September 24 2008 show notes
Sep. 25, 2008 8:57 pm
By Thom Hartmann A...
- The bailout. Do we need to tax speculation now to save us from further economic ruin?
- Guest: CNS Editor-in-Chief Terence Jeffrey. Bailout.
- Guest: Heather Wokusch. US and Pakistan. Europe and economic meltdown.
- Guest: Alex Epstein, Ayn Rand Institute. Alex says democracy is an unjust system, while laissez-faire is the system of justice.
- Guest: "Everything You Know is Wrong": Dr. Rodney Stark. "What Americans Really Believe".
Topics, guests, upcoming events, quotes, links to articles, audio clips, books & bumper music.
- 117 days to go to the end of Bush's administration.
- Thom has gone through a series of evolutions of thinking about the bailout- could it be a big plan to destroy capitalism? An October surprise? But it is hurting McCain in the polls.
- In a casino, gamblers know that the house takes a certain percentage, so in the long run gamblers are going to lose. What if the house had no take? Wouldn't people gamble more? Did they originally plan for the economy to blow up after the election? Did it speed up because in 2007 the very small tax on transactions, the section 31 fees (set up in 1933 to fund the SEC), just 1/300 of 1% of trade, was eliminated? This increased liquidity. Bring back the fee at 0.25%. London has one. It would bring in a lot of money to put towards the bailout, and discourage speculation / churning, while having little effect on other transactions which people and companies make less frequently. Dean Baker suggested it months ago.
- Book: The Conservative Nanny State, Dean Baker.
- Article: A Stock Transfer Tax: The Right Medicine for Wall Street, Dean Baker, March 15, 2008.
"In fact, we should look to borrow another policy from the United Kingdom that can help set our financial markets in order. The U.K. imposes a modest stock transfer tax of 0.25 percent on every purchase or sale of a share of stock. This sort of tax would make almost no difference to a typical middle class shareholder. However, a tax of this size, with comparable taxes on various other financial instruments, like options and futures, would put a serious crimp in the money shuffling business that has wrecked so much havoc on the U.S. economy.
Furthermore, such a tax could raise a great deal of money, easily in the neighborhood of 1.0 percent of GDP or $150 billion a year. Imagine that we could finance national health care insurance with a financial transactions tax, or provide quality child care and pre-school education, or build up a green 21st century infrastructure, or maybe just have a nice middle class tax cut of $1,000 per family.
There is no shortage of good uses for the money that could be raised through a financial transactions tax. This is the conversation that the country should be having. Instead of funneling tens or hundreds of billions of taxpayer dollars to the failed wizards of Wall Street, we should be talking about what they can do for us."
- Article: Speculation and Taxation: Time for a Transaction Tax? Jun. 26, 2008.
"What about speculators? Last week the House Energy and Commerce Committee invited a few oil market experts to do a little speculation of their own, asking them to assess Wall Street's role in driving oil prices to record territory. They happily obliged, suggesting that a crackdown on some types of investment activity might bring prices down by 50 percent.
But how, exactly, should lawmakers curb speculation? In recent weeks, members of Congress have floated several ideas, including higher margin requirements, enhanced disclosure by investment banks, and bigger budgets for federal commodity regulators.
But most regulatory measures depend on making some sort of distinction between speculative and nonspeculative investment. And that sort of distinction has eluded American lawmakers for decades, frustrating their episodic efforts to limit speculation in various financial markets.
So what to do? Economist Dean Baker, codirector of the Center for Economic and Policy Research, has an answer. "Treat speculation like casino gambling," he wrote in a recent post to his popular blog, "Beat the Press" -- "just tax it." Baker suggested that a broad-based financial transaction tax might help curb commodity speculation while also raising a nice chunk of change for the Treasury (http://www.prospect.org/csnc/blogs/beat_the_press).
More specifically, Baker supports "a set of modest taxes on financial transactions" -- perhaps 0.2 percent on commodity futures trades and 0.25 percent on stock trades. In a 2002 paper, he and two colleagues suggested that such taxes might raise $150 billion a year (http://www.peri.umass.edu/236/hash/aef97d8d65/publication/172/). And as a bonus, they added, the taxes would probably "take a big bite out of the hides of speculators." "
- Newt Gingrich is gloating that the Democrats caved in and let the offshore drilling ban lapse.
- Book: "The General Theory of Employment, Interest and Money", chapter 12, "The State of Long-Term Expectation", John Maynard Keynes.
"The introduction of a substantial Government transfer tax on all transactions might prove the most serviceable reform available, with a view to mitigating the predominance of speculation over enterprise".
- Security Transaction Excise Taxes (STETs). Countries that have them. John Maynard Keynes said they were good thing against speculation. Call it the Republican proposal because it is from the administration, even if other Republicans are running away. Effects.
- Book: The Shock Doctrine: The Rise of Disaster Capitalism, Naomi Klein.
"In THE SHOCK DOCTRINE, Naomi Klein explodes the myth that the global free market triumphed democratically. Exposing the thinking, the money trail and the puppet strings behind the world-changing crises and wars of the last four decades, The Shock Doctrine is the gripping story of how America