PrefBlog

The G-20 discussed a Tobin tax:

Group of 20 governments split on whether to tax financial trading as part of a broader strategy to ensure the global economy’s expansion is less crisis-prone.

U.K. Prime Minister Gordon Brown told a meeting of finance chiefs in St. Andrews, Scotland today that such a levy could prevent excessive risk taking and fund future bank rescues, adding momentum to a debate begun by France. U.S. Treasury Secretary Timothy Geithner said a “day-by-day” tax on speculation is “not something we’re prepared to support.”

Clearly a lunatic view. Or populist. Or … perhaps even pre-emptive, to spike the guns of the French! Because after all, even the speaker states:

Brown, who didn’t say whether he’d ultimately endorse such a levy, said any policy would need to be implemented by all financial centers including those in the Middle East, Asia and Switzerland.

There’s nothing wrong in principal with taxing the financial sector in order to pay for bail-outs – but a Tobin tax will kill liquidity and encourage buy-and-hold carry trades – which are precisely the trades that killed the brokerages and banks in the first place. Much better is a beefed-up deposit insurance scheme – which has been proposed by Treasury in connection with the multi-nationals.

Mind you, in Canada we can’t even fund the deposit insurance we have properly. There’s a capital tax on banks, but the government blows it on useless garbage.

BIS has published the Report to G20 Finance Ministers and Governors: Guidance to Assess the Systemic Importance of Financial Institutions, Markets and Instruments: Initial Considerations, which is the missing reference in Julie Dickson’s recent speech.

The Financial Post ran an article regarding Canadian Alternative Trading Systems, Men of Shadows.

The Canadian preferred share market edged up today, with PerpetualDiscounts ahead by 3bp on the day while FixedResets were up 8bp. Volume dropped off again, with FixedResets dominating what little action there was.

This entry was posted on Monday, November 9th, 2009 at 7:47 pm and is filed under Market Action. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.