IMF's Strauss-Kahn casts doubt on transaction tax.

Reuters reported:

A tax on financial transactions to help pay for bailouts of failed banks would be difficult to devise and easy to avoid, the International Monetary Fund's managing director said on Wednesday.

Nonsense. His point was:

I have been a big fan of the transaction tax in the 1970s but since then a lot of things have changed. What has changed is the technicality of the financial industry," Strauss-Kahn told the European Parliament.

What is obvious is it becomes more and more easy to build derivatives to avoid a transaction tax

I have three responses.

First all derivative deals need to be recorded now anyway if we are to regulate finance, so this is just an excuse.

Second, derivative dealing not subject to financial transaction taxes by banks can easily be subject to those taxes - simply do it on gross turnover.

Third, if any derivative deal is recorded in a place where it was not arranged or in the place where the underlying asset was not located make it an offence not to declare it in one of those two places.

Problem solved.