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

Did Everyone see today's usa today editorial?

"Our view on Wall Street: Time to put the brakes on high-frequency stock trades"

http://www.usatoday.com/news/opinion/editorials/2010-05-18-editorial18_ST_N.htm

High-frequency trading might also be diverting Wall Street's attention from more productive activities, such as underwriting initial public offerings of stock. It is certainly diverting computer engineering talent that could be put to far better use at companies such as Google or Microsoft.

For these reasons, high-frequency trading should be discouraged. Perhaps the easiest way to do this would be to require that exchanges charge more for orders. If superfast traders had to pay what you do to make a transaction with your Schwab or E-Trade account, you can bet it would put a damper on their hyperactivity.

Backers of these traders, who range from geeks in garages to titans such as Goldman Sachs, argue that they provide a service by adding "liquidity" to the market. This is true. But it is also a clever way of saying that what these traders do — increase trading volume — is inherently a good thing.

It is not good if it can cause a market crash. It is not good if it means those with the fastest computers get the best deals. And it certainly isn't good if it means those with the fastest computers can manipulate the system to their advantage, leaving the impression that the stock market is a rigged game for Wall Street sharpies

Read the whole thing
 
What happened to the German FDP? Are they still against the FTT?
Also what about Cameron, havent heard anything from him as of late, is he still against?
 
The US is incapable of passing an FTT even if they wanted to given that the US senate can not even agree on what day of the week it is. This is a trend that will continue through at least the next presidential election cycle. So no global FTT = No FTT (that is unless you live in a socialist paradise)
 
this would be a huge opportunity for the US to gain back some of the business lost to London after sarbox, and get a ton of flow, listings, and business. hopefully the leadership of our country will look at it this way, rather than an opportunity to take more money out of the pockets of citizens to pay for the bailouts.
 
Quote from FightTheFuture:

Ottawa gives thumbs-down to bank tax

Canada launched a full-court press against the idea of a global bank tax Tuesday, as the prime minister and four senior cabinet members came out strongly against a proposal that's gathering global steam.

http://www.cbc.ca/world/story/2010/05/18/harper-bank-tax-protest.html
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This should be very interesting as Canada is hosting both of the upcoming G20 and G8 meetings in June. Canada is going to use their position as host to kill off banking taxes while Germany is going to really push for them. So I guess it's Canada vs Germany.

-Guru

P.S. My money is on Canada:)
 
http://www.businessweek.com/ap/financialnews/D9FP68J80.htm

The Germans hate the EU-PIIGS bailout and speculators, hedge funds and traders trashing their Mark-morphed Euro. German fear of inflation and financial irresponsibility is stronger than in other countries including the US.

German voters will fry incumbents worse than in the US. As in the US and then UK with earlier meltdowns, the German politicians need to serve up a pound of flesh and also fight off the short-sellers. Little do they understand that it will make market results even worse.

In the continents view, the UK has gone rouge - with the conservative winning - and acting like despised Bear Stearns not participating in the Greek bailout. Bear Stearns refused to join other investment banks in bailing out Long-term Capital in the late 1990s. No one helped Bear Stearns when they needed it in Meltdown 1.0 in 2008. Gordon Brown's UK could slow done unbridled German French fin reg but a new rouge UK can not.

The Germans and French along with the continent and Swedes have declared war over the fin reg gavel with the Brits and Americans. They are rushing to act now before the EU implodes further.

The German bailout rage will lead to an unbridled blitzkrieg to usher in a Euro tax with fiscal federal oversight. German taxpayers are footing the biggest bailout bill and they will insist on EU members adopting fiscal austerity, central budget review and compliance. You can't have a federal government with real power without a federal tax. An income or VAT is out - no room left.

I predicted this would happen if there was a meltdown 2.0 in Europe, which I have said I thought would happen for well over 6 months. I also called for the US saying no to a Euro federal tax - conveniently based on a FTT. See my article in Active Trader several months ago on the FTT and potential Euro tax, and on my blog too.

Yes, the EU could benefit from a federal Euro tax, but it doesn't help the US and the UK either. If they want a FTT for a Euro tax don't say the whole G-20 needs it too. If they hamper US hedge funds, traders and pension funds with that passport fin reg, the US needs to counter that with no FTT if the EU passes a FTT. Then we are back on a level playing field.

The German/French fin reg attack on non-Euro hedge funds - requiring a passport to Europe - is equally troubling.

If German taxpayers pay the biggest bailout share, they will want payback in new tax revenues. Many German leaders blame investment banks for helping PIIGS cheat on their reported budgets. Plus selling short right afterwards. They have followed the Goldman saga and are now pouncing.

Years ago I suggested a Social Tax concept. To base progressive tax rates on progressive social costs rather than progressive income-levels. Governments seem to be leaning this way with tax hikes based on declared social costs. Think BP paying for the oil spill and Congressional bills for a FTT - Let Wall Street Pay for Main Street. The flash crash with high speed trading is hurting our effort too.

This is no longer just political noise and it's a serious threat. I hope Secretary Geithner can hold his firm no to a FTT and the EU attack on non EU hedge funds too.

Let's see I Congress goes overboard on fin reg this week.

I've been on vacation after tax season and then helping family. I've been meaning to weigh into the discussion.

Few other notes somewhat off topic. I think this meltdown is for real. It could even be the big one. Or, the Euro bailout could work as it apparently has done in the US – which I am doubtful of. I think the private meltdown was swept under the central bank rug - parked still toxic assets. Government debt-financed wasteful stimulus and central-planning won't fix the underlying problems or face realty – a perceived constitutional birth right to entitlements in the West versus low cost non-entitlement labor in eastern state-capitalist countries.

Be careful, gold could eventually drop significantly and quickly. In my view, gold is a relic and it's not legal currency tender. Gold might be sold to meet margin calls, which could escalate very quickly in a flash crash environment. Gold is a perceived store of (herd-mentality) value. Just cause every one else crowds into the trade and the price goes up, doesn’t mean when the fire alarm is sounded and everyone rushes out of the trade at once, there is true value remaining.
 
Quote from Robert A. Green:


This is no longer just political noise and it's a serious threat. I hope Secretary Geithner can hold his firm no to a FTT and the EU attack on non EU hedge funds too.

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Bob great post as usual. I seriously doubt that even if the Obama administration did a full court press in favor of an FTT that it would ever see the light of day given the current gridlock in the senate that will only worsen for the foreseeable future
 
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