But this comes extremely close. We desperately need new tax receipts. You can daytrade with a miniscule .25% tax on each transaction. Twentyfive cents on a $100. Come on seriously.
Once more, how do you think the Street will react once they see this bill pass? Secondly, when when you remove liquidity markets get more volatile as you remove participants. I'm trying to get a copy of the article mentioned below. But the fact remains, liquidity is a major issue.
Abstract This study examines the impact of a stamp tax rate increase on market behavior, using data from two stock exchanges in China. We find that when the tax rate increases from 0.3 to 0.5% (which implies that the transaction cost increases by about 1/3) trading volume decreases by 1/3. This implies an elasticity of turnover with respect to a stamp tax of −50% and an elasticity of turnover with respect to transaction cost of −100%. The markets’ volatility significantly increases after the increase in the tax rate. Furthermore, the change in the volatility structure indicates that the markets become less efficient in the sense that shocks are less quickly assimilated in the markets.
I'm afraid I'm with ANON above. When Cantwell "supports" something it is the sure kiss of death (in other words, strictly grandstanding eye candy --- nothing but show).
Remember her last minute "support" for that public option?
The tipoff is Steny Hoyer suddenly voicing support in the House. Sorry, there's no way Hoyer is throwing his financial services' masters under the bus.
This is simply yet another diversionary tactic to scare up donations and throw business to the telecoms.
Sorry, but their track records (and voting records) precedes them --- and anything McCain is always suspect!
Commodity groups oppose a tax on trading financial instruments proposed by Rep. Peter DeFazio, D-Ore.
The bill -- HR 4191, the "Let Wall Street Pay for the Restoration of Main Street Act" -- was introduced in the U.S. House of Representatives on Thursday, Dec. 3. Sen. Tom Harkin, D-Iowa, was expected to introduce matching legislation this week.
DeFazio calls it a "minuscule" tax, amounting to 0.25 percent of stock transactions and 0.02 percent of the sale of futures contracts.
Farmers and ranchers use futures contracts as a hedge against price fluctuations, as do elevators that buy and sell grain.
Bethany Shively, spokeswoman for the National Cattlemen's Beef Association, said such a tax would impact a producer's effort to stay in business by buying and selling futures.
"Any additional taxes or fees on these instruments would be a tax on ag producers, and that is unacceptable," Shively said. "This type of proposal would put jobs at risk, not help offset their creation."
DeFazio said the tax could raise $150 billion annually. Half of that will fund job-creation programs and half will go directly to reducing the federal deficit, he said.
DeFazio said the measure skirts the middle class by exempting retirement, education- and health-savings accounts from the tax, and $100,000 in taxable transactions would be exempted annually.
Daren Coppock, CEO of the National Association of Wheat Growers, said the tax would only degrade the markets that commodity growers rely on to help moderate exposure to market swings.
"Adding a tax on financial instruments and futures contracts would be counterproductive to the goal of helping those markets recover or function more efficiently," Coppock said.
Sorry, but this tax will not do what you want. And there is no way you will get this to go global. There will always be a country that will want the capital, like Singapore or Hong Kong. If that's ok with you, then tell that to young companies that want to go public.
I will be blunt, I'm against this. First it would put me out of business, as I day trade to put food on the table and pay my bills. Secondly, this bill will not do what you think it will. Thirdly, despite DeFazio and Harken and your 21 congressional supporters, this bill will never get anywhere and thank god for that.
Do you really believe you will get the money to fund a jobs program with this? The moment you enact this, at best you will get one year's worth and even there it won't reach into the 100 billion mark. You will kill liquidity in the markets, and while you may not think you're affected because you don't actively trade stocks, you will get hit. How? Index and other funds. Each day they need to adjust their holdings to match performance to a key benchmark. You think they will eat up that cost? Never, they'll simply pass it on to you, and at best you will see a lower return on your money.
Then there's liquidity, though you may hate people like me, the fact is if you needed to get out of a position, we're here to do it. Instead, what will happen, you will see spreads widen, and volatility increase. You didn't care for the wild swings in Sept-Oct of '08? Well guess what, that may become norm.
