Salmond and Unionist politicians both talk as though theirs is the risk free option that will eliminate uncertainty about the future for Scots. Risks and uncertainty can only be reduced by recognising we can’t know for certain what the outcome of any choice will be and making plans for various possible outcomes

The SNP leadership and unionist politicians both talk as though if we just adopt the option they favour, Scots will face no uncertainties about the future and no risks. Salmond and Osborne are both stubbornly sticking with their own plan, with no plans on what to do if it doesn’t lead to the results they expect.

After the financial crisis, the Iraq war and the floods, continuing with no plans for different possible outcomes and just sticking to old assumptions will not do fine.

Eliminating risk and uncertainty is impossible, but by having plans prepared for various possibilities we can reduce both.

Scotland and the pound – Or the Euro?
Or its own currency?
Or staying in the UK? Every option brings risks

It’s true that the UK government couldn’t stop an independent Scotland using the pound, but that’s only half the truth. An independent Scotland would inherit its share of the UK’s assets and liabilities. That means it would inherit a share of the UK’s national debt – i.e an independent Scotland would be in debt. True, it would be at most no higher a debt as a percentage of GDP than the UK has.

However the UK has its own currency. If an independent, indebted Scotland didn’t have its own currency it would risk being in the same position as Ireland and Greece were after the financial crisis – forced to beg other governments or the IMF to provide them with pounds.  We might face the same harsh terms imposed on Ireland and Greece. If it joined the Euro it might have exactly the same problem.

Scotland could issue its own currency, but if it issued its own currency immediately on independence it would increase the risk of being targeted by currency speculators. There are other options though.

First, keeping using the pound for a few years after independence, before issuing our own currency. We could issue our own currency once the recession caused by the financial crisis has ended, and after uncertainty among businesses and investors over how independence would affect them has become less intense.

Ireland kept using the British pound for many years after independence before issuing its own Irish pound.

Of course lacking our own currency for several years while in debt would restrict what the Scottish government could do until it issued its own currency.

Another option would be to issue our own currency (e.g Scottish Pound) pegged in value to equal to the British pound. We could ban international currency trading of it and large transfers of it outside the country for the first 5 years.

During the Asian financial crisis in the late 90s the IMF advised Asian countries to keep their currency markets open, continue deregulated markets etcetera. The result was disaster for most of them.

Malaysia managed to make the crisis much less bad for it by pegging its currency to the dollar, banning all international currency trading of it and imposing limits on the amount of currency Malaysians could take abroad to stop the run on its currency which was fuelled by speculators.

As with the US and European financial crises the cause was deregulation empowering fraud and speculation.

Some might ask, so why not stick with the pound and stay in the UK to avoid these risks? The pound is no guarantee for economic stability for Scotland or even England though. We had the pound and were in the union and suffered the banking crisis and the recession since it.

In the 1980s an economic boom in the city of London financial sector led the UK government to increase interest rates to double figures during a recession in Scotland and the North of England, whose economies were devastated as a result.

With a government led by a party which gets more than half its donations from banks and hedge funds, UK economic policy continues to be made for the benefit of the banks and hedge funds, not the whole country. So the status quo carries its own risks. Another crisis as bad as the banking crisis could happen at any time.

Independence would provide a chance of regulating Scotland’s financial sector properly, which would be an example UK governments would find it difficult to ignore.

A country’s size doesn’t make it safer from economic crises
Regulation and having its own currency do
So staying in theUK doesn’t guarantee our economic future

Unionists politicians often claim Scotland couldn’t have survived the financial crisis as an independent country, pointing to Iceland, Greece and Ireland as supposed evidence that small countries can’t make it.

This is confusing the causes of the crisis, which was nothing to do with the size of the countries and everything to do with deregulation and in Greece and Ireland’s cases with not having their own currencies.

Norway, which has a population of 5 million – similar to Ireland’s and less than Scotland’s – regulated its banks properly and has its own currency. As a result it didn’t suffer the financial crisis suffered by the UK with over 10 times its population or the US with over 40 times its population, nor did it suffer any recession as a result.

Safe and secure with small government, welfare cuts,
personal debt crises and deregulation?

Welfare cuts and public sector job cuts by successive UK governments of both parties have eroded the welfare state on the false assumption that the market, left to its own devices, will provide employment to all who want it.

The  Conservatives in the Coalition government have gone far further than Labour did with this, but most of the “reforms” being carried out under the Conservatives were already being planned under Brown and Blair, even if they might not have taken them to the same extremes.

