The cost of the tax is small in comparison to what spreads and other costs will be. Proponents of the tax like economist Baker say the trans tax will take financial sector activity back to where it was in the mid 1980's. I bet worse than that. About one month ago I searched for data on what spreads were like in the 1980's. One researcher found that the mean market spread was $0.53 in 1986. Not only would that reduce trading to only a few times per year, long-term investors would have their lifetime returns reduced by a quarter or one half because of severely reduced compounding.
"Borrow and spend", "tax and spend"... two sides of the same coin. Only difference is when the impact is felt as the piper gets paid.
http://www.pbs.org/moyers/journal/10092009/watch.html Yeah ???? From another poster....very valid.... paperboy....good post.... ................................................. Note ex head IMF economist items... http://baselinescenario.com/ Yeah....it's really happening..... Again....GS will win....again... It will be about whatever GS wants.... Watch it happen.... ...................................................... 1980's gaming was a lot worse than 2009 gaming..... regarding true transaction costs..... Stock is never going to be taken down....without making money in some form in mind.... One will never see give aways in this business....not ever....
http://www.zerohedge.com/article/goldmans-defense-hft-sec GS will win..... http://www.thedailybeast.com/blogs-and-stories/2009-10-08/timmys-telephone-travesty?cmpid=p_yahoo
This would be terrible for volume if it happened. It would be even worse if it were coordinated across the exchanges worldwide. However, I can't see that actually being achieved efficiently. On the otherhand, money will create loopholes and further opportunites. What timeframe do posters forsee if America were to implement a transaction tax?
At least the useful idiots who voted for Obama will get what they deserve. Welcome to Socialism and change you can believe in.
Why would this be a bad thing? Daytrading provides zero meaningful economic activity - who cares if it dies?
It provides liquidity. Without liquidity you will have bigger spreads. With bigger spreads, all investors will be hurt. Why not learn from Sweden's experience? They tried this and they saw most of their volume move to foreign countries. Why wouldn't the same thing happen here?
It seems like there are two ways the IRS could collect this tax -- either via individual tax returns or by making brokers pay the tax, who would then pass it along to customers. If the latter, couldn't someone in the US just use a broker in another country not subject to the tax? If the former, obviously there's no way around it. In all of the articles written about this I haven't seen any discussion about the logistics of collecting this tax. Has anyone read anything about that or know the way other countries collected this tax?