"We risk becoming the best informed society that has ever died of ignorance"
- Rubén Blades

"You can't make up anything anymore. The world itself is a satire. All you're doing is recording it"
- Art Buchwald

"It's getting exciting now, two and one-half. Think of everything we've accomplished, man. Out these windows, we will view the collapse of financial history. One step closer to economic equilibrium"
- Tyler Durden

"It is your corrupt we claim. It is your evil that will be sought by us. With every breath, we shall hunt them down."
- Boondock Saints

Wednesday, December 7, 2011

A Private Response In Public Forum To The "Robin Hood Tax"

I was asked my thoughts on a New York Times article posted this morning titled "The Robin Hood Tax".  I break it down below but you can read it here also.  Below each article clipping you find my thoughts.
They call it the Robin Hood tax — a tiny levy on trades in the financial markets that would take money from the banks and give it to the world’s poor. 

And like the mythical hero of Sherwood Forest, it is beginning to capture the public’s imagination.
America wasn't built on the premise that taxation is designed to redistribute monies from producers and savers to consumers and spenders.  Populism invokes emotional attachment and as anyone who trades and has a positive Alpha knows, emotions will cloud your objective thinking and narrow your view.  The 99% are not living in the conditions they are because someone else stayed in on Friday nights and worked hard.  If this is what you think will level the playing field, you are being played.

Driven by populist anger at bankers as well as government needs for more revenue, the idea of a tax on trades of stocks, bonds and other financial instruments has attracted an array of influential champions, including the leaders of France and Germany, the billionaire philanthropists Bill Gates and George Soros, former Vice President Al Gore, the consumer activist Ralph Nader, Pope Benedict XVI and the archbishop of Canterbury.
"We all agree that a financial transaction tax would be the right signal to show that we have understood that financial markets have to contribute their share to the recovery of economies,” the chancellor of Germany, Angela Merkel, told her Parliament recently.
Should we be impressed that Gates, Soros, Gore, Nader, the Pope and the archbishop are attracted to this?  They only want this to clear their consciences, they are not in need of money from the 1%, they are the 1%.  If these guys want more cash to help people, use some more of their own.  If world leaders desire to have an entity help with the recovery of their economies they ought to focus on the markets themselves.  Financial markets have been the highway for innovation and funding of large scale, life changing projects.  When bankers, like Goldman (who lied to Congress regarding their market making operations around Timberwolf) are able to restrict share offerings like Morgan and BoA did with LinkedIn and game the market to induce a false perception of demand, economies suffer, iInvestors lose out, financial market integrity loses out, and those who are enticed by the manipulative aspect of markets (Zynga and Facebook) wind up ignoring this practice and perpetuate by repeating the same behavior.  If you want your economy to recover and you think financial markets are responsible to help, you should look into why they stopped helping (it is as if these leaders forgot how beneficial a market for allocating capital can be when its trustworthy and transparent.
On Sunday, Mario Monti, the new prime minister of Italy, announced plans to impose a tax on certain financial transactions as part of a far-reaching plan to fix his country’s budgetary problems, and he endorsed the idea of a Europewide transactions tax. 

So far, the broader debt crisis engulfing the euro zone nations has pushed discussion of the tax into the background. But if European leaders can agree on a plan that calms the financial markets, they would be in a stronger position to enact a levy, analysts said. 

“There is some momentum behind this,” said Simon Tilford, chief economist of the Center for European Reform in London. “If they keep the show on the road, they probably will attempt to run with this.”
Again, these people fail to realize that it is their behavior that caused their problems.  Their desire for material things, their citizens desire for cheap goods and services, and the entire species desire to pursue pleasure is was has contributed to these budgetary problems.  We can avoid the pain if we, as a people, recognize that the only way to solve the imbalances in the world is first do away with the practice of fiat money production.  You have to understand that finance has become a game of "hide the debt".  All the leaders are doing is trying to inundate us (the traders) and citizens with a barrage of news, to the point almost that we all become so confused and numb, the problem is eventually ignored.  The scale of money required is so large that one can only deduce that there is no other way to pay it off other than giving up your freedom and becoming a piece of property to your creditor (which is what has happened already...notice how Europe is now loaded with unelected leaders).  Listen to Nigel Farage tell this to the very leaders I speak of:

The Robin Hood tax has also become a rallying point for labor unions, nongovernmental organizations and the Occupy Wall Street movement, which view it as a way to claw back money from the top 1 percent to help the other 99 percent. Last month, thousands of demonstrators, including hundreds in Robin Hood outfits with bright green caps and bows and arrows, flooded into southern France to urge the leaders of the Group of 20 nations to do more to help the poor, including passing a financial transactions tax.
Enacting such a tax still faces many hurdles, however — most notably, skepticism from leaders in the United States and Britain, home to some of the world’s most important financial exchanges. 

