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Germany, France Repeat Tobin Tax Threat

Tyler Durden's picture




 

Two weeks ago when expanding its debt monetizing vehicle, the SMP, to include the debt of Spain and Italy, one of the few appeasements offered to the public by "Europe" was the resolute demand that a transaction tax, aka Tobin, be enacted immediately if not sooner. Today, about two weeks later, the same behemoths of European structural stability, Germany and France, hoping the general public has largely forgotten all that was said in mid-August, has come out with the generous announcement that... they will propose a financial transaction tax. It is unclear if sometime between the first proposal and today's, Merkozy dropped the demand for Tobin Taxation, in order for it to be priced in once again as an indication of the fiscal prudence of the European leaders. And if so, will the market respond like it did last time around and plunge by 5-10%?

From Bloomberg:

France and Germany in September will propose a tax on financial transactions to raise money for development projects, French President Nicolas Sarkozy said in Paris. “It’s normal to pay a tax when you buy a material good,” Sarkozy told ambassadors in Paris. “Why should financial transactions be the only transactions exempt?”

 

He said he wanted other European Union members to join the French-German proposal “so that we can get other countries to rally to it” at a G20 summit in Cannes, France in early November.

We can't wait until the next time European leaders propose a... transaction tax... again, and again, and again roughly every 2 weeks or so (after all between vacuum tubes and humans, the blended average duration of memory is about a few minutes) which will somehow pay for the tens, nay hundreds, of billions of PIIGS debt that is being purchased on a monthly basis.

 

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Wed, 08/31/2011 - 12:47 | 1619253 TruthInSunshine
TruthInSunshine's picture

 

 

 

The EU song:

Na Na Hey Hey Goodbye - YouTube
Wed, 08/31/2011 - 12:49 | 1619260 achmachat
Wed, 08/31/2011 - 12:52 | 1619273 Ratscam
Ratscam's picture

or good old Bonny M.
hurrey, hurrey it,s a holi, holiday
hurrey, hurrey it,s a bank holiday

Wed, 08/31/2011 - 12:53 | 1619280 TruthInSunshine
TruthInSunshine's picture

 

 

Of course, compliments of Greenscam & The Bananas&BubblesBernank, here's the U.S. song:

Pusherman - YouTube
Wed, 08/31/2011 - 12:55 | 1619289 slaughterer
slaughterer's picture

The transaction tax has been publicly debated in Germany for the last two years.  The  European method of raising state revenues has always been taxation.  Anyone thinking this will affect HFT trading does not know enough about the off-shore HFT shadow market.   

Wed, 08/31/2011 - 13:11 | 1619337 destiny
destiny's picture

THis tax was a complete failure in the 80s in Sweden to finally be abandoned in 90.

Wed, 08/31/2011 - 14:31 | 1619675 Bob
Bob's picture

"Complete" must be an exaggeration.  Surely it yielded significant tax income? 

What did it fail to do--decrease marginal trading volume?  Or was it just a victim of changing public discussion/politics/economic power concentration . . . under confoundingly changing economic conditions over that period?

Or something I haven't even guessed?

S'il vous plait, destiny!

Wed, 08/31/2011 - 12:47 | 1619254 Terminus C
Terminus C's picture

If at first you don't succeed, try try again. Or, is that the definition of insanity?

Wed, 08/31/2011 - 12:48 | 1619255 SheepDog-One
SheepDog-One's picture

Markets  now only running by carrots dangling from sticks like Bubbles Bernank's QE3 'really, its coming....3rd times a charm' nonsense, to various Eurozone threats and appeasements tax-no tax, austerity-no austerity....bunch of BS someone stop this stupid ride I want to get off now.

Wed, 08/31/2011 - 13:06 | 1619316 Cdad
Cdad's picture

And no mention on the BlowHorn [CNBC] about this renewed tax effort [which spooked the market last time it came up.]  Shocker!  

Wed, 08/31/2011 - 23:04 | 1621545 StychoKiller
StychoKiller's picture

Miyagi:  "Show me tax-on, tax-off..."

