This has to be all sarcasm, irony from crash n burn, right? No one could be that..... well.... Awesome quotes from crash n burn: "the rationale behind the transaction tax is to curb a parasitic activity that adds nothing to the economy'' The more trading, the more traders, the more competition that there is, the more liquidity, the cheaper it is for a long term investor to buy stock, mutual funds. A business relies on cheaper investment transactions to attract shareholders to the company. The large institutions would profit immensely once the competition is crushed. The profits would go to the few at the expense of the many. Trading is better than being an unemployed parasite on assistance. "while absorbing viable resources that could be efficiently deployed elsewhere." That makes no sense at all. You mean tax money that the government could efficiently vaporize? "by enacting this legislation, financial markets will be cleansed of all sort of parasites (independent traders, gurus, prop houses, retail brokers, etc)." Retail brokers are parasites? How will investors purchase stocks and funds? Or will investing be unnecessary in your utopia? The taxing government is a parasite. "the essence of financial markets is not to provide a venue for gamblers to flip contracts. markets are there to allow companies to finance themselves and hedge against uncertainty. speculation can not and should not based on a game of chance. that's why the transaction tax is necessary." The transaction tax in 1929 did not prevent the huge speculative bubble nor the crash. "nowadays, market speculation is around 98% of the transactions occurring on any given day. this has to change." Most of the trading volume is institutional, done on behalf of long term investors. There are only about 10,000 traders, most with their 5k accounts, merely trying to avoid the unemployment line. "hence, parasitic activities should be aggressively taxed to the bone, as they illustrate the profound perversity of a society in which e.g. <b>more than 10 million children die of starvation every year</b>." Tens of millions of parasites on government assistance should be taxed to the bone. Tens of millions have died of hunger from induced famine by socialist governments. Never hear of anyone complaining about that. "people need to work in a productive way, i.e. in a factory, office, land, etc, rather than spending time sucking blood out of the market." Hitler called capital gains âeffortless incomeâ so you do have a friend.
FYI-I've only read the article and a few posts. My opinion... History tells me that the rich are greedy people who use any and all available advantages to create small and large monopolies. It happens at all levels from Saudi Sheiks to urban planning. Their favorite tool is legislation. Thirty years ago, most of us had only (crappy) Mutual Funds at our disposal and not a lot of good advice. A single transaction at the local stock broker cost $150 and if all you had to invest was $15,000 then you were a 'mark' to be milked one hundred times!!! The Internet, and specifically, Internet brokers, threatens to turn that on its head. Now that I'm in charge of my own portfolio and beginning to enjoy some measure success, I now ask myself... "Does this mean that the rich folk will develop ways to take me out of their domain"? The answer may rest on answering this question... "Is the new Internet investor one of questionable skill, trading willy nilly providing the rich monopolist a new opportunity or is the new Internet investor a skilled tradesman who is slowly clawing away at their fortune?" I'm having a hard time sorting that one out but what is clear to me is that the rich will get richer if they have direct access to the bank accounts of the ignorant masses. How better to siphon money then through Internet brokerages? I think taxing high volume investment would hinder that dynamic. On the other hand, the argument that it would bring market stability is a very simple argument and therefore compelling to the voting masses. It is similar to banning shorting or getting rid of beta ETFs. Personally I'm not into high volume orders so I doubt it would impact my bottom line unless they taxed a portion of the principle rather than the cost of the transaction. My question is simple... would it create an opportunity for me to exploit and how? Eric
<I>On the other hand, the argument that it would bring market stability is a very simple argument and therefore compelling to the voting masses. </I> We had a 0.20% transaction tax during the 1929 crash. So much for the market stability argument...
The average Joe Blow daytrader era is about 15 years old. You gonna try tell yourself that before this time companies were unable to raise money? Come on. Financial markets depend on real production & real companies, not the other way around. Most of the financial markets activity nowdays is parasitic.
Thanks for the insight. I didn't know that. Somehow I can't see that being the straw that broke the camel's back but rather the canary in the mine. Eric
You are absolutely right I got sucked into responding to the non-sense. Felt stupid because of that but it was too late.
If it was not for Wall Street, those companies would have never reached the type of nonsense they got into. Since 1980s, any public company is more focused on financial engineering & its stock price rather than real activity, albeit a few exceptions. The big chuck are financial services companies anyway.
And the reason that we have seen such GROWTH in the financial services industry is because of the tax code - - - which allows for interest expense to be written-off IMMEDIATELY. Meanwhile, our Manufacturing sector gets pushed to the back of the economic "bus" where any investment in capital equipment sees the interest on the loan for that investment get ammoritized over the LIFE OF THE EQUIPMENT!!! Change the tax code, Fools!
0.25% is $250 per $100,000, so I would still stand by my comment that I might be able to make it. Crashnburn's comments are from someone who knows nothing about markets, and has no business on this site other than to annoy the ones that do understand markets.