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

Quote from ksharmon:

With regard to Germany

To the earlier question of explaining Germany, you need to recall that Angela Merkel is only in power because she cottled together a colation government.

http://www.spiegel.de/international/germany/0,1518,657368,00.html

The agreement on how to govern Germany over the next four years runs to some 124 pages. The coalition deal that Chancellor Merkel and FDP leader Guido Westerwelle finally agreed to over the weekend has provoked fury from the opposition. SPIEGEL ONLINE took a look at exactly what it contains.

Germany has a new government after the coalition partners hammered out a deal on how it intends to govern over the next four years. Following tough negotiations lasting three weeks Chancellor Angela Merkel's conservatives and the pro-business Free Democrats (FDP) finally emerged on Saturday with a coalition agreement.

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Now, if you follow this you will see what is going on. Angela Merkel is supporting the transaction Tax. She is the Chancellor.

However, in order to be able to govern she had to form a coalition with the Free Democrats....

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from earlier--

Germany's new development minister said Saturday he opposed taxing financial transactions, putting him at odds with support for such a levy expressed earlier this year by Chancellor Angela Merkel.

"I am speaking out clearly against a tax on financial transactions which would be used to finance development aid," said Dirk Niebel, a member of the pro-business Free Democrats who took up his post in October.

"It is already a stated position of the liberal party."

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So Merkel is in favor of the transaction tax but Merkel's own development minister is against. And she has to have him and his party with her to stay in power.
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As I said earlier, since the elections, when the Free Democrats replaced the socialists and formed a coalition with Merkel's CDU, this tax is off the table in Germany. No way the Free Democrats will let it happen.
 
Quote from FightTheFuture:
they would have better access and know how to research data and have the people trained to do that
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Modesty can be harmful in this case - the fail safe option is to spam, to reiterate the obvious, to repeat ad nauseam the commonsensical. It would be dangerous to overestimate someone else's knowledge on the basis of them having a tenure. That's just the halo effect... even if you've read 800 research papers on mutual fund performance evaluation (and there are as many), that does not mean you would know the current level of market maker's bid/ask spreads... or how their strategies work (as someone else pointed out - no papers on HFT, not a single one), and how this would impact the post-tax spread levels (and it does, greatly)... well, even the current level of retail commissions tends to be overestimated in the literature by two orders of magnitude... just tell yourself if you really trust researchers who come up with such staggering statements about Forex:

"In addition, dealer-customer spreads in retail transactions are reportedly much higher than 0.1%."

(that quote comes from the 'flagship' tome on the Tobin tax, "On the Revenue Potential and Phasing in of the Tobing Tax" by Haq, Kaul, and Grunberg (eds), which is likely to inform tax policies... does it make it true, just because it was published by Oxford University Press?)
So politicians end up applying transaction costs from the 80's to the current levels of market volumes, even though these volumes are now so huge precisely because commissions have dropped 100 times since then...

So take courage everyone - academic researchers (not to mention senators) are just normal people, who simply had more time than ourselves to read and write in a very narrowly defined field (or two at the max), but their area of expertise tends to be scarce on the implementation details, their code short on performance or just plain too short to work (the Pareto rule of quick heuristic solutions applies... not sufficient here!), and the 'anecdotal evidence' tends to be obsolete, and consequently - the advice given to politicians, even in good faith - tends to be inconsistent with practicalities of real life... Yes, ivory tower dwellers badly need the view from the trenches - and it is our job to provide it before the war is over.
 
Quote from abattia:
EU calls for tax on bank transactions
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Thank you abbatia! I've contacted their flagship Today programme, listened to by the British establishment on its way to work, and the only MBA-level economist on board, Evan Davis (his Bottom Line programmes are excellent BTW), who is also presenting the Today programme, and whom I've heard refer to the Tobin tax as 'such an impossible idea'.

My message to the British media was simple: conspiracy theory. Sorry guys, this was the only foot-in-the-door technique I could come up with, which had a real chance of giving our side of the story hearing in the media court (we are facing a really formidable pre-election spin-doctoring campaign.. aka the Brownie points...). Let's just hope that such rampant jumping on the anti-bank bandwagon won't backfire for all of us...

Regarding the incorrect information contained in the BBC News article entitled: "EU calls for tax on *bank* transactions" [emphasis mine] [ http://news.bbc.co.uk/2/hi/business/8407439.stm ] :

Banks will be exempt.

Banks are already exempt from this tax in the UK (UK Stamp Duty on Share Transactions, see: http://www.lowtax.net/lowtax/html/offon/uk/uk_gotaway.html ), on account of their important market-making functions. Any exchange member firm is exempt (including individuals trading proprietary capital of such firms as spread betting shops and prop trading shops), so given that banks are exempt, the tax revenues are miniscule.

So if not banks, then who will pay the Tobin tax (see: en.wikipedia.org/wiki/Tobin_tax )?
Yes, you've guessed it: it will be you, the fund investor who will bear the cost of eliminating competition for the banks. Just as any VAT increases are included in retail prices, so the new tax on stocks transactions would be included in the mutual funds expenses, twice.

Even if the fund is exempt, it will still pay the tax, as the difference between the buy and sell prices, because banks - the market makers - will have to pay the tax on their transactions. Or do you prefer to keep banks exempt from the tax on bank transactions? Don't believe me? How about Professor Burton Malkiel (tel.: ..., e-mail: ...) in his Wall Street Journal article:

A Transaction Tax Would Hurt All Investors. The unintended consequences of the 'Let Wall Street Pay for the Restoration of Main Street Act.' [ http://online.wsj.com/article/SB10001424052748703558004574579903734883292.html#printMode ]

Thank you,
/-/
 
Quote from ranger64:

http://www.spiegel.de/wirtschaft/soziales/0,1518,666496,00.html


from the german magazine "der spiegel":

according to a preliminary declaration for the eu-summit which emerged today, there has been a surprising agreement in brussels: looks like all governments of the eu-countries have decided to jointly introduce a financial transaction tax. they want the iwf to look into the plan.
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Not to be redundant....

But here it is.....

No journalists....politicians.....the public in general understand how markets work.....thus do not have a clue as to what a market making function is....

The IMF is aware of this....as Geithner points out....

However the populist movement demands a third party decider....out of necessity....ie "a judge"....

Since market makers have to be exempt in order to have markets at all.....and since this will also exempt the banks....

Then the TT will not be an elected option via the IMF....They will endorse an insurance fund to be funded by banks.....

End of story....

Secondly....the Tobin Tax is flawed....

The Tobin Tax was supposed to alleviate currency volatility....

However....one does not have to go very far to note the error....

There are wide bid ask spreads on many smaller currencies which were meant to negate currency flight.....however it is the risk of the country ....not an imposed difference between bid ask....or elde no poor countries would have problems with their currencies....
 
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