You don't think there won't be exemptions? In the UK and other European nations there were. But for those not given such a privileged, they moved their money to either new instruments that were exempt or to other countries. And trust me, the moment this is passed, every big institutional player like Goldman or Merril will find a loop hole.
I know a lot of you think "speculation" is evil or useless, but it isn't. You will tell me that I should hold long term, but let me tell you that my risks are better when I close out. Buy-and-hold doesn't work, unless you can nail a good deal and buy like Warren Buffet size blocks. All those investors in Enron or At&T or GM or Fanny Mae, who held on for years got burnt. Me? Yeah I may make nickels and dimes and dollars here or there, but a I can sleep at night knowing I'm out of anything that would hurt me financially. Why is that so wrong to people like you?
Lastly, the blame, it wasn't the stock traders or the futures traders that did this. It was the real estate folks and the derivatives tied to that. I know I know, it's "Wall Street," well that's like me bashing all the unions because of some corrupt Teamsters in Chicago or something. If you want to say it's connected, then tell me where I caused someone to lose their house?
I get the 'o' in "Euro" because it' denotes EUROpeans or EUROpe. But "Gulfo"? That reminds me of the talk of a single North American currency back a few years ago, dubbed the "Amero". Honestly, a little creativity in the name of a new currency should be a mandate in building these things. We originally had the Shilling and the Pound in the early colonial days. The "dollar" has a mixed origin, we officially borrowed the name from the Spanish Dollar because when we were designing our currency, we used that as a template. But there was also another continental influence as well, the German Thaler was also considered a template, this was used as one of the primary currencies in the Holy Roman Empire. Ironically enough, Spain would forfeit it's Dollar for the Peseta when it joined the Latin Monetary Union. Other cousins to the "dollar" that appeared in that era were the Dutch daalder, the Bohemian tolar. Hrmm...I'm noticing a trend here, there seems to be similar sounding suffix vogue going on here.
Ok, I know completely off topic, but hey history tends to repeat, and this is no different. The traditional currencies of the Gulf/Middle East region were the dinar. The Dinar itself is the child of the ancient Roman Denarius. In fact, the Arabs have a history of using asset-backed currencies, primarily gold. For centuries, the Gold Dinar was the currency of various caliphates and empires from North Africa to India. Outside of the Gold Dinar was I think the SIlver Durham or Dirham as the only other viable currency for trade in that era.; I had a professor who believed that the town of Durham, NC was actually named after such a coin, but who knows. A Muslim friend of mine said that the Quran actually stipulates that the zakat (tithing) be in gold or silver coinage, none of this funny fiat money.
Don't be surprised if in the 21st century, that these Gulf States create adopt a new Dinar. In the past, it was the Gold Dinar, perhaps now it will be the Oil Dinar?
Thanks midtowng. I couldn't find the exact amount Citigroup was going to get when I saw this earlier.
It seems to be all about helping Citigroup look better than they really are.
If ever there is an institution that needs to be broken up, it's Citigroup, not only from their own current health, but what they have done since the repeal of Glass-Steagall. Their influence and activities from dot con to enabling offshore outsourcing (through capital, although they also offshore outsource) and bad trade deals....
It's just so obvious. A few "chosen ones" don't have to play by any of the rules others do....at all costs, even putting the U.S. in serious national economic risk.
The Internal Revenue Service on Friday issued an exception to long-standing tax rules for the benefit of Citigroup and a few other companies partially owned by the government. As a result, Citigroup will be allowed to retain billions of dollars worth of tax breaks that otherwise would decline in value when the government sells its stake to private investors.
The actual value of this exemption could be zero (if Citi makes no profits) or up to 40%, roughly $15 Billion.
The IRS, an arm of the Treasury Department, has changed a number of rules during the financial crisis to reduce the tax burden on financial firms. The rule changed Friday also was altered last fall by the Bush administration to encourage mergers, letting Wells Fargo cut billions of dollars from its tax bill by buying the ailing Wachovia.
