Taxing the speed of capitals with a Tobin tax is a thousand time better than directing the capitals with capital requirements
Sir Tony Jackson in “Putting a rational spin on inefficient markets and irrational investors” August 31 writes “just because markets are inefficient, it need not mean investors are rational.” Right on. What happens if driving the car your GPS or radio, suddenly announces a roadblock ahead and recommends taking an alternative route? Rationally you do so though that could prove to be highly irrational if all others do the same at exactly the same moment.
That is why I sustain that taxing the speed of capitals with a Tobin tax is a thousand time better than directing capitals with Basel type capital requirements for banks based on credit ratings that could be wrong or that could change whether one second too early, one second too late or exactly in the right second.
Jackson refers to a paper by Paul Woolley and Professor Dimitri Vayanos titled “An Institutional Theory of Momentum and Reversal” which draws special conclusions about “assets with high idiosyncratic risk. And I wonder Sir, have you ever come around something with a higher idiosyncratic risk than an AAA-rated asset?
That is why I sustain that taxing the speed of capitals with a Tobin tax is a thousand time better than directing capitals with Basel type capital requirements for banks based on credit ratings that could be wrong or that could change whether one second too early, one second too late or exactly in the right second.
Jackson refers to a paper by Paul Woolley and Professor Dimitri Vayanos titled “An Institutional Theory of Momentum and Reversal” which draws special conclusions about “assets with high idiosyncratic risk. And I wonder Sir, have you ever come around something with a higher idiosyncratic risk than an AAA-rated asset?
Posts
