dstark

Britain's Brown urges global tax - MarketWatch

WTH?

Now all the investors and traders have to pay at tax on every transaction because the major financial institutions screwed up and didn't know what they were doing? )And still don't).

WTH?

IF we are going to do this, we should close the finanical institutions that got into trouble an start over.

And take back the pay of
the guys running the banks. And take back the bonuses.
WE are going to tax the many to pay for the few.

Time to close Citigroup, Bof A, WFC, MS, and the rest of these bozo companies that can barely survive borowing money at 0%.

Mr Payne

Time to crush the traders. Trading, as an activity, adds virtually nothing to our economy. Just a big value suck from non-traders to traders. Screw em.

DocT

"Time to crush the traders. Trading, as an activity, adds virtually nothing to our economy. Just a big value suck from non-traders to traders. Screw em. "

Actually most traders are beneficial to the economy since most lose money and increase the revenue of brokerage houses through transaction costs.

BCEagle91

> Actually most traders are beneficial to the economy since most lose
> money and increase the revenue of brokerage houses through transaction costs.

I think that investors are angry when the markets are falling while traders make money
from the downside. The tax would depress the markets that implemented the tax. This
tax has been discussed for a decade but it's all mostly been just that - talk. Brazil
implemented a transaction tax for foreign speculators but that's about it.

Then anger is at the banks. Traders would just be the ones paying it.

It's like the lawsuits against big tobacco. Consumers are paying for the wealthy lawyers.

member

trading is what allows capital goods prices to be at near equilibrium. Those prices are the fundamental basic of how a economy and its currency function. Lack of proper prices of capital goods leads to economic and social failure, look at the soviet union as an example. Before they went down they were paying American and Japanese brokerage houses for wires capital goods prices in there free markets.

Mr Payne

You need just enough trading to get to an efficient price. A tax designed to limit the massive amount of short term trades would do no harm in finding an efficient price.

member

The more trades the more exact the price. The more exact the price the less we over and under pay and the healthier the economy is in general.

Mr Payne

That's not exactly correct. I fail to see how the price being off a few cents in the secondary market makes the economy healthier.

member

The price being off a few cents doesn't make it healthier, it makes it worse much worse.

Mr Payne

How so? Please elaborate at length on how a .05% price difference in a security on the secondary market makes the economy much worse.

member

While I was talking about capital goods, I guess the same can applied to securities. As for why there would be a problem, its rather clear. As an example lets use some capital good like sugar, if the cost of sugar artificially went up 2 cents per unit, their could be a complete market chase to corn derivatives as sweeteners. Companies that are heavy users of sugar, may overwhelmingly switch to corn derivatives for there sweeteners and a entire sector could be lost. Just an example. The govt imposed a tariff which went against natural market prices and the sugar industry was lost.

Mr Payne

Completely not analagous. Explain how a global tax on trades (primarily on the secondary market) will hurt the global economy.

member

Well wouldn't it be similar to Smoot Hawley at a global scale? I think it would.

Mr Payne

The effect of a .05% tax on financial transactions means there would be a 'dead band' of .05% around the price of a share. Unless there was a real expectation that prices would deviate significantly off of that there would be no need to buy/sell. What it would likely due is reduce short term trading on shares and thus reduce volumes.

And this would be not be comparable to a tariff on goods.

collegeinusa

This is to provide revenue to the government for shrinking tax base. Nothing more