Wall Street's business is facilitating the capital markets, not "creating capital". Equity underwriting, a white shoe Wall Street activity, involves simultaneously facilitating a series of transactions we call an IPO. Creating capital is not really anybody's job - you can create capital/money by agreeing to take an IOU in lieu of cash for services rendered.

Also, Wall Street != algo/program/high frequency trading. That area of the capital markets, which requires sophisticated market infrastructure to exist in the first place, is exceedingly small by headcount and profit share.

>"The best analogy for traders? They are hackers."

Traders are hackers, and so are entrepreneurs. The kind that likes to tinker with data, play with mathematical models, and find nuances previously un-noticed or empirical anomalies irrational. The dream is to, in the process, find a way of modelling phenomena presently deemed unpredictable, i.e. to discover something new.

>"Discussion in the market place is not about the performance of specific companies and their returns. Discussion is about macro issues that impact all stocks."

Adam Smith didn't write about economics, he wrote about the political economy. The post-War trend of having a secular divide between politics and markets is historically unprecedented. Discussion has shifted because the salient points have shifted; beta is dominating alpha. A visual could be a slick of oil on top of an ocean - the oil is company-specific factors and the ocean the general market. In calm seas just watching the oil is fine. If you're in a Hellenic thunderstorm, however, the dominating factor is the rolling waves. Don't blame someone else because your model is obsolete.

>"I would be curious if anyone out there knows what percentage of transactions actually return money to a company for any reason"

I'm not sure what this means, so I'll take it as what percent of revenues came directly from capital raises (IPOs and debt offerings). This supposes that all other functions at the bank, e.g. asset management, making markets in stocks, providing brokerage and execution services, etc. are useless. From their latest GS 10-Q [1] we see that they earned $1.4 billion in underwriting for the first half of 2012. Not including net interest income their revenues for the same period were $14.5 billion; thus, underwriting represented 10% of Goldman Sachs's revenues for the first half of 2012. As a percentage of transactions I'm not sure how you'd work this out (is an IPO one transaction? Multiple?) nor what use it would be. For reference, underwriting represents nothing of Blackrock's or Bridgewater Capital's revenues.

>"Wall Street as a whole needs to be in the business of creating capital for companies and selling shares to investors who believe they are shareholders."

A healthy primary market cannot exist without a healthy secondary market, i.e. the success of an IPO, and whether it happens in the first place, is strongly related to how investors feel about being able to sell at some point down the road without incurring losses.

Let's examine the connection between holding term and governance mentality. The FT recently had a piece documenting that institutional investors, who own roughly 70 percent of U.S. stocks, despite having long-term positions and near total voting control, tend to by default vote with management and not participate in corporate governance [2]. Resolving our public capital markets is more complicated than fuck the facilitators; ape-handedly throwing taxes around before thinking through the consequences, intended and otherwise, isn't smart (though it will evidently get your article views).

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High frequency traders, in a race to the bottom, are in the short-term being run into the red by firms that trade time-consuming safety checks for speed. In the end the bad drives out the good and the market de-stabilises. The solution to this is having a series of pre, inter, and post trade checks that have to be run, e.g. monitoring the total dollar volume of trading over a time interval or the total dollar amount lost mark-to-market (yes, there are firms that took these functions out of pre-trade verification to save a few milliseconds). This puts a natural and non-arbitrary speed limit on the markets which accomplishing something meaningful in that time beyond feeling good about having conducted a witch-hunt.

[1] http://www.sec.gov/Archives/edgar/data/886982/00011931251234...

[2] http://www.ft.com/intl/cms/s/0/e19b6a54-fbf8-11e1-aef9-00144...