Hillary vs Bernie

[Valmy]

But of course that is just a mercy compared to what Norgy would do to Corporate Attorneys.

[DGuller]

In Norway, the state has shareholder majority in Telenor and Statoil, both companies operating in places that encourage bribery and corruption like Brazil and the former Soviet -stans.

I think oil companies are in a no-win situation.  You have to go where the oil is, and oil is usually located under some pretty unsavory feet.  You either play by their rules or you don't play at all.  The best you can do is not have your legal counsel help out with executions of troublesome environmentalists.

[Norgy]

But of course that is just a mercy compared to what Norgy would do to Corporate Attorneys.

They'd get the Comfy Chair.

[Admiral Yi]

Except that hedge fund managers, however objectionable their mores may seem to you, are not really the public policy problem.

What is the public policy problem, and how do reinstituting Glass-Steagall and enacting a financial transaction tax solve this problem(s)?

[viper37]

Real financial regulation would to me look like hedgefund managers hanging from lamp posts. 

When the government does not rush to their rescue, they usually do that by themselves, so not a problem of regulation.

[Valmy]

But of course that is just a mercy compared to what Norgy would do to Corporate Attorneys.

They'd get the Comfy Chair.

[DGuller]

Except that hedge fund managers, however objectionable their mores may seem to you, are not really the public policy problem.

What is the public policy problem, and how do reinstituting Glass-Steagall and enacting a financial transaction tax solve this problem(s)?

Here is my take:  the problem is that a large chunk of our economy is based on zero-sum speculation.  At the very least it's a waste of human potential, since the best and the brightest can make much more money shifting money from other people to themselves rather than doing something productive to society.  Other problems are that this speculation can bring down the real economy with it, or that the needs of the speculative economy drive the economic policy to the exclusion of productive sectors.  Transaction tax would introduce enough friction in the trading system to keep a lid on the most marginal of speculative activities.

[Berkut]

Except that hedge fund managers, however objectionable their mores may seem to you, are not really the public policy problem.

What is the public policy problem, and how do reinstituting Glass-Steagall and enacting a financial transaction tax solve this problem(s)?

Here is my take:  the problem is that a large chunk of our economy is based on zero-sum speculation.  At the very least it's a waste of human potential, since the best and the brightest can make much more money shifting money from other people to themselves rather than doing something productive to society.  Other problems are that this speculation can bring down the real economy with it, or that the needs of the speculative economy drive the economic policy to the exclusion of productive sectors.  Transaction tax would introduce enough friction in the trading system to keep a lid on the most marginal of speculative activities.

What kind of transaction tax are you talking about?

And how do you make sure to target it only at the transaction you want to discourage, while maintaining the flexibility and agility in the system we certainly want?

These are honest questions, btw...not a set up.

[Admiral Yi]

Here is my take:  the problem is that a large chunk of our economy is based on zero-sum speculation.  At the very least it's a waste of human potential, since the best and the brightest can make much more money shifting money from other people to themselves rather than doing something productive to society.  Other problems are that this speculation can bring down the real economy with it, or that the needs of the speculative economy drive the economic policy to the exclusion of productive sectors.  Transaction tax would introduce enough friction in the trading system to keep a lid on the most marginal of speculative activities.

I disagree with some of your underlying assumptions.  First of all, as Joan (I think it was) pointed out long ago, the great majority of derivative contracts are for currency and interest rate swaps, which are legitimate hedging instruments.  Second of all, any non-swap derivative such as a future or a stock option can and is used as a hedging instrument as well.  A farmer selling soy beans forward or a pension fund buying stock puts or CDS is not engaged in a zero sum speculative game, they're giving up upside in exchange for reduced downside.

[The Minsky Moment]

Except that hedge fund managers, however objectionable their mores may seem to you, are not really the public policy problem.

What is the public policy problem, and how do reinstituting Glass-Steagall and enacting a financial transaction tax solve this problem(s)?

The blahs were intended to connote my skepticism of the usefulness of those particular measures.

[Admiral Yi]

The blahs were intended to connote my skepticism of the usefulness of those particular measures.

Gotcha.

[DGuller]

What kind of transaction tax are you talking about?

No idea about details, just a general concept.  Every time you buy or sell some financial assets or write contracts or something of that nature, you pay a tax as a tiny percentage of the amounts involved.  It would be an insignificant amount for regular trading, but for algorithmic traders that can buy and sell billion dollars worth of assets to eek out some nickel or two in arbitrage, it would be prohibitive.  Sort of like charging 0.1 cents for every e-mail:  won't really do anything to you or me, but spammers offering you various penis enhancement deals would be hit hard.

And how do you make sure to target it only at the transaction you want to discourage, while maintaining the flexibility and agility in the system we certainly want?

The very nature of such tax would target high frequency trading, so it does this automatically, which is why this idea gained some traction.

[DGuller]

Here is my take:  the problem is that a large chunk of our economy is based on zero-sum speculation.  At the very least it's a waste of human potential, since the best and the brightest can make much more money shifting money from other people to themselves rather than doing something productive to society.  Other problems are that this speculation can bring down the real economy with it, or that the needs of the speculative economy drive the economic policy to the exclusion of productive sectors.  Transaction tax would introduce enough friction in the trading system to keep a lid on the most marginal of speculative activities.

I disagree with some of your underlying assumptions.  First of all, as Joan (I think it was) pointed out long ago, the great majority of derivative contracts are for currency and interest rate swaps, which are legitimate hedging instruments.  Second of all, any non-swap derivative such as a future or a stock option can and is used as a hedging instrument as well.  A farmer selling soy beans forward or a pension fund buying stock puts or CDS is not engaged in a zero sum speculative game, they're giving up upside in exchange for reduced downside.

There is such a thing as too much hedging.  When everyone hedges each other, a failure of one actor in that complicated hedging chain can start off a chain reaction.  That's why the concept of "too big to fail" is a bit questionable right now:  if you have a million of small financial institutions all interconnected extremely closely with each other due to holding each others' financial instruments, they're all really just one big institution as far as system stability is concerned.

[The Minsky Moment]

The FTT concept is for a global tax.  Read Tobin's original article - he makes this clear.  Financial transactions can take place anywhere so a localized tax doesn't work.

I also don't really see algo traders or HFT as a public policy priority.  Even they were there are other measures that can be implemented nationally to address it.

[Admiral Yi]

Anyone read "Flash Mob?"  I read about half the book, gave up, didn't seem the author understood what he was writing about.