The Socialist geniuses who dominate much of Europe’s power elite have been pushing for a “transactions” tax on all financial transactions conducted in Europe as a kind of punishment for the 2008 financial crisis. But it was just voted down, at least in a pan-European sense:
European finance ministers sounded the death knell on Friday on a proposed EU-wide financial transaction tax…
It effectively scotches an ambitious European Commission proposal for a pan-European levy on all equity, bond and derivative trades, which was designed to force the financial sector to repay taxpayers for the cost of the economic crisis. <source>
By voting it down, member states will now be forced to decide whether they will impose such a tax within their own countries (France is very much in favor of course).
But the real credit goes to the British, who have firmly held to their own path when it comes to integrating with continental Europe, and who as a result now possess a financial center far more vibrant than the one in New York. London has no intention of pursuing the Robin Hood transaction tax — note the difference between what other countries are considering and where the UK stands on it:
While there are likely to be sufficient supporters of a transaction tax in principle, led by France, Germany and Austria, big differences remain over its design and what the revenues would be used for.
As a result, some diplomats expect the final outcome – after several more months of talks – to be a form of stamp duty, with a far narrower scope than that envisaged by Brussels. It will also exclude London, Britain’s financial centre.
Exactly: London is winning the global competition for “most preferred financial center” (see London tops financial services league) and knows better than to pull the equivalent of a Sarbanes-Oxley, which obliterated New York’s status as the place to go public if you have an exciting growth company.
Just look at Hong Kong now compared to New York:
In 2011, Hong Kong raised $36.1 billion through new listings for the year—down from $67.9 billion in 2010, but still higher than the $31.4 billion raised in New York… <source>
Incidentally, Hong Kong is now part of China.
How did this happen?
In simple terms, the combination of Sarbanes-Oxley, which was a knee-jerk response to Enron criminality, and the Bill Clinton / Bob Rubin destruction of Glass-Steagall and resulting transformation of Wall Street into a rigged casino, has driven away companies seeking a listing.
The Enron crisis could have been averted if regulators and law enforcement agencies had simply applied and enforced existing laws and regulations. But they chose not to — willfully chose not to — and here we are saddled with suffocating regulation of the wrong kind and not enough of the right kind.
The British and Chinese have become wiser than us: for how long?