Tag Archives: troubling

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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Bangladesh and now Independent Baluchistan

by Syed Atiq ul Hassan

Pakistani politicians and army officials blamed people of East Pakistan as being burden on Pakistan’s treasury. They were called coward and beggars. Today, Bangladeshi economy is better than Pakistan’s. Today Bangladeshi Taka is better than the Pakistani Rupee in international market. Today, Pakistan is begging Bangladesh to play cricket in Pakistan with assurance to provide them full security so that the Pakistani image can be restored for holding international cricket events in Pakistan.

There is no question that the situation in Baluchistan is alarming and needs urgent attention….Military operation cannot be the solution – Pakistan should not forget what happened in East Pakistan.”

First East Pakistan to Bangladesh and now towards Baluchistan to Independent Baluchistan, political reasons may be un-identical but the tale of injustices; ignorance and autocratic behaviour of Pakistani establishment and civilian federal bureaucracy remain the same.

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False nationalism

By S. Akbar Zaidi

THE comprador, clientelist military of a clientelist state has suddenly found its own sense of pride and nationalism. A military which has been critically dependent on US aid for far too many years has now turned around to say that it will ‘rely on domestic resources’ to make up for the $800m cut, or threat of a cut, by the Americans.

Given the nature of the political economy of Pakistan and of its military, at a time of a fiscal crisis in the state, this is a serious joke.

The amusing part of this newfound, false nationalism of Pakistan’s military is that the latter has not in the past ever said ‘no’ to US or any other aid, and nor has it said that it will ‘rely on domestic resources’. This has been said by all civilian governments, in jest of course, whenever they were denied financial assistance, but this is the first time that Pakistan’s armed forces have woken up to their own very compromised, comprador status. Moreover, just to underscore how false such statements are, one needs to be reminded that the $800m which might be cut is a mere one-third of what the US is to give Pakistan’s military this year. The remaining $1.6bn which Pakistan’s military (and not Pakistan’s government — a critical distinction) receives, will of course be utilised in the way the Americans demand of Pakistan’s military.

One needs to explain and emphasise the nature and extent of US military aid to Pakistan’s military to highlight how critical this has been to Pakistan’s army, a fact which will show why this newfound nationalism is so false and such a joke. For instance, just in the period since 2001, over the course of what was called the war on terror, the US gave the government (or the country) of Pakistan $12.14bn over 2002-09. Of this, as much as $8.91bn, or 73 per cent, was classified as ‘security-related’ aid to Pakistan, most of which was given as part of the services provided by Pakistan’s military, as part of the Coalition Support Funds. Clearly, the Bush-Musharraf relationship was largely the US providing aid to Pakistan’s military, and not to its people.

It was only after the change of government in both countries that the nature of the aid-giving relationship with Pakistan changed. Once the Obama administration took over and the Kerry-Lugar-Berman Act was passed there was a considerable shift towards non-military aid to Pakistan. In 2009 and 2010, as much as $6.61bn was authorised by the US administration, although not all of it was disbursed. Of this, as much as 44 per cent was meant as non-military aid, for economic-related purposes, a huge, and critical, shift compared to the past.

What these numbers show is that a considerable part of assistance from the US to ‘Pakistan’, has actually come to Pakistan’s military. To emphasise this point further, if we look at the current fiscal year, the US is said to have earlier promised $2.4bn specifically marked as assistance to Pakistan’s military or military aid.

In the same year, the Government of Pakistan in the budget, allocated Rs495bn to the military. Hence, the US taxpayer was funding the equivalent of (or an additional) 41 per cent of what the Pakistani taxpayer was providing. By all accounts, a very considerable amount and a significant proportion of expenditure by, and on, Pakistan’s military. Pakistan’s military is still critically dependent on US aid.

The second consequence of the statement by the Pakistan military, of relying on ‘our own resources’, is equally troubling. First of all, ‘our’ resources are in particularly bad shape, thanks mainly to a huge military budget over the years ….

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