the establishment does not want to close the casino; they are content to take their cut.Tom Clougherty of the Adam Smith Institute has now examined the proposals in detail:
- There are two taxes: a flat rate ‘financial stability contribution’ on all financial institutions, and a ‘financial activities tax’ on profits and remuneration
- It is unlikely that the revenues thus generated would be ring-fenced; the money will disappear into the pot.
- Such compulsory 'insurance' will actually increase instability, as irresponsible banks will know that they will be bailed out.
- It is unfair that the taxes apply to all financial institutions, since insurers and hedge funds had little to do with the crisis
- The proposals show no understanding of the actual causes of the financial crisis (loose monetary policy, fractional reserve banking, and fiscal incontinence)
The saddest thing is that the world’s financial system desperately does need reform. Without a radically new approach to controlling the money supply and taming the credit cycle, history is doomed to repeat itself. But the IMF’s proposals do not even qualify as a step in the right direction.