lifestyle leader

Last week Rory asked as to the whereabouts of Paul Volcker - the elder economic statesman who has been flying unusually below the radar. Well, Volcker has re-appeared in the headlines to deliver a two-part message:

First, he has doubts about the White House's plan for fixing the financial system and is arguing that, while mostly positive, the plan risks making the moral hazard problem worse for large, interconnected institutions. This sort of contrarianism supports Rory's suspicions that Volcker has been less visible because he is not politically convenient. Nevertheless, his value-added to the Obama administration is to be a strong, independent and experienced voice. So if he is raising doubts about the plan publicly, the doubts should be addressed head-on, no?

Second, he seems to be inclined towards some sort of tax on transactions between financial institutions. I have already explained why I thought a Tobin Tax was a bad idea, but I now suspect that Volcker is referring to something different. Nevertheless, if his biggest concern is moral hazard then a transaction tax will not even begin to address the problem, no matter how effective it might be at achieving other objectives.

In other words: I'm confused.