Democratic presidential candidate Hillary Clinton is proposing new taxes on large-volume trading in financial markets, one of several measures designed to appeal to the party’s liberal nominating base as she squares off against insurgent rival Sen. Bernie Sanders (D-Vermont). The challenger’s left-wing economic populism has won him traction in some early nominating states, putting pressure on Clinton to maneuver her campaign to guard against a repeat of 2008, when a relatively unknown Barack Obama swept the party off its feet with an appeal to passion and principle.
Hillary Clinton on the campaign trail. (www.hillaryclinton.com).
Clinton’s strength is seen as her experience and pragmatism, although clearly the campaign is focused on the nomination, and not the inevitable pivot to the center (rhetorically, at least) that marks most presidential bids as they begin to look towards the general election.
I hope to dissect some of her proposals in greater detail in the coming days. The tax on so-called high-frequency trading, is actually a tax on order cancellations in financial markets. This is designed to penalize large-volume, computer-driven trading strategies, which Clinton and some other critics blame at least in part for market meltdowns and flash crashes; it is also designed to discourage “spoofing,” a technique that can involve submitting open orders in an effort to push the market one way or the other, and later canceling them.
Debate will no doubt ensue as to whether imposing new taxes on market trading is likely to achieve the “fairness” and stability proponents claim to desire. These new costs would however, very likely do two things:
- Reduce market liquidity, by making it more expensive to trade. Lower liquidity means higher spreads (the difference between bid and ask), which also makes transactions more costly. These direct and indirect costs will hurt both institutional and individual investors.
- Increase the cost of risk management. Small and large traders alike often rely on series of continually adjusted stop orders to protect profits and cut losses. These systems can rely on orders that are placed and later canceled and replaced with a new order to reflect market movement. Taxing order cancelations will make it more expensive to manage risk in this way, thereby potentially injecting even more risk into capital markets.
Politico and others have reported that former Secretary of State Clinton is relying on former Rep. Barney Frank (D-Massachusetts) and Gary Gentler (who helped craft Dodd-Frank) to advise her on economic matters.
On the heels of Gallup’s report painting a pessimistic picture for the president comes this from Investors Business Daily: The stock market’s strong January gains predict a presidential victory for the challenger candidate come November. After 1932, every bullish first month in the markets has foreshadowed the incumbent going down, while every mild month (no matter if the market was up a few percent or down a few percent) meant a second term for the administration.
The White House, its allies and some in the media have been talking about the “cuts” in President Obama‘s recently proposed “budget” – you know, being hard times and what with the deficit and all. Gee, that must have been tough, but then again doing the right thing isn’t always easy! Thank goodness we’ve got a president willing to lead during these difficult times.
Or not. Obviously (for anyone who has paid attention the last two years or beyond), any suggestion of austerity from this administration is nothing more than political posturing, and cannot be taken at face value. So it really wasn’t credible to be talking about “cuts” in the budget. (To be fair, it rarely is when anybody in DC talks about cuts.)
There’s been discussion of the budget and what to make of it, and as usual Charles Krauthammer cuts through much of the clutter to offer cogent analysis. Read his Washington Post commentary on the budget, and continue to learn about our president.
P.S. Barack Obama had one of the most successful lame duck sessions in recent memory, and got a bounce in the polls to show for it. With this disastrous budget and its phony presentation, along with his small-minded meddling in state politics (see Wisconsin), the president may have stumbled badly enough to lose this momentum.
So how does go California, anyway? A stream of articles and editorials over the last year has sketched a sad picture of the once-Golden State’s economic outlook. Much has been said of the budget crunch, political gridlock and the stranglehold of public-sector labor unions on the body politic.
Victor Davis Hanson explores the changed reality of life in central California which forms one part of this story. It’s a different place than when the writer grew up there, now resembling parts of the third world in his estimation. Two Californias, published in National Review, has been making the rounds on the web and deserves reading.
Lower income taxes on individual and corporate earnings boost economies and improve living standards, suggests a Show-Me Institute op-ed published in the St. Louis Beacon. States taxing personal income at a lower rate and spending less per capita are growing in population, while those in relative decline tax and spend more heavily using these measurements.
Thanks to SMI, its supporters and like-minded thinkers I think we can expect to see continued and increasing discussion surrounding taxation in Missouri. The most recent cycle and e-tax reform may just have been the beginning. Fifty federated states a laboratory of democracy makes – the census results come at an opportune time for such discussion.
I just read an article that appeared a year ago in the Centennial Review, a publication of Colorado Christian University. Written by CCU President and former Sen. Bill Armstrong, it’s one of the best articles I’ve seen on the economic downturn, so I commend it to anyone who wants to understand what has happened, in basic terms, or to be able to communicate that to others.
With the mid-terms rapidly approaching, the economy continues to be the number one issue for this election. We need leaders who can communicate boldy, intelligently, and effectively about theses issues – and each of us, as individual citizens, would do well to also be able to discuss this issue in similar fashion. We can’t let the many distorted stories being told to us from Washington go unchallenged.
Financial Crisis Made in Washington
by William L. Armstrong
Rep. Mike Pence (R-Indiana) writes a piece for the KC Star about President Barack Obama‘s economic policies, after the president’s trip to the Midwest.