Traders are in the cross hairs of newly proposed congressional legislative bill proposals. The greatest harm could come from bill H.R. 1068, better known as, "Let Wall Street Pay for Wall Street's Bailout Act of 2009".
This bill would put a 0.25 percent tax on all securities transactions as a means to pay for the Troubled Tax Asset Relief Program (TARP). The proposal claims $150 billion a year could be raised. The bill goes on to state that the tax would have a negligible effect on the average investor.
In reality taxes have to be paid by someone. Robert Green rightly assessed in Active Trader, April 2009, "Ultimately , the financial-transaction tax could put thousands of traders out of business overnight...Entire Wall Street firms may simply shut down their proprietary trading desks, further drying up liquidity and making the U.S. markets less appealing to the rest of the world."
Less liquidity in the energy complex futures markets will mean greater volatility swings in crude, diesel and gasoline spot and futures prices. Individual traders, trading groups and hedge funds will move their trading away from US markets to more liquid foreign markets.
TARP eventually needs to be paid off. However, taxing transactions will not be the intelligent method to dispose of this liability.
No comments:
Post a Comment