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

Everyone on this thread fighting for the sake of your livelihood , trading. I suggest you put ZDREG on ignore. His comments are never helpful and plain negative and unoriginal. I appreciate everyone doing there best and put your voice forward to fight this transaction tax.
 
Quote from TimeCorrosion:

Let me correct my own math a bit:

Suppose each trade you don't make or lose anyting on the trade itself; after one round turn trade, you are down to (1-0.005)=0.995 of your principal due to tax; after two round turn trade, your are down to 0.995^2; and after n trades, you are down to 0.995^n; and as n increases, your trading principal approaches zero; and in order just to survive, you have to make a HIGHER AND HIGHER **EXPONENTIAL** return each year the more you trade, and NO ONE can fight against an EXPONENTIAL function !!!

We will be so DEAD !!! If large banks are exempt, how is this bill call "Let Wall Street Pay for Main Street?" And tell me this is not robbery in plain daylight by the government!!! What the fcuk !!
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Here is the member who sent the IMF the ET link. What the hell were you smoking that made you think that was a good idea?
 
Quote from rsikit:

I have read a few of the comments on the IMF comment page in opposition to the tax. In my opinion I think anyone who comments shouldnt focus on the trading aspect and how it will ruin trading. I think the IMF doesnt care how it affects trading or doesnt care that it increases the cost of an sp contract , which is also what I saw on there. They are more inclined to worry about jobs, gdp, economy, the real big effect on captial flows and what not. So again in my opinion we should be fighting this transaction tax on the global level, which is what the IMF is about with economical effects in the big picture. Our domestic fight in congress is more about mom and pop retiree and the effects it will have on trading and what not.
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Yes, it is important to stay on point with what they are looking for. Read the Lipsky interview if clarity on this issue is required: http://www.bi-me.com/main.php?id=43378&t=1&c=38&cg=4&mset=

John Lipsky: First of all, I want to be clear about the subject and scope of our report. We are responding to the G-20 Leaders’ request for an analysis of the various ways in which the financial sector could help to defray the costs of public sector crisis support. Since you mentioned “taxation,” I would stress that while this may provide a convenient shorthand reference for the project, our report will encompass other possible funding sources, including some that resemble user fees.
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http://business.timesonline.co.uk/t...ectors/banking_and_finance/article6999771.ece

Emerging fear of inter-national disunity: "if everyone does their own thing":

"Darling’s big worry is that Obama’s bombshell proposals, based on ideas set out last year by Paul Volcker, former chairman of the Federal Reserve Board, will shatter the consensus within the G20 nations on banking reform".

"If everyone does their own thing it will achieve absolutely nothing. The banks are global — they are quite capable of organising themselves in such a way that if the regime is difficult in one country they will go to another one, and that doesn’t do anyone any good.”

Lord Myners, the City minister, will host a meeting at 11 Downing Street tomorrow to discuss long-term solutions to the “too-big-to-fail” dilemma.

He is gathering senior representatives from each of the G7 nations, along with officials from the International Monetary Fund, the Bank of England and the Financial Services Authority.

Myners convened the meeting to discuss the best way to ensure banks will not need taxpayer bailouts in any future crisis. One plan is to force them to pay into a global insurance fund that could support the sector in times of stress. Another is a tax on all financial transactions, known as a Tobin tax.

Some of Wall Street’s biggest banks are examining ways to duck out of the restrictions. Goldman Sachs and Morgan Stanley are believed to be in talks with the US Treasury about changing their legal status to avoid the new rules".
 
Quote from rsikit:

I was simply asking you a question, I read it and its not as bad as your little GAME OVER doom and gloom comment. Traders adapt to what they are given, well if you cannot understand that, then I mean good traders adapt. So with all your negative comments on here over the past how everyone is done, but yet we are still here kicking and that's because we adapt to the situation. There are lots of things that were done and can be done to short when necessary if that's the way someone wanted to trade. By no means would this new rule if adopted be game over as you say. It seems from your comments you are bitter for some reason at other people. Sad life you must lead
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you are correct when u say the game is not over because of this rule change.I was saying that for a number of traders it would be the breaking pt. of course the transaction tax is the main issue. that is the make or break issue for traders. there is no way a professional trader could survive a transaction tax based upon the value of the transaction. anybody who checks the math will come to this conclusion.
 
Darling is right on in times online. There is no magic too big too fail amount, activity or concept. It's the connectivity. Little AIG Financial Products was the corner stone that cracked and crashed the castle. Trading is used by banks to reduce risk as much as take risk.

Does anyone really think that Obama who never spent anytime in financial services or business or even economics understands one iota about how wall street works. Obama does know acorn and Chicago-style corruption. So he automatically thinks that wall street must be a bunch of Chicago-style political crooks too.

