Thursday, July 23, 2009
On the small chance you are keeping score from home, Barack Obama proposed another tax yesterday:
President Barack Obama said for the first time that the government might assess new fees against financial companies engaging in what he labeled "far-out transactions," in order to protect taxpayers from future bailouts.
What, exactly, is a "far out" transaction? It is not, man, making mortgage loans and issuing credit cards to people who cannot afford to pay them back, but it is hedging a lender who does such things against losses when those same borrowers default.
Groovy. But -- here's a tip for those few journalists out there who still appreciate the meaning of words -- calling it a "fee" does not make it any less a tax.
That's just the empty suit talking again. He doesn't have a clue what he means, and no one else does either. As long as the lapdog Congress doesn't rush to put it into a bill there is no actual danger of some new, destructive tax.
Regulators have a hard time defining "far-out" transaction, i.e. derivatives, so that they can be regulated or taxed. Because the are just contracts for allocating risk, they come in infinite flavors. --Ben
More evidence of Obama's lack of business experience or acumen, with his pedigree out of HLS, he could have worked for Cravath or Sullivan & Cromwell or some other top firm (and I would have felt much better about his experience, if even for a couple of years), instead, he knows as much about business and the markets as Floyd the Barber.
The WSJ editorail page recommended the same thing last week suggesting that TBTF firms engaging in risky behavior would be subject to a bailout tax to cover their asses--and ours-- the next time their behavior has them--and us--looking at the abyss.
Sounds fair to me.
Perhaps the POTUS was also referring to a fornication tax, as in "far out F@#@ing," to reprise a phrase from my long-ago youth.
The POTUS might also have been referring to a hallucinogen tax, or a psychoactive drug tax, similar to what had been proposed in California to deal with the budget deficit there. After all, where did the phrase "far out" originate?
" Floyd the Barber. "...In that Floyd is likely self employed or a small business owner, he has experience the O will never receive. The experience of having actually earned something. The O and wife talk of sacrifice and hard work, though neither of them have ever performed either.
"The WSJ editorail page recommended the same thing last week"
Reading comprehension issues are at work here. The editorial addressed government subsidies of risk taking by certain, blessed market participants though not all, and advocating a rethinking of the too-big-to-fail problem. At no point did the editorial suggest or support a "tax on far out" transactions.
The substance of the two messages were also 180 degrees apart. The journal was advocating a way to free markets of government distortion. Obama, a man at peace with government distortion of markets, was only advocating an increase of government revenues and ham-handedly seized upon derivatives as a vehicle.
The Journal is seeking to increase the worldwide competitiveness of US financial firms, which would lead to healthier markets, employment and profits. Obama is seeking to extract tribute. One cares about the future and Won cares about nothing at all.
We may need to make sure that there is a similar mechanism in place for some of these other far-out transactions. So if you guys want to do them, then you got to put something into the kitty to make sure that if you screw up it's not taxpayer dollars that have to pay for it, but it's dollars coming out of your profits.
I thought that's what capitalism was for.
So do we need to split up these big financial institutions so they can fail without any worry that they'll take the whole economy with them? Go back to something like Glass-Steagall?
I'd prefer one big regulation like "you can't get bigger than x" rather than 10 million small regulations about what transactions they can and can't do, which ones should be taxes, and so on.
By the way, in our effort to keep score on taxes from the Obamanization of America, it's worth remembering that the middle class is safe. Absolutely rock solid safe! The President repeatedly promised no increases for the middle class, and anyone said he was going to do it was "lying". No tax increases there. No way, no how.
Except for the kneecap-and-trade, the increased user fees, higher sin taxes, and now...
A middle class income tax increase!
Liar, liar pants on fire.