Proponents of the tax are delusional or self-destructive. They actually believe that if all G20 or more nations implement the tax so that financial activity will not flee to another country, all will be good. The fact is that most financial activity will simply stop as the tax and its side effects like increased spread will make it far too expensive to overcome. Two choices for most if an FTT is passed, flee if that is an option or simply go out of business with wave after wave of side effects throughout the economy.
The Tea Party no-tax-hike trend is growing and high-tax liberals are on their heels. Now is the right time to return to our original position of no new taxes selectively applied on bankers, speculators or traders. Itâs a slippery slope, allow bankers to be bashed with a bank tax and speculators will be bashed next. The bank tax and FTT advocates still talk about banks âpaying their debts to societyâ â outrageous allegations from liberal populists who would as quickly attack the speculators as the bankers. Before the Scott Brown MA senate victory last month, while President Obama was holding high-court with UK PM Brown, and other world liberal leaders, our strategy was to concede a bank-liability tax instead of a more-onerous FTT. As the tide reached its crest towards the end of 2009, we felt it was unavoidable to not allow the liberal-lion to feast on some prey at the financial watering hole. We figured, better a bank tax on (as the President derides) "fat cat bankers" than small business traders who would be put out of business overnight with a FTT. Well now things have changed and we are strong enough to defend our watering hole. Block the liberal-lion all together and donât allow them to feast on bankers, speculators or traders â our entire flock. Allow the lion to feast on the banker and they will grow stronger and then feast on speculators and traders next. Starve the lion! They can cut spending to fix their problems, without taxing valid market players out of business. Hereâs my reply to the WSJ article on Canada holding our line! City taxes, state taxes, federal taxes and now global taxes? Start with banks so it's easier to pass and then open the door to global taxes on others. Isn't this global liberal-high-tax imperialism to take over the world with their high-tax and high-spend ways on climate and social causes? This global liberal cabal is co-opting the IMF to usher in their global tax and sovereignty led by the liberal EU - in dire need of an EU-wide federal tax. Having global cooperation on financial and other reform is a good idea but not a global tax and spending structure. It' a slippery slope to more big government and more moral hazard. There are better ways to fix our common problems. How about borrowers who can't afford loans not borrowing and spending in ways like Greece and real estate buyers? Only an IMF bank insurance-fund levy makes some sense, and only if the bank levies are made into a "lock-box" to be used for dealing with future financial-meltdowns (bailouts or more-orderly shutdowns). The big unresolved problem with this IMF plan under G20 consideration is that it increases moral hazard - which is considered part of the problem. Will banks figure they have purchased more insurance (and back stop) and therefore can use this insurance when needed? The IMF levies are not intended to cover risk, but to prevent too-big-to fail risk taking. Don't rush to tax and spend and open the door to a global tax regime. Listen to Canada! Canada is right! Fix problems by addressing the root cause and trying to prevent them. Just assessing more taxes is always the liberal way out. It never fixes the problems and just leads to more government spending - which actually is part of the root problem in the first place. Banks are being hurt with over leveraged borrowers who are insolvent and who is the biggest over-leveraged borrower of them all? Governments.