As a result the number of people reliant on food banks has increased by a factor of 10 in the first 3 years of the Coalition government, many genuinely disabled people are denied enough money to survive. Is that certainty, security and lack of risk?

Neither unionist parties nor the SNP have put forward any plan to deal with the personal debt crisis facing millions of people in the Scotland and the UK, which could also lead to an economic crisis affecting even those who are not in debt as millions go bankrupt and default on their debts.

Neither have either side put forward any serious plan to reverse the growing inequality which, if it’s not changed, will make any economic growth irrelevant as only a tiny minority will benefit from it.

So the unionist claims that staying part of the UK automatically makes Scotland (or any of the rest of the UK’s population) safe and secure is ridiculous.

To even significantly reduce the risks and uncertainties most people live with we need several things. Proper regulation of the financial sector. An end to allowing banks and hedge funds to buy political influence through donations to political parties. Enforcement of anti-monopoly and oligopoly laws. A guaranteed comprehensive welfare state.

The floods in England again show how the minimal government neo-liberal theory backfires. Man-made climate change, cuts to the Environment Agency’s budget and relaxing of planning processes (especially on building on flood plains) led to disaster for thousands - and a government left impotent by its own small government agenda.

Acknowledging Uncertainty,
Planning for various possibilities

Yes and No campaigns, unionists and nationalists, alike, need to start acknowledging that they can’t be certain what the results of the choices they advocate would be - and providing a set of various plans to deal with each major possibility.

Politicians are frequently successful by telling people what they want to hear – and we all often convince ourselves that what we want to believe is the truth. But that often backfires with severe consequences for everyone. Better to face up to the facts, including the fact that there are many questions which we can’t be 100% certain of the answers to – and that it’s better to have planned various options to deal with various possible outcomes.

Why Greece will be forced to leave the Euro unless it's offered a better deal ; the other problems with the EU and the Euro ; and the mass starvation they are distracting us from

(If this article is too long for you to read as a blog post see my website version with contents links between different sections)

Greece's keep the Euro, reject austerity option?

Greece has the option of rejecting the austerity bail-out package and disowning it's debts, while keeping the Euro as a currency, with or without remaining Euro-zone governments' permission. First Minister Alec Salmond similarly plans to keep the pound as a currency if Scotland becomes independent, based on many countries using the US dollar as their currency (1).

Despite the myth that defaulting on large debts leads to instant bankruptcy for debtor countries, South Korean economist Ha Joon Chang's book '23 Things they don't tell you about capitalism' notes numerous examples of indebted countries defaulting on their debts and immediately finding new creditors willing to lend to them (2).

This option might result in even worse austerity problems than the bail-out package in the short term though and might lead to the same end result of Greece leaving the Euro unless the bail-out package is renegotiated to reduce the austerity element, increase the stimulus element and crack down on tax havens to increase tax revenues for Greece and all other governments.

The remaining Euro zone countries could try to force Greece to drop the Euro by blanket trade sanctions, but that might lead to currency crises in Portugal, Spain and even Ireland and Italy, with the Euro zone ending up restricted to Northern and central Europe.

There is the possibility that some politicians and voters in Northern European countries might prefer this, but it would hurt their exports. Germany's exports have increased massively as a result of the Euro. This is because while the Deutsch mark was very high in value due to Germany's strong economy, making German exports expensive (as international trade involves currency exchanges), the Euro's value is based on the average strength of the economies of the entire EU and so is lower in value than the Deutsch mark. This made German exports cheaper to buy in other countries and so more competitive against their rivals exports (and against goods produced in the countries Germany exports too.) (3)

A Northern and central Europe only euro-zone, composed of stronger economies, would mean the value of the Euro would rise, making exports from Euro-zone countries more expensive for consumers outside the Eurozone (in countries using currencies other than the Euro), so reducing orders for and sales of those exports.

The problem with Greece keeping the Euro without a Eurozone agreement

More likely, Greece might run out of money if it tried to remain in the Euro without the agreement of Eurozone governments, as it's government can't print Euros - only the European Central Bank (ECB) can - and the ECB is mostly under the control of the German and French governments as the two largest economies in the Eurozone.

That could force Greece to return to the drachma as a currency.

A return to the drachma?

The drachma, based on the weak Greek economy, might well fall further in value at least in the short term due to the crisis.

This would have the effect of increasing the cost of all Greece's imports - most importantly fuel (especially oil, gas, coal and refined petrol), with Greece relying on imports for two-thirds of it's energy requirements (4).