"The government is consciously forfeiting future tax revenues. It's another form of assistance, maybe not as obvious as direct assistance but certainly another form," said Robert Willens, an expert on tax accounting who runs a firm of the same name. "I've been doing taxes for almost 40 years, and I've never seen anything like this, where the IRS and Treasury acted unilaterally on so many fronts."
"Maria "I'm Bill Gates' personal representative" Cantwell"
LOL! So true. Did Cantwell check with Bill Gates on Glass-Steagall?
"Dodd is supposedly dead Senator walking btw (in terms of his prayer's chance of getting re-elected) (ah Connecticut, are they getting a clue yet?)"
What's with these Connecticut Senators protecting entrenched banking/insurance interests? The other, Liebermann, is killing health care reform. I guess the state is too close to Wall St and imagine many who work on Wall St. live in Connecticut.
I need to read the actual legislation but I've been all for a Tobin tax, or transaction tax.
You might mention to Mr. Hirsch that he just needs to create an account, that we're not like other sites where there is only one account or requires special something....the architecture here is one of a community blog, so he could have his name on the piece as it goes out into the wild world of RSS feeds.
But great post and love DeFazio, now I just have to parse the actual bill.
We also need this on a global scale, else trades will happen on other exchanges not subject to the tax.
that entire "soup can label" mentality drives me bats. as if "brand name" guarantees "quality"....but on the other side and this does include some ivy schools, they appear to be watering down the difficulty of a Bachelors these days and moving it to a Masters which hurts all of those who got the original difficult Bachelors.
But on that entire "elite" institution thing, yeah right.
While I readily concede that Harvard and Hopkins have some first rate minds (and spend more money on research), the "Ivy League" mentality that considers one degree better than another (i.e., apples to apples) seems odd at times. Yes, a Wharton or MIT pedigree help you land that first job, but from then on it matters less than what you do with your opportunities. The annual ranking of schools and departments gets almost nonsensical. At the private university where I got my PhD, we were in the middle of the "quality" range while Harvard, Columbia, and Berkeley were considered more desirable. But where did our professors get their doctorates? From Harvard, Columbia, and Berkeley, of course. The differences were perhaps price of admission. But once in a professional career, no one ever asked me where my degree was from -- the guy in the next office had his Harvard pedigree on the wall, but we made the same salary and published in the same journals. I was even asked to serve on advisory boards at the "better" schools, which blew my mind. I am reminded of Malcolm Gladwell's "Outliers," in which he observed that above an IQ of, say, 130, your chances of getting a Nobel are not statistically improved by being a lot smarter.
When I hear that a degree from Harvard or Yale means a better education, I have a four letter response: "LTCM." Or maybe Bush.
But then, I did not get an offer from Goldman Sachs -- so my opinion may carry less weight among the elites. Perhaps it's just as well.
Frank T.
Midtowng's analysis of the problem is dead-on. I, too, am old enough to remember all the promises that those valuable manufacturing jobs would be replaced by "thinking" jobs.
Remember, also, when they used to say America enjoyed the "highest standard of living in the world." They don't say that anymore, do they?
The bottom line is this: We need to bring these industries back to the United States of America. We are so de-industrialized now, what's to stop the Chinese from invading us right now? We get all of our steel from them and others overseas. The policymakers have forgotten: these guys are still the Communists and they still have the same goal--World domination. Economic conquest is just the beginning.
We need to bring back steel, textiles, auto production, televisions and electronics--everything that we can until our people have enough good jobs and everything used by our armed forces is produced here in the United States. Free trade isn't free. It's been a cruel joke.
See that "share" button? Submit this post to reddit and other sites, rate it up to spread this action item. Cross post it in comments on other sites we know are analyzing reforms and also know reinstatement of Glass-Steagall is a critical one.
Yeah, I was shocked to read this but let's jump on it and give it the good ole college try. If the public is aware just what Glass-Steagall is and demands it is reinstated, we might just get somewhere.
Also note Rebel's quote. Yes, Mr. "Phil Gramm" McCain is also calling to reinstate Glass Steagall, along with Maria "I'm Bill Gates' personal representative" Cantwell.
