So far indicators such as overnight deposit of banks at the ECB show ever growing astronomical figures. Clearly showing that interbank lending is still way off a situation which could be described as 'normal'.
Well ... the author came across some interesting remarks on Twitter issued by Megan Greene of RGE which said basically that researchers currently don't have more than just a clue where all this ECB cash is being directed by those banks. (No exact way of knowing) Although we sign of decreasing interest rates for state bonds it is more or less unclear where the money did go to or where it is intended to go to. So it is fair to say that the ECB released 1 tn Euro into a 'BLACK HOLE'. It shouldn't sound as a accusation but more like a cry for utmost immediate transparency in order to show economists and governments alike what channels this 'extra cash' is flowing into. By forcing banks to keep statistics on exactly that and releasing them rather quickly.
But taxation 'carrot & stick' should not only apply to banks in order to stimulate growth invoking loans but also to companies which take up such loans in order to be more competitive or produce new products etc. By giving tax breaks not only by granting a deduction of interest rates for those loans but also give additional tax breaks* simply by applying a factor which those loans can be multiplied with in order to increase their weight on the balance sheet as a foundation to calculate revenues from. Simply reduce tax revenues in the same way the revenues from highly speculative operations are increasing. Making this a fiscal 'null sum' game in the first place but giving the right incentives to business providing a decrease in government social benefit payments and in the longer term also rising revenues because of much increased business activity.
and taxation used for steering/stimulating 'real economy' not to enlarge state 'honey pot' (federal state budget)
[update Mar 12th 2012]
Thinking about inflation risks by diverting funding from financial products to investments in 'real economy' it might help when inflation is rising above unacceptable levels to tighten the demands for bank capitalization above the desired 9% according to Basel III. It should also contribute to more stability just in case the financial system gets itself again into 'rough seas'.
*Joseph Stiglitz: "If you want to encourage investment, what you do is lower taxes on firms that invest and you raise taxes on firms that don't invest."(Twitter: @joestiglitz
Some related links:
Apr 29th 2012 Bundesbank and German government about to fight real estate bubble
last updated April 2nd 17:06 UTC