The day after the Robin Hood protest, for example, Mr. Gates, the chairman of Microsoft and one of the world’s wealthiest men, presented a report to a closed-door meeting of the G-20 leaders that laid out his ideas on how rich countries could aid poor ones. One of his proposals was a modest tax on trades of financial instruments that could generate $48 billion or more annually from the G-20 countries.
All OWS needs to do is try this hard to learn the skills required to capture the capital one person is willing to pay so that they, themselves, may be able to live in prosperity.  Instead, these folks have enjoyed $5 coffees, trendy hoodies, iPhones, PlayStation 3, buy one get one bar specials, outrageous Spring Breaks, new cars at 16, Black Friday, etc, you get the point.  Now the people of this nation, our fellow shareholders in America Inc. think that taking from those who produce will make their lives better.  Will you take your $50,000,000 to buy a Yacht and pay for 20 people to staff it daily?  I bet most would go buy clothes, TV's, cars, houses, phones and things for themselves that have no marginal benefit for the country (most of which are only affordable because the products are made in a country where the labor costs about 1/16 it does here and where Unions do not have a stronghold, again, most of the 99% created their own problems).  One thing we could do here in America is shrink the cost for government by restricting the liberal health plan, the insider trading, the Crossword puzzle subscriptions, and even those nice golf trips Obama loves so much.  Instead we have the unelected leaders and those who liberal spend our tax money telling us that we need to pay more while they do as their hearts desire.
Ms. Merkel and France’s president, Nicolas Sarkozy, quickly piped up, enthusiastically endorsing the tax. But Britain’s prime minister, David Cameron, expressed serious reservations, saying Britain would embrace it only if it were adopted globally. British officials fear that unless the tax is worldwide, trading will flee London’s huge markets to countries with no tax. 
The Obama administration has also been lukewarm, expressing sympathy but saying it would be hard to execute, could drive trading overseas and would hurt pension funds and individual investors in addition to banks. 
So basically the whole world needs to change, spend time writing laws, and find more money to pay for the structure to monitor trades to ensure that the appropriate taxes are being paid, all because the Europeans fudged their math, lied to the EU member nations and now have to "pay for their sins"
Administration officials say they would prefer a tax on the assets of the largest banks as a way to discourage them from risky activities. “The president is sympathetic to the goals that a financial transactions tax is trying to achieve and he is pushing for a financial crisis responsibility fee and closing other Wall Street loopholes as the best and most feasible way to achieve those goals,” an administration official said. 

Still, support is growing for the idea, which has been largely dormant since the 1970s, when a version was first proposed by the economist James Tobin, later a Nobel Prize winner. 

“The tax is a good idea because banks are where the money is. It’s the same reason Jesse James robbed banks,” said Rose Ann DeMoro, executive director of National Nurses United, which recently held demonstrations at the offices of 60 members of Congress in support of the levy. “The thing about the financial transactions tax is it’s stunning how quickly people get it and how fast they embrace it.” 

Labor groups like the nurses’ union and the A.F.L.-C.I.O. see the tax as a way to finance job creation programs to fight high unemployment in the United States and Europe
Hear me out again, taking money from other people will not make your life better.  So you take from producers, you better fill that void because from the producer perspective, the incentive to create is gone, after all, his hard work is susceptible to Populism and the will of the people.
Other advocates hope it will slow the speculation that many blame for undermining the euro and causing wild swings in financial markets. Mr. Gates and Mr. Sarkozy would like to use the money to finance development in the world’s poorest nations. And leaders like Ms. Merkel and some members of Congress are eyeing it as a relatively painless source of money to help plug government deficits. 