Miyagi:  "Show me austerity-on, austerity-off..."

 

Wed, 08/31/2011 - 12:48 | 1619257 Carpathia
Carpathia's picture

A Tobin tax is a good idea.  It puts a cost on HFT.  It raises revenue which is badly needed.  Q.E.D.

Wed, 08/31/2011 - 12:49 | 1619264 Sudden Debt
Sudden Debt's picture

Flashbacks often occur when the Matrix makes changes to the reality.

HAVEN'T YOU GUYS SEEN THE MOVIE?!

Wed, 08/31/2011 - 12:51 | 1619268 MarketTruth
MarketTruth's picture

Can they just tax the HFT computer transactions? This would include 'fake' bids/asks that never result in a trade itself... so as to cause a totally false market meltup. If they can only tax the HFT computers that would add 'liquidity' to the tax system.

Wed, 08/31/2011 - 14:28 | 1619732 MachoMan
MachoMan's picture

Sure they can...  they just better have the speech prepared to granny that everything in the 401k had actually been held up by vacuum tubes, shenanigans, and hopium and will now be reset to pennies on the dollar, its real value.  But apparently, this is a speech they're not willing to make, even if it means sacrificing all credibility and moral underpinning (what little was left anyway) of the system.

 

Wed, 08/31/2011 - 12:54 | 1619278 buzzsaw99
buzzsaw99's picture

If there is copious quote stuffing but zero consummation has a transaction actually occurred?

 

coitus interruptus bitchez

 

if a bear shits in the woods does the nyse notice?

Wed, 08/31/2011 - 12:53 | 1619283 youngandhealthy
youngandhealthy's picture

 

To curb HFT a "quote fee" should be introduced. That will remove the most perverse HFT strategies

Wed, 08/31/2011 - 12:54 | 1619285 Version 7
Version 7's picture

What if the transaction is rolled back?

Wed, 08/31/2011 - 12:56 | 1619292 buzzsaw99
buzzsaw99's picture

with busted trades you will likely get a two-fer

Wed, 08/31/2011 - 12:59 | 1619298 youngandhealthy
youngandhealthy's picture

A transaction is a complete business event which is "cleared" and later settled within 3 days.

A "quote-fee" will be a cost per quote regardless of any transaction. This will remove the 10 000s of offers and bids  that occur in milliseconds.

Wed, 08/31/2011 - 13:18 | 1619372 Id fight Gandhi
Id fight Gandhi's picture

What value does quote stuffing do for anyone in the market?

When they cheered visibility years ago, now they cheer the "benefit" HFT and fake quotes.

Wed, 08/31/2011 - 13:04 | 1619313 kengland
kengland's picture

THe market is unreal. Never in my lifetime have I seen such willingness on so many to put billions, trillions, to work under the perception that the government is going to buy shares. They just don't care anymore. No one is rational at all.

Wed, 08/31/2011 - 13:13 | 1619346 BlackSea
BlackSea's picture

Other people's money...

Wed, 08/31/2011 - 13:14 | 1619353 Hansel
Hansel's picture

Why would anyone want to step in front of $1+ trillion new dollars flooding the market?  Obama could announce some stimulus on Sept 7, and Bernank could on Sept 21st.  Bears aren't big enough to fight that kind of money, so they sit out just like the last few years. 

Wed, 08/31/2011 - 13:18 | 1619367 kengland
kengland's picture

Bears and Bulls don't matter at this point. I'm talking about the general public. Even the most ignorant now see in public that this economy is not real. Why is EVERYONE not selling at this point. Real tangible assets are the only escape route. Equity? THere is no more equity. How do you value anything. That's really it. If my retirement was held hostige by this, I would be trying to eject FAST.

Wed, 08/31/2011 - 13:30 | 1619404 Hansel
Hansel's picture

401k money is locked up until retirement.  The options are buy stocks or buy bonds.  Absent a tangible asset option in the 401k, why would someone sell stocks to buy bonds yielding 2%?  Or park it all in cash yielding 0%?