So, if you can get these two glorified lobbyist puppets on board (maybe they are having a tinge of guilt?) we might stand a chance.
Dodd is supposedly dead Senator walking btw (in terms of his prayer's chance of getting re-elected) (ah Connecticut, are they getting a clue yet?) and he's running the Senate financial reforms via the banking committee.
“I find the notion that everyone should get a higher education to be ridiculous. The market for education is flooded.”
If there were not easy access and money to get in and stay in college, then the unemployment rate would go through the roof. Colleges and the military are absorbing a phenomenal ‘potential’ labor force. I recently took a course at the local community college. It was a giant recreation center. I lost count of the basketball and hand ball courts, weight rooms, etc Students by the thousands literally sitting around with laptop computers watching movies and playing games, everyone had an ear plug in their ear listing to music, texting, etc. Many students were getting second Associate Degrees (e.g. criminal justice and business administration). One student I talked to with those two degrees was interviewing with the ‘dog pound’ (i.e. dog catcher).
If a small fraction of them left school and hit the labor market we would be facing a revolution. Government and economic oligarchs know this. They flood the market with student loans and combat games/movies with a mind to keep young people in school or military and out of the job market.
But this comes extremely close. We desperately need new tax receipts. You can daytrade with a miniscule .25% tax on each transaction. Twentyfive cents on a $100. Come on seriously.
Once more, how do you think the Street will react once they see this bill pass? Secondly, when when you remove liquidity markets get more volatile as you remove participants. I'm trying to get a copy of the article mentioned below. But the fact remains, liquidity is a major issue.
I also see this as way to get desperately needed revenue. We can pay for a jobs bill and benefit from less volatility in the markets.
I'm afraid I'm with ANON above. When Cantwell "supports" something it is the sure kiss of death (in other words, strictly grandstanding eye candy --- nothing but show).
Remember her last minute "support" for that public option?
The tipoff is Steny Hoyer suddenly voicing support in the House. Sorry, there's no way Hoyer is throwing his financial services' masters under the bus.
This is simply yet another diversionary tactic to scare up donations and throw business to the telecoms.
Sorry, but their track records (and voting records) precedes them --- and anything McCain is always suspect!
LINK: Ag groups call financial tax counterproductive
The Fed needs to be careful keeping the rate that low for that long. Inflation will start creeping up.
Sorry, but this tax will not do what you want. And there is no way you will get this to go global. There will always be a country that will want the capital, like Singapore or Hong Kong. If that's ok with you, then tell that to young companies that want to go public.
I will be blunt, I'm against this. First it would put me out of business, as I day trade to put food on the table and pay my bills. Secondly, this bill will not do what you think it will. Thirdly, despite DeFazio and Harken and your 21 congressional supporters, this bill will never get anywhere and thank god for that.
Do you really believe you will get the money to fund a jobs program with this? The moment you enact this, at best you will get one year's worth and even there it won't reach into the 100 billion mark. You will kill liquidity in the markets, and while you may not think you're affected because you don't actively trade stocks, you will get hit. How? Index and other funds. Each day they need to adjust their holdings to match performance to a key benchmark. You think they will eat up that cost? Never, they'll simply pass it on to you, and at best you will see a lower return on your money.
Then there's liquidity, though you may hate people like me, the fact is if you needed to get out of a position, we're here to do it. Instead, what will happen, you will see spreads widen, and volatility increase. You didn't care for the wild swings in Sept-Oct of '08? Well guess what, that may become norm.
You don't think there won't be exemptions? In the UK and other European nations there were. But for those not given such a privileged, they moved their money to either new instruments that were exempt or to other countries. And trust me, the moment this is passed, every big institutional player like Goldman or Merril will find a loop hole.
I know a lot of you think "speculation" is evil or useless, but it isn't. You will tell me that I should hold long term, but let me tell you that my risks are better when I close out. Buy-and-hold doesn't work, unless you can nail a good deal and buy like Warren Buffet size blocks. All those investors in Enron or At&T or GM or Fanny Mae, who held on for years got burnt. Me? Yeah I may make nickels and dimes and dollars here or there, but a I can sleep at night knowing I'm out of anything that would hurt me financially. Why is that so wrong to people like you?
