Quote from Robert A. Green:
As we continue in financial-meltdown mode globally, and with populist anger growing high pitched against banks and bankers again, itâs becoming politically-required to insist on taking a pound of flesh from banks to pay for bailouts and fixing the debt crisis.
So, political talk must continue on banks having to pay some kind of tax or levy. The U.S. and UK want bank levies or FAT (financial-activities tax), but for sure they donât want an FTT. FTT chases transactions away from NYC, Chicago and London, which are the leading money centers of the West. These money centers stand the most to lose with an FTT. Itâs harder to move balance sheets and bankers to avoid FAT in the UK, or a balance-sheet liabilities levy in the U.S.
France and Germany are just fine with transactions leaving NYC, Chicago and London to avoid FTT, and they like that FTT also goes beyond banks to kill off HFT, and limit trading by funds and other speculators. FAT and the levy are more targeted and they donât kill off speculation. France and Germany want to punish the short-sellers, to weaken their competition in the market. France and Germany are trying to buttress bonds with bailouts, while short-sellers try to decimate them further.
First and foremost now, Germany needs to quickly construct a simulated EU fiscal union, with budget controls, spending oversight and enforcement â better than the same controls that failed last time around. To get this sovereignty-killing plan in place, Germany needs the UK, Sweden and other anti-FTT, non-euro zone, EU-players to support them. Hopefully, this agreement includes a backroom deal to kill off FTT in exchange. FTT has no chance of passage EU-wide, and little chance EZ-wide, so why not scrap it for the fiscal-union support?
Is Germany using FTT to shake down the UK and Sweden into more support of their EZ? FTT makes little sense economically, or even on how to share the tax revenues if passed â they were never clear about that â so FTT seems to be more of a shake-down stick than a realistic tax plan.
It is disturbing to see some fund managers in the UK slightly supporting FTT now. Whatâs up with that? Are they caving into fear of being outlawed as traders, which is an even worse outcome?
