The ever-knowledgeable Thom Hartmann has proposed the resurrection of a familiar market remedy to our current economic ills that:
--has served us well in the past, and is currently employed by healthy economies abroad
--pays for itself and then some after only a few years
--puts the responsibility for the cost on Wall Street, where it belongs
--brings revenue back to the taxpayers
--reduces the toxic speculation that helped create this problem, and encourages healthy investment
--is simple, and can stand alone
Best yet, we already know it works, because we used it for decades to generate revenue, and it was successfully adopted by the UK, France, Japan, Germany, Italy, Greece, Australia, France, China, Chile, Malaysia, India, Austria, and Belgium.
It's called a Securities Turnover Excise Tax. That is, if we were to implement, say, a .25 percent STET (tax) on every stock, swap, derivative, or other trade today, it would generate around $150 billion in revenue its first year. Wall Street would be funding its own bailout. As it damn well should.
Thom Hartmann gives some history of the STET tax:
Franklin D. Roosevelt, as part of the New Deal, put into place a series of rules to discourage speculation and promote investment, including maintaining -- and doubling -- the Securities Transaction Excise Tax. Other countries followed our lead.
...In the United Kingdom, for example, whenever you buy or sell a share of stock (or a credit swap or a derivative, or any other activity of that sort) you pay a small tax on the transaction...the UK's STET is .25 percent, and Taiwan just dropped theirs from .60 to .30 percent...
...We did the same thing here in the US from 1914 to 1966 (and, before that, we did it to finance the Spanish American War and the Civil War).
Imagine, financing a war with a tax instead of endless debt, and putting rules in place to guard against runaway speculation. Hartmann goes on to detail the further advantages of an STET tax:
John Maynard Keynes pointed out in his seminal economics tome, The General Theory of Employment, Interest, and Money in 1936, such a securities transaction tax would have the effect of "mitigating the predominance of speculation over enterprise."
In other words, it would tamp down toxic speculation, while encouraging healthy investment. The reason is pretty straightforward: When there's no cost to trading, there's no cost to gambling. The current system is like going to a casino where the house never takes anything; a gambler's paradise. Without costs to the transaction, people of large means are encourage to speculate -- to, for example, buy a million shares of a particular stock over a day or two purely with the goal of driving up the stock's price (because everybody else sees all the buying activity and thinks they should jump onto the bandwagon) so three days down the road they can sell all their stock at a profit and get out before it collapses as the result of their sale. (We ironically call the outcome of this "market volatility.")
Real investment, on the other hand, occurs when people buy stock because they believe the company has real underlying value that will build with responsible management of people and resources. This kind of investment stabilizes markets, and allows small investors to gain wealth over time.
And the icing on the cake (and not turd icing on a shit cake, as was the Bush bailout plan) of implementing a STET tax:
Perhaps the most important benefit of immediately re-instituting a STET in the USA, however, isn't that it would raise enough money to bail out the banks and billionaires (and after that crisis is covered, could pay for a national health care system), or that it would encourage investment and calm down markets. Those are all strong benefits, and absent the current Republican Administration bailout proposal would stand-alone strongly.
What I have a hard time believing is that these Wall Street guys (and too many of our folks in Congress) are acting like the US has never seen this kind of crisis before, that they couldn't see it coming, and have no real clue about how to solve it.
So instead of offering a tried and true solution that they know will work, they propose a garbage plan that will bankrupt the next administration and leave nothing for infrastructure, education and healthcare. They propose a crap sandwich that we ALREADY KNOW will debase the dollar, create stagflation, and spike commodity prices and interest rates, which will enrich Wall Street but further impoverish the rest of us (rendering us, as Hartmann says, "less prone to protest" since we'll be busting our humps to get out of debt). Best yet, it can be blamed on Democrats who currently control Congress and, should Obama be elected, be blamed on him.
This is where the "incompetence" meme only really applies to the Democrats who fall for this shit time and again.
Haven't we had enough fun playing "Disaster Capitalism"? I know I could use a breather.