Nurses Push Tax on Trades to Help Sick

By Sarah Anderson
Chicago Sun-Times
May 15, 2012

http://www.suntimes.com/news/otherviews/12452745-452/nurses-push-tax-on-trades-to-help-sick.html

Of all the street actions leading up to the NATO summit, the
one that might seem most perplexing is a nurses’ rally for a
tax on securities trades. Financial markets are pretty remote
from hospital bedsides, you might think.

Why would nurses get mixed up in an issue like that?

RoseAnn DeMoro, executive director of National Nurses United,
says there’s a simple explanation: "The big banks, investment
firms and other financial institutions, which ruined the
economy with trillion-dollar trades on people’s homes and
pensions and similar reckless gambling, should pay for the
recovery."

Nurses have been on the front lines of the crisis, seeing
firsthand the health impacts of skyrocketing poverty and
record high rates of uninsured Americans.

Their specific tax proposal: a small fee on each trade of
stocks, derivatives and other financial instruments. Even at
a rate of 0.5 percent or less, such taxes could generate
massive revenues to pay for things ordinary people in Chicago
and elsewhere urgently need, such as affordable health care
and decent schools.

Endorsers of their Friday rally in Daley Center Plaza include
100 union, environmental, and global health groups.

What these groups see as a practical way to meet society’s
basic needs is unlikely to be embraced by Chicago’s trading
industry, however. The city has become a Mecca for "high-
frequency traders."

These firms’ computers make thousands of trades per second to
exploit fleeting stock price discrepancies.

Because what the nurses are calling a "Robin Hood tax" would
apply to each trade, high-frequency traders would be hardest
hit. For long-term investors, the cost would be negligible.

One firm with a lot to lose is Citadel. The hedge fund has
claimed to account for as much as 10 percent of global
equities trading in a single day. Their annual profits from
speed strategies have been as much as $1 billion.

Dozens of small high-frequency trading houses have also
popped up around the Chicago Mercantile Exchange. Thirty of
35 members of the industry’s national lobby, the Principal
Traders Group, are based in the Chicago area.

An example is Infinium Capital, a firm notorious for rocking
world oil prices by sending thousands of erroneous buy orders
to oil markets in a few seconds. It was fined $850,000.

Like many in its industry, Infinium can run circles around
ordinary investors because its computers are located next to
exchange servers. Those on the same floor as the Merc’s
servers can transmit up to 5,000 orders per second with less
than 10 milliseconds of lag time.

As support for the Robin Hood tax gains momentum, lobbyists
for the trading houses will surely turn their sights on it.
The Financial Services Forum has already urged the Obama
administration to block such taxes, not just in the United
States, but also in Europe.

One of the speed traders’ arguments is that such taxes would
make it hard for them to provide the liquidity that oils our
nation’s financial machine. But many traditional investors
point out that during crises, speed traders drain liquidity
just when it’s needed most.

They’re also concerned that the lightning-speed computers
could go haywire and trigger another crash.

Nurses vs. high-speed traders. Now there’s a match-up you
probably never thought you’d see playing out in the streets
of Chicago.

© 2012 Chicago Sun-Times

[Sarah Anderson directs the Global Economy Project of the
Institute for Policy Studies, a progressive multi-issue think
tank, in Washington DC. She’s also the co-author of the IPS
report, America’s Bailout Barons: Taxpayers, High Finance,
and the CEO Pay Bubble.]

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