Lastly, the blame, it wasn't the stock traders or the futures traders that did this. It was the real estate folks and the derivatives tied to that. I know I know, it's "Wall Street," well that's like me bashing all the unions because of some corrupt Teamsters in Chicago or something. If you want to say it's connected, then tell me where I caused someone to lose their house?
I get the 'o' in "Euro" because it' denotes EUROpeans or EUROpe. But "Gulfo"? That reminds me of the talk of a single North American currency back a few years ago, dubbed the "Amero". Honestly, a little creativity in the name of a new currency should be a mandate in building these things. We originally had the Shilling and the Pound in the early colonial days. The "dollar" has a mixed origin, we officially borrowed the name from the Spanish Dollar because when we were designing our currency, we used that as a template. But there was also another continental influence as well, the German Thaler was also considered a template, this was used as one of the primary currencies in the Holy Roman Empire. Ironically enough, Spain would forfeit it's Dollar for the Peseta when it joined the Latin Monetary Union. Other cousins to the "dollar" that appeared in that era were the Dutch daalder, the Bohemian tolar. Hrmm...I'm noticing a trend here, there seems to be similar sounding suffix vogue going on here.
Ok, I know completely off topic, but hey history tends to repeat, and this is no different. The traditional currencies of the Gulf/Middle East region were the dinar. The Dinar itself is the child of the ancient Roman Denarius. In fact, the Arabs have a history of using asset-backed currencies, primarily gold. For centuries, the Gold Dinar was the currency of various caliphates and empires from North Africa to India. Outside of the Gold Dinar was I think the SIlver Durham or Dirham as the only other viable currency for trade in that era.; I had a professor who believed that the town of Durham, NC was actually named after such a coin, but who knows. A Muslim friend of mine said that the Quran actually stipulates that the zakat (tithing) be in gold or silver coinage, none of this funny fiat money.
Don't be surprised if in the 21st century, that these Gulf States create adopt a new Dinar. In the past, it was the Gold Dinar, perhaps now it will be the Oil Dinar?
Thanks midtowng. I couldn't find the exact amount Citigroup was going to get when I saw this earlier.
It seems to be all about helping Citigroup look better than they really are.
If ever there is an institution that needs to be broken up, it's Citigroup, not only from their own current health, but what they have done since the repeal of Glass-Steagall. Their influence and activities from dot con to enabling offshore outsourcing (through capital, although they also offshore outsource) and bad trade deals....
It's just so obvious. A few "chosen ones" don't have to play by any of the rules others do....at all costs, even putting the U.S. in serious national economic risk.
But will they promote their own unified currency?
I agree, this sounds like getting rid of oil traded in U.S. dollars.
Also, you know this should be in the "global" forum. Macroeconomics is for U.S. EIs for the most part.
It seems the government is moving in the exact opposite direction.
The actual value of this exemption could be zero (if Citi makes no profits) or up to 40%, roughly $15 Billion.
Forbes breaks it down.
"Maria "I'm Bill Gates' personal representative" Cantwell"
LOL! So true. Did Cantwell check with Bill Gates on Glass-Steagall?
"Dodd is supposedly dead Senator walking btw (in terms of his prayer's chance of getting re-elected) (ah Connecticut, are they getting a clue yet?)"
What's with these Connecticut Senators protecting entrenched banking/insurance interests? The other, Liebermann, is killing health care reform. I guess the state is too close to Wall St and imagine many who work on Wall St. live in Connecticut.
I need to read the actual legislation but I've been all for a Tobin tax, or transaction tax.
You might mention to Mr. Hirsch that he just needs to create an account, that we're not like other sites where there is only one account or requires special something....the architecture here is one of a community blog, so he could have his name on the piece as it goes out into the wild world of RSS feeds.
But great post and love DeFazio, now I just have to parse the actual bill.
