Well there you have it. My recipe for recovery in my role as World Leader – The Three Taxes. Not imposed on banks in the conventional sense of attacking profits but on their principal activities – lending money and trading – to recognise their special position. In other words, to make banks part of the civilised world rather than taking us all for a ride.  Because so far, banks have not been looking, listening or speaking but just carrying on as if nothing has happened.

The Three Taxes – Funny Money Tax, Financial Transaction Tax and Excess Interest Tax – are not without contention.

The Funny Money Tax is a direct response to the careless application of fractional reserve banking particularly over the past 10 years or so. Some institutions will complain that they have behaved honourably and should not be affected. Well the point is not so much a blame game as a programme for future responsibility. It is the realisation of the frailty of the world economy that was not fully appreciated.  There is nothing like a disaster to concentrate the mind. It may be that this tax could be levied at higher rates on those banks which have taken the King’s – or rather the Taxpayers’ – Shillings (many of them) so to speak until that shilling is recovered in full, although no doubt this would generate a lot of work evading such a variation and may not be worthwhile.

The most contentious is the Financial Transactions Tax but here the motivation is to quench excess volatility in the market. Some will argue that the ability to reflect market value almost instantaneously is a good thing and shows that the market responds but the problem is that it leads to substantial overshoot in valuations and is fundamentally unstable, which is what I want to quench. Because at the end of it all there is a product or service which, as I said, works on a completely different timescale. If someone can think of a better way to do it, I am all ears but in the meantime let’s get on with a simple solution and see whether it works as envisaged. Arguing about it while the practice carries on is just like Nero fiddling while Rome burns.

The Excess Interest Tax will be the most popular to implement of course, as it affects each person and business. It may lead to some bank charges being increased but if we couple it with the requirement for instant portability of accounts, transparency in interest charges and draconian penalties for lying, it will ensure that this unrepresentative tax on all of us by the banks will be reduced and that on its own will generate more spending and more banking.

Imposing these taxes should be done as soon as possible although it may be as well to start at quite a low level. Some institutions will cry foul and take their ball away but they will be replaced by others. And the new guys that enter the field will be much more efficient, which can only be a Good Thing. Banks and financial institutions are terribly wasteful and hide this behind their massive profits made not from usual business activities but as a result of their special place. Do they really need their tower blocks?

It is time to stop this farce.

Eagle-eyed readers will note that I am writing this under my own identity! Yes I have graduated to being a Staff Writer for this blog. Which is not much of a change really as we have batted ideas between us ever since the first post. We don’t see eye to eye about everything but do discuss most posts before they see the light of day!