That would certainly hurt the Greek economy, but would it hurt it any worse than EU (or Eurozone) governments' austerity measures and enforced sell-off of it's remaining assets at the bottom of the market (including state owned utilities which could bring in revenue if the economy recovered)?

A Greek government after the second elections in June might decide it wouldn't.

However it would also allow Greece to print it's own money and would make it's exports more competitive (it's problem being that it doesn't export enough at the moment and would need to export far more).

This could also (in the longer term, once it re-stabilised) allow Greece to invest more in e.g solar power to reduce its dependence on energy imports.

The need for Germany to allow Greece to re-negotiate the bail-out deal

German Chancellor Angela Merkel says agreements made must be honoured, but those agreements were made without any democratic consultation of the Greek people, with the elected Greek Prime Minister ( George Papandreou ) forced to resign when he suggested a referendum on the bail-out deal (5). He was replaced with an unelected bureaucrat Lukas Papademos, who had previously been vice President of the European Central Bank (which issues the Euro).

If there had to be referenda for countries to join the Euro, why wasn't there one an agreement to impose austerity for the majority in Greece, especially when austerity has shown itself to be counter-productive?

So why shouldn't 17% of Greeks have voted for Syriza, the Green-socialist anti-austerity coalition? And why shouldn't over 20% of them be saying they'll vote for it in the emergency repeat elections in June? (6) (Though the centre-right pro-bail-out deal New Democracy was ahead of Syriza in one poll it's apparent poll lead was within the margin of error of the poll ) (7).

Syriza may be unrealistic in demanding no austerity measures whatsoever - some cuts may be necesary - but it is right that there is no democratic legitimacy to the bail-out deal imposed by Euro-zone and EU governments so far; and right that the level of austerity demanded is counter-productive and unfair (as well as letting the richest Greeks off with tax avoidance through tax havens while the rest suffer.

Syriza has every right to use it's existing electoral mandate and any votes it gets in the new elections to demand a renegotiation of the terms of the bail-out deal. Stimulus measures such as public works and government funded infrastructure building and training programmes may well be necessary.

Austerity taken to the current extremes chokes off any chance of the economic growth that Greece requires to be able to pay off it's remaining debts. This only benefits Greece's creditors, primarily Eurozone governments and big US, British, German and French banks, who can continue to farm the Greek population for interest payments as long as they remain in debt (8). Is it a co-incidence that allowing tax havens also benefits them? Or that forcing the sell off of state utilities on the cheap benefits them and investors from Northern Europe and the US?

Given a fair deal Greeks might well be able to stay in the Euro - polls show most would prefer to.

Merkel's statements have already begun shifting towards suggesting there could be a bigger stimulus element to the bail-out package, which is encouraging (9).

(Merkel also suggested to the current caretaker Greek Prime Minister that the new Greek elections should be accompanied by a referendum on whether to stay in the Euro - which the PM said he could not as a caretaker government did not have the authority.) (10)

Why Greeks feel oppressed by larger countries :
the history

The reason that many Greeks feel oppressed by larger countries is that for centuries to present, they have been. Since gaining their independence from the collapsing Ottoman Empire in the 19th century they were invaded and occupied by German forces in World War Two.

After Greek Communist partisans kept several German divisions occupied for most of the war, the 'liberating' British forces' and regular Greek military's reward to them was to shell thousands of Communist demonstrators and partisans with artillery with Churchill's approval in 1944.

This was followed by a civil war from 1946-1949 in which the US and British governments backed the Greek military against Communist groups. Communists and suspected communists were hunted down and persecuted for decades.

Under the US backed military government of the 'Colonel's regime' from 1967 to 1974, the assassination, jailing, torture or disappearance of anyone critical of the ruling military was commonplace, with CIA assistance.

President Lyndon B Johnson responded to the complaints of the Greek ambassador to the UN about US operations in Greece and Cyprus in 1967 by saying "Listen to me, Mr. Ambassador! Fuck your parliament and your constitution! America is an elephant. Cyprus is a flea. Greece is a flea. If those two fleas continue itching the elephant, they may just get whacked by the elephant’s trunk, whacked good.… We pay a lot of good American dollars to the Greeks, Mr. Ambassador. If your prime minister gives me talk about democracy, parliaments, and constitutions, he, his parliament, and his constitution may not last long."

So many Greeks see the current crisis as more of the same - few people have been killed (some demonstrators by police), but so far they have had larger countries governments imposing 'agreements' on them without any democracy.

