Here's The Real Reason Europe Is So Happy To Have Ireland Over A Barrel

The funny thing is, Ireland doesn’t need fresh cash for the government until sometime next year, but the rest of Europe is eager to see the country come cap-in-hand for a bailout NOW.

Why? Well, it’s probably true that it would be better to solve the issue now than wait until the last minute.

But that’s not the only dynamic. According to some reports, a condition of receiving bailout money would be for the country to hike its notoriously low corporate tax rates. Ireland has resisted, but obviously the “rich” European countries would love to see Ireland come to tax parity and eliminate this competitive advantage.

Bear in mind that from a debt-to-GDP ratio, Germany is actually in worse shape than Ireland. Ireland’s problem is its acute funding crisis/deficit, but it’s still not a a critical level from a long-term standpoint.

Thus it’s an excellent chance for the rest of Europe to trade a bailout for an agreement to reduce its competitiveness.

Here’s the German data from 2006-2009. Note debt-to-GDP at 73.2%.


And here’s Ireland with a debt to GDP at 64%:


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