Economics for 2010, or How The Banks Were Brought To Heel
I don't believe it. It looks like I am going to be forced to praise a politician, an activity which I am generally not in favour of at all. The individual in question? That would be Barack Obama, for having had the courage to step right out and say that having received vast amounts of taxpayer support, the banks are going to be expected to repay money. The details are explained neatly in Robert Peston's blog.
The summary is that for banks above a certain size, a tax will be levied on the assets they hold, and this is a BIG tax. Obama is looking to raise $90Bn or so from it in ten years, this being roughly the sum by which banks in America have profited from taxpayer support over there. In addition, it has been refined so that retail deposits (the money that you and I hold in savings accounts to give the bank capital to lend) is exempt, so it punishes more exactly those banks who were doing the funny money act. In other words exactly the ones who had the biggest hand in causing this to start with. In short, RBS gets hit more than Nationwide (were it big enough to register)
There are those who argue that such a tax is retrospective and thus unfair. Well, so was the need of these banks to suddenly need to rely on the taxpayer for support. And this at least sends out a message that if you do look to socialise the risk of your business then yes, you will get away with it in the short term but you will be asked to pay in the longer term
That's made my evening, that has.
Thoughts (as ever)?
The summary is that for banks above a certain size, a tax will be levied on the assets they hold, and this is a BIG tax. Obama is looking to raise $90Bn or so from it in ten years, this being roughly the sum by which banks in America have profited from taxpayer support over there. In addition, it has been refined so that retail deposits (the money that you and I hold in savings accounts to give the bank capital to lend) is exempt, so it punishes more exactly those banks who were doing the funny money act. In other words exactly the ones who had the biggest hand in causing this to start with. In short, RBS gets hit more than Nationwide (were it big enough to register)
There are those who argue that such a tax is retrospective and thus unfair. Well, so was the need of these banks to suddenly need to rely on the taxpayer for support. And this at least sends out a message that if you do look to socialise the risk of your business then yes, you will get away with it in the short term but you will be asked to pay in the longer term
That's made my evening, that has.
Thoughts (as ever)?