"International Monetary Fund economists, reversing the fund's past opposition to capital controls, urged developing nations to consider using taxes and regulation to moderate vast inflows of capital so they don't produce asset bubbles and other financial calamities." [ source: "IMF Suggests Capital Controls for Emerging Markets", Wall Street Journal article, Feb 19, 2010, URL: http://online.wsj.com/article/SB100...a&loomia_si=t0:a16:g2:r2:c0.0697507:b30855332 ] But... always try to get as close to the data as possible, because spin doctors ruling over the traditional media might have just tried to distort it. 1. It is not the IMF's (op)position, merely the authors views (there are hundreds IMF staff papers like these): "DISCLAIMER: The views expressed herein are those of the author(s) and should not be attributed to the IMF, its Executive Board, or its management" (Ostry et al, 2010, p. 2). WSJ's Bob Davis clearly failed to notice this disclaimer when he wrote about "the fund's" past opposition and the present "reversal". 2. It is not a report favoring capital controls: "A key issue of course is whether capital controls have worked in practice. Our sense is that the jury is still out on this, and it is difficult to get the data to speak loudly on the issue. The evidence appears to be stronger for capital controls to have an effect on the composition of inflows than on the aggregate volume" (Ostry et al, 2010, p. 5) 3. Even a cursory glance at the literature could not indeed lead anyone to recommending capital controls: Take a look at "Table 1. Selected Cases of Control Measures on Capital Inflows". In that literature review, there were only 18 cases when capital controls clearly worked ("Yes"), and 48 cases when they did not work, either at all or for long ( "No" / "Yes(Short Term)" ). This means effectiveness in only 1/4 cases, and failure in the majority of 3/4 cases. 4. Financial transaction taxes do not work in the long term as a form of capital control: a) Cardoso and Goldfajn (1998) -- Yes (Short Term) (paper not peer-reviewed), and b) Reinhart and Smith (1998 -- Yes (Short Term) (peer-reviewed, but published in a book, which are typically colleague-reviewed) c) no more evidence on taxes as a form of capital control (apart from those 2 papers out of 66, many of which are circular references to other IMF Staff reports). Source: Ostry et al, 2010. Capital Inflows: The Role of Controls. IMF Staff Report, URL: http://www.imf.org/external/pubs/ft/spn/2010/spn1004.pdf
Well I sure hope the IMF isn't going to turn and start supporting a FTT. That would be really bad but I just don't see that happening. Thoughts? -Guru
That's a nice looking website! I think the page http://skepticalscience.com/argument.php is particularly effective since it breaks everything down into tiny morsels digestible by even the most ADD-challenged individuals. It's probably a good idea to have something like that for this issue. However, building a website like that is a very time-consuming process.
http://www.cnn.com/2010/POLITICS/02/20/conservatives.meeting/?hpt=T1 U.S. Rep. Ron Paul, R-Texas, on Saturday won a straw poll for president on the final day of the Conservative Political Action Conference in Washington. He got 31 percent of the vote. Former Massachusetts Gov. Mitt Romney, who won the straw poll the past three years, was second with 22 percent and former vice presidential candidate Sarah Palin with 7 percent. The straw poll provides an early window into who conservative activists believe should be the next GOP nominee. --------------- How realistic is the poll though? I remember when the FTT was first introduced by Brown, Ron Paul introduced a bill that would prevent the US into signing into any global tax, never went anywhere though.
In August, Mr. Geithner asked Treasury staff members to look into whether it would make sense to tax banks' financial transactions to recoup Troubled Asset Relief Program losses. He told staff to not broach the topic with the White House until he gave the go-ahead, because he didn't want to "give oxygen" to the tax idea before it could be thought out. Meanwhile, however, others began calling for a transaction tax, including U.K. Prime Minister Gordon Brown and House Speaker Nancy Pelosi. The result: By the time Mr. Obama rolled out his own bank-fee plan in January, it appeared to many a defensive move. The announcement came just after Republican Scott Brown stunned Washington by winning the late Ted Kennedy's Massachusetts Senate seat. Mr. Reich, for instance, said in an interview the plan seemed "to be in response to...the perceived populist upsurge." http://online.wsj.com/article/SB10001424052748703798904575069610953163620.html?mod=googlenews_wsj
Well I guess it's a good thing Timmy decided taxing transactions was a bad idea and came out forcefully against it. It really sounds like he understands how bad over regulation and taxation can be and has stood up as the voice of reason to an over reaching administration... -Guru
Excuse my late entry and relative ignorance. I would like to know what the current proposal would look like. Is it on face value or actual cost? What is the proposed rate? On stocks? On futures? Is there any relative risk consideration? (Would 1 eurodollar be taxed the same as 10 bonds?) I have a small group meeting with my senator tomorrow and would like to know what I'm talking about. Thanks.