The myth of laziness and corruption as the causes of under-development

German, British and French politicians have found it convenient to allow the myth that Greece's debt is mainly due to Greeks being lazy or corrupt. South Korean economist Ha Joon Chang points out that in the early 19th century, when Germany and Japan were less industrialised than France or England, Japanese and Germans were seen as lazy and backward. Chang comes to the conclusion that rather than changed culture resulting in development, cultural changes come about as a result of development, which is why people in poor, undeveloped countries are stereotyped as lazy. A society riddled with bribery is similarly usually the result of poverty and lack of economic and governmental development, rather than a cause of it (11).

James Steadway, chief economist at the New Economics Foundation, found figures suggesting Greeks on average retire older than Germans - and work 50% longer hours (12).

Tax avoidance and Evasion which increases government deficits and debts is facilitated by tax havens - why no EU or member state action on this?

While there was too much tax evasion in Greece, EU member governments have not closed down the tax havens which continue to facilitate tax avoidance and evasion by big banks, firms and the wealthiest across the EU and the world. Switzerland is a favourite tax haven for wealthy Greeks and Greek companies, while Greece's creditors include banks like the US based Goldman Sachs and the British based Royal Bank of Scotland, both of which, like most of the UK's FTSE 100 companies, are heavily involved in tax avoidance through tax havens (13) - (15).

This is surely a form of corruption on a grand scale - especially when parties in government are receiving large donations to party funds for election campaigns from the billionaires, banks and firms using the tax havens - and former government ministers involved in regulating (or more often de-regulating) industries end up on the boards of companies their department or government regulated.

The need to recycle the trade surpluses of stronger economies into developing weaker ones

Many economists (e.g Will Hutton and former World Bank economist Joseph Stiglitz) say the Eurozone's major weakness is the lack of any sufficient regional development fund to even out the inevitable trade imbalances between strong economies like Germany's and weaker ones like Greece, Portugal and Spain. A sufficient fund would act to recycle a large part of the trade surplus money of countries like Germany into investment in the weaker economies like Greece (16) - (17).

The insufficiency was exacerbated by the redirection of regional development funds from Portugal, Greece, Spain and Ireland to new member states as the EU expanded eastwards, arguably too fast, without referenda in the existing member states and without any EU minimum wage.

This is just as true of the EU as a free trade area as it is of the Euro-zone as a single currency area.

The US is a huge country made up of many states with significant differences in the strength or weakness of their economies, but this is moderated by large infrastructure and investment projects in poorer states by the US Federal Government.

Why complete free trade plus a single currency across countries at hugely different levels of development can't work

South Korean economist Ha Joon Chang's book 'Bad Samaritans' has something relevant to say here too. His book takes numerous historical examples to show that the British, US and other developed economies built up key industries over centuries by subsidising them and protecting them from the imports of foreign rivals. Only once they were strong enough to defeat any competition internationally did their governments become advocates of free trade - and even now advocate it for developing countries (and make it a condition of aid and trade deals) while often subsidising and protecting their own industries. Similarly foreign investment does not create growth first, but is attracted by building up a strong economy by publicly funded infrastructure and investment (18).

So is the EU free market and Eurozone project one that makes it impossible for weaker economies to ever develop their own industries when forced to open their markets to imports from stronger economies built up over centuries of protectionism? Does the Euro make things even harder for them by making the more developed economies' exports even cheaper? Should exceptions be made on the bans on protectionism and state subsidies for some of the industries of the weaker economies in the EU (just as poorer developing countries outside it desperately need to be allowed to protect and subsidise their agriculture and industries to develop them without being penalised by losing aid or trade deals as a result)?

Without these kind of exceptions being allowed for weaker economies, their electorates may end up concluding that they will be less badly off out of both the euro currency zone and the EU itself.

Contrary to Germany's image of itself as paying to bail out irresponsible Greeks, the current system gives all the benefits to the wealthier countries in the EU and the euro-zone with the costs largely paid by the poorer ones.

While this is true of trade between relatively developed nations of different economic strengths and levels of development within the EU and the developed world, it all holds even more true for trade between the developed countries and the almost entirely undeveloped former colonies in Africa and much of Latin America and Asia.

The need to resolve the developed world crises in order to deal with much bigger ones -
the starvation, hunger and lack of clean drinking water crisis in the developing world and the energy, resource and climate change one worldwide

Germany and the other strong economies in the EU should offer these kind of concessions in order to end the crisis quickly and move on to dealing with far more serious crises - such as the hundreds of millions of people in other parts of the world who are going without enough food to eat and without clean water to drink - and the coming catastrophic energy, resource and food crisis if we don't reduce our wasteful over-use of energy and resources.

