Would Bernie Sanders Kill Trading As We Know It?

[i am nobody]

http://www.businessinsider.com/swed...nancial-transaction-tax-wont-work-2011-9?IR=T

When Sweden began taxing financial transactions in the 1980s, "between 90%-99% of traders in bonds, equities and derivatives moved out of Stockholm to London," Borg said.


The writer of this article is a former economist at the Swedish ministry of finance and the country’s Riksbank
http://www.ft.com/cms/s/0/b9b40fee-9236-11e2-851f-00144feabdc0.html#axzz3zm34Cq21

In Belgium the biggest broker Binckbank said that in all European countries where they are active, volume went up, but in Belgium it went more than 10% down in january because of the speculationtax. Also the volume from the taxed items lost 50% in 1 month time, and was, or switched to non taxed items, or investors moved away from the Belgian market. This reduces the income from this tax already by 50% from 34 million to 17 million EURO. And the bank thinks this is only the beginning of a huge shift of capital.

 

[d08]

Ironically the UK had and still has an FTT called the stamp duty, so the Sweden experiment points more to poor design then damning the FTT idea itself (which I still personally think is a bad idea).

Weren't all banks exempt as market makers?

 

[Humpy]

The politicians are always looking to raise more money. Probably to waste on Trident submarines etc. if you are in Britain. They could kill the markets for the UK or anywhere else given the opportunity.
They would put more tax on the super rich but then donations and kick backs would dry up.
The better areas of London are not for the Brits so much anymore. Foreign oligarghs etc. are buying up the best areas. We have to make way for them and shift out to the suburbs ! That's capitalism.

 

[tommo]

Again with those pesky facts, something you really need to work on there tommo. Where exactly did your 93% drop in trading volume in Sweden number come from? According to the most referenced academic paper regarding the matter, "50% of all Swedish trading had moved to London." (http://www.cpb.nl/sites/default/fil...ial-transaction-tax-review-and-assessment.pdf). Ironically the UK had and still has an FTT called the stamp duty, so the Sweden experiment points more to poor design then damning the FTT idea itself (which I still personally think is a bad idea).

So did you make up the 93% number completely, take your best guess average of the drop in equities, derivatives, and bonds trading and present it as a factual number, or are Anthony et. al full of crap?


The funniest part is that you fabricated this exaggerated number in support of a post saying that you weren’t resorting to hyperbole!

"Even though the tax on fixed-income securities was much lower than that on equities, the impact on market trading was much more dramatic. During the first week of the tax, the volume of bond trading fell by 85%, even though the tax rate on five-year bonds was only 0.003%. The volume of futures trading fell by 98% and the options trading market disappeared. On 15 April 1990, the tax on fixed-income securities was abolished. In January 1991 the rates on the remaining taxes were cut in half and by the end of the year they were abolished completely. Once the taxes were eliminated, trading volumes returned and grew substantially in the 1990s.[44]"

Dam those pesky facts eh Sig? Keep trying to justify your arguments. You might get one of them right.

 

[Frederick Foresight]

Look, guys, if the FTT is as big a turkey as you say it is, then why worry, since Congress will never let it fly anyway? A lot of unnecessary angst, wouldn't you say? And while we're on the avian metaphor, I don't think Bernie is a fool. He might want to try and give the goose a squeeze, but even he doesn't want to kill it.

 

[i am nobody]

Places like Dubai, in fact all arab countries that have billions of dollars, can start an arabian Nasdaq or CME. These arab countries have a huge problem: they have to prepare for when oil will be finished.
They have to create new economical projects to replace the diminishing income from oil. Dubai is already a big international financial center. They have the money to become a real competitor for Western financial markets. And they are not with their hands tight like many Western countries.
This FTT has the potential to explode in the face of the Western governments and make so much damage that recovery will be impossible. Sweden never recovered more than 50% of the volume they had before taxing.
Huge amounts of capital will try to find a new and better location. And Dubai will be one of the big winners. Just watch their two airports and how the are connected with the rest of the world.

 

[Sig]

"Even though the tax on fixed-income securities was much lower than that on equities, the impact on market trading was much more dramatic. During the first week of the tax, the volume of bond trading fell by 85%, even though the tax rate on five-year bonds was only 0.003%. The volume of futures trading fell by 98% and the options trading market disappeared. On 15 April 1990, the tax on fixed-income securities was abolished. In January 1991 the rates on the remaining taxes were cut in half and by the end of the year they were abolished completely. Once the taxes were eliminated, trading volumes returned and grew substantially in the 1990s.[44]"

Dam those pesky facts eh Sig? Keep trying to justify your arguments. You might get one of them right.

Again, where did your exact 93% number come from? I see it nowhere in the information you provided? In fact the additional information you provided conspicuously excludes stocks, which presumably made up the majority of the 1984 Swedish marketplace volume. That seems to indicate that you fabricated the 93% number, although I'm happy to be proven wrong if you let us know where you got it? I'm guessing you came up with some kind of average of the numbers above in your head, without any knowledge of what percentage of that market was made up of stock, bond and futures trading, and presented it as an exact number, not "about 90%", but 93%. That's intellectually dishonesty if not outright fabrication.
Again, I agree FTTs are a bad idea. We're on the same side here. I don't agree with people making up or approximating numbers and presenting them as exact fact. I know the overall number of 50% of all transactions doesn't make your point nearly as well as cherry picking the largest numbers regardless of what percentage of the market they made up in 1984 Sweden. However it is the truth and if we're going to have a reasoned, well-intentioned discussion about the issue we need to be intellectually honest and bring up all the aspects even if they don't paint a story of imminent doom. You lose credibility and become less and less effective every time you make up what you purport to be an exact number from an exact source but which is really just your best guess estimate. Not sure why you can't see that.

 

[kut2k2]

I'd be curious what examples you have of a tax, a straight up tax, being imposed by executive order? We get it, you don't like President Obama. Since this conversation isn't about him, he hasn't proposed an FTT, and a basic understanding of executive orders make the concept you propose nonsensical, what exactly were you adding to the conversation? Your obsession is a bit sad really.

Sig, you must understand that for Scat, everything begins with race. Barack Obama is Black, so Scat is in no way objective about him from square one. Scat's racist posts in the toxic dump known as Politics & Religion are legendary even there. Then Obama had the gall to get elected President of the United States, which must have sent Scat's blood pressure up to the redline. Doesn't matter what Obama does, Scat and his ilk will find a reason to hate it, because they hate him uncompromisingly, because they hate Blacks uncompromisingly. That's all.

 

[felixbocharov]

I would not bet on that. The idea of robbing the haves and pocketing easy money corrupts people.

He has some good points, the distribution of wealth is really dishonest, also "Capital" by Piketty is worth reading.

But I thought he is lacking a charisma to convince people, buy he was pretty strong in New Hampshire, he beat Hillary badly, and I don't know what to think about it right now...

 

[gkishot]

He has some good points, the distribution of wealth is really dishonest,

Interesting statement. What would be "honest distribution of wealth" and why?