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InvisibleBlack -> RE: Britain and the Euro area (12/10/2011 8:16:33 AM)
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ORIGINAL: mnottertail
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ORIGINAL: InvisibleBlack
I also notice that the current treaty under discussion doesn't really talk to what the enforcement policy will be if a member nation doesn't toe the line after this loss of sovereignty. If a country doesn't keep it's debt at the right level or doesn't maintainthe proper GDP ratios or whatever - exactly what is the EU going to do? Apply economic sanctions? Push out the elected government and replace it with an EU one? Send in the troops and hoist the EU flag?
I don't think the path forward from here is very pretty for the EU.
Well, IB....they'd have to fine the offenders, wouldn't they? I expect they would have to loan the country the funds to pay that fine as well.
A real sinker.
It's beautiful, isn't it? Right now, if you can't keep your spending in line ... well ... the EU will loan you more money to pay off your debts. In the new system, what? If you can't keep your spending in line we'll fine you ... and then loan you more money to pay off your debts and the fines?
What amazes me is that they have seriously put this forward as a plan. Realistically, all they've managed to do is buy themselves a little time so that the markets don't implode before the holidays. We'll be having another crisis 1Q 2012 without a doubt.
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ORIGINAL: Politesub53
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ORIGINAL: tweakabelle
Polite, the media here is suggesting that the basis of UK opposition lies in a feeling that a proposed Europe-wide Financial Institution's Tax will impact unfairly on the UK. The tax is (I'm told) primarily designed to reduce the impact of inter-bank trading/speculation (aka gambling), which has been coming under increased criticism lately.
London is the main European financial centre, and I've seen figures that up to E40 billion of the estimated E60 billion will be generated in the UK.
The observation in the media here is that half of the financial transactions you speak take place in the UK. My understanding is the new tax will be used to prop up the ECB bailout fund.
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How do you feel about this tax? Are these estimates accurate in your view? Is this the real reason for Cameron's refusal to sign in your view? Or is it reluctance to impose the tax in the first place?
I dont think the tax is fair, banks here are already heavily taxed, more tax will only be passed on to the consummer, and as such wont halt speculation like we have seen in the last decade. All that will halt that is regulation, especially a firewall between mainstream banks and investment banks.
About a month or so ago, a tax on financial transactions was proposed for Germany. The Germans refused, making the point that if you added a financial tax to their economy, the markets would simply move to the UK and the German financial industry would dry up and everyone would do business on the London exchanges.
This is their solution to that problem.
It's a non-starter as well. If you tax financial transactions in England, finance will simply shift its business to the US, where there is no such tax, or to Singapore or somewhere else. The days of needing a physical exchange are long gone. It's a convenience, nothing more, and certainly not a convenience worth spending billions on maintaining. You can shift your accounts and where you do business with a few simple mouse clicks.
If, in some autocratic anschluss you were able to force such a tax on the US as well, the markets would simply shift elsewhere and eventually if you pursued them, they'd simply create a new exchange somewhere else (The Isle of Mann? The Cayman Islands?) and avoid the fees that way. As it is, a frightening amount of financial transactions takes place on the unmonitored "black liquidity pools" where no regulator or assesor dares tread.
[Edited: Typos]
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