Per FT report today, the US administration is likely to impose a levy on the banking sector to recover. Per President Obama, "every dime" owed by the banks to TARP. The levy will aim to raise $90 billion from the 50 largest institutions in the US, including those with foreign operations in the country (a point that raises the issue of unfavourable treatment of the foreign banks which had no access to TARP and yet are expected to pay for it). 60% of the fee is expected to be generated from the top 10 institutions – another strange feature of the plan that skews the burden of the proposal toward larger banks despite the fact that there is no evidence they benefited disproportionately more from TARP funding. The levy – envisioned for 10 years period – is being set at 15 bps of all insured debt other than deposits and will apply to all institutions with assets over $50 billion. Of course the net effect of the levy will be a higher cost of banking for the end customer.
One can rationally expect the EU to follow the US suit and slap more charges on already stretched taxpayers/consumers.
Bashing the banks is a happy past-time for our commentators, politicos and regulators who have been calling for higher levies on the banks. But anyone with economic stability and growth on their mind should really think as to where the money for such levies will be coming at the end.
Irish banks are in no position to pay the Exchequer for any support out of earnings, so it is us – common banks customers and, co-incidentally the taxpayers – who will be tasked with paying DofF the going costs of banks guarantee scheme, Nama and any other levies the Government might impose on the banks.
As one cannot escape this charge on his/her account, it will be an involuntary transfer from the private economy to the state. Care to call it a new tax, then?
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Prof. Robert Hall (Stanford): "The average American thinks economists are the masters of an alien religion. It’s really deeply shocking." I think it's great!
Nassim Nicholas Taleb was asked by BBC's Jeremy Paxman whether the people taking to the streets in Athens is a Black Swan Event. He replied: “No. The real Black Swan Event is that people are not rioting against the banks in London and New York.”
National Debt Clockfrom Finance Dublin: "a measure of the legacy our Government is in the process of bequeathing to the children of Ireland."
"Getting worse more slowly is not the same as getting better", Prof. Brad DeLong (U of California, Berkeley)
"Samia of Fife was five feet tall, exactly, and all sixty inches of her were in a state of quivering exasperation. She weighed one and a half pounds per inch and, at the moment, each of her ninety pounds represented sixteen ounces of solid anger," Isaac Asimov, The Currents of Space
"Merkel/Schaueble, DSK and Trichet held emergency phone conference this morning. Question is: Will the debt Junkies continue to share their needles? The debt spiral/contagion is in full motion!" laughingbear, April 28, 2010
"If any other electorate in Europe, nay, the world, faced this scandal [NAMA], their citizens would be on the streets!" Paddy, July 28, 2009
U of Chicago IGM Forum panel of economists deliberations on top questions in economic policy (here)
I lecture in Finance in Trinity College, Dublin and in the Smurfit School of Business, UCD. I also serve as the Chairman of Ireland Russia Business Association, and hold non-executive appointment on the Investment Committee of Heinz Global Asset Management, LLC (US).
I am research-active in macroeconomics and finance, as well as economic policy analysis and my academic record can be found on the designated section of my blog.
In the past, I served as the Head of Research and Partner with St Columbanus AG, Head of Macroeconomics (Institute for Business Value, IBM), Director of Research (NCB Stockbrokers), Adviser to the Irish Exporters Association; Group Editor and Director (Business and Finance Publications). I also served as non-executive member on the Investment Committee of Goldcore.
Born in Moscow, Russia, I was educated in the UCLA, University of Chicago, Johns Hopkins University and Trinity College, Dublin.
All opinions expressed are my own and do not reflect the views or positions of any of my past, present or future employers. Potential conflicts of interest are highlighted in the posts wherever I can reasonably foresee such arising.
Forthcoming peer reviewed articles: 1 In submission: 3 Book chapters published: 7
Book chapters forthcoming: 2 Books published: 1 (edited volume)
Books forthcoming: 1 (edited volume) My SSRN webpage: here I am currently ranked within top 0.6% of researchers listed by SSRN Note: Requirement for research active adjunct faculty: 1 peer reviewed article within the last 3 years