With my A2 class we are looking at policies to help developing economies. Earlier in the year economist Jeff Sachs called for a tax on every deal conducted by the financial industry to curb the excessive power of Wall Street, and pay for the west’s unfulfilled promises to poor countries.
“Wall Street has had the most profitable year in its history. It made profits of $55bn (£37bn) in the midst of the biggest downturn since the Great Depression,” Sachs said. This was due to the 0% interest rate policy by the Fed Reserve and the bailouts paid by the taxpayer. Sachs is quite rightly disappointed with the G8 countries as they promised in 2005 to double the aid to Africa which would equate to $60bn – they are $20bn short. To put it in perspective the credit default swap (CDS) market was worth $62tn which is the output of the global economy. CDS – the buyer of a credit swap receives credit protection, whereas the seller of the swap guarantees the credit worthiness of the product. Below is a very good discussion of the Robin Hood Tax.