Prime Minister Gordon Brown's idea of a financial transactions tax has received a lukewarm response from G20 countries.
The proposal, which took delegates by surprise at the meeting in St Andrew's overshadowed other items on the agenda.
Naturally. Gordon's idea of being "statemanlike" is just throwing in ideas that are not on the agenda. This one-eyed Scots idiot seems to equate lobbing in stuff that no one has prepared for to being "radical". It's this silly fucker's standard tactic.
The US said it would "not support" a transaction tax and Canada added it was "not an idea we would look at".
The Conservatives said that Downing Street had previously "poured cold water on this proposal" and that the Treasury had called it "unworkable".
But what is the standard protocol for by-passing silly little local governments...?
Chancellor Alistair Darling said the leaders had agreed the International Monetary Fund should now consider the possibility of introducing an international transactions tax, which would be used to create a fund for bank bailouts.
That's right: you submit it to a supranational body who will attempt to enforce it on everyone anyway (remember Blair trying to get the EU to force ID Cards on us?).
He said governments should consider whether it would be possible to develop a tax that would be universal, comprehensive in scope and compatible with financial stability, as well as fair and which would not "distort things".
Taxes always distort things, you stupid fuck.
He described the idea as "clearly work in progress, it will take time to develop but it is, I believe, an important piece of work".
Yes, yes it is an important piece of work—if, by "important", you actually mean "completely fucking insane".
Look, the government now owns most of our banks; it has a duty to ensure that they can make a decent profit so that we taxpayers—those of us who pay for our government's profligacy—can get some of the money back. This Tobin tax would, quite obviously, make that long climb back to profitability considerably longer and harder.
Now, I am no economist, quite obviously, but some people do have the relevant training. So, first up, Timmy discusses the reasons why Tobin suggested such a tax—to "throw “sand in the wheels” of turbo-charged capitalism" in a world of fixed exchange rates (which ours is not. Until the world currency anyway)—and how it would have unintended consequences (surprise sur-fucking-prise) in penalising those who are not eeeeevil bankers.
We now have the Austrian Government making the decision about whether my trades on the currency markets are necessary or not? As just a very minor example, my income is variously in $, £ and €. My expenditures are similarly, variously in $, £ and €. Incomes in one corrency rarely match with outgoings in that same currency so there’s a certain amount of shufling things around month by month. But according to the Austrian Government I should be taxed because, umm, well, apparently I’m some bastard international bank who deserves to be screwed.
You can levy a tax wherever you like. But just because you levy it somewhere doesn’t mean that that’s where it stays: there is this thing called tax incidence.
And as the report says, we do have a transaction tax on financial transactions in the UK: Stamp Duty on share transactions. And who actually bears the economic burden of that tax? The wheelers and dealers? Actually, no: a report back in 2002 pointed out that it was individual’s pension funds that bore part of the brunt, the other major effect being a rise in the cost of equity capital to UK based firms. And as we know, a rise in the cost of capital shows up in the workers’ paycheques as a reduction in them.
So far from a Tobin Tax screwing the bankers, it, once again, screws the workers.
And Chris Dillow expands on all of this, helpfully pointing out that the bastard tax wouldn't bloody work anyway—and, just to ram home how fucking nuts this is, outines why it wouldn't even have stopped the current problems.
- It would have done nothing to have stopped this financial crisis, and might even have made things worse. The two markets upon which a tax would impinge most - FX and stock markets - played little role in this crisis; they were, as near as dammit, innocent bystanders. The tax would not have stopped RBS overpaying for ABN-Amro, would not have stopped HBOS making bad loans, and probably wouldn’t have stopped Northern Rock funding its mortgage lending by borrowing in wholesale markets.
What the tax might have done, though, is reduce the liquidity of mortgage derivatives. But this was, for many banks, precisely the problem. As Alistair Milne describes in The Fall of the House of Credit, the problem with many “toxic assets” is not so much that they were devalued by defaults, but rather that they became illiquid, untradeable. A transactions tax might have exacerbated this problem.
- A transactions tax does not necessarily stabilize markets. It might do the opposite. As Andrea Terzi points out (pdf), such a tax doesn’t so much reduce short-term trades as trades with low expected gains. However, these trades are often stabilizing trades - those done by arbitrageurs hovering up pennies.
If the tax bears more heavily upon these than it does upon noise traders, then it might make bubbles more likely, not less.
Which all goes to show that Gordon Brown—a Labour historian*, by the way, not a fucking economist—and Alistair Darling (a total fucking ignoramous Trotskyite cunt of a lawyer) know less than fuck all about economics, and that the pair of them are barkingly insane.
Unless, of course, all that they are interested in is taking control of the entire money supply and thus ensuring complete control over the British nation—in which case, they might just be evil genuises.
UPDATE: Capitalists@Work have dubbed this The Worst Policy of New Labour, Ever.
What really staggers me though is that Badger and Brownstuff could promote this idea in the very week in which they confirm the UK taxpayer is to own the largest international bank in the world by assets and 43% of another top 20 bank.
So the UK government now owns banks and is advocating a policy which will cripple their recovery. This is beyond stupidity, it really is.
In years to come the political world will have a new lexicon for all this Government;
'as stupid as a Brown plan'—for a truly appalling policy announcement
'even Brown would not have done that'—for a real turkey of an idea
Doesn't everyone already use these phrases...?
*The title of his PhD thesis—which took him ten years to complete—was The Labour Party and Political Change in Scotland 1918–29. The man is a fucking twat who knows bollocks-all about most history that isn't couched in Labour Party terms.