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

Amazing politicians in this country can even bring a tax like this up and get a hearing. This is pure socialism. Socialism did not make the United States the greatest financial power in the world. Socialism has not worked anywhere. It should scare us to death the government wants to wipe out speculation.

Capitalism involves speculation. If you open a lemonade stand you are speculating. Any business endeavor you enter into you are speculating. Guess what there is risk and you might lose everything you put in. Should we tax people for opening up lemonade stands in order to protect them from a "socially unproductive" activity that is just to risky. Should governments make those decisions for us.

Trading is no different than any other business it just happens at a faster pace. You buy and you sell to make a profit. Holding a stock position for 5 years is no more "socially productive" than short term trading. It is the same a buy and a sell just different time frames. I could buy ingredients for my lemonade stand and sell all the lemonade the same day or I could hold it with the intent that it could be worth more down the road. Both are the same activity. Both are out to produce a profit. It can be argued that the least risky of the two methods is to buy and sell all the lemonade on the same day. Who is the greater speculator in the markets the short term trader or the buy and hold crowd. Both are speculating but who is taking the most risk. I would argue to to stay overnight in the market is very risky. Of course pundits would say yes but to hold over long periods of time will come out better. That got proven wrong over the last few years. People were destroyed by holding on to long. Looks like 401k's are pretty speculative.

Speaking of "socially productive" who defines what is socially productive. Are most business "socially productive' No way most are in business to make money. If I sell video games is my business socially unproductive. If it is should the government be so concerned with my well being that they put roadblocks to steer me to something more socially productive.

This attitude we see cropping up is more than about trading. It is much bigger than trading. It is about people who want to control all our lives. Our government is under control by a majority who believe they should make decisions for us. That we are to stupid to know what is best. They believe they should steer us toward what they think is a productive activity.

What happened to the land of the free? What happened to being able to choose my own path.

If they wipe out speculation they keep us all mired at the bottom. Reality is they don't want anyone to get ahead. Speculation is how you get ahead. Every great business in America was built by someone speculating. By someone taking a chance. By risking something in order to have a shot at gaining something greater.

We need to fight this tooth and nail because it goes way beyond trading. It goes to the core to what built this nation.

Freedom

If we don't fight it they will happily drag this nation into a social welfare state.

Okay enough of my diatribe.
 
Quote from loufah:


I object to $4/gallon gasoline that is only that expensive because traders wanted to make a few billion more dollars. That hurts the entire country.
Man, speculation has to be part of the system.
You Americans live(d) beyound your means for a long time on the cost of the rest of the world by spreading inflation. The ultimate exaggeration came with the mortgage and subprime mess so that every one of you could live in houses you normally never could have afforded. I live in Europe and have to pay higher taxes (e.g. on gasoline), have to live in smaller flats/houses etc. because of that.
But ok, you are the super power/protector of freedom, and Asia and Europe were simply too dumb to come up with alternatives (and bought your debts/CDS). So it's fine for me as it is (was).
But now you begin to turn things inside out and dig your own grave by cutting your (our) freedom and capitalistic foundations. That is madness!
 
Quote from loufah:

Maybe they won't move in crazy ways. Maybe they'll move based on their fundamentals and not on manipulation. Maybe half the listed companies that shouldn't have gone public because they have negative PE and a dubious business plan will get delisted. Maybe people will invest in a company so that it can prosper over 5 years instead of 5 minutes.

the easiest stocks to manipulate are the illiquid ones. i could make a stock go up 2pts with my whopping 500k bp.
 
Quote from rsikit:

Sure rumors might be proven false and what not but by that time the stock has been cut in half and people are forced out.
This wouldn't happen if only quality, diversified companies went public. Companies that consistently lose money (like VG), companies that are selling something that is commoditized (like VMW), companies that have basically a single customer (STEC) should not be public. You don't see companies like IBM or PG make wild swings. Start-ups nowadays have a business plan that says "go public or get bought out within 6 months". That's got to stop.
 
Quote from loufah:

This wouldn't happen if only quality, diversified companies went public. Companies that consistently lose money (like VG), companies that are selling something that is commoditized (like VMW), companies that have basically a single customer (STEC) should not be public. You don't see companies like IBM or PG make wild swings. Start-ups nowadays have a business plan that says "go public or get bought out within 6 months". That's got to stop.

I disagree a rumor doesnt not know a quality company from a non quality. Either way, we should get back to the fight at hand . We do not need to argue with each other, we all know the consequences here, and we should be writing on every article we see and writing the reps.
 
Quote from loufah:

Maybe they won't move in crazy ways. Maybe they'll move based on their fundamentals and not on manipulation. Maybe half the listed companies that shouldn't have gone public because they have negative PE and a dubious business plan will get delisted. Maybe people will invest in a company so that it can prosper over 5 years instead of 5 minutes.

The financial markets are not any different than any other market where supply meets demand. If something is too expensive it will be sold and if something is too cheap it will be bought. This wont change by implementing a punishment tax on every transaction. So if you think that a financial transaction tax will make the market move less crazy and fundamentals will lead the moves, I think you need to think again. There will always be people who know a change in company fundamentals before you and the general public does and there will still be very very volatile bear markets. Now you can protect your money in a very liquid market but with a financial transaction tax you will be punished first by the tax and second by the wider spread because of the much lower liquidity. And the only thing you want is protecting your money.

p.s. sorry for my English but its not my first language :-)!
 
Geithner is testifying on the ag committee I think on derivitives reform today. We shall see if they bring up anything about the tax.
 
Btw: Even in Germany, a quite "socialistic" country, when the socialist party came up with a tranny tax in their agenda before the elections in September, they got smashed by the voters and are now completely eliminated from the government as people realized this ain't no good.
 
To ensure that the law targets speculators and not pension funds or retirement investors, the tax would be refunded for tax-favored retirement accounts such as 401(k) plans and education and health savings accounts. Additionally, the tax would not apply to the first $100,000 of a trader's annual transactions.
Sounds like this will *not* affect the vast majority of investors, only high-frequency traders.
 
Quote from faith4more:

......

Capitalism involves speculation......


Agree. Speculation is the heart and soul of capitalism. Taking that away, you will have an economy like Cuba where doctors, cleaners, accountants, cooks, engineers, cleaners and textile factory workers make the same salary. USA no doubt is heading that direction.
 
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