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White House Vows Not To Water Down Volcker Rule, As European Commission Is About To Endorse Tobin Tax

Tyler Durden's picture





 

Just headlines for now. Headlines will turn to headaches for Goldman longs shortly. And what will really set off the migraine is the just released announcement that the European Commission will back a Tobin Tax on financial institutions. We are fairly confident that this would not be proposed without at least a preliminary nod from their counteparts across the Atlantic. We believe that the slow but certain conversion of the banking sector into a utility industry is now reality. And yes, bonuses in utilities max out at 25% of the base, not 2,500%.

Reports Dow Jones:

European Commission policymakers will endorse the idea of a "Tobin tax" on financial transactions to help European governments boost revenue, in a report due out next week." New tax bases, e.g., financial transactions, should be explored, in a coordinated way, as potential sources of government revenues," says the commission's "2020" outlook. AFP was able to see a copy of the report to be released March 3.

The idea of taxing the financial industry, in the wake of the economic crisis, still divide European Union leaders. Efforts to coordinate such a tax on a pan-European basis would face huge obstacles as taxation is a reserved power at the national level.

The new European Commissioner for financial services, Michel Barnier, has endorsed the idea. Barnier said in a recent AFP interview that such contributions from banks, insurers and markets could be used to lessen the budgetary load on states weighed down with post-crisis deficits and debts. The taxes could also provide funding for challenges such as climate change or food security.

U.K. Chancellor Alistair Darling, whom Barnier will visit in the City of London next month, has said that E.U. finance ministers had a "constructive discussion" on proposals by Sweden for "a levy on systemically important financial institutions," which will be debated in Madrid in April.

Time to short the XLF

 


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Tue, 02/23/2010 - 15:15 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Tobin tax yes.  will it be too late......

Tue, 02/23/2010 - 15:36 | Link to Comment velobabe
velobabe's picture

The doomsday cycle Peter Boone, Simon Johnson, VoxEU

  • Shiela Bair Rejected by Vogue Over Her Looks, but Geithner Gets the Nod - 02/23/2010 - Yves Smith
  • Tue, 02/23/2010 - 15:37 | Link to Comment Mr Lennon Hendrix
    Mr Lennon Hendrix's picture

    The downward spiral is sinching.

    Tue, 02/23/2010 - 16:33 | Link to Comment cougar_w
    cougar_w's picture

    [doomsday cycle]

    Must Read!

    This was really brilliant. Nothing new, but very well synthesized.

    "Once shareholders have a serious amount of funds at risk, relative to the winnings they would make from gambling, they will be less likely to gamble."

    How can anyone not agree with this premise? 15% capital requirement seems perfectly sane to me.

    Tue, 02/23/2010 - 17:34 | Link to Comment velobabe
    velobabe's picture

    To some, suicide attack on IRS made pilot a hero (washingtonpost.com)

    while the rest of this country is getting ready to open up a can of joe stack. h/t crab cake

    Tue, 02/23/2010 - 22:28 | Link to Comment Anonymous
    Tue, 02/23/2010 - 15:19 | Link to Comment Going Down
    Going Down's picture

     

    US Treasury Secretaries of the last 40 years.

    John Connally DEAD
    George P. Shultz ENDORSES VOLCKER RULE
    William E. Simon DEAD
    W. Michael Blumenthal ENDORSES VOLCKER RULE
    G. William Miller DEAD
    Donald Regan DEAD
    James Baker
    Nicholas F. Brady ENDORSES VOLCKER RULE
    Lloyd Bentsen DEAD
    Robert Rubin
    Lawrence Summers

    Paul O'Neill ENDORSES VOLCKER RULE
    John W. Snow ENDORSES VOLCKER RULE
    Henry Paulson

     

    http://jessescafeamericain.blogspot.com

     

    Tue, 02/23/2010 - 15:28 | Link to Comment Oracle of Kypseli
    Oracle of Kypseli's picture

    Utter nonsense.

