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Wednesday, 28 September 2011

Out of their tax-payer funded minds

Brussels has just come up with its proposal for a tax on interbank transactions: 0.1% annual fee on all inter-bank exposures and a 1 bp fee  on all derivative deals.

They must be out of their minds.  Only a few years ago, 10bp was the up front fee for a syndicated interbank financing / guarantee / standby letter of credit, while 1bp was the spread on a simple derivatives deal, and Brussels want to take that as an annual spread for themselves, effectively doubling the cost of doing the sort of plain vanilla business that they ought to be encouraging in order to stimulate the economy.

Let us not forget that the euro zone crisis was not caused by the same sloppy banking as we saw in the UK, US and some of northern Europe.  In the rest of the euro zone it was caused by overspending pork barrel politicians such as Mr Barroso, and their failure to collect taxes.

Moreover, a tax on British state owned banks is nothing more than a cost imposed on the UK tax payer in order to bail out the rest of the EU.

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