For years, taxes on capital flows were seen as a barbarous relic of the 70s, on a par with Demis Roussos and Baked Alaska. No friend of free markets dared support the idea of US economist James Tobin, dreamed up to curb currency volatility after Bretton Woods collapsed.
That’s changing. Since Lord Turner, chairman of the UK’s Financial Services Authority, started stirring interest in taxing financial transactions last year, politicians in Germany, France and Australia have voiced tentative approval. Now Japan, through the musings of vice-finance minister Naoki Minezaki, might just be falling in line. Read more
Special taxes on banks are catching on – but moves around the world are disparate and show few signs of coordination so far, either in detail or in ambition.
In all of this, the big effort globally is to ensure banks have greater buffers against failure (higher capital) and that the authorities work to getin tinto a position where bad banks can fail (to minimise the implicit state insurance), but also to get banks to pay for the residual insurance that taxpayers are likely to provide for future systemic crises. Read more
Short-term interest rates in the US have turned negative. This might mean imminent disaster or it might be traders chasing safe investments as they look to secure end-of-year profits – choose between numerous explanations.
There are also competing explanations for the rise in US mortgage delinquency rates. Most of the rise is in people who are extremely late on their payments, rather than just a little: Read more
More good news for China, Russia and India and more warnings for the US, UK and EU. George Soros asks if the new communist/capitalist divide has been replaced by a polarisation between international capitalism and state capitalism. Read more
Gordon Brown has just tried to upstage the G20 finance ministers meeting by reheating the idea of a global levy on financial transactions – a tobin tax of sorts. His words were rather more cautious than the spin and this idea is still going absolutely nowhere, writes Chris Giles of the Financial Times. Read more