I just sent the below email. Thumbed on my iPhone with typos. CEO GreenTraderTax.com On Jan 3, 2010, at 10:33 PM, "Robert A. Green" <rgreencpa@gmail.com> wrote: I have covered this tax topic in-depth on my blog, magazine articles and petitions to US Congress. _Please visit my blog to read my articles. _This tax will seriously damage markets, economies and jobs. The answer is more bank capital, regulation and leverage constraints. A bank levy is better than a financial transaction tax but even a levy invites moral hazard. Switzerland, Hong Kong and other market centers will not enact this tax so it will competively hurt the US and UK the most. The IMF is concerned with both of these countries improving their financial condition and this tax will hurt it. The IMF's initial reports and Secretary Geithner are correct on the levy being preferable over a tax. Only desperate political and non-profit elements hungry to win votes (UK Labour) and funds for social causes and a new global tax sovereignty regime are in favor of this tax. None of their reasons justify this economic destruction. Speculators make markets and markets are as imortant as products. Stifling or killing off speculation will raise prices for users like farmers. It's government interferance like price controls. Some desperate countries facing EU budget infractions may be interested in this market control but that is against IMF policies. There is no valid justification for this tax. The IMF report due in early 2010 can put this financial firestorm out worldwide and in the US, UK and finally EU. _Thank you for saving the world again. Thumbed on my iPhone with typos. CEO GreenTraderTax.com
Merkelâs Coalition Split on Financial-Transaction Tax, FTD Says http://www.bloomberg.com/apps/news?pid=20601100&sid=alRDQLEBJnxY
How about extending the simple heuristic Reg-T-like leverage limits to other markets with similar volatility? Especially to the market, where overleveraging caused the 2008 'credit crunch' crisis? Why not focus our regulatory zeal on those lower-middle-class 10:1 leveraged house market speculators who were the primary source of the financial contagion? What exactly is the difference between: property_market_speculators_leverage = 1 / (1 - loan_to_value_ratio) and the good old: stock_market_speculators_leverage = stock / net_liquidation_value Well, probably this: the latter has been capped in the US at 2:1 since the 1940's, whereas the former is potentially unlimited. E.g. Fannie Mae permits 1 / (1 - 0.8) = 500% (5:1) leverage on a painfully illiquid house market with margin-call-liquidation periods measured in months. On the other hand, if you try to buy DIA or FXE shares with similar or lower volatility (and liquidation period measured in milliseconds), you cannot exceed 200% (2:1) overnight due to the good old (literally) Regulation T. And if all animals were equal, then Tobin tax would cover property market transactions as well. The proponents would feel on their own skin how exactly 'tiny' would a 1% transaction tax be when applied to a 10:1 leveraged bet (such as a mortgage). (Answer: the Government would take 20% of your cash deposit, even before any market losses multiplied by 10). And now a surprise: the capital-efficient low-volatility currency markets permit 100:1 leverage. So Tobin-tax them with a 1% rate and you get... a daylight robbery, whereby the IRS confiscates the entire cash deposit the customer had (twice, if the customer wants to close the position). But no, every manual worker has a right to home ownership, so labour unions would fight a tax on property market leverage tooth and nail, which is why in this particular market leverage will be tagged socially useful, and we shall silently exempt it (because it is not a 'financial' transaction, at least the US Rep. DeFazio says so). The IMF knows that they have to tax someone, because their (J.P. Morgan's) models of bank capital requirements fail to account for volatility mean-reversion, allowing the most aggressive risk-taking to go on precisely the very top of any bubble, and constraining bank lending only *after* the fact (i.e. the crash), when credit is most badly needed for economic recovery. Spain flauted these not exactly common-sensical regulations and saved some 'excessive' reserves for lean years, and now their banks can afford to take over British ones, which played by the Basel II rules... So to sum it up, a 0.25% Tobin tax on SPY traders (or rather on their accredited investors - mostly pension funds) will obviously address all root causes. Rather than merely creating a 10:1 preference for ES futures trading (because there the Tobin tax rate proposed in the US is 10 times lower, 0.02%). (a letter sent to mailto:IMFConsultation@imf.org ) BTW, http://www.imf.org/external/np/exr/consult/2009/index.htm should start displaying some of these messages after January 1.
Great find on locating Harkin's bill. Here is another link to track it: http://www.govtrack.us/congress/bill.xpd?bill=s111-2927 It currently had (3) co sponsors. It's interesting that it was introduced with so little fan fare. I was searching everyday day for the bill but it never came up anywhere. Very interesting indeed. -Guru
Does anyone know if the schedules for the Senate Finance Committee and the Committees that the Defazio bill is currently sitting are posted online? The schedule for the House & Senate are available online, but I've yet to find schedules for individual committees.
I Here is a list of the committee members for the Senate Finance Committee: http://www.govtrack.us/congress/committee.xpd?id=SSFI -Guru