Germany's economy is threatened tonight by the failure of Hypo Real Estate Holding AG as emergency talks are held on a 35 billion-euro ($49 billion) bailout. As Bloomberg has reported though:
The lender sought the lifeline after its Dublin-based Depfa Bank Plc unit, which specializes in government lending and depends on now-closed money markets for funding, failed to get short-term funding amid the credit crunch.
This is not accident. This is design. As I wrote in the TJN submission to the Treasury Select Committee hearing on Offshore Financial Centres earlier this year:
Tax havens are places that create legislation designed to assist persons - real or legal - to avoid the regulatory obligations imposed upon them in the place where they undertake the substance of their economic transactions. This is not by accident or chance: we provide clear evidence that these places, some of them countries, some not, but all with the power to pass legislation, set out to undermine the impact of legislation passed in other jurisdictions. These are deliberate acts of economic aggression targeted at sovereign states.
Ireland created its abusive tax laws and lax regulation (where a hedge fund can get approval in two hours) knowing that they would undermine the regulation of other states, just as it has also offered a blanket guarantee on bank deposits for which it knows it has insufficient resources to make meaningful, deliberately knowing that this would also undermine the regulation of other states for its own short-term advantage.
Now we are seeing the impact. Germany will be paying the price.
The public might be angry with bankers right now. They should be even more angry with tax havens.
And to put it bluntly, it's time for Europe to bring Ireland into line before the damage it is causing becomes immeasurable.