Streetwise Professor

September 28, 2023

Come On Down! And Will the Last Business in Chicago Turn Off the Lights? Thanks.

Filed under: Commodities,Derivatives,Economics,Exchanges,Politics,Regulation — cpirrong @ 4:50 pm

Texas governor Greg Abbot has extended an invitation to the CME Group to relocate from Chicago to Texas. The exchange group may well be moveable because the city’s new mayor, Let’s Go Brandon Johnson, has mooted a $1 or $2 per transaction tax on futures, options, and securities transactions in order to fill the city’s gaping fiscal hole–despite the fact that this is currently illegal under Illinois law.

Now you might not think that a buck is a big deal, given that a T-note or crude oil contract has a nominal value of around $100 grand. But it is a big increment to the cost of executing a contract. For example, the bid-ask on a crude oil futures trade is usually about $10, and the brokerage commission adds on only a few bucks. So the tax would increase transactions costs on the order of 5 or 10 percent.

I note that the industry fought for years at efforts to impose a 15 cent futures transaction tax. What Johnson is proposing is substantially greater than that.

Now, if Johnson’s objective was actually to raise revenue, this would be an incredibly stupid idea. Rule one of taxation: tax what can’t move. Although in the floor days uprooting the exchange and taking it outside the city or the state would have been very difficult, that’s not the case in the electronic era.

Have servers, will travel. Yes, CME Group (and CBOE–which given recent developments might end up in CME) has corporate employees there, but if any city should understand that is no impediment to relocation, Chicago should given the exodus of several major corporate HQs from the Chicago area in recent years–Caterpillar, Boeing, and Tyson Foods being prominent examples.

Moreover, even before the CME says hasta la vista motherfuckers, it faces competition in some of its products from ICE, and a tax would shift business there.

Numerous trading firms (notably Citadel) have fled Chicago for reasons–namely the marked decay of the city. (And I do mean marked: even in the last two years the decline has accelerated dramatically.) The CME has certainly already put those factors on the scale when making its decision, and a sizable transaction tax would almost certainly tip the balance heavily in favor of joining the exodus.

Notice that I framed my analysis as a conditional statement: if Johnson’s objective was actually to raise revenue. One cannot be too sure these days. Mayors of city after city have taken actions, or failed to take actions, that seem designed to drive out all but the underclass and turn the polities they govern (I use the term loosely) into crime-ridden, drug infested wastelands. In fact, it’s hard to name a big city whose elected officials haven’t done that or aren’t doing it.

American Spectator writer Scott McKay calls it “weaponized government failure:” “deliberate refusal to perform the basic tasks of urban governance for a specific political purpose.” The “specific political purpose” being to drive out middle class voters who pose the main political threat to the Brandon Johnsons and their ilk.

Framed as a hypothesis, I’m hard pressed to come up with contrary evidence.

Whether that’s the true purpose behind Johnson’s transaction tax brainwave, if he moves forward with it it’s a near lock that CME will hit the road. An electronic exchange is footloose and fancy free and not beholden to any place. Where once there were “locals” whose physical presence was necessary to operate an exchange, there are now what may be called “globals” who can and do supply liquidity from anywhere.

And if it moves, Texas is a good place. No income tax for one thing. Reasonable housing costs. And as for the weather, as I told my late mom when she fought coming here: “Look, you spent four months a years indoors in Chicago. You’ll spend four months a year indoors in Houston. Just different months.”

So come on down, Terry Duffy. I’ll be here to greet you. With bells on.

Print Friendly, PDF & Email


  1. Terry’s wife was car-jacked a few months ago. I’m sure that is not a fact militating towards staying. The party will really be over if and when mickeyD’s decides to pull out. By the way, why doesn’t Brandon and his socialist pals slap a dollar per burger tax on the arches? Makes as much sense.
    Oh yeah! Thanks for the great Bob Marley track.

    Comment by Donald Wolfe — September 29, 2023 @ 7:17 am

  2. When a leftoxenomorph is elected, fraudulently (id 2020) or not, to a position of power, authority, control, rule, you can be 100% certain that leftoxenomorph is going to act moved by two impulses: (1) to better itself by any means, corruption, outright stealing, bribes, kickbacks, influence, nepotism, you name it and (2) to further the cause of the religion of leftoxenomorphism as much as it can, infecting, indoctrinating, invading, obfuscating, gaslighting, lying, gatekeeping, etc, etc.

    Why do I use the “it” instead of “him”? Because I don’t consider leftoxenomorphs human, any longer. They turn into something else, profoundly human-hater and anti-human, and by doing so they lose the right to be seen as humans by the rest of us.

    We need to start seeing leftoxenomorphs in the true darkness of their evil nature. An enemy, different species from humanity, regressed out of humanity by their embracing of the religion of leftoxenomorphism, made up of all things lefto-puke.

    Yes, I’m putting a moral clause on taxonomy. What?!

    Because if we keep considering leftoxenomorphs as human beings with which we have a mere difference of opinions we are selling ourselves short of the proper understanding of the phenomenon we are facing.

