1/4% Tax on all stock trades pushed in NY Times today

Quote from ZeroSigma:


Note also that the Obama bank tax seems to have satisfied the blood-thirsty public. While there are still some serious voices claiming that it is not enough (such as former IMF's chief economist, Simon Johnson here: http://baselinescenario.com/2010/01/14/the-obama-financial-tax-is-a-start-not-the-end/ ), the additional measures proposed here are more regulation, not more taxation (we know already from this January 6th BBC interview that prof. Johnson does not recommend the Tobin tax, see http://www.elitetrader.com/vb/showthread.php?s=&postid=2691614&highlight=simon+johnson#post2691614 and PM me or Explorer for the entire interview in mp3 format - guess what happened after we posted in on the http://houndbite.com website... but that's merely post hoc ergo propter hoc, unless you are even more paranoid than myself;).
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Hmm...so houndbite is no more. If 'they' shut down YouTube as well we really can get paranoid....:eek:
http://www.youtube.com/watch?v=fNdXYTgSKW4
 
Naysayers of the bank tax say it does not address too-big-to fail, high risk and leverage, and moral hazard - the government being the back stop for this risk.

But can too-big-to fail and moral hazard feasibly be solved without creating another problem too-small-to compete globally? One reason Glass-Steagal was repealed was to allow US banks to better compete with foreign banks. US banks were far under counted on top size, value and business lists. Those lists were dominated by banks from Europe and Asia. Foreign banks always included investment banking and insurance too in countries like France.

The US bank tax is for 10 years. The UK banker bonus tax is one-off for 1 year. The French said they will do the same as in the UK. The Germans and Spanish and rest of Europe and Asia are shielding their banks. Japan shielded too much in the past and that contributed to their lost decade.

Banks need better PR and to stop hiding from populist pitchforks. They should explain their important role and not just be viewed as a giant casino trading operation.

I don't see too big to fail and moral hazard being solved so fast.
 
Ps meant to add that even a hedge fund like Long-Term Capital was too-big-to fail in 1998 which led to Asian contagion and curiously soon therafter the tech wreck bubble.

I don't think regulators can decouple risk from contagion so they should not believe they can shut down their fire deapartments any time soon. Sure risk management can be improved and risk contained with new rules and charges but that won't fix the problem fully or even much at all. Less risk may lead to less gain. The government and most people are hard wired to feed bubbles rather than be naysayers. Real esate, gold perhaps, Treasuries etc. Excessive consensus and group think can lay the foundation for bubble conditions. Regulation over reach won't work and it will hamper things. Like the FTT, many people have wishfully thinking about oneous fixes that will cause more damage and not help.
 
ok, I thought I'd lighten the mood and share this old youtube video where Radiohead / Ewan Mcgregor argued for a Tobin Tax. Try and see the funny side, if you can!
http://www.youtube.com/watch?v=GeqRAjQ7jvg&feature=related

It is dated November 2006...interesting to know how highly speculators were regarded even before the financial crisis, described by Ewan as 'vultures preying on weaker economies'. I guess playing Nick Leeson in Rogue Trader didn't change his opinion.
:)
 
Britain to hold 'Tobin tax' debates

http://www.google.com/hostednews/ukpress/article/ALeqM5haEjogxHwWc_C5m2xnUjkzgCbzQA

Britain is pushing ahead with international discussions on a "Tobin tax" on financial transactions to reduce deficits caused by the banking crisis and to help the developing world, it has been confirmed.

City minister Lord Myners is to hold a seminar this month with representatives of the IMF, World Bank and other G7 economies at which a levy of this kind would be under discussion, Prime Minister Gordon Brown's spokesman said.

He said a number of international bodies were showing interest in the transaction tax, which he described as "an idea whose time may well come".

Mr Brown used November's G7 finance ministers' summit in St Andrews to float proposals for a transaction tax, which studies suggest could raise £420 billion a year if implemented worldwide.

But the scheme won a lukewarm response from the US, where president Barack Obama has launched alternative plans for a direct 0.15% levy on US-based banks' liabilities in a bid to recoup at least 90 billion US dollars (£55.3 billion) of public money spent rescuing the sector from collapse.

Lord Myners appeared to indicate that the British Government had not ruled out following Mr Obama's example, telling BBC Radio 4's Today programme that ministers wanted to "promote a global debate on this".

But Mr Brown's spokesman later said that, while the UK wanted to promote discussion on co-ordinated responses to the banking crisis, a US-style levy was not on the cards.

"What president Obama has done in the US is not something we need to do, because our investment in the banks is through the shares we hold, and therefore at some stage there is some sort of payback," said the spokesman.

He added: "What Lord Myners said is that he is convening a seminar later this month. There will be people from the IMF, the World Bank and G7 countries there looking at very broad principles.

"Whether or not... there is a broader case for some sort of global levy that all international bodies sign up to is something that is still under discussion."
 
Quote from Explorer:

Britain to hold 'Tobin tax' debates

http://www.google.com/hostednews/ukpress/article/ALeqM5haEjogxHwWc_C5m2xnUjkzgCbzQA

Britain is pushing ahead with international discussions on a "Tobin tax" on financial transactions to reduce deficits caused by the banking crisis and to help the developing world, it has been confirmed.

