Well...look at it this way....
Most of the money is invested in mutual/hedge funds.....
A transaction tax would mean that there could be no active styles of management....in that the gap would go negative from performance in stocks versus bonds....and thus no further need for stocks as a vehicle....
What could happen is to impose a 2% tax or something like this....but this is also not logical because it is simply passed on.....
Also...a transaction tax on stocks is not where the crime took place....therefore the wrong asset class is being punished.....
What do stocks have to do with the mostly unregulated instruments that were causal ?
Also, if politics got stupid enough...then trading will shift to other jurisdictions....along with the tax base and capital raising.....
Companies like BATS are the future.....Just look at how fast they entered the market versus the NYSE.....They will do the same in Europe......
It seems that the arguments are too clear....and that not too much intelligence is needed......
However, direct access trading is here to stay....and because of electronic trading, transaction costs will go down to nothing.....
Also....indexing stocks only makes since when there are a lot of entities trying to outperform the index....Otherwise...the index would have to become more like a bond having to pay competitive interest....
This is why the head of Vanguard is such an idiot...he is criticizing active management...when it is active management that has enabled him to
have the product that he has....
