Those letters supporting Herbert's suggestion are scary. The hate, the envy, the get them bastards kind of logic. It is almost as if their minds are made up; not one argument from those who oppose this ridiculous proposal was challenged.
Stock markets are responsible for $30 Trillion loss to the world economy. http://www.marketoracle.co.uk/Article7923.html
It's rather unlikely that Obama would want to enact a financial transactions tax, at least not in his first term anyway. There are millions of day traders in this country, and with the financial markets in the state they are in right now, it makes no sense to even remotely think of doing this, as most traders would stop, and liquidity would dry up in an instant. This recession/depression, or whatever you wish to call it, is going to last for at least a few years, and if Obama wanted to put a financial transaction tax in, you can expect this recession/depression to last for the next several years. I don't think we have anything to worry about right now. With everything that's happened on Wall Street, and all the bailouts that have taken place, we should be fine for the near term. At some point though, it wouldn't surprise me in the least if Obama/Congress attempt to pass very strict laws on Wall Street, banks, brokerages, etc... They would want to regulate the crap out of the financial markets to stop speculators, or at least tax the crap out of them. For the next two years, the Senate will only have 58, possibly 59 Democrats. They don't have enough senators to block the Republicans from staging a filibuster. The real test will be in two years, when there will be at least 3-4 Republican Senators who are retiring, and their seats absolutely must be won by the Republicans. If they don't, Obama and rest of his socialist party will have free rein to do whatever they wish. As long as we can keep the Democrats under 60 Senate seats, the Republicans can derail, and pretty much stop this legislation from passing, if they really want to. Since they get major campaign contributions from Wall Street/Banks, you can bet they will do everything to kill it, at least while they still have the power to do so.
I am not sure if anyone covered this in a previous reply as i don't have time to read all. What will happen is that instead of trading the stock, you will trade a swap with a broker who is exempt from the tax. The broker just swaps out all the related cash flows to you as the swap holder, and charges a funding spread (which is inconsequential for most intraday strategies). We call those swaps 'CFD's' here in the UK.This is how most traders trade stocks here and get around the tax. If the tax does get eneacted, you will be able to get around it in some way
This is is true if that what banks' intentions are. However, several posts ago Anaconda illustrated why it might be in large financial institutions interest to get this tax passed. These institutions will be exempt, and this will give them a big edge over us, not like they do not have many anyway. I also think that we are safe for the next 1-2 years.
So big players and evil Wall Street will be exempt but the "little guy" will pay? I think not... not in this political environment anyway... not to mention it would defeat the purpose by exempting most trades from the tax
If the large institutions are exempt, the amount obtained from the tax, will be severely reduced. Since most trades are made through large, US, EU and some Asian institutions, the math does not add up. And it will be just another tax. The purpose of it is to take out speculators that daytrade (these are now the new badguys) as well as obtain $100+ billion a year in all areas. But if the retired Mr Smith decided to sell his GS stake one night, after holding it for 3 years, he will be taxed as well. Members of the Futures Industry for example, are responsible for 80% of all futures and options trades in the US. And if the Obama administration estimate to gain a minimum of $10 billion from futures trading, and you reduce that amount by 80%, it just seems ridiculous. So then the tax makes no sense, except it will make the US one step closer to becoming a European country. With volatility today, why should you be punished for selling when it is time to get out?
Exactly... there will be ways around it, it may take us some time (maybe even up to a year) to perfect exactly how to get around it but it will happen. This tax would be a major inconvenience but I do not think it would eliminate us traders.
Pretty much, but it will of course will be spoon fed to public differently. Something lie this: This tax is punish evil speculators who caused all this financial trouble (never mind that this is total lie, public will eat it easily, and it will not be worded as punishment of course), they sure can afford to pay 1/4 of 1 percent. It is such a minuscule fee after all. Then there will be some beautifully versed language why big companies are exempt, something a long the line that they perform a great service by providing stability to market place and so on. I would say that the odds are greatly in favor of this tax never taking place, but we live in financial turmoil where many stupid things can be legislated.