On Nov. 16, the French Senate passed a bill supporting a financial transactions tax. And the European Commission in Brussels has said it would like to put a tax of $10 per $10,000 of transactions in place throughout the European Union by 2014, predicting it would raise 57 billion euros ($77 billion) a year in European countries alone. 
The easy answer is to take from those who create and not to point out to those who mooch that they a reaping what they sow.  In the first paragraph of this highlight Merkel, along with some Congress members felt this is the easy, painless source of money needed to plug their deficits.  Well, I have a heroine addiction and my easiest way to plug the hole with the least amount of pain is to rob you.  Guess its ok because the government we're told God put there is doing it to its own citizens.  And not just any citizens, these are the citizens with the balls to put their money on your idea, your business, your dream without ever having met you.  To tax these people so "financial markets have to contribute their share to the recovery of economies" is the lamest fucking excuse in the book.  You want to have the markets help, give us some human capital to invest in.  Our education is so dumbed down, there is no new intelligence coming out to create new goods and service.  Those that do, team up with the banks and scam the IPO's and fuck the rest of the shareholders, all for a quick buck that is most likely meant to "plug a business deficit" to play of Merkle and Congresses excuse.
Last month, Representative Peter DeFazio, an Oregon Democrat, and Senator Tom Harkin, an Iowa Democrat, proposed an American version of the tax that they said could raise $350 billion over 10 years. 

Their legislation would impose $3 in taxes for each $10,000 in transactions. Other proposals, including those from the nurses’ union, call for a tax of $50 per $10,000. 

Mr. DeFazio said his tax plan would “raise money to invest in the real economy,” but he acknowledged that it faced an uphill battle in Washington, especially within the antitax Republican caucus. 

Opponents say that even at the rate in the DeFazio-Harkin bill, the tax would add significantly to the cost of trading, exceeding what institutional investors pay in commissions. 
Will Congress have to pay too or will they be excused like they have been for trading on material, non-public, potentially market-moving information?  What large corporations will be excluded from this law so that they will have a competitive advantage?  Will the NBBO still be ignored?  How will this be tracked on dark pools?  Have any these absolute fucking idiots considered the fact that here in the US
“At a time when we face a slow economic recovery, such a tax will impede the efficiency of markets and impair depth and liquidity as well as raise costs to the issuers, pensions and investors who help drive economic growth,” Kenneth E. Bentsen Jr., executive vice president for public policy at the Securities Industry and Financial Markets Association, said in a statement. 

George Osborne, the British chancellor of the exchequer, described the proposed tax as “economic suicide” for Europe. In this time of economic crisis, he said, the European Union “should be coming forward with new ideas to promote growth, not undermine it.” 

And Glenn Hubbard, who was chairman of the Council of Economic Advisers under President George W. Bush, said the Robin Hood tax is a “monstrously bad idea.” 

“Such a tax isn’t really going to get at the banks,” added Mr. Hubbard, who is now an adviser to the Republican presidential candidate Mitt Romney. “It’s going to hit the people who own the assets that are traded,” like investors. 

Supporters of a financial transactions tax note that Britain already imposes a levy of $50 per $10,000 of stocks traded, while Hong Kong and Singapore, with fast-growing financial markets, impose fees of $10 to $20 per $10,000 of the value of certain transactions.

The United States imposed a tiny tax on stock trades from 1914 to 1966. 
The British actor Bill Nighy, who has made online videos promoting the tax, calls it a beautiful idea. “It would raise enough money to solve problems at home and overseas, and it could do it without hurting ordinary people,” he said. 
Back to those banks again.  The same banks that can't even evaluate their own risk.  The ones that lied, under oath to our Congress and got away with it.  The same banks that robo signed the shit out of this country then took our monies to keep the Ponzi going.  The same banks that charge $32 overdraft fees and attempted to install a $5/month usage fee on debit cards.  The same banks that can take $1,000 and turn it into $10,000 thanks to fractional reserves.

Hubbard is right that the idea is "monstrously bad" but for the reasons.  It is bad because of all the other ways that governments could plug their holes without coming after the financial markets as if they are efficient, not broken, transparent, and duly maintained.  The markets are broken, HFT is destroying their integrity with each new week, the lawmakers give Goldman as pass on their lies while they nail Roger Clemens to the wall (Last paragraph).  This whole dog and pony show is a bunch of bullshit and I'm not the only one who sees it.  The people with the over inflated sense of self worth are the ones causing the damage.  Those in power seem to think they are above the law and act as the benchmarks for morality more so than say, recognizing they are the core of the problem.  So, Ms. Merkle, when will the governments help the participants, as they require at certain times, to clean up the broken structure that is it so markets can be the contributer again to the economies that it was originally designed for?