Nurses Push Tax on Trades to Help Sick
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.
Nurses rally for a financial transactions tax. (Photo by Robin Hood Tax campaign)
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
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