Together with France, Germany thinks that a financial-transaction tax, formally proposed by the European Commission this week, will serve to reduce volatility in the markets, and also to raise revenues for the governments that are the ultimate guarantors of the financial system (see article).
Even if American opposition means the tax cannot be imposed worldwide, say the Germans, it should be adopted by the European Union. If that proves impossible because of British resistance, it should begin in the euro area. The objections of banking havens such as Ireland and Cyprus may not count for much; one is a ward of the euro zone, and the other may soon become one. Sweden, which is outside the euro, says its own transactions tax in the 1980s served only to push bond- and derivative-trading to London. “We cannot foresee that we would introduce such a tax in our system again,” says Anders Borg, Sweden’s finance minister. Let the traders relocate, Germany seems to be saying, and let London bear the risk; when the euro zone demonstrates the value of the tax, others will surely follow.
For Germany, there is much Schuld to go around. The proper response to financial sin is not through buying indulgences, but through repentance, faith in the tenets of financial stability and good works: pay down the debt, be righteous in your public finances, restrain the lust for higher wages and curb the greed of moneylenders. Only in this way can Europe avoid damnation