    Break the bloody banks you frigging cowards, they should be performing a public function not operating casinos.  

    Tue, 02/23/2010 - 16:06 | Link to Comment Assetman
    Assetman's picture

    Love and kisses,

    Steve Wynn

    Tue, 02/23/2010 - 16:29 | Link to Comment carbonmutant
    carbonmutant's picture

    +1

    Tue, 02/23/2010 - 15:33 | Link to Comment Anonymous
    Tue, 02/23/2010 - 15:40 | Link to Comment Anonymous
    Tue, 02/23/2010 - 17:04 | Link to Comment Anonymous
    Tue, 02/23/2010 - 17:05 | Link to Comment Anonymous
    Tue, 02/23/2010 - 15:44 | Link to Comment Anonymous
    Tue, 02/23/2010 - 17:51 | Link to Comment Anonymous
    Wed, 02/24/2010 - 11:00 | Link to Comment Anonymous
    Tue, 02/23/2010 - 15:49 | Link to Comment Anonymous
    Tue, 02/23/2010 - 15:49 | Link to Comment ArkansasAngie
    ArkansasAngie's picture

    they are a monopoly.  Goldman et al have a tollroad

    Tue, 02/23/2010 - 15:51 | Link to Comment crosey
    crosey's picture

    Would we need a Tobin Tax if we simply reintroduced the gold standard?  Can we put the serpent genie back in the bottle? 

    Tue, 02/23/2010 - 15:51 | Link to Comment Anonymous
    Tue, 02/23/2010 - 16:05 | Link to Comment Anonymous
    Tue, 02/23/2010 - 16:11 | Link to Comment Anonymous
    Tue, 02/23/2010 - 23:15 | Link to Comment Jesse
    Jesse's picture

     

    Great points, nicely said.

    Tue, 02/23/2010 - 16:22 | Link to Comment Anonymouse
    Anonymouse's picture

    Just a matter of time before, "for ease of coordination and to ensure fairness so there are no free riders", the Tobin Tax will be administered by the UN or one of its surrogates (like the IMF).  They have been in a turgid state over getting an independent source of funding since Tobin came up with the idea back in 1972

    Tue, 02/23/2010 - 16:34 | Link to Comment carbonmutant
    carbonmutant's picture

    And what international agency is going to mange this charge on foreign-exchange transactions?

    Tue, 02/23/2010 - 16:52 | Link to Comment Anonymous
    Tue, 02/23/2010 - 17:01 | Link to Comment Anonymous
    Tue, 02/23/2010 - 17:52 | Link to Comment Anonymous
    Tue, 02/23/2010 - 17:54 | Link to Comment Anonymous
    Tue, 02/23/2010 - 18:10 | Link to Comment pak
    pak's picture

    Tobin tax, Glass–Steagall and a "single capacity" rule. No compromise.

    It looks ridiculous to me that for the last 30 years every momma in the developed world wanted her kids to become investment bankers.

    Tue, 02/23/2010 - 18:46 | Link to Comment Anonymous
    Tue, 02/23/2010 - 20:16 | Link to Comment Anonymous
    Tue, 02/23/2010 - 23:20 | Link to Comment Jesse
    Jesse's picture

     

    I don't see the value of a Tobin tax that is that high, except to force the retail guys into a buy and hold strategy, and allow anyone who can finagle an exemption to dominate the trade.

    I would have thought a much more nominal 'flat tax' would do the job of discouraging HFT without knocking the small spec out of the game.

    Wed, 02/24/2010 - 09:33 | Link to Comment pak
    pak's picture

    $1000 x 50 x 0.005% = $2.50

    It's "0.005%", not "0.005".

    Which does the job of discouraginng HFT (somewhat), and that's all.

    Tue, 02/23/2010 - 22:16 | Link to Comment Anonymous
    Tue, 02/23/2010 - 22:37 | Link to Comment Anonymous
    Sat, 04/17/2010 - 10:15 | Link to Comment Tom123456
    Tom123456's picture

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