Taming the Fat Cats is a terrible Op-Ed from the NY Times that encourages Obama and the rest of the federal government to put in place a 50% bonus tax similar to the one England has put in place this year and France is planning. The essential argument they make is that 1) these banks wouldn’t have profits to pay out bonuses with Federal help, 2) the misbehavior of these firms is what got us into this mess, and 3) all the other countries that might benefit from the US putting in place such a tax are either too far away, also putting one in place, or won’t benefit because it is a one time tax.
To all that I say:
A) We asked them to lend a lot to stimulate our economy and trade to reintroduce liquidity into capital markets. Now we want to introduce an ex-post tax to punish them for doing what we asked? What will happen the next time we ask them to do something?
B) Much of the blame for the financial crisis lies in government as well as in the private sector. You won’t hear our elected officials taking a 50% pay cut for their part, so why punish the bankers for theirs? Even if they did, they are punishing the wrong people. Many of those responsible for the financial calamity at the banks have already been fired. Most of those who remain had essentially nothing to do with the meltdown, so why punish them?
C) The US is an enormous beneficiary already from the European bonus taxes. Bankers are talking about moving to the United States and many are calling the end of London as a serious competitor to NYC as t he global financial center. We want to give that up for a few ten billion in extra taxes this year? The NPV of being the center of global capitalism is worth hundreds of billions to us, if not trillions in seismographer, lower borrowing costs, depth and breadth of capital markets, lower currency market transaction costs, liquidity provision, and risk management services. And yes, the center of global capitalism really could be Singapore. If England could be the center of global banking at a time when there were far more Frenchman then yes, even a low tax city state could be the center of global capitalism if it attracted the right people. Just see the role Hong Kong played with China in the last 30 years.
I don’t usually reply to posts but I will in this case. I’ve been experiencing this very same problem with a new WordPress installation of mine. I’ve spent weeks calibrating and getting it ready when all of a sudden… I cannot delete any content. It’s a workaround that, although isn’t perfect, does the trick so thanks! I really hope this problem gets solved properly asap.
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