Pennies on the dollar?

RebelCapitalist.com - Financial Information for the Rest of Us.

yeah, what I'm thinking. $1.25 trillion, are they worthless? Despite the Fed's printing press I hardly think such a large sum is "made up from thin air".

Today you post 3 graphs describing price changes. And, they are all going up.

On 12/15 your posting “PPI for November 2009”, you presented 4 graphs describing price changes. And, they are all going up.

Nevertheless in your 12/15 posting you concluded: “…one can see inflation is still really at bay.” So I guess those 7 up trend lines fall into the category of “My lying eyes”?

This senate will not pass anything that helps people and is best for all of the country (vs. MNCs and financial conglomerates).

This health care reform bill is a complete fiasco. Excise taxes that aren't index, weak subsidies, caps on insurance limits, mandates without opportunity for cheaper alternatives, NO cost controls. People who are defending it are trying to compare it to Dutch and Swiss models. FAR from it those models heavily regulate the insurance industry - particularly limiting the amount of profits that a company can make. Democrats screwed the pooch on this one.

RebelCapitalist.com - Financial Information for the Rest of Us.

come on, Citigroup is adding to the economy? That's the kind of institutions it would affect and it's not a big deal, they simply break up into different institutions. Happens every day with mergers, acquisitions and spin offs.

Are you claiming that the recent spin off of AOL or Skype will crash the economy? It's very similar.

It doesn't mean investment houses are limited at all.

On Cantwell, you won't see me defending her to save my soul. At every turn she has done Bill Gates "global migration" i.e. enable our offshore outsourcing, labor arbitrage, age discrimination against our employees agenda....

So, I'm not surprised in the least on that vote.

But you'd have to show me an unbiased study (not produced by the banking industry) to show why Glass-Steagall is magically such a threat for the results of such a reinstatement just reverse many of the mega mergers of the 2000's.

The Federal Reserve has bought $1.25 trillion in mortgage backed securities plus $175 billion in "debt".

That's an astounding number and is this just pure caca CDOs that are worth pretty much nothing?

I'm not hearing anything about this and to me, $1.25 trillion makes the latest Treasury screw up (don't ask them to be a day trader!) peanuts.

which is why the effort must be global and there are various proposals around the globe as a result.

JV, you need to get to specifics and calm down.

First why does this even have to be? I pay a cap gains tax, I also pay taxes on other income. here I pay a tax whether I make money or not! That's crap. You ever stop to think we pay too many taxes?

I actually trade S&P contracts, so for me the expenses would be far higher than that. But let us suppose I did trade stocks. Your example is wrong, because it wouldn't be $100 unless I purchased stock that was a dollar a share at 100 shares. Be real. Let's say a $25/share, so it's $6.25 to buy and then another $6.25 to sell, a total of $12.50. For me to break even on the tax (let alone the commission), that stock would have to move at least $.13 cents. Now also keep in mind that spreads, for the market makers to facilitate their own transaction tax, would have to widen the bid/ask spread to AT LEAST this mount (not .0025, but really .005). Today stocks are decimalized and the spreads are often a penny to two cents apart. My costs just went up about 500% just on the spread. Now if I'm able to adjust my trading strategy to accomodate this change, I may make a profit, but the average day trader (myself included) don't really make our money until perhaps 5 or 6th out of ten trades. Now, if I do make money, I've got to pay taxes on that.

Oh by the way, since you've now eliminated the independent trader or market maker, guess who steps in? Yeah that's right, you've just given Goldman Sachs a new fortune. And down the road, when Obama is out or the Republicans control congress or the white house, they will get exemptions like many instutionals did the last time we had a transaction tax.

Anyways, back to using me as the pinata. Using my S&P trading as an example (but for our hypothetical stock), I booked 27 trades yesterday (12/17/09). So let's see to buy I pay .0025 and to sell I pay .0025, that's half a percent each trade. So yesterday would have cost me just in paying the transaction tax (TT) and not counting the increased spread or commission or possible loss :

XYZ Stock: $25/share * 100 = $2500
Round Turn (RT) = .005 or $12.50
27 trades of XYZ would mean my TT cost would be $337

Now taking into account that yesterday that 60% of my trades were losses, let's assume I'm able to get out within the bid ask spread. Since market makers have to take into account the TT, then we'd expand the spread from say to .125 or $12.50.

60% of 27 trades is 16.2, so let's say 16. So let's say, I'm able to get out at the bid if I'm long or at the ask if I'm short, my cost would be $12.50.

16 * $12.5 = $200

So so far my loss for the day is $337 + $200, or $537. I've employed $2500 (or $25 * 100) to buy the stock. Now for the sake of fairness, say the remaining 11 trades are winners, and also within the new spread (or $12.50.), it could be more, but let's say I just want to play the Bid/Ask.

11 * 12.50 = $137.50
So subtract my wins from my losses and I'm at -$62.50 for my losses, plus the $337 in TT, so my total loss would be $399.50. This, I may add didn't include commission. That $337 was paid out during the day to use $2500, whether I made money or not.

Now I know what you're going to say. That's $67500! You can afford a measly $337. But that isn't exactly fair, because I'm using the same $2500 over and over again, it isn't additional money, it isn't new money, it's the same cash.

I've read DeFazio's bill, and his isn't the only one waiting to be looked at. Regarding lobbyists, how is that any different than linking to a labor union? Both have their agendas. Don't tell me they're different things, because both are representing a group for a fee. And once more, if you have one exemption, then you will open the door to the big guys.