On the Tobin Tax

Ritchie and Larry are both in favour.

Clearly it\’s insane then.

We\’re in a credit crunch, liquidity has dried up.

Thus they decide to tax liquidity.

Friggin\’ genius or what?

6 thoughts on “On the Tobin Tax”

  1. Are we still in a liquidity crisis? I didn’t think so. I thought there was govt. guaranteed liquidity all over the shop. A Tobin Tax could always be suspending, during a crisis, if you think it matters (I don’t know, haven’t thought / read much about it). What kind of transaction would a Tobin Tax tax? Would it tax inter-bank lending? I wouldn’t tax lending of all varieties would it? (perhaps it would; I’m know nothing about the details).

    Perhaps if creating, acquiring, and hedging mortgage backed securities had been a little more expensive, we’d be in less bother now?

  2. I guess we’d get “offshore transaction havens” – although Richie tells us that international co-ordination isn’t needed.

    Tim adds: The eurobond markets are in London precisely because the US imposed taxes which London did not….

  3. AIG financial products had in place all the bonus restrictions Sarko is suggesting. THe problem wasn’t the incentives within AIGFP, it was the fact that AIGFP existed at all. The role of regulators should be to find hidden leverage and make sure it is properly priced (assuming the banks don’t do it). HIgh bonuses should be a clue, but hen go for the institution not the individual.

  4. Pingback: OK, The Tobin Tax passes that test then.

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