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View Diary: Open thread for night owls: A stock transfer tax makes good sense (178 comments)

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  •  I strongly disagree. (1+ / 0-)
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    basquebob

    First, I have seen no evidence that HFT causes more volatility.  The worst that can be said is that HFT failed to arrest volatility. Remember that there have been crashes since before computers were invented.

    Second, even if HFT was somehow proven to be a prime cause of volatility, so what? Don't fall for the right-wing fallacy that the Dow Jones reflects the health of the nation. It doesn't.  Most Americans don't own much stock.  Most Americans are long-term (10+ years) investors.

    It is worth the extra liquidity to risk some short-term volatility that will only hurt traders. And it will only hurt half the traders, the other half will make a profit. Which can be taxed.

    Is the threat to move trading to another country a real threat? Yes it is. We can make snide remarks about regulatory systems in other countries. But who do you trust to give you a fair deal? A Emperor descended from the Sun Goddess? Or Mitch McConnell and his AA-rating? I say it's a toss-up...

    •  we totally agree on this... (0+ / 0-)
      ...the Dow Jones reflects the health of the nation. It doesn't.  Most Americans don't own much stock.  Most Americans are long-term (10+ years) investors.

      On the liquidity side of things as far as HFT is concerned, many beg to disagree with you. In the 2010 flash crash that lack of ability or willingness to provide the necessary liquidity seems to be the main culprit. The experts have said that if the transactions that triggered the flash crash would have been handled by specialists on trading desks, as they were traditionally done, it would not have happened.

      The bottom line is that investors are leaving the markets in droves because of volatility among other things. The trust has been breached.

      And, of course the threat will always exist of moving the markets somewhere else. It has been done, but it comes with many perils that are overlooked when things looks rosy. The bottom line is that there is a lot more to the markets than the exchanges themselves and many other real costs than the tax structure of where those exchanges reside.

      "Capitalism has defeated communism. It is now well on its way to defeating democracy."
- David Korten

      48forEastAfrica - Donate to Oxfam

      by basquebob on Sat Oct 08, 2011 at 11:36:44 AM PDT

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