Europe’s Tax on Financial Trades Is a Risky Bet

By Mark Buchanan

Millions of Europeans are about to become the subjects of a vast social experiment. What’s troubling is how little anyone understands about where it might lead.

A total of 11 European Union member states — including France, Germany, Italy and Spain, but not the U.K. — plan to introduce a small tax on financial transactions by the beginning of 2014. Financial institutions will pay 0.1 percent on all stock and bond trades, and 0.01 percent on derivatives. Although taxes that are at least crudely similar exist in about 40 nations around the world, the European measure will be the first introduced on such a large scale.

The idea of a financial transactions tax goes back to the economist John Maynard Keynes. In the 1930s, he argued that speculation on assets drives market instability and suggested that an appropriate levy could deter it. If small enough, the tax would have a negligible effect on long-term stock investors, who trade infrequently and focus on real economic factors in making their decisions. It would primarily deter short-term speculators who buy and sell frequently in response to temporary market movements.

The idea makes intuitive sense and could, in principle, help channel investment to productive economic activity. There’s much debate, though, over whether it can work in reality. Well- known economists such as Joseph Stiglitz and Larry Summers have supported a transactions tax. Others of equal prominence have countered that it would be likely to lower equity prices, drive trading across borders and possibly increase market volatility.

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Israel to Assad: air strikes did not aim to help Syria rebels

By Dan Williams

JERUSALEM : (Reuters) – Israel sought to persuade Syrian President Bashar al-Assad on Monday that recent air strikes around Damascus did not aim to weaken him in the face of a two-year rebellion, and played down the prospects of an escalation.

“There are no winds of war,” Yair Golan, the general commanding Israeli forces on the Syrian and Lebanese fronts, told reporters while out jogging with troops.

“Do you see tension? There is no tension. Do I look tense to you?” he said, according to the Maariv NRG news website.

Intelligence sources said Israel attacked Iranian-supplied missiles stored near the Syrian capital on Friday and Sunday as they awaited transport to Assad’s Lebanese guerrilla ally Hezbollah.

Israel has repeatedly warned it will not let high-tech weaponry get to Iranian-backed Hezbollah, with which it fought an inconclusive war in 2006.

Damascus accused Israel of belligerence meant to support outgunned anti-Assad rebels. The air strikes were tantamount to a “declaration of war”, it said, and threatened unspecified retaliation.

Veteran Israeli lawmaker Tzachi Hanegbi, a confidant of Prime Minister Benjamin Netanyahu, said on Monday that Israel did not want to clash with Assad.

Interviewed on Israel Radio, Hanegbi said the Netanyahu government aimed to avoid “an increase in tension with Syria by making clear that if there is activity, it is only against Hezbollah, not against the Syrian regime”.

Israel is reluctant to take sides in Syria’s civil war for fear its actions would boost Islamists who are even more hostile to it than the Assad family, which has maintained a stable stand off with the Jewish state for decades.

Hanegbi said Israel had not formally acknowledged carrying out the raids in an effort to allow Assad to save face, adding that Netanyahu began a scheduled week-long trip to China on Sunday to signal the sense of business as usual.

The Israel prime minister did not comment about Syria during a visit to Shanghai on Monday.

“DIPLOMATIC CHANNELS”

Yedioth Ahronoth, Israel’s biggest-selling newspaper, said the Netanyahu government had informed Assad through diplomatic channels that it did not intend to meddle in Syria’s civil war.

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