Eurozone countries go it alone with new treaty that excludes Britain

[Mich the Tester]

Well I think it´s clear at the moment they´ll be wanting Eurobonds to be bought so one could imagine that a tax on Eurobonds would be avoidable at least in the short term, or until some point when the financial crisis is over, but I was pointing out how incentives can tip the balance to encourage trading which left Frankfurt and Paris at the end of the 90´s to come back. Apart from Eurobonds I can´t imagine the tax will be avoidable for Eurozone companies, so share dealing and non-Eurobonds is another area where no doubt a tax would be applied and hence the possibility to have an incentive.

Right, now I'm just putting myself in the shoes of the civil servant that has to sell this idea to Ms Merkel.

"Angela, babe, I've got this really good idea; what we'll do is introduce a financial transactions tax for any transactions in the Eurozone. Then what we'll do is give back the money in the form of 'incentives' for companies to stay in the Eurozone, AND that way we can pump fake money around the place in a completely unproductive fashion and keep lots of civil servants in work."

Do you really think Angela Merkel is that stupid?

I don't.

[doodab]

Right, now I'm just putting myself in the shoes of the civil servant that has to sell this idea to Ms Merkel.

"Angela, babe, I've got this really good idea; what we'll do is introduce a financial transactions tax for any transactions in the Eurozone. Then what we'll do is give back the money in the form of 'incentives' for companies to stay in the Eurozone, AND that way we can pump fake money around the place in a completely unproductive fashion and keep lots of civil servants in work."

Do you really think Angela Merkel is that stupid?

I don't.

IMO the main motivation for the financial transaction tax isn't to raise revenue. It's to deter financial transactions seen as "socially undesirable" i.e. those related to highly leveraged speculation and HFT. They will be happy to see that activity move overseas, or remain in London, along with the systemic risk it's perceived as creating (whether it does or not is another matter, IMO), in order to ensure a stable & functional European banking system able to provide useful services to the wider economy. The majority of OTC derivatives are interest rate swaps and FX & commodity futures, most of which is legitimate activity due to companies hedging risk. The fact that these companies are based in the eurozone means that activity will stay where it is, they aren't going to relocate because the cost of hedging their cocoa purchases has gone up by a few cents, and only a truly stupid financial institution would stop taking that business, so they will stay here too.

The crucial thing for the UK is to retain the harmonisation of import duties and the free movement of goods and people around the EEA. Otherwise a chunk of the "British" manufacturing sector that currently exports to Europe (Toyota, Nissan, Honda, BMW, Epsom and many other multinationals make up a large part of it) will be off to eastern Europe or the PIIGS which would be quite a blow.

If we do continue to trade with Europe, standards for products and services and other regulations (e.g. distance selling) will need to be followed anyway, so we probably want to have some say in how those are set or we risk them being set by continental competitors with potential adverse impacts for UK companies.

[scooterscot]

On the other hand it could all be a plot to entice the Scots into leaving the UK.

Understandable, the Scottish economy is growing faster than the rest of the UK.

[scooterscot]

IMO the main motivation for the financial transaction tax isn't to raise revenue. It's to deter financial transactions seen as "socially undesirable" i.e. those related to highly leveraged speculation and HFT. They will be happy to see that activity move overseas, or remain in London, along with the systemic risk it's perceived as creating (whether it does or not is another matter, IMO), in order to ensure a stable & functional European banking system able to provide useful services to the wider economy.

WHS - and this is what countries strong in manufacturing want. Stability for all.

The problem with this living standards in eurodisney shall continue to rise while those at home go into reverse, not to mention the gap between rich a poor growth rate.

On this day the two horse race was conjured into existence, DC came home riding the pony and he know's it.