Tuesday, February 02, 2010


The Economist's reaction to the President's proposed bank tax:
So what might be the unintended consequences of Mr Obama’s plan? The main impact will be on proprietary trading, the desks that attempt to profit from market movements with the bank’s own money. If more of these desks are shut down, the markets will become less liquid. That will mean wider spreads and higher dealing costs for other investors, though that may be a price worth paying for safer banks. It is more likely, however, that the prop traders will move to hedge funds. The big hedge funds will get bigger and will have more impact on the markets. The unregulated part of the finance sector will become more important systemically, something the authorities may regret when the next crisis comes along.
Those unintended consequences again.


Anonymous said...

Well said. Shutting down the bank's prop desks is a terrible idea.

--Scurvy Oaks

Anonymous said...

Sorry, I meant banks', not bank's.

Carl said...

SO: Agreed. Such activities already are taxed, and were not the cause of the current credit crunch.

Alpha Dem Bandito said...

> So what might be the unintended consequences of Mr Obama’s plan?




Weeeeee don' care about no steeeeenkin' CONSEQUENCES!!!