The Fiscal Cliff and the Robin Hood Eurozone Crisis

Abstract

In a world of polarized politics that is symbiotic with the decisions of policy-making organizations, during, post, and in the transition from the recent economic and financial crises, more emphasis is foreseen in the remaining tools to combat the sluggish growth, the banks' cash excess, the low inflation and the hiccupping interest rates in the financial markets. By resorting to a trio of economic tools (taxation, interest rates, and inflation) to invigorate economy growth and protect from further financial risk dispersion, this article's hypothesis is whether to tax the banks' profits directly, thus affecting the pricing of their products as well as their economic growth, or indirectly by asking to hold higher capital adequacy ratios or in taxing their borrowing and then bails them out or bail them from within.

KEYWORDS:

• bail in
• bailout
• budget deficit
• capital adequacy
• Eurozone
• fiscal cliff
• fiscal policy
• monetary policy
• Tobin tax
• unemployment