We also need this on a global scale, else trades will happen on other exchanges not subject to the tax.
that entire "soup can label" mentality drives me bats. as if "brand name" guarantees "quality"....but on the other side and this does include some ivy schools, they appear to be watering down the difficulty of a Bachelors these days and moving it to a Masters which hurts all of those who got the original difficult Bachelors.
But on that entire "elite" institution thing, yeah right.
While I readily concede that Harvard and Hopkins have some first rate minds (and spend more money on research), the "Ivy League" mentality that considers one degree better than another (i.e., apples to apples) seems odd at times. Yes, a Wharton or MIT pedigree help you land that first job, but from then on it matters less than what you do with your opportunities. The annual ranking of schools and departments gets almost nonsensical. At the private university where I got my PhD, we were in the middle of the "quality" range while Harvard, Columbia, and Berkeley were considered more desirable. But where did our professors get their doctorates? From Harvard, Columbia, and Berkeley, of course. The differences were perhaps price of admission. But once in a professional career, no one ever asked me where my degree was from -- the guy in the next office had his Harvard pedigree on the wall, but we made the same salary and published in the same journals. I was even asked to serve on advisory boards at the "better" schools, which blew my mind. I am reminded of Malcolm Gladwell's "Outliers," in which he observed that above an IQ of, say, 130, your chances of getting a Nobel are not statistically improved by being a lot smarter.
When I hear that a degree from Harvard or Yale means a better education, I have a four letter response: "LTCM." Or maybe Bush.
But then, I did not get an offer from Goldman Sachs -- so my opinion may carry less weight among the elites. Perhaps it's just as well.
Frank T.
Midtowng's analysis of the problem is dead-on. I, too, am old enough to remember all the promises that those valuable manufacturing jobs would be replaced by "thinking" jobs.
Remember, also, when they used to say America enjoyed the "highest standard of living in the world." They don't say that anymore, do they?
The bottom line is this: We need to bring these industries back to the United States of America. We are so de-industrialized now, what's to stop the Chinese from invading us right now? We get all of our steel from them and others overseas. The policymakers have forgotten: these guys are still the Communists and they still have the same goal--World domination. Economic conquest is just the beginning.
We need to bring back steel, textiles, auto production, televisions and electronics--everything that we can until our people have enough good jobs and everything used by our armed forces is produced here in the United States. Free trade isn't free. It's been a cruel joke.
People need to wake up.
See that "share" button? Submit this post to reddit and other sites, rate it up to spread this action item. Cross post it in comments on other sites we know are analyzing reforms and also know reinstatement of Glass-Steagall is a critical one.
Yeah, I was shocked to read this but let's jump on it and give it the good ole college try. If the public is aware just what Glass-Steagall is and demands it is reinstated, we might just get somewhere.
Also note Rebel's quote. Yes, Mr. "Phil Gramm" McCain is also calling to reinstate Glass Steagall, along with Maria "I'm Bill Gates' personal representative" Cantwell.
So, if you can get these two glorified lobbyist puppets on board (maybe they are having a tinge of guilt?) we might stand a chance.
Dodd is supposedly dead Senator walking btw (in terms of his prayer's chance of getting re-elected) (ah Connecticut, are they getting a clue yet?) and he's running the Senate financial reforms via the banking committee.
“I find the notion that everyone should get a higher education to be ridiculous. The market for education is flooded.”
If there were not easy access and money to get in and stay in college, then the unemployment rate would go through the roof. Colleges and the military are absorbing a phenomenal ‘potential’ labor force. I recently took a course at the local community college. It was a giant recreation center. I lost count of the basketball and hand ball courts, weight rooms, etc Students by the thousands literally sitting around with laptop computers watching movies and playing games, everyone had an ear plug in their ear listing to music, texting, etc. Many students were getting second Associate Degrees (e.g. criminal justice and business administration). One student I talked to with those two degrees was interviewing with the ‘dog pound’ (i.e. dog catcher).
If a small fraction of them left school and hit the labor market we would be facing a revolution. Government and economic oligarchs know this. They flood the market with student loans and combat games/movies with a mind to keep young people in school or military and out of the job market.
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