OK, I've been asked to write on this by at least 1/2 dozen people in the last 3 days, so I'm going to briefly do so.
HR 1068 was introduced as a bill in congress by Peter DeFazio of Oregon and backed by 7 others. You can Google it to get that info. It is subtitled "The Let Wall Street Bail out Wall Street Bill".
The bill wants to have a .25% tax on every stock, future or options transaction.
Mr.DeFazio clearly has no clue, nor does anyone backing this rubbish, what it would actually do to the economy to have something like this pass. I don't see any way it passes, though in this crazy environment where there are massive rushes to judgement, anything is possible.
If it passed it would probably wipe out 1.5 to 2.0 MILLION jobs, including 98% of all traders. Mr.DeFazio claims that it would generate $150 BIL a year in taxes that would repay the bailout and once that happens it would phase out. Shocking as it is, this congressman is clueless as to the ramifications, and his math couldn't be wronger. Further, it would punish no one who had anything to do with Wall Street's greed, it would do the exact opposite, the only ones standing would be the most powerful, it would wipe out all the small firms that had nothing to do with the problems, and traders and it would dissuade investors from investing. More than likely the stock market drop 30 to 50% within a few months and it would further erode investor confidence.
This is just another one of those "look mom, I have a stupid idea but it sounds appealing to my constituency that isn't well informed so it might help me get reelected!" bills.
Let me just break down a trade for us traders;
You fade this mornings gap up (like we did - Ka-chingo!) You short 300 shares of AAPL at $100 a share average cost. (Yes, I know its $90s, but for ease sake...)
300 X's $100 = $30,000
According to this bill to make this trade ONE WAY would cost you $75, plus figure $10 you might normally pay, for a $85 trade. A roundtrip, which obviously you would need to do, it would be $170.00
Trading volume would dry up overnight, so that $150 BIL would become more like $50 BIL (at most I believe since trading would become virtually obselete).
Again, I don't see any way it passes, it may be the single dumbest thing I've heard yet.
I have to run out, but obviously my below 7000 target looks pretty easy at this point, we're within 100ish points of that. Who knew? Berkshire was some beast of a call, as was SPG, etc, etc, etc. We are ROCKING!
You want to know how we would get a SUSTAINABLE rally here? If they nationalized the banks, folks. That's how dumb they really are. Its so simple, if they did that we would get a nice big gap down and then the biggest one day reversal in the history of the stock market in my opinion. And, if it didn't happen that day, it would happen Day #2. I would be buying with BOTH FISTS everything I could once we got that washout.
Instead they keep trying to prop things up and it obviously backfires. I wish someone in charge had a clue. It's so simple my 7 year old can figure it out, the market WANTS the government to take over the banks. They keep saying on CNBC and everywhere how it would be horrible if they did it, they are DEAD WRONG! It would be the best thing FOR the market to do that!
If anyone who reads my blog has any access to any politicians in a real way, please encourage them to look at reality and stop the nonsense. These banks are worthless, lets make them worthless for real, wipe out the shareholders and move FORWARD instead of backwards. It's kinda like getting your Ex-Girlfriend pregnant because she threatens to commit suicide if you leave her. OK, so now you have a suicidal pregnant girlfriend (don't ask how I know this, please! :))
You don't make the problem better by keeping it alive, you make it a LOT worse, and that's exactly why the market continues to go lower and lower. It will not have any real sustainable rally until they take the things off life support and let them die. Then and only then can we get a real nice Bear market rally that may last a while. It won't ultimately last, but it will stop the bleeding.
Let's see what shakes Tuesday, which is as you know historically known as "turnaround Tuesday". Perhaps we bounce on HOPE and being oversold. We'll see, but we should get some sort of capitulatory move soon. That would wash out some longs and get us a nice bounce to trade at least. If we gap up again, we short it again, its like shooting ducks! The GAPS here have been GOLDEN, folks, you should all be playing them, they are GOLDEN!