1/4% Tax on all stock trades pushed in NY Times today

[Tom1am]

Quote from JOSEF:

The tax will have the effect of putting most, if not all, discount brokers out of business.

Furthermore, with reduced liquidity. the bid/ask spreads will be vastly higher than they are today. The obvious effect of this will higher indirect costs for all long-term investors. This, it is naive to think that long-term investors won't also pay a steep price for this tax.

Finally, the real "big boys" that this tax is after won't be impacted anyway. They will simply move their business to foreign markets that do not have this tax.

So it puts the business back where it was 30 ago before the

"Johnny..Time to rub the bunyons" commercials.

Volume used to be a few hundred thousand shares a day, now it is billions. People used to buy stocks as an investment, and even some mutual funds used to charge 8-10% loads. With the exception of trading in arcades and a few local broker houses, people actually bought a stock because they thought the business model made sense, or the fund family had a long term track record.

Doesn't happen anymore, anyone with a laptop can be atrader and swing 1000's of shares a day, and I do not think that is the original intent of the stock market to raise capital to start businesses. The poor schmoe who bought XYZ because of the busines model or dividend gets nauxcious when the market swings 1000 pts in a day, and goes in a different direction tomorrow.

Anyway, if people just bought and sold "golden crosses" they would probably be better off than trying to swing 1000 shares a day anyway, and you don't need excessive trading to do it.

If they pass this tax, all you have to do is short the indexes and cover at Dow 2000. The real good news is it puts CNBC
off the air.

Tom

 

[JOSEF]

Quote from Tom1am:

So it puts the business back where it was 30 ago before the

"Johnny..Time to rub the bunyons" commercials.

Volume used to be a few hundred thousand shares a day, now it is billions. People used to buy stocks as an investment, and even some mutual funds used to charge 8-10% loads. With the exception of trading in arcades and a few local broker houses, people actually bought a stock because they thought the business model made sense, or the fund family had a long term track record.

Doesn't happen anymore, anyone with a laptop can be atrader and swing 1000's of shares a day, and I do not think that is the original intent of the stock market to raise capital to start businesses. The poor schmoe who bought XYZ because of the busines model or dividend gets nauxcious when the market swings 1000 pts in a day, and goes in a different direction tomorrow.

Anyway, if people just bought and sold "golden crosses" they would probably be better off than trying to swing 1000 shares a day anyway, and you don't need excessive trading to do it.

If they pass this tax, all you have to do is short the indexes and cover at Dow 2000. The real good news is it puts CNBC
off the air.

Tom

It is a different world today than it was 30 years ago. People didn't depend on on 401ks for their retirements for example. A transaction tax would indirectly be added as a fee to anybody with a 401k account. As a result, everybody's returns on their retirement accounts are bound to be hit making it so much harder to retire.

There were no discount brokerages 30 years ago. The bid ask spreads were much wider. Do we really want to turn the back the clock to where it was 30 years ago? Sweden tried it and learned quickly that capital moved to foreign markets that did not have this tax. After just seven years they eliminated it.

 

[bears21]

Quote from Tom1am:

So it puts the business back where it was 30 ago before the

"Johnny..Time to rub the bunyons" commercials.

Volume used to be a few hundred thousand shares a day, now it is billions. People used to buy stocks as an investment, and even some mutual funds used to charge 8-10% loads. With the exception of trading in arcades and a few local broker houses, people actually bought a stock because they thought the business model made sense, or the fund family had a long term track record.

Doesn't happen anymore, anyone with a laptop can be atrader and swing 1000's of shares a day, and I do not think that is the original intent of the stock market to raise capital to start businesses. The poor schmoe who bought XYZ because of the busines model or dividend gets nauxcious when the market swings 1000 pts in a day, and goes in a different direction tomorrow.

Anyway, if people just bought and sold "golden crosses" they would probably be better off than trying to swing 1000 shares a day anyway, and you don't need excessive trading to do it.

If they pass this tax, all you have to do is short the indexes and cover at Dow 2000. The real good news is it puts CNBC
off the air.


what people who invest now dont understand about yesteryear is that the U.S. back then was like MSFT of the 80s and now the US is MSFT of 2009. fully blown out and not much room for growth. now its about maintance and a slower growth rate. we are no longer an emeging market yet a big cap stock as a nation. those rates of returns people saw in their retirements from the 50s through the 90s are over with. you have to trade more or atleast have a more active portfolio to try to reap the same rewards because those %s are harder to come by.
Tom

 

[Xspurt]

Let's say this tax is passed (and I believe it's a when and not an if,) what is the earliest we could be hit with it?

(It now transpires the global warming threat was a scientific fraud but I expect green taxes so why not make traders responsible for economic collapse?)

 

[tomdavis]

Quote from JOSEF:

My take is that the concern should be reversed. The Dems control the House and there is no filibuster in the House. So, it is probably more likely to pass the house. However, in the Senate we only need 41 senators to stop it. Schumer has already stated he is opposed to it. Him + the other 40 Republicans makes it 41. I am assuming all the Republicans are opposed to it.

I just spoke to a friend of mine who works in DC for a large lawfirm that does a lot of work for the financial industry. He thinks that this bill will fly though the House with little if any debate. The Senate, he says, is another matter. He told me that Schumer's opposition is largely posturing. Schumer is an expert at this. If he gets a big enough payoff for his state (i.e., votes for himself in the next election), he'll change his mind. Many of the other Democratic Senators will be influenced by the analysis that comes in from CBO and whatever testimony is given in the hearings before the vote. If the concensus is that this tax will create large-scale unemployment in the financial industry, it will die a quick death in the Senate because the all Republicans and several conservative Democrats will line up together making it impossible to get 60 votes. If the reports show that the effect on unemployment will be negligible (hard to believe, but who knows) then it may get through the Senate.

 

[bears21]

Quote from Xspurt:

Let's say this tax is passed (and I believe it's a when and not an if,) what is the earliest we could be hit with it?

(It now transpires the global warming threat was a scientific fraud but I expect green taxes so why not make traders responsible for economic collapse?)

because you are generalizing, why should all traders pay for the few institutions who are responsible. thats like me saying i think all blacks should be held responsible for violent crime. you cant lump everybody together and put a lable on them. the select few should not carve out the impression of the whole.

 

[jj69]

Quote from Ghost of Cutten:

I personally think this has about a 50/50 chance of passing in the next few years. Look at the legislation from the 1930s - that was totally "un-American" socialist and even totalitarian legislation, but because the public were so angry and didn't understand much about economics, it got passed. There were plenty of intelligent people and politicians against the worst excesses, but the crazy shit happened anyway along with the more moderate stuff. Never underestimate the stupidity and vindictiveness of the general public.

This is exactly my fear. And that public anger will slowly boil over as unemployment festers and will reach a point of explosion. Without this, reason has a good shot at prevailing. I think 50/50 is about right.

 

[rsikit]

A little perspective for all of this stuff in the media. Europe and especially the French have been huge advocaters of this tax for the past 10 years nothing has changed, and actually in previous years they were louder in their support for it. Plus Defazio's bill from the beginging of this year the 111th session of congress, the one that helped start this thread ahd 13 co sponsors had 13 co sponsers, the new bill being drafted has 5 co sponsors, and other similar bills by John Larson has no co sponsors. The bill from sept 26 2008 in the heart of the crash/crisis had 34 co sponsors and also never made it anywhere. So while we are worried and we should be by being proactive, it had more sponsorship last year then this year. The vocal advocates if you research have gone back years with their advocacy for this bill. It was closer being passed last year in Sept becuase it was in the original Tarp bill that was voted down. Then taken out of the Tarp bill that passed. We have to be vigilant and its hard to take a rest here but we have to take some goodness so far that the leadership that needs to pass this has not endorsed it at this time and has basically passed the buck to having it done universally or globally. Which 2 countries we know would not support are Sweden and Switzerland, who have both come out and said we will not support this tax. Obvioulsy Canada and Russia came out to but who knows with them. Russia is emerging and could feel the need at some point to do this as other emergin markets to stem capital flows. Right now all we go on is lip service by the media and let the media whip us up into a frenzy and we should fight this every step of the way, but again remember it is media right now. It is media that keep touting this but also keep touting the same individuals over and over from the past few years. And if you look at the co sponsors from last sept to the bill this past Feb 21 have dropped off the co sponsor list, and we have not heard from them about this tax. By the way for the OP that was asking how quick they could get this into action, I have seen 2 things, one is a union sugesstion which I take with a grain of salt that said let the tax start 3 years after the bill is enacted. And if you read the bill from last sept, it said in the bill that this will be enacted on Jan 1st 2009 so basically they were waiting three months to enact it last year if it had passed. That bill last year was HR 7125

http://www.govtrack.us/congress/bill.xpd?bill=h110-7125

 

[Xspurt]

Quote from bears21:

because you are generalizing, why should all traders pay for the few institutions who are responsible. thats like me saying i think all blacks should be held responsible for violent crime. you cant lump everybody together and put a lable on them. the select few should not carve out the impression of the whole.

Do you understand what a fraud is? lol

I'm a trader buddy and making traders responsible for big bankers greed is as big a hoax as the faked data on global warming that's now coming out of the woodwork.

 

[jj69]

Quote from rsikit:

Time is on our side. They have the best chance to pass this now. The longer it drags out the better for us.

I disagree. I think they have very little chance of passing it now. In fact I'd love to see this come up for full vote right now so it can get shot down for good. I think as time drags on and the Dems get more and more desperate and pressured with election looming, the more dangerous they become. If we survive next year with big repub victory in nov., odds shift in our favor considerably i would think.