U.S. Secretary Geithner says a Tobin Tax, a tax on financial transactions, is something America will not support and slaps down the U.K. Prime Minster for mentioning the "T" word.
A day-by-day financial transaction tax is not something we're prepared to support.
Oh really? There are already various proposals introduced in Congress for some type of transaction tax on speculation in commodities which affect the national economy (oil).
As noted in this previous post, the only real way a financial transaction tax could work is if it is implemented globally. Else, trades will simply move to a country which has no such tax.
Why would other nations being considering a Tobin Tax? Prime Minister Gordon Brown wrote a Financial Times op-ed to explain:
I believe any measures we consider should be assessed against four core principles.
First, in a global economy and with a global financial sector, any such measures could work only if applied globally.
Second, any measures must not create distortions or incentivise avoidance.
Third, any measures must complement regulatory measures already being adopted or discussed.
And fourth, any costs to the financial sector must be fair and measured to enable institutions to do their job for our economy.
The IMF is researching a Tobin Tax and will report in April. But it's fairly clear global finance is trying to kill the idea without consideration, esp. our TARP loving Treasury Secretary.
Meanwhile, even though it's clear there needs to be a global response to financial regulatory reform, Business Week lists all of the ways other nations are diverging from acting in concert. Note how many nations are retracting Stimulus, since their economies are responding. Other nations are also raising interest rates.
What was that about the dollar being the mother of all carry trades?