You said Koch, so you lose. The tax on market trading is just moronic. What is the goal of that besides raising revenue. It will reduce liquidity and increase costs on hedgers (you know, the people who actually make stuff).
I'm glad Sanders is running. It will make the primaries and attendant debates far more interesting. Ms. Clinton will win handily, and then win in the general, in my opinion, but I'm glad there will be someone credible pushing her from the Left, and Sanders is credible, even if he doesn't win (and he won't). He has some very intelligent takes on a lot of issues, many that I agree with. You got your wish, glynch! -
Trading and investing are two very different things. A transaction tax doesn't really hurt investors or the efficient allocation of capital in a substantial way. It does hurt traders - but there's a reasonable amount of evidence that all the extra liquidity that traders provide today vs many years ago doesn't really do much of value to the economy - it just makes the traders money, and it does so at a net aggregate expense to longer-term investors. Smaller bid/ask spreads are nice, but they really aren't that big a factor for a long-term investment.
Studies have shown that these taxes increase volatility, lower liquidity, and slow price discovery. Those are all unequivocally bad things. As far as hurting only traders and not long term investors, I don't see how that's possible. They'll both be subject to the tax and negative effects of it. It isn't just speculators trading with each other. There are just as often hedgers who are locking in prices for their long term investments. Actually a market without significant hedging activity from investors isn't likely to be very liquid in the first place.
There is some concern that with modern HFT, there is actually just excess liquidity that is not necessarily improving market function anymore - and may be causing new problems (like the flash crash). FWIW, the research is still unclear on this topic. From the CBO: One argument in favor of a tax on financial transactions is that it might reduce the amount of short-term speculation and computer-assisted high-frequency trading, and direct the resources now dedicated to those activities to more productive uses. Excessive speculation can destabilize markets and lead to disruptive events, such as the October 1987 stock market crash and the more recent “flash crash” that occurred when the stock market temporarily plunged on May 6, 2010. However, the tax would discourage all short-term trading, not just speculation—including some transactions by well-informed traders and transactions that stabilize markets. Empirical evidence suggests that, on balance, a transaction tax could make asset prices less stable: In particular, a number of studies have concluded that higher transaction costs lead to more, rather than less, volatility in prices. (However, much of that evidence is from studies conducted before the rise of high-frequency trading programs, which now account for a significant share of trading in the stock market.) A trader makes much smaller margins and generally the proposed taxes are a tiny % of each transaction. Since traders are making many more transactions and producing the vast majority of market volume, they are going to bear the brunt of it. If you're buying something and hope to make 10% over a year, an 0.01% tax doesn't matter very much. If you're buying something and hoping to sell it for a 0.03% profit in a few minutes, an 0.01% tax is a big deal.
Also FWIW, France imposed a tax of this sort (I believe larger but also limited only to larger companies) in 2012, so we have at least some evidence in the post-HFT world. this is one study on it: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2378347 In this paper, we assess the impact of the securities transaction tax (STT) introduced in France in 2012 on market liquidity and volatility. To identify causality, we rely on a distinctive design of the tax, which is imposed on large French firms only, all listed on Euronext. This provides two reliable control groups (smaller French firms and foreign firms listed on Euronext) and allows us to use a difference-in-difference approach in order to isolate the impact of the tax from the other economic changes that have occurred simultaneously. We find that the STT has reduced stock trading, but we find no significant effect on theoretically based measures of liquidity, such as price impact, and no significant effect on volatility. The results are robust whether we rely on different control groups (German stocks listed on the Deutsche Börse), different datasets (firm-level or aggregated data), different periods (from one to six months), or different methodologies (propensity score matching, regression discontinuity design).
Well this is where it gets confusing. Traders dont only work for financial institutions. They also work, for example, for energy companies that are making long term investments in energy supply and delivery. And they have to manage their hedge positions continually, including short term trades, not just every few years. Also, a lot of the bank trading is done for clients. Flow trading, as they call it, could be done in the service of all types of non-financial institutions. On top of that, often these companies who are making investments also have speculative traders also, trying to make money on top of their long term investments. I also dont see how there can be excess liquidity or how hft caused the flash crash. There were short term crashes way before hft, like the 1987 crash. Basically a financial transactions tax isnt taxing only wall street, its taxing everyone who has to make trades. A better option would be to just do something like require higher capital requirement at banks.
How did it happen for you? Obviously you haven't moved in very elite circles if you don't detect a general undercurrent of wealth and privilege perpetuating itself throughout generations. Having moved in these circles, I can tell you that this indeed is how it works rather frequently. PS - if you hope to join us, try working harder next time.
^ THAT IS ABSOLUTELY TRUE!!! I CAME TO THE U.S.A. WHEN I WAS TWELVE, MY PARENTS BOTH WORKED TWO JOBS AND LIVED IN SLUMS AND HAD NOTHING HANDED TO ME AND WENT TO ONE OF THE WORST SCHOOLS IN HISD AND LOOK AT ME NOW!!! I AM ONLY ABLE TO POST ON CLUTCHFANS AND NOT WALL STREET JOURNAL!!!
Looks like you have successfully recruited Swoly-D on your side. Congrats, you are a compelling speaker to a certain type of mind.
You're a lawyer for big texx? The whole privilege stuff is bs. What you're detecting is your own biases
No need to recruit me. I don't need anyone's help to succeed. I will do it on my own, thank you very much, sir.