Wed, 08/31/2011 - 13:48 | 1619512 kengland
kengland's picture

Cash is not a bad option. In the event of a collateral collapse, the subsequent derivative collapse will make the stock drop look like a summer pool party. Cash could be king again. That has a higher probability then missing out on some sort of repatriation of dollars.

Wed, 08/31/2011 - 14:25 | 1619715 Hansel
Hansel's picture

Cash is a hard sell to those wanting to make enough money to retire.

Wed, 08/31/2011 - 16:22 | 1620358 kengland
kengland's picture

That's the problme. Folks that are "in" because of that idea have no idea of the risks they are taking. They think SNP is just market. No idea of event

Wed, 08/31/2011 - 15:01 | 1619909 SilverRhino
SilverRhino's picture

Take the damned tax/penalty haircut, park it in metals and you WILL be at par in 6 months when it's all said and done.  

This market, all this paper is a fucking SCAM at this point.  And it's becoming more obvious by the week.  

Wed, 08/31/2011 - 16:23 | 1620361 kengland
kengland's picture

I love this thought. Problem with it though is that unless you are no longer part of the company, you are not allowed to "cash in." At least that is the case for two people I know

Wed, 08/31/2011 - 13:07 | 1619318 TradingJoe
TradingJoe's picture

I still hold on to my humble opinion that nothing will stop these fraudster but violence! Politics, diplomacy, etc, forget it! They need to feel before they hear or even take notice! Where do you hurt a politician the most...fear to lose his "job", where do you hurt a speculator/fraudster the most...fear to lose his/her loot..ergo...?!?!?

Wed, 08/31/2011 - 13:16 | 1619363 jon
jon's picture

well then start by committing violence against yourself. cash out and burn all your dollars! you know, the FBI pays people to be agent provocateurs -- why do it for free?

you have a perception problem, broseph. politics is violence. adding fuel to the fire doesn't put it out.

Wed, 08/31/2011 - 13:10 | 1619329 lolmao500
lolmao500's picture

Put a tax on bidding instead. So all these bastards at JPMorgan-GS-FED won't be able to manipulate the markets.

Wed, 08/31/2011 - 13:21 | 1619383 Kat
Kat's picture

I'm assuming you have never met a politician.  The TBTF will be exempt!  They may not be officially exempt, but the regulators and the legal system will look the other way.  You, on the other hand, will pay and pay big.

Wed, 08/31/2011 - 13:15 | 1619360 midtowng
midtowng's picture

a Tobin Tax is what the world needs, but it won't work unless America and England are on board (which is very unlikely).

Wed, 08/31/2011 - 13:19 | 1619374 Kat
Kat's picture

Is there some reason that you need to pay higher transactions costs to trade? 

I mean, if you really feel strongly about this, I can provide you with a giant spread now, before government springs into action to make your life more expensive for you.

Wed, 08/31/2011 - 13:16 | 1619362 Kat
Kat's picture

No plunge!  They will simultaneously announce a money printing operation that will make Gideon Gono's seem like child's play.

Wed, 08/31/2011 - 13:22 | 1619385 jon
jon's picture

taxes are always a terrible idea. the outcome is this: they'll collect a little more revenue and suddenly discover that they're only spending it in one way: the interest payment on the national debt. they're the government and they've decided that they're unimpeachable, so, the only thing to do with X dollars is to lever it up to k*X dollars. period.

now that they've made themselves dependent on financial transactions for revenue, they'll introduce price controls or some other market-devastating bullshit program and ruin their own goddamn tax base -- just like they do to income tax with minimum wage and labor laws, and so on down the line.

an act like this will drive markets fucking berserk.

they'll keep talking about it at meetings not because they're proposing to do it, but because they're daring the greeks or some other fucking sucker nation to do it first. not one eurozone gov even knows where to begin. when a group of people get together and fuck each other, it stands to reason that they have all collectively gotten fucked.