    We are facing an evil religion bent on world conquest and on the destruction of human civilization in order to bring about a planetary trip back to the medieval Dark Ages with its rabid fanatical practitioners, the leftoxenomorphs, as the neo-feudal-class of overlords and a few surviving humans (after the great ongoing leftoxenomorph depopulation efforts) as their enslaved serf-class of humanoid cattle living in their “15’ cities” cattle pens and serving them as trained monkeys under a system of “social credit scores” with digital tokens (cashless society, “Central Bank Digital Currencies”) as only means of exchange as in a video game they will totally control, with as much individual rights as a Jew in Auschwitz and quite similar prospects at the smallest attempt at resistance or lack of utility for the leftoxenomorph overlords..

    If people don’t open their eyes to the real nature of current events we are going to lose the planet and human civilization will be swept under a lead tombstone of cannibal collectivism in a 4th Reich that may very well last for thousands of years and an Ayn Rand’s “Anthem” dystopian nightmare without the good ending.

    Further tolerance and civil behavior are not the way to deal with this Extinction Level Event problem our species is facing.

    Humanity is on the way out and most people are not even aware of the war being waged against us.

    Let us begin by not seeing leftoxenomorphs as humans but as an enemy species bent on our destruction.

    Comment by FRONT_TOWARD_ENEMY — September 29, 2023 @ 8:45 am

  3. Stuff happens. Cities come and go. Rome’s population was down to twenty thousand or so in “late antiquity”. Londinium’s was down to God-knows-how-few-if-any.

    You’d think SF might survive – wonderful bay. The rest? Who knows? At one with Nineveh and Tyre?

    Comment by dearieme — September 30, 2023 @ 10:22 am

  4. As a former CME board member that sat on the Budget Committee, I can give some color around this issue.

    1. If they implement a tax, and Pritzker okays it, the CME is gone and so is every trader and trading firm. But, Pritzker has said he will veto a tax.

    2. They can institute a corporate head tax. We had to deal with one when I was on the budget committee thanks to Jesse Jackson who advocated for it. My idea was to take all non-essential employees out of the city but the problem is where? Geographically, Chicago has high commute times and if you lived in Glencoe and had to commute to Oak Brook…brutal. (This goes to the professors, “if it can’t move, tax it”)

    3. The marginal cost to moving is not low. Over the last century, physical human networks have been created that benefit the exchange. The interplay between exchange employees and trading firm employess/accountants and lawyers can’t be easily replicated. This is not an assembly line. There is a question as to how many people would move—->family obligations and other things get in the way. So, there is a human capital cost.

    4. Is Dallas the best place? Charlotte might be better with its banking, proximity to NYC,DC and a slightly closer flight to London.

    5. The entire community would benefit by moving en masse and picking one town. Besides CME, there is the OCC and CBOE along with all the trading firms etc.

    6. As D Wolfe commented, crime is a big deal. Can you recruit new employees? Do your current employees feel safe coming to work? I think this rates higher than taxes believe it or not. CME can hire private security for around the building but what do you do about the, streets, the CTA/Metra etc?

    Comment by Jeff Carter (@pointsnfigures1) — October 1, 2023 @ 6:46 am

  5. @FTE – it all makes sense if you understand the Enlightenment as a speciation event in the true Darwinian sense. The emergence of Homo individuus from the older Homo collectivistica.

    H. i. is defined as having the psychology of individual identity. H.c. is defined as having a psychology of collective identity. Given that, it should be no surprise that the ideas of individual rights emerged with the Enlightenment.

    H.c. does not recognize the rights of an individual. Their highest value is loyalty to the collective. To betray the collective or collective morality is to deserve ejection or death.

    For H.i., betrayal of the collective morality (Nazism, Communism, Islam) may be the highest virtue.

    H. i. first emerged marking the Greek Enlightenment, 1500 years ago. The power of the Christian Collective put an end to them with their 100-year destruction of Greco-Roman civilization after 320 CE. Roving bands of monks (the antifa/BLM of their day), murdered every free thinker they could get their hands on.

    The lesson is that H.i. can live with H.c. but H.c. cannot live with H.i. H.c. lust to live in a slave state. That is what we are seeing today. The attempt, again, of H.c. to kill off H.i. and re-institute collectivist slavery.

    It’s my view, now, that every sentient species goes through this crisis. Any species in which their version of H.c. wins is still-born. Fated for extinction. Collectivist societies are reflexively introverted. They always eliminate creative thinkers as dangerous heretics. Collective betrayers.

    Eventually a planetary extinction event will come and obliterate them, because they never develop the technology to leave the planet.

    Comment by Pat Frank — October 1, 2023 @ 10:11 am


    You published your opinion above and I respect that. In my opinion you wrote some pretty nasty and controversial stuff, and yet you don’t have the integrity / guts to sign your name?

    Bob Otter

    Comment by Bob Otter — October 2, 2023 @ 10:23 am

  7. Noticed that Lothian mentioned the above piece in his column last week but ended it by asking “why does Craig spend so much time in Chicago?” Not sure what his comment implies.

    Comment by George Sladoje — October 3, 2023 @ 11:16 am

RSS feed for comments on this post. TrackBack URI

Leave a comment

Powered by WordPress