Oxfam estimate that a billion people or one in seven of the world's population can't afford enough to eat each day for themselves or their children - a problem made worse by the rising price of food partly due to the rising price of fuel for transporting it, while the UN and other experts estimate between 800 million and 4 billion (probably more like 4 billion) have no access to clean drinking water, resulting in them suffering illness and often death from water borne diseases (19).

You can sign an avaaz petition which will be handed to G8 and other government's leaders at the G8 summit demanding they act to provide food security for the growing numbers of hungry people here.

The focus on developed world debt and currency crises is distracting from the need for the upcoming G8 summit to deal with those two major problems that result in millions dying each year from starvation, under-nutrition and lack of clean water.

The developed world crisis are relatively minor by comparison and only affect the majority here due to huge inequality, plus tax havens letting the wealthiest and big banks and firms avoid paying massive amounts of tax with the collusion of governments and politicans, plus rampant deregulation and the failure to re-regulate. Even with all that few people are starving or going without clean water here, though some are going hungry or dying of cold.

Sources

(1) = Scotsman 27 Jan 2012 'Alex Salmond: ‘Chancellor would bite our hands off to keep the pound’',
http://www.scotsman.com/the-scotsman/politics/alex-salmond-chancellor-would-bite-our-hands-off-to-keep-the-pound-1-2081286 ; 'However, Mr Salmond said there were 67 countries in the world that were using another nation’s currency, “either in formal or informal monetary unions at the present moment”, while remaining independent.'

(2) = Ha Joon Chang (2010) ‘23 Things they don’t tell you about capitalism’, Allen Lane, 2010

(3) = Business Insider 20 Nov 2011 'Why German Taxpayers Should Be Forced To Bail Out Italians And Greeks',
http://articles.businessinsider.com/2011-11-20/markets/30421346_1_german-banks-german-state-eurozone

(4) = Trading Economics 'Energy imports; net (% of energy use) in Greece', http://www.tradingeconomics.com/greece/energy-imports-net-percent-of-energy-use-wb-data.html

(5) = guardian.co.uk 06 Nov 2011 'Eurozone crisis: Greek PM George Papandreou to resign', http://www.guardian.co.uk/world/2011/nov/06/greece-george-papandreou ; 'The socialist prime minister has faced growing calls to step down at home and abroad since shocking markets and world leaders with an ill-timed decision, announced last Monday, to put the 27 October bailout agreement to popular vote. After being publicly dressed down by French President Nicholas Sarkozy and German Chancellor Angela Merkel, the 59-year-old politician was forced to back down and shelve the referendum plan...'

(6) = Wall Street Journal Online 16 May 2012 'Greece's Radical Leftist Syriza Secures First Place- Poll', http://online.wsj.com/article/BT-CO-20120516-711097.html

(7) = Bloomberg 17 May 2012 'New Democracy Moves Ahead of Syriza, Greek Poll Shows', http://www.bloomberg.com/news/2012-05-17/new-democracy-moves-ahead-of-syriza-greek-poll-shows-1-.html

(8) = Bloomberg 23 Feb 2012 'European Banks Take Greek Hit After Deal', http://www.bloomberg.com/news/2012-02-23/rbs-reflects-greek-debt-damage-with-credit-agricole-days-after-aid-accord.html ; On US banks see (12) below

(9) = guardian.co.uk 17 May 2012 'German stance on Greek crisis softens as eurozone fears mount', http://www.guardian.co.uk/world/2012/may/17/germany-greek-crisis-eurozone

(10) = Guardian Business Blog 18 May 2012 'Eurozone crisis live: Row after Angela Merkel 'suggests Greece holds euro referendum'', entries for 6.15pm BST and 6.23pm BST, http://www.guardian.co.uk/business/2012/may/18/eurozone-crisis-stock-markets-greece-spain#block-31 and http://www.guardian.co.uk/business/2012/may/18/eurozone-crisis-stock-markets-greece-spain#block-32

(11) = Ha Joon Chang (2007) ‘Bad Samaritans’, Random House, London, 2008 , Chapter 9 'Lazy Japanese and Thieving Germans'

(12) = New Economics Foundation (NEF) 16 Feb 2012 'Greece should reject the Troika and default on its own terms', http://neweconomics.org/blog/2012/02/16/greece-should-reject-the-troika-and-default-on-its-own-terms by James Meadway, Senior Economist, NEF

