked first. Ireland is not in that position because it relies too much on its status as "tax haven cum operational base" for companies entering the EU market. So you can't leave and you can't keep being a tax haven, but if you play fair you can keep all you got and keep building from there.

Article 50 is not a realistic option, it also has nothing to do with how the EU and ECB policies are applied in reality, the fact that you suggest that as an option speaks about the general attitude problem of many people who see the current version of the EU as a stepping stone to anything but a complete catastrophe.

If the EU does not do a complete 180 on it's current policies it would just continue to do more and more damage not only to it's member states but to whatever is left of the idea that it can be more than a shared market and now a concrete anchor around your ankles unless you are in the G20, and considering the current state of affairs in the G8.

I don't object in principle to the idea of a federated Europe (If I were a European national I would strongly object however), but I just don't see it happening and the current state of the EU drive it further and further away, it's policies are destructive and they breed contempt. If the EU is to become a federation it cannot go on as the Franco-German conglomerate while being indecisive and contradictive.

You can't force countries like Ireland and Greece to swallow it and say I know it's hard now but in 10-15 years when everyone's forgotten about it we might start thinking about federalization again and in 2078 we'll "pay you back".

This doesn't work like that, there is absolutly no political capital for federalism in the EU currently the likelihood of it falling apart completely which is slim as it is, is still considerably higher than it becoming a federated union.

>Most EU states say they don't, but in practice they do. It makes life easier for everyone, keeps the peace, and protects the block from US/Russian/Chinese power. There will always be critics, but hey, that's life.

Most voters within the EU member states do not want federalization and they want their national sovereignty and identity kept as it is, in the past few years it's even going completely the other way. Federalists within the EU exists, but they exists within the ranks of the elites, a lot of them are unelected Eurocrats that while hold a lot of power within the EU do not have much power in individual states. There isn't a single member state where this is a popular idea, in most of them even in Germany it is political suicide to even speak about federalization.

>Actually Luxembourg was in a pickle not long ago, because of their tax affairs. The difference is that Luxembourg will never be a competitor to large countries "where it matters", so it's given a bit of leeway; plus, its representatives are first-class and know how to play the game.

Luxembourg is protected by Juncker even tho the EUP is in brussels all the important EU institutions and the money is in Luxembourg the EUP is more or less of a "joke" since The Council of Europe and the Commission do most of the "grownup" work. If the EU Parliament had power it would look differently rather than being overly representative of fringe elements and political laughing stock that wouldn't get elected nationally.

>Norway has the same population

Israel has 8M Turkey has 75M What's the point? Norway isn't in the EU, norway isn't a hub for multinationals, norway is a very rich country due to nationalized natural resources and a very smart investment portfolio.

>Actually, Norway has 5M and Ireland 6+M

No the Republic of Ireland, hence Ireland in this context has under 5M people (4.5-4.6 to be exact), Ireland as a geographical construct has about 6M people but this includes the 1.8M residents of Northern Ireland which are British nationals at least for the time being.

Whatever the nominal point of the EU, the reality is that it massively benefits Germany, France and (formerly) the UK at the expense of the periphery - especially the southern periphery.

The Euro has been an absolute disaster for the PIGS - precisely because it has legitimised nationalist economic policies within a nominally (but disingenuously) open trade zone.

That's bad enough on its own, but the German and French right wing are immensely fond of couching this as a moral failure on the part of the feckless, lazy southerners who don't work hard enough to pay their bills.

That's criminally offensive to the economic reality, which is that the Euro has mostly become an excuse for loan sharking and economic exploitation.

Tax policy is a confused footnote. Juncker, who is so very very ashamed of Ireland, was in charge of putting in place very similar sweetheart deals in Luxembourg - a fact which he seems to be trying hard to deny.

> Yeah it wasn't pretty. Ireland was not allowed to default on its loans which was what they should have done.

The situation is more complicated than that (IANAL or etc.) The majority of people in Ireland, and the Irish government, had no desire for any kind of sovereign default, and the majority of the Irish bank debt had already been (foolishly) covered by the Irish state on its own initiative. There was still a significant residuum of subordinated bank debt which the Irish taxpayer was forced to bail out as part of the Troika package, though. (Allegedly this was mainly Timmy Geithner's doing, by the way.) The irony is that come 2016 the EU is now trying to prevent the Italian government from bailing out sub debtors in the Italian banks.

The other irony is that TFEU really doesn't prohibit member state IMF access or sovereign defaults at all. In fact it's basically set up to make sovereign default the only safety valve in the Euro area; it was generally understood as specifically prohibiting any form of EU or ECB "bailout" of EU sovereigns. It was only after the fact, when Greece and Ireland were headed for trouble, that the EU member state governments decided that they didn't like the idea of member state defaults after all, and began to interpose themselves between the IMF and those countries. It was only then that the Euro really became a fiscal/monetary/financial rat-trap with no adjustment mechanisms for struggling countries.

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

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

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