Today French President Sarkozy and German Chancellor Merkel made a huge call to action for the Economic Unification of Europe. They're all in.
If you've been watching the economic indicators coming out of Europe lately, you should conclude their economies are stalling. Germany's GDP was D.O.A. with 0.1% Q2 GDP growth and Q1 revised downward to 1.3%. France's GDP growth was literally zero with 0.9% Q1 2011 GDP growth (sound familiar?). Finally, France and Germany decided to try something different. Instead of gutting the middle classes and social safety nets, they proposed a tax on financial transactions. That's right, a tax on Wall Street.
A Tobin tax proposal, is actually round two in a bare knuckle fight against Banks and Big Business. Nation-states lost with a 1-2 knockout by Wall Street during the financial crisis and watered down to Swiss cheese corresponding financial reforms. A Tobin tax is a tax on stock transactions, financial transactions. It's kind of like throwing a nickle in the toll booth while speeding down that great nanosecond router hopless highway, all the while making hundreds of thousands of trades per second.
Imagine that, making flash traders and hedge funds pay up for large budget deficits. Discouraging and disincentivizing speculative shorts, or at least charging a small piece of silver to cross the financial Styx. During the financial crisis, many a lone voice in Congress also proposed various transaction taxes, to fall on deaf ears. After all, Wall Street wouldn't hear of it.
Germany and France also proposed to harmonize corporate tax rates across EU member states. This also will be assuredly fought tooth and nail. A key strategy here is to disallow large multinationals playing nation-states off of each other. United We Stand is the suggestion, or at least to cushion themselves on the long, race to the bottom, drop down for labor arbitrage, repressed wages and income inequality. For example, Ireland is a notorious super cheap corporate tax rate, so much so the luck of the Irish attracted austerity and a bail out. Lest we not forget, Europe is also loaded with those stupid global corporate tax tricks, like the double dutch.
More frightening, Sarkozy & Merkel recommend all EU member nations enact a balanced budget amendment within their constitutions. It appears Tea party mania has hit the globe and this assuredly will create riots in Greece and Spain.
What is fascinating are we have three major policy initiatives that truly offer more power and control over Wall Street and Multinational corporations, who routinely play nation-states off of each other, forcing nations to drop to the lowest common denominator in order to obtain jobs and industry.
Sarkozy and Merkel also rejected the idea of European bonds, pointing out first they needed to have an economic authority and plan before issuing bonds.
Estimates on revenues raised from a Tobin tax vary greatly depending upon details, some figures suggest $850 billion a year.
The below PBS News Hour report gives a more in detph overview of today's historic events: