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

Quote from ksharmon:


If this bill is passed, it will have unintended consequences that are hard for the proponents of this tax to believe.
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Nothing unintended about it.
 
my response to Ryan:

Jacob: responding to Ryan | Respond
November 25, 2009 10:41 AM PT
It’s about market participation and price discovery. The liquidity and narrowing of spread to a penny didn’t occur out of thin air. The benefits are greater market participation has help the ability of pension funds and mutual funds dramatically. In markets you must have a buyer and a sell, that integral function is dependent one the buyer or the seller to accept the risk of their counter-party. Without that component you can’t have orderly price discovery and thus increasing the cost associated to all investors. The world in evolving and markets are opening up all over the world, the US can’t afford to lose the competitive edge that it enjoys with its financial markets. There is is extreme value in all market participants, wether they are small day traders or large institutional investors. This tax would have a devastating effect on the US capital markets and their structures. The cause of the market turmoil last year was the lack of liquidity and this tax strikes at the heart of liquidity.
 
The simple point is...

Anaconda is largely correct.

There is an unholy alliance, to boot, between big gov. and big corporate well lobbied entities like GS. Back years ago stock comission fees were like 50-100 bucks EACH way. Now it can be as little as a dollar (IB).

But WS hates little retail prints like most of us. This tax, and critical big boy exemptions for GS and others, allows them to thin the herd, as we are not capitalized enough to survive the new costs of doing business.

They know this.

So does the Gov.

As usual, the little guy gets the rump.
 
Quote from Anaconda:

This has been discussed to death and so few of you actually understand what is going on.

It's very simple. The major Wall Street banks will get exemptions and the rest of the traders, particularly the small retail daytraders will go bye bye from the industry. That should create more applicants for the Armed Forces and Obama's "volunteer" programs, while Goldman and the gang get to enjoy fat ass margins on market making and prop trading. Institutions will still move stock around and pass the costs down to the investors.

Creating arguments how this will destroy jobs is like beating on a dead horse. The lackeys pushing this through publicly may not know what is going on, but those financing these lackeys know exactly what they are doing.

Get it through your head. This transaction tax is not an idiotic idea. It's great for a small minority and very bad for a large majority.

Oh and finally. The politicians do not care what you think, at least most of them. You are not the ones financing their campaigns or promising them favors after their terms. They really do not care. You can always check back to the overwhelming public resistance to the bailout bill and how that worked out.
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how would they justify an exemption for those few big players? those who caused the big mess should then be the only ones NOT to pay that tax? and every single small trader/investor who saves and invests money for retirement will pay?

that tax would put most brokerages out of business - at least all those who serve daytraders. it would hurt software- and data vendors, etc. and most of all - it would more or less KILL derivative exchanges and extremely hurt stock exchanges.

if those few big players would be the only ones NOT to pay the tax - who in the world should take the other side of their daily trading activity??? small investors who make a buy or sell every few weeks? does anyone really believe that?

how should such a tax raise a lot of money - if liquidity will simply be gone? it simply cannot work. at least not with something like 0,25% per side for every buy and sell. maybe 0,05 or 0,01 or whatever - if at all. question remains how much money it would actually raise.
 
Let's look at this from high atop the mountain. He are some of my thoughts:

- Obama, who purported himself to be anti-Wall Street during his Presidential campaign, was full of crap. He has done next to nothing in terms of Wall Street reform, and still has these Big Boys (Goldman, e.g.) in his back pocket;

- The average Joe will see this tax as a good thing, since naively they will think that this is a tax on Wall Street;

- Needless to say, this tax will hurt retail traders that do this for a living. Undoubtedly, it will put a great money of them out of business;

- Although institutions still make up a majority of daily volume, there will be decreased liquidity in the markets at large. This will result in larger spreads, and more violent moves in the markets (on events). This could actually be a lucrative opportunity for day traders that ride this tax out;

- Congress couldn't manage themselves out of a paper bag (this has been a phenomon for the last 9 years), so how on earth does Pelosi think that she can engineer a tax outside of the US borders ? Seriously, does she even have the remotest clue ?

Given the dire nature of the state of our leveraged economy, I believe that the govt will be open to any sort of tax increase. And of course, the Big Boys that provide government with contribution cash flow, will all get exemptions. I mean, why should Goldman have to pay more than a 1 % Marginal tax rate on 6 BB profit ?? Welcome to the world of Socialism.
 
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