Obama panicked with Scott Brown and rolled out the volcker rule without proper coordination with the UK and G20 as was previously agreed too. Geithner was in line and leading us well. Certainly the US was supposed to wait for the IMF April report and the G20 was supposed to decide on issues together. Darling and others including banks are probably all fuming at Obama. Geithner must be embarrassed and cut off at the knees after his hard work to forge cooperation. The Obama financial bombshell was faster than bush jumping ahead of the UN in Iraq and certainly as unilateral. Has Obama fallen so hard and so fast that he could lose it in just a month's time? It's clear from news today about Axelrod's all political hands on deck that the white house is panicking about the midterms. Too bad this has reopened the FTT on all forums in the UK. Still think the IMF will say insurance levy over fee or tax and they may want to hold some of those premiums not trusting governments to safeguard the cash. Boycott celebrities that call for a FTT saying you need to redirect that socially useless money for their entertainment to these new taxes. iPhone
 
Quote from TPCS: it is important to stay on point with what they are looking for. Read the Lipsky interview if clarity on this issue is required
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Point taken. But you see, the IMF editors/moderators turned out to be rather selective... With the 95%+ rejection rates in mind, I submitted several letters, all equally technical and all containing insights not really that far intellectually behind those that were eventually published (the 'What the fcuk' comment nothwithstanding;):
- Estimating Tobin tax revenue (the US example)
- Estimating the "fair" rate for the financial transactions tax
- RegT cap on house market leverage; counter-cyclical Basel
and while they replied to the first one I sent, they selected for publication only the (abstract of) the middle one. Perhaps it's as simple as exceeding the user quota (I am naive enough not to use multiple identities - but I'm learning from you benwm;), or perhaps there is something more to their selectivity than meets the eye...

So given the apparent limits, can you submit yet another comment of mine (the one you see below), which is hopefully adequately general and macro-level, and completely avoids our usual obsession with Prof. Tobin's wishes.

More importantly, it comes from the corporate sector, which is the only disinterested party in this case. No more banking sector complaints about leverage limits, no more governments and NGOs praising transaction taxes to help them out of their current funding crisis (and get re-elected to boot). It is a rather technical review of policy recommendations contained in a recent McKinsey report on deleveraging. Oh, and it would suit your blog rather nicely, don't you think?;)

__________

A recent report "Debt and deleveraging: The global credit bubble and its economic consequences" published by McKinsey Global Institute (McKinsey & Co's research arm established in 1990) includes several suggestions for regulators seeking to increase financial markets stability (see URL: http://www.mckinsey.com/mgi/publications/debt_and_deleveraging/index.asp, p. 46-8).

The report argues in favor of the following stability-enhancing measures, all of which are targeting "excessive" build-up of leverage in the financial system and in the real economy, placing constraints on such build-up to avoid "over-leveraging" and ease the deleveraging process required afterwards:

1) a high-granularity (sector-level), internationally standardized system for tracking leverage should be maintained by the Financial Stability Board or the IMF, which would facilitate early identification of potentially developing credit bubbles (with sector-level leverage being proxy for such bubbles),

2) a new regulation should be incorporated in the Basel II framework, requiring banks to adjust their internal risk models to reflect levels of leverage in the relevant sectors (or ideally even narrower borrower groups) they are exposed to; this would effectively force banks to increase capital reserves in anticipation of any increases in default rates, rather than merely reacting to volatility increases when the deleveraging process is already underway (note that this assumes leverage is a leading indicator of volatility, which may be contested by banks forced to implement such models at their own expense),

3) because it would be "impractical and undesirable" for regulators to intervene at a very micro level of detail, macroprudential policy should be used instead to control leverage levels in specific (overheated) sectors of the real economy; an example of such intervention, albeit still at a national level, is a comprehensive set of "overexuberance" metrics (with readily available datasets) and a systemic risk "surcharge" over the existing microprudential bank capital requirements, recently proposed by the Bank of England (see pages 17-19 of their November 2009 discussion paper "The role of macroprudential policy", URL: http://www.bankofengland.co.uk/publ...ability/roleofmacroprudentialpolicy091121.pdf ),

4) national regulators should reassess the need for further increases in bank capital ratios, given that the leverage of the US commercial banks has already reached average pre-crisis levels by the third quarter of 2009 (the ratio of risk-weighted assets to Core Tier 1 capital is around 13.3, i.e. below the 15-year average of 13.8) and further regulation-induced compulsory deleveraging would restric credit supply to the real economy or raise the cost of credit; if this long-term leverage level were to be used as a regulatory leverage limit (i.e. if banks were required to maintain at least 7.5% of tangible common equity to secure their risk-weighted assets), then 3/4 of the banks in financial distress would have weathered the recent financial crisis,

5) central bankers should include leverage in their monetary policy objectives, on top of the traditional inflation targets, thus preventing the development of asset bubbles, not only in financial markets but also in real estate; this can be also achieved with more precisely targeted regulatory tools, such as margin requirements propagated through the broker-dealer industry (already implemented or under discussion, such as the new leverage limits recently proposed by the US regulators) or maximum loan-to-value ratios permitted in mortgage lending (however difficult they may be to implement for political reasons),

6) policy makers should reconsider the highly preferential tax and capital treatment of residential mortgages, because most bank loans are extended to finance real estate purchases (and asset bubbles), at the cost of small and medium-sized enterprise loans; moreover, equity financing should receive equal treatment with corporate debt issuance (which currently enjoys preferential tax treatment),

7) regulators should analyze and possibly limit all incentives for households to take on debt (broadly defined, not restricted to tax incentives, because they were not required for overleveraging to develop in countries such as Spain), making it more difficult to access credit, especially for less creditworthy borrowers (this should include limiting loan-to-value ratios on broadly defined household debt).
 
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