It's a Half Step
Barack Obama is now proposing a tax on "risky" financial transactions.
The problem here is two fold:
- Many of the risky financial transactions were there to skirt regulations, and this just creates another incentive for people to do this again.
- Many of the problems with our markets come from people who attempt to generate minuscule profits across thousands, or millions, of trades, Goldman Sachs front-running the entire US stock market comes to mind.
For the investor, this is an infinitesimal cost of doing business, but it puts the rampant speculator out of business.
It eliminates regulatory arbitrage, and could go a long way toward paying for health care reform.
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