Taxing the Speculators - NYT

I just saw this article today and thought it might be of interest.
What do you guys think?
http://www.nytimes.com/2009/11/27/o...l=1&adxnnlx=1259427821-9fvy/9P+55EQRp2AZ/vAxg

Zombi said:

I just saw this article today and thought it might be of interest.
What do you guys think?
http://www.nytimes.com/2009/11/27/o...l=1&adxnnlx=1259427821-9fvy/9P+55EQRp2AZ/vAxg

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I've posted a couple threads on this myself, and have gotten little to no response. I think most of the traders out there are in denial about this as it stands to put most of them out of business, especially scalpers and daytraders here in the U.S., where spreadbetting and CFD's are not available as alternatives.

Honestly, I think this is going to be a reality, and it will happen soon. When this happens, it will not be long until it is implemented on a global scale (Nancy Pelosi has already talked about this as reported in a recent Reuters news article) and will be inescapable, so going offshore, etc will be of little value. This is going to happen whether we want it or not, as the public is outraged over the criminal activities of the hedge funds and investment banks and are going to demand this as "punishment." The FTT will probably also be part of exchange controls arising out of the financial crisis and resulting liquidity flows (i.e. Brazil's 2% tax to stop inflows of hot money). The FTT is also very likely to come in a global form via G20 agreements, etc. The fact of the matter is that traders better wake up and start making some contingency plans, because this is coming!

For the record, I'm not for the tax (except for Goldman Sachs, who should get a 100% FTT).

Just like the tides of the ocean things come and go, ebb and crest.
Take a look at what happened after 1929.

some additional articles on this thread:

http://www.trade2win.com/boards/us-stocks/78328-financial-transaction-tax.html

Interesting reading in those articles Nile.
The ones that were posted in your post are definately more positive stating that it has little support from the Obama administration.

I really wouldn't think that this bill will help anybody, half of the tax revenue will go towards paying off national debt and the other will go to a pool to help create jobs.
IMHO giving the government money is a waste.

A Tobin Tax would have wide ranging ramifications way beyond the obvious, and in my opinion would be disastrous.

The ironic thing is that it's being done in part to decrease volatility, but I can only see it increasing volatility as liquidity would dry up and spreads would widen.

The idea that you can hurt 'speculators' without hurting every other type of market participant is absurd and simplistic. What about all the businesses that need to simply move currency about, or hedge exposure to commodities?

If they want to stop 'risk taking' maybe they should pay the regulators more so they get some that have a clue what's going on

OK, who is really in charge, the bankers, or the puppet govts. allowed to stay in place/project the image of power in order a to assist the banks? Example, when Clinton stepped aside in order to 'allow' Obama to become president, who did they go to for permission?
No 'tobin tax', no change...never...just a news squawk to placate the electorate's anger re. bankers, until their short attention goes back on to the x-factor or U.S. equivalent....

Black Swan said:

OK, who is really in charge, the bankers, or the puppet govts. allowed to stay in place/project the image of power in order a to assist the banks? Example, when Clinton stepped aside in order to 'allow' Obama to become president, who did they go to for permission?
No 'tobin tax', no change...never...just a news squawk to placate the electorate's anger re. bankers, until their short attention goes back on to the x-factor or U.S. equivalent....

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I totally see what you're saying, however I will say this: This is GOING to happen, BUT not in the sense that everybody thinks it will.

If people think Goldman Sachs, JPM chase, CIti, Wells Fargo, BONY Mellon, etc. will be subject to this, then they have another thing coming. The Tobin tax (FTT) is coming, but it will only hit the people who were NOT responsible for all the problems for which the public wants to avenge. The guy that will be penalized is the daytrader sitting at home in his underwear with his $30,000 Etrade account, and the hedge fund running $100 Million, not the financial "masterminds" that floated $1 quadrillion+ of engineered financial crap and brought down the system. The FTT WILL be a reality, just like the carbon tax, and will be one of the many funding mechanisms for the new global financial architecture which has been devised by the same elitists that originally crashed the system with their "financial innovations."

nile_croc said:

I totally see what you're saying, however I will say this: This is GOING to happen, BUT not in the sense that everybody thinks it will.

If people think Goldman Sachs, JPM chase, CIti, Wells Fargo, BONY Mellon, etc. will be subject to this, then they have another thing coming. The Tobin tax (FTT) is coming, but it will only hit the people who were NOT responsible for all the problems for which the public wants to avenge. The guy that will be penalized is the daytrader sitting at home in his underwear with his $30,000 Etrade account, and the hedge fund running $100 Million, not the financial "masterminds" that floated $1 quadrillion+ of engineered financial crap and brought down the system. The FTT WILL be a reality, just like the carbon tax, and will be one of the many funding mechanisms for the new global financial architecture which has been devised by the same elitists that originally crashed the system with their "financial innovations."

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Had to laugh last week regarding the appeal being upheld by our UK supreme court; the banks won versus the claim of unlawful o/d charges. They (the banks) had openly stated that if they lost that'll signal the end of free banking...priceless thugery by 'banksters'.

If the state needs to raise more tax from banking they will, in tandem and accord with the banksters, tax the littlest guys. But IMO they'd do it by increasing charges across the board and leaving trading alone. Geithner basically told Brown to fook right off when he suggested it recently...

does this mean that were done.Is it all over.Speculators are going to be exticnt.

