Trading Tax Would ‘Decimate’ Markets, NYSE’s Niederauer Says

[tradersboredom]

Now this tax would eliminate even more jobs in the financial sector.

This is not the time to taxing more from the economy when jobs are scarce in wall street.

This tax will just take more capital out of the market or removing more liquidity. The lack of capital is what is the problem. Liquidity is major problem in the markets with banks like C and BAC and investment bankers which don't have capital to finance takeovers. How can these banks and investment banks lend when they are insolvent or have cashflow problems themselves.

Investors won't buy stock unless their investments are liquid and stable prices. For daytraders they have limited risk but for large investors over 2 million dollar investments, they need the large liquidity of market makers or large traders and stable prices.

Capitalism to work you need access to capital.

This proposed legislation is the MOST IMPORTANT thing to happen to this trading profession. It's like legislating more people out of work in a recession.

Quote from sammybea:

Thanks for the article. I wouldn't say this is dead in the water with Pelosi/Obama running the country.

 

[Cutten]

Remember this tax used to exist, it got introduced in the WWI era and increased in the 1930s, it stayed on the books for decades. If it happened once it can happen again.

 

[OldTrader]

Quote from Cutten:

Remember this tax used to exist, it got introduced in the WWI era and increased in the 1930s, it stayed on the books for decades. If it happened once it can happen again.

Exactly. Not to mention that gap between expenditures and revenues that will be growing rapidly, causing politicians to look high and low for a place to tax someone.

This is no time for complacency.

OldTrader

 

[listedguru]

Let's hope this is true: From Robert Green

Did Chairman Frank say the financial-transaction tax is on hold pending Wall Street payback of TARP funds?

Someone sent me this article today, from Alphatrends’ blog (by Brian Shannon): http://alphatrends.blogspot.com/2009/02/traders-tax-update.html

According to this blog, a board member with the Boston Securities Traders Association met with Congressman Barney Frank last Thursday to discuss the financial-transaction tax proposal. Frank assured him it was off the table for this presidential cycle (the next 4 years or so). Frank said the only way it would be enacted is if Wall Street doesn't pay back its share of tarp funds.

The good news: This is one leading Democratic Congressional leader who will not support and pass the financial-transaction tax during the Obama administration, and he probably speaks for other leaders too (Sen. Charles Schumer, NY and Sen. Dick Durbin, IL). A GOP Congress or administration would probably never support this ill-conceived tax.

Frank’s hearsay statement “The only way it would be enacted is if Wall Street doesn't pay back its share of TARP funds” still troubles me. It’s the same rationale used in the financial-transaction tax proposals: That Wall Street should pay for the TARP bailout.

Blue-dog Democrats advocate “pay go” to raise targeted taxes and user fees to pay for targeted government spending. The Democrats blame the toxic asset mess on Wall Street (and traders), and they want Wall Street to pay for the clean up.

What’s new with this Frank hearsay statement? Only that Congress needs to hold off on the financial-transaction tax until it determines if Wall Street has paid back the TARP bailout funds. If not, then it may charge the financial-transaction tax to “pay go” the TARP bailout.

Chances are Wall Street will not fully pay back TARP loans, and TARP capital may fall in value or go to zero with nationalizations. Does this mean the financial-transaction tax is hovering over traders’ heads?

We need to get traders exempted from this carrot-and-stick approach. Traders haven’t received bailout loans or capital and again, traders are not responsible for the toxic asset mess. Rather, home owners, mortgage brokers, mortgage securities packagers, rating agencies, appraisers, sellers and investors are responsible.

 

[Random.Capital]

Quote from piggie2000:

“It would decimate liquidity in the market in an unprecedented way,”

Given the general agreement that there is too much leverage and too much speculation in the financial industry - and given that such "innovation" goes hand in hand with extremely deep liquidity - it would seem that "decimating" that which is broken is a path at least worth considering.

 

[stevegee58]

Quote from sammybea:

Thanks for the article. I wouldn't say this is dead in the water with Pelosi/Obama running the country.

I agree on the Pelosi observation but not necessarily the prez. Pelosi has crazy eyes and is a liberal true believer. On the other hand, Obama is a truly analytical person. It's too early to say what he'll do, but I think he'll listen to all sides and hopefully make the right decision. (i.e. what's right for us traders.)

 

[stevegee58]

Quote from Cutten:

Remember this tax used to exist, it got introduced in the WWI era and increased in the 1930s, it stayed on the books for decades. If it happened once it can happen again.

Source please?

 

[JB3]

^ If that above is true, we are F'ing screwed. What is the possibility any of these deadbeat companies are going to pay back the TARP money? Give me a break. That is a one way loan.

 

[blackjack007]

it has a low chance of passing, but if it does, i'd say it has very low chance of being around more than a few years.

once mutual funds jack up their expenses and limit redemptions or tack on fees to sellings shares, the public outcry will force the demoncrats to undo this lame tax.

joe public isn't against it yet because they don't realize how much it will affect them.

 

[JOSEF]

<i>Your kidding yourselves if you think this won't pass. I hope you Obama voters are happy now. It should serve as a lesson to you all about how far out of control the democrats have become.</i>

If the Republicans are opposed to this tax, they can filibuster it and get it stopped. So, if it does indeed pass, the Republicans have as much blame as the Democrats.

By the way, on CNBC I have heard all kinds of right-wingers fail to oppose this tax. Heck, Jack Welch stated that he was fine with a 0.25% transaction tax on stocks. So, if it does pass, there is plenty of blame to go around. And it should serve as a lesson to everybody how far out of control BOTH parties have become.