SEC may Reinstate Uptick Rule

[Tide31]

Quote from sprstpd:

Somewhat, however I'm sure people wanted to become rich when the top tax bracket was 39% and when it goes back to that level, I'm sure people won't mind becoming rich then either. And yes, people got rich when the highest tax bracket was 39%.

All I've heard from Obama is that he is going to repeal the Bush tax cuts. You may not agree with that, but it seems reasonable to me.

Everyone says that Obama is a Keynsian economics fan. Did anyone see the Newsweek parody of this? "We Are All Socialists Now", this month.

Yes big gov't spending in a downturn is a major Keynsian theory. However, cutting taxes at the same time to spur on the economy is the other part. When economy recovers, you make up the deficit with higher taxes Keynes said. 39% tax rate led to surpluses, but economy was good then, big difference. Raising taxes in this environment has historically been a huge mistake and goes opposite to Keynes thinking. Cut the Cap Gains tax and cut Corporate tax and he will be a true Keynsian, and a hero for pulling us out of this and we will be pushing to have him in for a third term after 8 years. Will never happen though, - politics. What we are seeing is Marxism.

 

[gnome]

Quote from sprstpd:

"... if we need to tax the more fortunate people who live in this country a little more in order to reduce that deficit, then it seems reasonable to me.

Wouldn't seem so "reasonable to you" if you were one of them. It's not like somebody just GAVE them extra money and now they have to give some of it back..

 

[sprstpd]

Quote from gnome:

Wouldn't seem so "reasonable to you" if you were one of them. It's not like somebody just GAVE them extra money and now they have to give some of it back..

If I said I am one of "them," would that change anything?

Here is an article that is related to this topic:

http://www.timesonline.co.uk/tol/money/tax/article1996735.ece

 

[bevo96]

Quote from sprstpd:

I agree that the government seems to piss away money like its nothing and if they are going to do that, why give them anymore money? Obviously if I could see the future and knew whether or not the money would be pissed away beforehand, it would make my decision pretty easy. However, I do know that the deficit will eventually crush us all and if we need to tax the more fortunate people who live in this country a little more in order to reduce that deficit, then it seems reasonable to me.

Ok,

If we really all agreed that the deficit (which the previous Republican administration created to some unnecessary degree) was a problem, then why are we cheering all of the new government spending that is being rammed down our throats. 650B for healthcare on top of everything else??? How does that help lower a deficit? How efficient do you think ANY government program will be?

In actuality the RICH are not going to pay for this. Most of the really rich (Net worth greater than 25MM) dont generate much ordinary income, and when they do its usually in an offshore trust, corporation or some other tax efficient entity. THE PEOPLE WHO PAY FOR EVERYTHING ARE THOSE WITH NET WORTHS UNDER 5MM WHO MAKE 250K+ A YEAR. ITS EASY TO BE A LIBERAL WHEN YOU ARE 25MM+ RICH. MARGINAL TAXES DONT AFFECT YOUR MUNI BOND INCOME.

 

[Ivanovich]

I'll probably get flamed for this, but it seems that whenever the few manipulate prices that affect the many, this crap is going to come about. It was the same thing when oil shot into the stratosphere - people, senators, the mob, if you will, started going after speculators.

Many people (on this site and elsewhere who traded) complained when the price fell through the floor: "Where are the cries about speculation now? The speculators are selling, why not prevent them from selling?"

The answer, of course, is obvious - the mob, or general population, is not hurt by low gas/oil prices. But when prices are sky-high, then they have to figure out a way to pay their bills and make ends meet. The government hears the people say "why must all of us go without because a few fat cats are in control?" And I kinda agree with them.

The same is true now with the market. Stocks fall through the floor, and this hurts the mob. The mob looks to those speculating on driving prices down. And I truly believe there are some out there doing this- to what effect they can is another argument. But when big money - or dark pools of liquidity out there - begin to cause pain to the mob, you'll always see something happen to try to stop it.

One can argue that the government's job is to protect it's people. That essentially means the mob, but government is actually much better at protecting special interests. However, when things get extreme, as speculators tend to do (push things to the extreme) then you'll see an equally strong political/legal answer to try to balance it.

It's just the way of things.

 

[Ivanovich]

Quote from bevo96:

Ok,

If we really all agreed that the deficit (which the previous Republican administration created to some unnecessary degree) was a problem, then why are we cheering all of the new government spending that is being rammed down our throats. 650B for healthcare on top of everything else??? How does that help lower a deficit? How efficient do you think ANY government program will be?