Wed, 08/31/2011 - 13:22 | 1619387 Stuck on Zero
Stuck on Zero's picture

Hurrah.  The U.S. badly needs a financial transaction tax.  To be equitable, all services should be taxed just like product sales.

Wed, 08/31/2011 - 17:07 | 1620546 Problem Is
Problem Is's picture

Wall Street caused the derivatives fraud economic implosion...

Wall Street Should Pay...

1% tax on all derivatives and HFT to be used solely to pay off the National debt... No corporate ho' welfare queens or TBTF banksters need apply for any funds...

Wed, 08/31/2011 - 13:23 | 1619391 Racer
Racer's picture

They should have an 'order placement' tax for the US and they would solve the debt problem in one nanosecond!

Wed, 08/31/2011 - 13:43 | 1619491 Mr. Magniloquent
Mr. Magniloquent's picture

Corrected: "We own the body you inhabit and the breath you draw, so why should financial transactions be exempt?" ~ Nicolas Sarkozy

Wed, 08/31/2011 - 13:43 | 1619493 GoldmanSux
GoldmanSux's picture

The Tobin Tax, in the last two or three decades, has referred to a tax on FX transactions. Note here, they just referr to a transaction tax. So, possibly, much broader than just FX.

Wed, 08/31/2011 - 14:18 | 1619667 Die Weiße Rose
Die Weiße Rose's picture

show me the HFTTT  high-frequency financial transaction tax,  bitchez....

lol all the way to the deutsche Bank  ;)

Wed, 08/31/2011 - 14:35 | 1619772 CuttingEdge
CuttingEdge's picture

Not sure what shit the Stasi bint and dwarf frog were smoking when they thought this one up but I sure as hell wouldn't mind a hit or two. Fucking delusional the pair of them.

Something like 60% of EU financial transactions are done in London. Ergo UK-based companies will get hammered disproportionately. And all to raise readies for a (soon to be) redundant currency and an institution that hasn't been able to balance it's books (or open them up to outside scrutiny) since inception (the EU government).

No fucking way on God's green earth will Cameron and Osborne agree to it. To do so would see substantial tax revenue from the city exiting stage left for the US, Switzerland and the Far East.

Wed, 08/31/2011 - 14:37 | 1619779 Die Weiße Rose
Die Weiße Rose's picture

meanwhile, back home in the troubled US economy...

Millions of Distressed Properties Stuck in 'Shaky' U.S. Housing Market

Yes. We have somewhere in the neighborhood of four million distressed properties out there. Those are either seriously delinquent mortgages or ones already in the foreclosure process.

What's more, the survey of 20 cities found overall home prices have actually fallen over the last 12 months.
And home sales for this year are on track to be the worst in 14 years. And things could get worse yet, once banks pick up the pace on millions of foreclosures, as expected.

They have been delayed by a government investigation into mortgage lending practices.

And most of those loans have to be pushed through the system at some point.
And the longer we take to get through that, the longer the housing market is going to take to recover.

http://www.pbs.org/newshour/bb/business/july-dec11/housing_08-30.html

Wed, 08/31/2011 - 15:55 | 1620187 Volaille de Bresse
Volaille de Bresse's picture

"Not sure what shit the Stasi bint and dwarf frog were smoking when they thought this one up but I sure as hell wouldn't mind a hit or two. Fucking delusional the pair of them."

 

Quite the contrary : these two are struggling to be re-elected so they need to : 

- let people believe they have ideas (tough challenge)

- let people believe they actually have a grip on things (an even tougher challenge). Charging poor people for the crisis created by  rich bastards is in fact the only option they have. 

Wed, 08/31/2011 - 17:04 | 1620534 Problem Is
Problem Is's picture

Merkozy? If I'm not mistaken...

Shark-ozy + (M)Urkel  = Sharkel

Thu, 09/01/2011 - 02:32 | 1621907 seoerlin
seoerlin's picture

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shacai's picture

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