When markets spiral downwards, it’s only a matter of time before the usual suspects are identified. The short sellers, the speculators and evil traders in general are found guilty of driving down the market to fill their pockets. While this may be a common view among certain folks, one would expect politicians to have had some education or at least receive some sound financial advice.
After banning short selling in some European countries, masterminds Sarkozy and Merkel take one more step in their struggle against free markets. They seriously proposed a Financial Transaction Tax, also known as the Tobin Tax or the Robin Hood Tax. The idea is plain simple. Massive amounts of money are flowing across the globe 24 hours a day, so let’s confiscate a tiny bit nobody will miss and all government deficits will be solved. Everybody happy. Even better still, the volatility in the markets stem from trading so let’s cut down this evil practice. Life is easier with fixed prices.
It’s hard to battle such a belief. Economists will have a hard time taking this kind of fairy tales seriously. With this tax the financial infrastructure will be devastated. Market makers will be wiped off the map and tens of thousands will lose their job. The financial lobby will probably be in the trenches at this very moment.
The Financial Transaction Tax will never arrive, but the sheer thought of serious people proposing a financial mass destruction is weird. Luckily our own minister of finance will save us (and the market).