Sarkozy Dumps Financial Transaction Tax After Pressure From Banks

French President Nicolas Sarkozy is once again setting himself up to look like a fool, this time over his pledge to implement a tax on all financial transactions, popularly referred to as the "Tobin Tax".

Just days after pledging to proceed with a tax on all financial transaction tax in France if the rest of the Europe would not go along, he walked away from the "Tobin Tax" idea completely after receiving pressure from French banks.

Via Google Translate, please consider Sarkozy waiver of the Tobin Tax by pressure from the banks, according to the German press

The French government had abandoned its demand to impose a tax on financial transactions, also called Tobin Tax, after pressure from the country's largest banks, which have threatened to relocate their businesses in other territories, as confirmed by sources in the banking sector Germany's Handelsblatt.

According to newspaper reports, Paris would replace the tax on financial transactions by a "tax on stock negotiations", similar to that established in the UK, after having held talks with French banks.

Earlier this week, the Spanish prime minister, Mariano Rajoy, expressed his support for the imposition of a tax on financial transactions, but admitted to be studied "some details".

Not only does it look like Sarkozy caved under pressure from French banks, it appears the Spanish prime minister Mariano Rajoy caved in as well.

Will this flip-flopping by Sarkozy, especially after being adamant that France would go it alone if necessary help his election chances?

For a discussion of Sarkozy's dwindling election chances please consider Le Pen Inches Closer to Bumping Off Sarkozy in First Round of French Elections; Interesting Crossover Vote Opportunity for Hollande Supporters to Dump Sarkozy

Never before has a sitting French president been dumped in the first round of elections. That outcome is now a strong possibility.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

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