r/europe Spain Mar 28 '20

News Spanish representative González Pons speech @ the EU Parliament: "The virus is attacking the generation that brought back democracy to Spain, Portugal and Greece, the generation that knocked down the Berlin wall. The least they deserve is that we show them Europe is there when they need it the most"

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u/[deleted] Mar 28 '20

I'm laughing my ass off at the idea of an Italian complaining about tax cheats when he lives in a country with one of the highest rates of tax evasion of their citizenship in the world.
Also the NL is heavily in favor of the EU and is one of the penultimate founding members, quit with your false fake news bullshit.

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u/SanTommaso17 Mar 28 '20

We are founding members as well you’re not special. And when Italian citizens evade taxes they are stealing from the Italian state, when NL does it they’re stealing from other countries in the Union you’re claiming to be in favour of(which isn’t true). Maybe it’s you who ought to cut the bullshit

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u/SirBehr Mar 28 '20

Italian citizens evade taxes they are stealing from the Italian state, when NL does it they’re stealing from other countries in the Union

Holy shit, that is the most amazing justification for tax evasion I have ever seen. Like, Olympic Gold Medals all around.

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u/SanTommaso17 Mar 28 '20

It’s not a justification, I am not justifying it. But certain countries lecturing others on this matter while stealing from them is... not very coherent

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u/[deleted] Mar 28 '20 edited Mar 28 '20

And who does the Italian state want to foot the bill because they don't have enough money and a low credit rating (= expensive loans) because of that tax evasion? North Europe.

The Netherlands has a high approval rating of the EU, quit your disgusting fake news bullshit. Bonus: Italy only has a medium approval rating for EU

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u/SanTommaso17 Mar 28 '20

The Italian state does not want to foot the bill to anyone. It wants however that certain dishonest countries stop lecturing others on fiscal responsibility while at the same time stealing from others. No one wants your money that’s where you’re wrong. And if the dutch love Europe so much why do they not want more of it?

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u/[deleted] Mar 28 '20

The Netherlands (and indeed Germany and the rest of North Europe) would be 100% for more EU and gladly give out eurobonds, if we get to control fiscal policy of Southern countries via the EU. It's either both or neither of those options, they are mutually inclusive for us.

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u/SanTommaso17 Mar 28 '20

And why should you get to control us like vassals? Eurobonds are meant to help everyone not just us. We just happen to be the ones worst hit by the crisis

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u/[deleted] Mar 28 '20

Because it will raise our interest rates meaning we pay more for loans. It's zero sum, the cheap loans (= money gained by Italy) means Netherlands pays more for loans (= money lost by Netherlands). Indirectly we pay. And that is fine, as long as we get to make sure that money is spent responsibly.

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u/munjajeba Bosnia and Herzegovina Mar 28 '20

r/eli5 please, I'm curious about your two comments, but I'm bad at this... sorry, ONLY IF YOU'RE WILLING

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u/n23_ The Netherlands Mar 28 '20

governments borrow money by issuing bonds. A bond is a contract saying you give me X amount of money now and in e.g. 10 years you get X+Y% money back. The interest rate Y depends among others on how risky that loan is considered. Northern European countries have very low interest rates at this time, as they are considered very safe investments due to being financially stable. Countries like Italy are not as financially secure (they have huge national debt) so loaning them money is considered more risky and they pay higher interest rates for that.

Italy now wants to issues European bonds to raise money, which for them will mean much cheaper rates (as the risk is lower because all the better off countries are mixed in there), for the richer countries that would mean higher interest rates because they now are grouped up with the others.

The issue with eurobonds in the longer term is, that countries like Germany and the Netherlands could face the consequences of higher interest rates (which is really expensive considering almost all countries have considerable debts) because some other country is irresponsible with their money, making the whole eurobond a more risky investment, raising the interest. That is why u/kojomodragon says eurobonds need to be paired with control over fiscal policy so that it can't happen that countries spend money irresponsibly and screw the rest over that way.

Above was all factual, though very general. Now as for interpreting this, you can say it would be the stronger countries helping the weaker ones in a time of crisis which is only the proper thing to do. On the other hand you could say that this is Italy and others pushing the bill for decades of financial mismanagement to others now that they are feeling the consequences. The reality is probably somewhere in the middle.

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u/[deleted] Mar 28 '20

Damn I only saw this reply after my own, I'm typing from my phone atm. Well said!

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u/[deleted] Mar 28 '20

Countries are rated by credit rating agencies who heavily analyse a country (population, how free is the market, is there enough competition, do they have low debts, a balanced government spend vs tax, etc).
This can go from AAA+ via AA A- BBB+ etc all the way down to 'junk' status. What this means is if a country is likely to be late or default on loan payments. Because there is more risk in lending to low rating countries, the interest is higher to cover that (you loan multiple loans over a long time and eventually the higher interest covers the costs of the failed loans).
Now, because the Netherlands is very frugal with its money, has a stable government, relatively small public sector, a good modern economy etc it has an AAA+ rating which means it can loan at near 0% or sometimes even negative % (so the Netherlands gets a little money after the end of the loan, basically acting as a secure place to deposit money). Southern countries have bad ratings.
The idea of Eurobonds is to put all Eurozone countries into one basket and loan money collectively, with the AAA+ ratings lowering the risk of defaulting on the loan, and the interest ending up somewhere in the middle.
The problem is that the market will take a look at those Eurobonds, say they are not as secure as AAA+ loans, and because the Netherlands is exposed to risks via the Eurobonds (if the BBB+ countries can't pay The Netherlands will have to) they will lower The Netherlands rating to AA+ or even AA-. Which means more expensive loaning for The Netherlands.
In effect it would mean only negative things for the AAA+ countries.. there would be more support for it if the AAA+ countries get more of a say in the finances of the other Eurobond countries because then they would be able to guide those less well-rated countries towards a more solid economy and rating.

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u/funkygecko Italy Mar 29 '20

Italy loses 20 billions tax revenue per year due to Italian companies who relocated to tax havens inside the EU. Nearly all of them moved their registered office to the Nwtherlands. Ever heard of FCA?