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Market Currents

Saturday, November 7, 2009
5:31 PM TweetThis
  • Meanwhile, IMF director Dominique Strauss-Kahn says progress is being made on a possible financial sector tax, also known as the IMF tax, which would be an incentive to take less risks, but also create an insurance fund to be used in case of a future crisis.
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This news story has 8 comments:

  •  
    I trust the IMF to do EXACTLY the wrong thing for future global stabilization.
    2009 Nov 07 05:56 PM Reply
  •  
    So long as the US can pay a "concessional" version of the tax using IMF SDRs...

    LOL, that one is probably so much a fantasy I won't even finish the thought!

    It will work like its kindred concepts like Global Warming/CapNTax/UN (whatever) always work...

    Soak the U.S. and transfer the money to the po nations, which ironically still includes China, India, and Brazil.
    2009 Nov 07 06:25 PM Reply
  •  
    That the US would seriously consider participating in such a ridiculous tax just goes to show you the sad state we find ourselves in, letting a non USA agency dictate when it believes our financial industry has caused harm to other nations and then to decide on how the collected penalty tax is to be divided up is insanity, one world government is here, Obama will embrace this with both arms believing he made a positive change in the world. This has to be a bad movie, a nightmare it really cant be happening!
    2009 Nov 07 06:26 PM Reply
  •  
    I did not know we still take the IMF seriously!
    2009 Nov 07 08:10 PM Reply
  •  
    The Left's solution to everything is either more taxes or more government or both.
    2009 Nov 07 10:35 PM Reply
  •  
    How about this? Let's impose a tax on people who vote in favor of new taxes. This is very similar in concept to a state lottery which is also a tax on the stupid.
    2009 Nov 07 11:17 PM Reply
  •  
    I'm not terribly keen on this idea.

    The solution to "too big to fail" could be solved much easier if the American government did the following:

    (1) Re-enact Glass-Steagall

    (2) Require that FDIC fees/premiums take into consideration the size of the banks. The Goliath banks like BAC and C would have to pay extraordinarily large fees in comparison to smaller banks. These banks are the "riskiest" due to their sheer size, so it makes sense that they would pay the highest premiums to the FDIC. It's sort of like how health insurers would charge higher premiums to smokers because they are a bigger health risk; or auto insurers require higher premiums for accident-prone drivers.

    In essence, I'm saying make the FDIC premiums so high that shareholders have an incentive to encourage large banks to split up and stay smaller. This would achieve one of two goals --- either (a) the FDIC would have a large amount of funds in case of bank failures and/or (b) there would be less "too big to fail" banks to begin with. Either way, it would help steer the costs of risk away from the taxpayers to some degree.

    (3) Require all foreign-owned banks doing business in the United States to [a] abide by Glass-Steagall and [b] file with the FDIC. Why? So that the too-big-to-fail banks elsewhere in the world will either be required to [a] break up or [b] stop competing in the world's largest market. Making them file with the FDIC might seem silly, but it's more or less just a requirement to say they have to do the same thing as a US bank if they compete on American soil.
    2009 Nov 08 12:07 AM Reply
  •  
    A financial sector tax would do nothing but make the system more bureaucratic and less efficient. Any tax would soon be viewed as simply the cost of doing business. It would not hamper the dangerous schemes perpetrated in the markets. It only would create a lot more bureaucracy to be paid for by the proceeds of the taxes. The amount that would actually be put to use for insurance purposes would not justify all of the bureaucracy such a tax would create. Plus there would be huge arguments about how the taxes should be assessed; and there would be a huge problem deciding exactly how the insurance money should be spent. Should it be given back to those who paid it in? Or should it be given to countries that are in the worst shape in a time of financial hardship? Is this another plan for communism, which we know doesn't work? Such a system would likely spend 1/3 of the money acquiring the taxes. It would spend some managing the money. Then it would spend another 1/3 deciding when and how to dole out the money (and fighting law suits about this issue). Sounds like a great plan doesn't it!
    2009 Nov 08 01:11 PM Reply
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