What's Important in the Financial World (1/23/2013)
European Finance Tax
Financially troubled Europe may have found a new way to bring in billions of dollars in revenue. It will place a tax on transactions by banks and related companies. That could pour cold water on the trading businesses in the region. According to Reuters:
The new tax was inspired by a political drive to make the financial industry contribute more heavily after a financial crisis in 2007 sparked a global economic downturn. It is due to be rolled out with 10 other European countries, including Germany and Italy but not Britain. Critics say such a tax can only work if it is imposed worldwide, or at least Europe-wide, and that its adoption in around 2015 risks pushing trading and jobs elsewhere.
London Whale Apologies Continue
Jamie Dimon's never-ending explanation of the "London whale" debacle and his round-the-world tour to apologize continued at Davos. Reuters reports:
JPMorgan Chase & Co Chief Executive Jamie Dimon apologized to shareholders for the $6 billion loss caused by the so-called "whale" trade, calling it a "terrible mistake," but said the bank has moved on and is still highly profitable.
"If you're a shareholder of mine, I apologize deeply," Dimon said at a presentation at the World Economic Forum in Davos, Switzerland. "But we had record results and life goes on."
Despite a $6.2 billion loss from bad trades in JPMorgan's chief investment office last year, the bank still managed to earn a record $21.3 billion in 2012.
Views of a 2013 Recovery
The World Economic Forum in Davos will give economists a chance to flog their views of the 2013 recovery, and apparently they will not be optimistic. According to the Financial Times:
The world economy appears set to emerge slowly from its hangover after the financial crisis but momentum on policy reform must not cease, economic experts attending the World Economic Forum in Davos will tell business leaders this week.
Economists sense that the risks to recovery are now much lower even if the pace of any upswing is likely to remain weak and their broadly positive sentiment is also shared by most officials attending.
Christine Lagarde, managing director of the International Monetary Fund, will go to the Swiss mountain resort with the message: "We stopped the collapse. We should avoid the relapse. It is not time to relax".
Laboured as she recognised her buzzwords were, they sum up the views of leading economic thinkers attending Davos who have lost last year's fears of an imminent collapse of the euro.
Filed under: 24/7 Wall St. Wire, Market Open Tagged: featured