Sunday, December 25, 2011

Germany's Schaeuble pushes for Financial Transaction Tax

by Bill McBride on 12/25/2011 07:36:00 PM

Update: The UK has a stamp tax on stock shares (but not other financial transactions), see:
http://www.hmrc.gov.uk/stats/stamp_duty/table15-1.pdf
and
http://www.cepr.net/documents/publications/financial-transactions-tax-2008-12.pdf

This could be a key story in 2012 ...

From Bloomberg: Schaeuble vows to push for financial transaction tax

"In the EU we've agreed to explore the chances of a financial transaction tax in the first months of the new year," [Schaeuble] said. "If the hurdles are too high then Germany and France will push for introducing the tax only in the euro zone."
...
"I don't want to wait until such a tax is introduced worldwide. Otherwise we would risk not only the stability of our financial markets... but we would also be endangering the legitimacy in the public eye for the entire system.

"That's why I'm fighting with such determination for a financial transaction tax. It might not be able to stop the ludicrous developments in financial markets but it would at least brake them a bit."

Schaeuble said he wanted the tax to slow down the pace of financial transactions and possibly make some speculative business unprofitable.

"The markets are a bit too preoccupied with themselves these days rather than supporting the real economy," he said. "We've got to decelerate the pace of transactions."
...
"I'm very much in favour of Europe leading the way," he said. "That can possibly mean that certain speculative business models are no longer profitable. But that is what we want."
This might sound good, but if this was just introduced in the euro zone, many financial transactions would move to the UK or the US. I think a transaction tax would have to enacted everywhere to be effective.

Schaeuble also said the European financial situation is "controllable". That is pretty scary since Schaeuble has misdiagnosed the problems in Europe - calling for more and more austerity - and it looks like Europe will get "Schaeubled" again in 2012!

Yesterday:
Schedule for Week of Dec 25th
Summary for Week ending Dec 23rd

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