Christiaan said:

does this mean that were done.Is it all over.Speculators are going to be exticnt.

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No, but allow me to illustrate:

You're a daytrader and you scalp. You buy a $40.00 and sell at $40.25 five minutes later. Congratulations on your winning trade! You made $250 on 1000 shares! Not bad for five minutes work. Wait a second, you got this new tax to worry about.....gotta calculate that: $40x1000=$40000, $40,000x.0025 = 100, and that's just on the buy side. Sell at $40.25: $40.25x1000=$40250, $40250x.0025 = $100.62. Add commissions into this and then you keep what's left.

Do the math...you be the judge!

nile_croc said:

No, but allow me to illustrate:

You're a daytrader and you scalp. You buy a $40.00 and sell at $40.25 five minutes later. Congratulations on your winning trade! You made $250 on 1000 shares! Not bad for five minutes work. Wait a second, you got this new tax to worry about.....gotta calculate that: $40x1000=$40000, $40,000x.0025 = 100, and that's just on the buy side. Sell at $40.25: $40.25x1000=$40250, $40250x.0025 = $100.62. Add commissions into this and then you keep what's left.

Do the math...you be the judge!

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BTW, this tax is charged REGARDLESS of whether or not you make a profit: it is a tax on principal both on the BUY side, and again on the SELL side. Also, don't forget about capital gains taxes too!

If you're a trader, you'd better hope that your average profit exceeds at least 1/2%. All the "scalpers" out there who are going for pennies, dimes, etc. on a trade will be gone. The traders left will have more overhead, as well as wider spreads and lower liquidity to tend with.

Something else to consider, and I don't know how they plan on doing this: the tax will also be applicable to Futures contracts, Options, Forex, etc., however I don't know how the principal figures will be calculated.

If it is brought in it will kill liquidity and therefore get less in tax than they had hoped for and then it will be repealed in my view. It will also impact international trade in a big negative way especially when spreads start widening because of lack of liquidity.


Paul

okay help me clarify

i enter a forex trade let's say i open a position for 6000 units.because this is a scalp trade I have a stop-loss of 10 pips.My trade did not work and my stop-loss was hit.How much money did I lose extra because of the tax.

Please clarify this for one more time.

thank you

Christiaan said:

okay help me clarify

i enter a forex trade let's say i open a position for 6000 units.because this is a scalp trade I have a stop-loss of 10 pips.My trade did not work and my stop-loss was hit.How much money did I lose extra because of the tax.

Please clarify this for one more time.

thank you

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You would lose exactly 8 pips!!!&!^!

But seriously, no one has the faintest clue. This won't happen in the near future anyway now that the US have swatted it away, so forget about it.

anyone saying forget about it is foolish imo.

Plan for it (and the various forms it could take). Develop strategies NOW

virtuos0 said:

You would lose exactly 8 pips!!!&!^!

this won't happen in the near future anyway now that the US have swatted it away, so forget about it.

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I wouldn't be so sure about that. The push is on to "punish" the people whom the public BELIEVES to be responsible for this crisis. Look how fast they slapped on the short sale bans last fall. All it takes is the right crisis, and they can put this thing to work very, very fast.

Case in point: Last summer, when oil went to $140+ per barrel, all we kept hearing was how speculators were responsible for this and that "there oughta be some kind of tax or something" to get back at these horrible, greedy, traders. Luckily that came to a screeching halt very quickly when the credit crash derailed the oil market. A few more months of the "pain at the pump," however, and they would have slapped on some kind of tax to oil contracts as an emergency "relief" measure.

They're going to do this, and the FTT will be a reality, it's just a matter of capitalizing on the right crisis.

arabianights said:

anyone saying forget about it is foolish imo.

Plan for it (and the various forms it could take). Develop strategies NOW

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I would completely agree.

Like I said earlier, i've posted a couple threads about this in the past year here at T2W and have gotten little to no response. I really believe that it's because traders out there are in denial about this as it is a serious threat to them in their styles of trading (making the assumption that most of the traders here are daytraders/scalpers etc). Kind of like how politicians never want to talk about the national debt, and instead choose to ignore it, and hope it will go away on its own. All I can say is the old cliche': "failing to plan is planning to fail!"

This is coming, sooner or later, like it or not, it will be here, and the odds are it will be on a global scale as well, so going offshore, etc. will not help. So instead of denying it, there's no better time than the present to get ready for it.

My personal opinion is that this will happen sooner, rather than later. We are about to embark on the next leg of the global credit crash, and with more crises, only come more regulations, taxes, laws, and "emergency measures." I believe the FTT will probably be an emergency measure, just as they attempted to ram it through our congress here in the U.S. in September of '08 when they passed the TARP. Luckily, however, the FTT was thrown out of that bill. We'll see what happens!

arabianights said:

anyone saying forget about it is foolish imo.

Plan for it (and the various forms it could take). Develop strategies NOW

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Who said I don't have a plan? My strategy is to get a job as a naked butler to make up the shortfall.

Seriously, an A-level economics student could tell you why this is a stupid idea. So surely the people in charge of the economy will be able to work that out for themselves...

oh ****, we're doomed!