City minister Lord Myners is to hold a seminar this month with representatives of the IMF, World Bank and other G7 economies at which a levy of this kind would be under discussion, Prime Minister Gordon Brown's spokesman said.

He said a number of international bodies were showing interest in the transaction tax, which he described as "an idea whose time may well come".

Mr Brown used November's G7 finance ministers' summit in St Andrews to float proposals for a transaction tax, which studies suggest could raise £420 billion a year if implemented worldwide.

But the scheme won a lukewarm response from the US, where president Barack Obama has launched alternative plans for a direct 0.15% levy on US-based banks' liabilities in a bid to recoup at least 90 billion US dollars (£55.3 billion) of public money spent rescuing the sector from collapse.

Lord Myners appeared to indicate that the British Government had not ruled out following Mr Obama's example, telling BBC Radio 4's Today programme that ministers wanted to "promote a global debate on this".

But Mr Brown's spokesman later said that, while the UK wanted to promote discussion on co-ordinated responses to the banking crisis, a US-style levy was not on the cards.

"What president Obama has done in the US is not something we need to do, because our investment in the banks is through the shares we hold, and therefore at some stage there is some sort of payback," said the spokesman.

He added: "What Lord Myners said is that he is convening a seminar later this month. There will be people from the IMF, the World Bank and G7 countries there looking at very broad principles.

"Whether or not... there is a broader case for some sort of global levy that all international bodies sign up to is something that is still under discussion."
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I wonder if the US is one of the G7 countries taking place in this 'seminar?' My guess is probably not. Why don't they just throw in the towel on the Tobin tax already? It ain't going to happen. The IMF is going to come out against it in April and Gordon Brown is going to lose the election - then this dreaded tax will be put to bed for good (IMHO). I'm sure this is just grandstanding on Brown's part trying to salvage his political career.

-Guru
 
Fianancial transaction tax FTT bills in the US are structured to address payback of TARP. The bank tax swoops in to handle TARP losses. Does't the bank tax then make the House and Senate FTT bills moot?

It's interesting how this winded up so neatly and Treasury really massaged things. Treasury knew during Q4 that it wanted to avoid a FTT and FTT bills were based on recouping TARP losses. Remember how Treasury worked closely with banks to rush to pay back TARP, also approving replacement capital raising. Treasury also sold some bank shares too, so they couldn't say what the UK says about expected recovery on that front. Treasury winded up with a 15-basis point bank tax over 10 years. Just big enough to assuage populist anger, win votes for the mid terms, kill the FTT, have banks protest, and show the world significant leadership. Some wasn't so neatly handled like why are banks paying for the autos and GSEs. This was a big picture deal with the details massaged and filled in.

Expect US progressives in Congress and the media to keep following their cohorts in Europe. But they need a new reason to ask for a FTT and global social spending will not be a good enough reason for Americans.
 
Quote from Robert A. Green:

Fianancial transaction tax FTT bills in the US are structured to address payback of TARP. The bank tax swoops in to handle TARP losses. Does't the bank tax then make the House and Senate FTT bills moot?

It's interesting how this winded up so neatly and Treasury really massaged things. Treasury knew during Q4 that it wanted to avoid a FTT and FTT bills were based on recouping TARP losses. Remember how Treasury worked closely with banks to rush to pay back TARP, also approving replacement capital raising. Treasury also sold some bank shares too, so they couldn't say what the UK says about expected recovery on that front. Treasury winded up with a 15-basis point bank tax over 10 years. Just big enough to assuage populist anger, win votes for the mid terms, kill the FTT, have banks protest, and show the world significant leadership. Some wasn't so neatly handled like why are banks paying for the autos and GSEs. This was a big picture deal with the details massaged and filled in.

Expect US progressives in Congress and the media to keep following their cohorts in Europe. But they need a new reason to ask for a FTT and global social spending will not be a good enough reason for Americans.
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The one thing that worries me is everyone is calling for revenue to reduce the deficit. Defazio's latest bill (HR 4191) is designed to fund job creation and reduce the deficit (a 50/50 split I believe). His previous bill (HR1068) specifically called upon a FTT to repay TARP.

I agree with you though that the proposed Obama bank tax is enough to appease the populists' thirst for blood. Also it is quite clear that the administration doesn't support a FTT. Both the FTT's bill in Congress will mostly likely die out in committee and never even come up for a vote (IMHO).

-Guru

P.S. It looks like HR 4191 has (28) co sponsors now (27 previously IIRC).
 
Brown needs all the attention he can get with an election coming up and trailing in the polls. He tried so hard to be a strong presence in Copenhagen but was completely marginalized by leaders who recognize Brown is on political life support.

He is unpopular within his own Labour Party and is a liability to his own party. He really is such a dick obsessed with global governance and the New World Order hoping to get his name into the history books if he can forge any agreement on anything. His biggest challenge will be to get his own party to agree that he should lead them into the election.
 
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