In actuality the RICH are not going to pay for this. Most of the really rich (Net worth greater than 25MM) dont generate much ordinary income, and when they do its usually in an offshore trust, corporation or some other tax efficient entity. THE PEOPLE WHO PAY FOR EVERYTHING ARE THOSE WITH NET WORTHS UNDER 5MM WHO MAKE 250K+ A YEAR. ITS EASY TO BE A LIBERAL WHEN YOU ARE 25MM+ RICH. MARGINAL TAXES DONT AFFECT YOUR MUNI BOND INCOME.

First, I don't think many people who know better (outside of the mob) are cheering any of this spending.

Second, while the rich have - in the past - been great at hiding their income, I think you've seen the end of that era. Tax havens are drying up faster than a puddle in the desert. Gone are the days when you could hide your money so easily.

 

[bevo96]

Quote from Ivanovich:

First, I don't think many people who know better (outside of the mob) are cheering any of this spending.

Second, while the rich have - in the past - been great at hiding their income, I think you've seen the end of that era. Tax havens are drying up faster than a puddle in the desert. Gone are the days when you could hide your money so easily.

Ivan,

My point is that RICH is not defined by ordinary income, its defined by net worth.

Lets assume your average tax rate is 30% and you make 250K. This means after taxes you are taking home 14,500/month. Certainly you are not starving, but you are NEVER going to get anywhere close to rich. If one lived frugally (cheap house, cars, no travel) you could imagine saving 10K a month assuming you have no major expenses (unlikely). Maybe I have a skewed view of what "rich" is but I dont think this gets you close.

 

[flytiger]

Quote from Tide31:

Everyone says that Obama is a Keynsian economics fan. Did anyone see the Newsweek parody of this? "We Are All Socialists Now", this month.

Yes big gov't spending in a downturn is a major Keynsian theory.

That's only because his Father was from Kenya. He thought they said, "Kenyasin Economics."

 

[murray t turtle]

Quote from Tide31:

Reinstate uptick. ..... with ETF's like SKF. I think Cramer and beaurocrats are trying to rig the market only to go higher. They all have a vested interest in a higher market, as do we all in the long run. However, we are/were a free-market system.

SKF.... To say they are the reason for pressure on bank stocks is misguided to say the least. How about overleverage, bad lending practices, recession, dividend cuts, etc...

There is a reason that the market is where it is. Stocks trade off of defineable parameters, like PE, cash flow multiples, margins, book value, etc... I hear noone saying that the market, or bank stocks specifically, are so very under-valued with the current economy that it warrants a change.

Modern day Robinhoods, thats what we have here. Re-distribution of wealth. This scares me to no end. It's like we are in Sweden, except without all the blonde women. New healthcare system financed by taxing the wealthy in headlines today. Am I crazy, or does this concern anyone else?

==============================
Nice balance Tide31

Interesting thing about Citigroup,reliable reports let us know they complained privately about short sellers to the powers that be. Did not help Citigroup much @ all.Did not help LEH at all.

Some of the smaller lenders & community lenders/givers may do well;,many reasons for that, for example they dont waste money on private corp jets[during downtrend] like Citigroup attempted.

Thoughtful work here,Tide31.Yes this concerns many, but i dont know anyone who thinks[who really thinks/laugh out loud] that the gov can run GM or sickcare systems./health care systems.

=========================================

And the courts/legal system can help a little bit-founder of weather channel said Algore should be sued for fraud.

Best of times & the worst of times.
%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%

 

[bellman]

End of discussion. Any reasonable person can see the validity of the words of angrycat. The thread is closed in my book.

Quote from Angrycat:

It's not a stupid question. You are correct. The rule was stupid because it was an attempt to bias the market to the upside. Biasing a market is what created the housing bubble.

Since we still our all-knowing, omniscient government still hasn't learned that creating positive bias predisposes markets to bubbles (and it doesn't care to learn, as long as learning is not politically expedient), it will continue to create distortions. The question is why not a downtick rule for buy orders. Isn't irrational exuberance equally dangerous?

The SEC study found that liquid stocks were utterly unaffected by the uptick rule when the market went to decimalization. In illiquid stocks, it caused the bid/ask spread to widen and sucked the liquidity out them. Thus, the uptick rule was detrimental to illiquid stocks (where retail investors are over-represented as a percentage of all traders) while having utterly zero effect on the rest of the market.

Specialists and market makers have been gunning for the rule since its repeal because it gives them more control of the orders and increases spreads in less liquid stocks, increasing the profit for them and increasing the price for the customer.

Landis thinks that writing VELOCITY in all caps will suddenly make the term meaningful. The speed at which prices move is utterly irrelevant and if the market is too fast for him, he probably should stay out of it. In fact, the faster the market clears, the more efficient it is. The intention of the uptick rule is to prevent markets from clearing efficiently. The effect is retail customers get screwed. Professional traders have never been inconvenienced by this little rule. That's how the SEC "looks out" for the little guy.