Krugman: time for Financial Transaction taxes
"Should we use taxes to deter financial speculation? Yes, say top British officials, who oversee the City of London, one of the world’s two great banking centers. Other European governments agree — and they’re right."
And, as is well known:
"It would be a trivial expense for long-term investors, but it would deter much of the churning that now takes place in our hyperactive financial markets.
This would be a bad thing if financial hyperactivity were productive. But after the debacle of the past two years, there’s broad agreement — I’m tempted to say, agreement on the part of almost everyone not on the financial industry’s payroll — with Mr. Turner’s assertion that a lot of what Wall Street and the City do is “socially useless.” And a transactions tax could generate substantial revenue, helping alleviate fears about government deficits. What’s not to like?"
Read the rest here. As he explains, its opponents who say it's unworkable and doesn't address the real problem, are plain wrong.
And on a separate but somewhat related matter, it's also worth reading Martin Wolf - the FT's chief economics correspondent - on why it's time to tax bankers' pay. Among other things, he explains that:
"Since the aim of policy is to recapitalise the banks, the tax should not reduce their ability to do so. It would be far better then to impose a tax on contributions made to the bonus pool. There is no public interest in such payments."
What is needed, at the end of day, is leadership.