The proposed introduction of a 0.15 per cent tax on financial transactions and a 35 per cent tax on profits from proprietary trading by the banks (let's hope there are profits!) will do nothing but further strangle the financial marketplace. In an environment where the overall economy stagnates for the better part of the past ten years this can not be seen as an intelligent measure. In addition, the definitions required to make the fiscal net reasonably workable (which transactions? which institutions? - if only banks will that not give a tremendous boost for the 'shadow banking system'?) will not be worked out all that easily. As always, the political kleptocracy's instinct is to rely more on tax increases rather than conduct a root-and-branch reform of misdirected spending policies.
The headline that another Euro 100 billion (!!) might be spent by (mainly unaccountable) politicians and (international) bureaucrats on behalf of the citizen-slaves staggers the mind. In terms that can be understood by the man on the street that means that an average family of three Greek citizens indirectly benefits from a windfall of nearly 30,000 Euro. We have watched with alarm as the political class all over the 'Western Democracies' has allocated an ever-increasing amount of the national wealth creation towards the pursuit of the pet projects that benefit their client lobbies. The spending for the Greek bailout reaches new peaks of irresponsibility and is a blatant attack on all honest and parsimonious savers and investors. Those readers not only interested in protecting their wealth from predatory politicians but also looking for ways to stop misgovernment in its tracks should look at supporting Dirdem as more direct democratic control of decision making offers the only hope of turning things around.
Another economics professor and former IMF economist, Harvard University's Ken Rogoff, adds his voice to the chorus of those who perpetuate the false thesis that only a closer (full?) fiscal (and therefore political) union of the EU member states can save the Euro. As we have explained in another post, this theory confounds the problems of individual states' reckless fiscal and economic policies with the problem of the global banking system.