It's Probably Just a Bait and Switch…

But as a part of the joint announcement by Sarkosy and Merkel on greater EU integration to fix the current series of debt crises they have proposed to impliment a Tobin tax on financial transactions:

The French president, Nicolas Sarkozy, and German chancellor, Angela Merkel, announced the dramatic proposals after a two-hour mini-summit. They also called for the imposition of tighter restrictions on member country's deficits and announced a synchronising of the tax policies of their own two countries. Sarkozy has also secured the support of Merkel for a Tobin tax – a financial tax on all international transactions – to raise funds to ease the crisis engulfing the European economy.

The amount of money generated by a Tobin tax would actually be smaller than generally anticipated, because much of the financial activity is pure short speculation, where extremely short term bets with payoffs of a fraction of a percent, create profits for doing nothing.

The banks suggest that such a tax is a bad idea because it would discourage such activity, but I consider it to be an even more valuable feature than any potential revenue raised.

Much of the unproductive rent seeking that occurs in our economy is an artifact of just such a behavior.

So, to paraphrase this xkcd cartoon, Mission F%$#ing Accomplished:


Of course, in reality, it's just smoke and mirrors:  The Tobin Tax proposal is just a way to sell their idea for a European balanced budget amendment, and at the end of the day, the Tobin Tax will go away, and the Banksters will get what they want, because that's how the game is played.

Mark Thoma has a good analysis of the tax, and you can also check out the Wiki page.