Quote:
Originally Posted by SEE3772
I'm not talking about Options and Futures derivative transactions. I'm talking about non reportable Over The Counter derivative contracts that were illegal from 1936 - 1982. Credit Default Swaps, Structured Investment Vehicles and Synthetic Collateralized Debt Obligations. These private contracts are not taxed and the banks are not required to report them on their balance sheets. 1.5 quadrillion worth of derivatives. A 1% Tobin Tax. Also illegal Wash Trades. Where through High Frequency Trading contracts are bought and sold simultaneously. If the Credit Default Swaps are not banned in the future they will destroy the US T Bonds.
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I agree with you that CDSs and various other types of structured vehicles continue to pose serious systemic risks to the financial system, and have long argued that the crafters of Dodd-Frank should have paid more attention to this issue instead of cranking out 2,300 pages of arcane, virtually worthless legalese that fails to effectively address the most critical issues.
But my point was essentially that a "Tobin tax", or any similar transactions tax levied at sufficient rates as to collect aggregate revenues greater than a fraction of one percent of GDP, would simply cause affected trading activity to dry up or move elsewhere. Disincentivization of most of that type of activity would, in my opinion, not be a bad thing. (In fact, I think it would in many respects be an unambiguously
good thing!)
It's just that it's a fantasy to believe that you could make much of a dent in the deficit by imposing this type of tax.