(13) = Bloomberg 06 Mar 2012 'Goldman Secret Greece Loan Shows Two Sinners as Client Unravels', http://www.bloomberg.com/news/2012-03-06/goldman-secret-greece-loan-shows-two-sinners-as-client-unravels.html

(14) = Scotsman 18 May 2012 'Greek debt deal set to cost RBS £825 million' http://www.scotsman.com/news/international/greek-debt-deal-set-to-cost-rbs-825-million-1-2154674

(15) = Guardian 11 Oct 2011 'Tax havens and the FTSE 100: the full list', http://www.guardian.co.uk/news/datablog/2011/oct/11/ftse100-subsidiaries-tax-data

(16) = Observer 13 May 2012 'This crushing debt trap threatens to bring down the whole of Europe', by Will Hutton , http://www.guardian.co.uk/commentisfree/2012/may/13/will-hutton-euro-in-danger

(17) = guardian.co.uk 05 May 2010 'Reform the euro or bin it', by Joseph Stiglitz (former World Bank economist, also quoting nobel prize winning economist Robert Mundell) , http://www.guardian.co.uk/commentisfree/2010/may/05/reform-euro-or-bin-it-greece-germany

(18) = Ha Joon Chang (2007) ‘Bad Samaritans’, Random House, London, 2008 , Chapter 2 'The Double life of Daniel Defoe - How did the rich countries get rich'? ; also Chapters 3 & 4

(19) = BBC News 13 May 2012 'Harrabin's Notes: Safe assumptions' , http://m.bbc.co.uk/news/science-environment-18020432

Tobin Tax campaign returns as Robin Hood Tax

An expanded version of the Tobin tax first proposed by Nobel winning economist the late James Tobin in 1972 has been renamed the Robin Hood tax and already has the support of the British Prime Minister, the German Chancellor and the French President. It also has the support of hundreds of economists.

Another Nobel winner, American economist Paul Krugman; and former World Bank economist (and now a critic of it) Joseph Stiglitz both back some kind of Tobin tax. Oxfam, the World Development Movement and many other charities and trade unions on both sides of the Atlantic and the Channel back the Robin Hood tax.

The tax would be on large scale currency transactions by banks and other financial institutions, most of which are speculative (i.e basically gambling on a huge scale). So it wouldn’t affect buying some currency for a holiday for instance. The proposed rate is about 0.05% - a very low rate but enough to bring in considerable tax revenues given the vast size of many currency transactions. (The ‘Robin Hood Tax’ covers some categories of transaction not covered by the original Tobin tax – perhaps because new forms of currency and stock market speculation have developed since the 1970s)

The tax would discourage currency speculation, like the current speculative trading on the Euro or the run on the pound on Black Wednesday in the 1990s, by making it less profitable. At the same time it would generate large amounts of tax from big banks, hedge funds and other large firms which would mean first that if banks went under again the tax would mean they would be paying for their own bail-outs – and it would leave plenty left over to spend on helping the poorest, education and protecting the environment we all rely on for our survival.

The Obama government has been being lobbied heavily by the hedge funds, the banks and their representatives in ‘free market’ (read oligopoly) ideologue groups like ‘The Heritage Foundation’.

A Mr. Duvet (was that name chosen to sound warm and safe during cold weather?) was a spokesman for the Heritage Foundation on the UK’s Channel 4 News a few months ago. He explained that the 0.05% tax (half a per cent) was more than the banks and the hedge funds (massive gambling outfits) could bear. (After all they’d only just been bailed out for billions). He went on to suggest a VAT tax be introduced in the US, presumably on the grounds that the Heritage Foundation couldn’t give a toss about the effect of a tax with no relation to income on the vast majority of people.

On 8th November 2009 Obama’s Finance Secretary Timothy Geithner rejected the Tobin tax saying “A day-by-day financial transaction tax is not something we are prepared to support” and that the economy required a stimulus rather than more taxes.

Obama’s falling approval rating in the US and the Democrat’s loss of Ted Kennedy’s seat to a Fox News and Tea-Party backed Republican may change that yet though. Immediately after the loss of that seat Obama announced that banks taking deposit accounts would not be allowed to continue hedge funds and other speculative operations – they would have to become separate firms. He may yet be open to being persuaded that a Tobin or ‘Robin Hood’ tax won’t do his poll ratings, his election results or his prospects of reducing the US budget deficit any harm.

To read more or to sign up as a supporter of the Robin Hood tax go here.