Following the 2008 financial crisis, dozens of countries bailed out hundreds of banks, costing tax payers trillions of dollars. Clearly, something has to be done to share the burden.
The IMF has come up with the fairest idea
to share that burden: a global bank tax.
This obviously fair and simple way of ensuring that there's a big fund --
to bail out banks tax payers in the event of the next another
financial crisis -- is now in danger of failing to become reality thanks
largely to Australia and Canada.
The arguments put forward by these two
recalcitrant countries are as weak as they are irrelevant:
1. Neither country had to bail out any banks
2. Both countries have sound financial systems
3. Neither country plans to bail out Greece
These arguments, while true, are clearly not very neighbourly.
I mean, Australian and Canadian tax payers are pretty fair minded people (I've never been one myself, but I've met some) and would be happy to step up to the plate by paying higher bank charges to cover this tax. Australian bank charges are so extortionate already that a few more percent would hardly even be noticed.
Compare the Australian/Canadian arguments with those of the main proponents and you'll see how unfair these two countries are being.
America's argument is that banking and
finance is global (Goldman Suchs sells junk bonds mortgage backed
securities in dozens of countries, for example) and therefore the pain should
be shared globally as well.
Sounds fair to me.
After all, when American tax payers bailed out over 700 banks, it was for the global financial good -- and not because banks were the top contributors to Barack Obama's presidential campaign.
And on the European end, Germany, France and the UK strongly support this tax. Sure, these countries had to bail out a few banks of their own, but it's more the community mindedness that's behind this push.
Specifically, they're worried about the European Community. Even more specifically, they want a great big slush fund to bail out Greece (initially), Ireland, Portugal, Spain, Italy, and then Greece a second and third time.
Fair enough. I'm worried about these countries as well. The idea of simply forcing them to live within their means is as repulsive to me as banks placing credit limits on VISA cars.
The two taxes being proposed are: a) a percentage of the on-balance sheet and "possibly" off-balance sheet items; and b) a percentage of bank profit plus total compensation.
This is awesome. Obama's 0.15% balance sheet tax alone would bring in $120 billion from JP Morgan's $80 trillion balance sheet in the first year. It may bankrupt JP Morgan and trigger another financial crisis, but at least we'll have the tools to deal with it!
If you feel as strongly about this as I do,
write letters to the treasurers of Australia and Canada, enclosing cheques to
the value of how much you would like to contribute to bail out failed US banks
and mismanaged European governments.
I think JFK put it best when he said:
Ask not what your country can do for you.
Ask what you can do for someone else's country.
Cheers,
Peter.