On Mon, Dec 1, 2008 at 7:52 AM, Dan M <[EMAIL PROTECTED]> wrote: > > It's rarely as simple as portrayed in economics 10
Of course not. > 1, but this type of > problem has been long known. I think that I learned about it with hog > prices...the fact that there is a time constant between the price of hog > bellies and the ability to add new hog bellies to the market. This leads > to > market volatility, since when prices are high, a lot of new little piglets > are raised, causing an excess in supply, lowering prices, causing few > piglets to be raised, causing a shortfall in supply, etc. For the reason you pointed out later, this doesn't apply. In fact, that's exactly what I was pointing out -- supply and demand for oil change so slowly that huge short-term price swings can't be explained by supply and demand, so some other forces must be regulating it, to the detriment of nearly everybody. Your reminders to me of inelasticity were on point, I think. Prices obviously can more easily go non-linear when supply and demand are inelastic. I guess that leaves the question of how to figure out if the price response was rational with regard to supply and demand, or was influenced significantly by non-market forces. But that begs the question of whether or not derivatives and such are market forces, whether or not information was equally available to all, etc. So I suppose there's no hard logic to my original post, really just an intuition that the price movement was hard to reconcile with the reality of supply and demand. Having said all that, it seems that such price fluctuations are so disruptive that no matter what causes them, it would be in our society's interest to figure out a market-friendly means of moderating them. Maybe that's not true if they are driven entirely by inelasticity, but I sure would like to see a thorough analysis of that question. > The housing bubble was partially due to cash with no place to go. But, > much > of the excess in housing prices was deliberately caused by homeowners' > votes > against affordable housing in places like California. Why do you think > that > prices for comparable housing in LA are so much more than Houston or > Dallas? You have more space. ;-) When did we vote against affordable housing? Prop 11? Nick _______________________________________________ http://www.mccmedia.com/mailman/listinfo/brin-l
