Re: Wal-Mart is evil, why it must be eradicated
On Sat, Dec 6, 2008 at 9:39 PM, Dan M [EMAIL PROTECTED] wrote: But, I think this recession will hit everyone, and a sinking tide lowers all boats. I know that investment bankers are nervous now. Both of them? :-) Nick ___ http://www.mccmedia.com/mailman/listinfo/brin-l
RE: Wal-Mart is evil, why it must be eradicated
I'm no statistician, but aren't you comparing apples/oranges here. First of all the median income includes all residents while the median home prices include only homeowners. But, affordability indexes usually compare this. It's true that, nationwide, about a third of households are renters. But, the person buying the property to rent has to make money on the rent, so rents are also higher. I realize that there were some goofy disparities between rental property prices and homes in the last 10 years. Here, it's the other way around. I think we are spending more on housing for a 1350 sq. foot apartment than our buyers are spending on their mortgage and real estate taxes (after the tax deduction...without counting that, they are paying about 5% more for 3000 sq. feet than we are paying for 1350 sq. feet). Second it looks to me that median home prices doesn't include condo prices. I'm not sure about the last, but I know that in my parent's home town (Santa Cruz) UCSC students vote in the local elections and I would imagine that that makes them residents. I found another resource, and it said that students living on campus, even if they can vote in the next election, are not counted, but grad students (the only ones who can live off campus) living off campus do count. The median family income is much higher than the median household income: 350k. So, it is a community where the average household is in the top 2% of the nation. That means that as long as those very very high paying jobs are there, the housing prices might stay up. But, I think this recession will hit everyone, and a sinking tide lowers all boats. I know that investment bankers are nervous now. Engineers certainly can't afford to buy those houses, unless they are paid far above averageand then the company that hires them are at a great disadvantagewhich is why HP will keep shifting work to Houston's Compaq campus. Dan M. ___ http://www.mccmedia.com/mailman/listinfo/brin-l
RE: Wal-Mart is evil, why it must be eradicated
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. This is called the Cobweb Theorem, first articulated by Kaldor. OK, I forgot the name, but I'm glad that someone who's got a Phd in econ reinforces that this is a well known phenomenon. When you are in a doctoral program in economics, one of the things you are drilled in is that the assumptions you make in developing your models are often the most significant factors in the results you make. FWIW, this is the most critical part of solving complex problems with partial information, much of which is not primary information, but information plus the hidden assumptions of those reporting the problems. In working with worldwide downhole fleets of nuclear measurement tools, I've had to deal with this. Problems that are forehead smakers when you finally see them can linger unsolved for months or even years because of hidden assumptions. So, one of the greatest skill sets a team (often comprised of engineers, scientists, techs., field operators, manufacturing people, etc.) can have is going through the data and finding their hidden assumptions that make them miss the elephant in the room. Indeed, if the team is beyond the bare minimum number to get the job done, hiring a well trained person from an adjacent field who has creative ignorance is very useful because they ask good basic questions. 95% of which have easy answers, 5% of which take some though, and 1%-2% of which lead to finding flaws that were missed due to assumptions. That is why grad students and their profs all have large repertoire of jokes in which the punch-line involves an economist making an assumption (e.g. Assume a can opener.) In the case of perfect competition, the assumptions include: 1. Numerous buyers and sellers 2. Homogeneous product 3. Perfect information in the market 4. No barriers to entry or exit Yup, I've heard of that. For all of these reasons I am not one to subscribe to the quasi-religious faith that markets are always the optimum solution. OK, we're on the same page so far. But in the case of the gasoline market, there is in fact some fairly persuasive evidence that there is a pretty high degree of competition. It is the fact that prices do move around a lot, and in both directions. When firms have a large amount of market power, you definitely do not observe this kind of price movement. Firms with power set prices, and control those prices, so as to maximize their profits. You just don't see a lot of price movements. But with gasoline you see prices move on a frequent, even daily basis. What is interesting about this market is that there is a cartel that provides 40% of the output. Yet, this cartel couldn't prevent oil prices from falling to under $10/barrel in '98 because they could not penalize cheaters. The big oil companies (BP, Shell, Exxon) are very small players in comparison with OPEC's national oil companies. Yet, folks are convinced that these bit players control everything. Anyways, it seems, in this case anyways, that we agree fairly completely. Dan M. ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: Wal-Mart is evil, why it must be eradicated
Doug Pensinger wrote: Not by climate. Not by access to a diverse environment (beach in Austin? Mountians?) And by the way, I hate LA and I'd consider Austin before I would LA. Well, maybe... The only place in the USA I know is LA. I think I could live there. Alberto Monteiro ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: Wal-Mart is evil, why it must be eradicated
Julia Thompson wrote: The only place in the USA I know is LA. I think I could live there. See Austin first before you make up your mind. :) That was a remote hypothesis, back in Bush I government. Clinton's xenophobic government closed all doors for foreign workers. Barring a major cathastrophe (like Brazil being occupied by Russia/Venezuela), or a major breakthrough in human science (like the cure of death) I think I will live here forever. Alberto Monteiro ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: Wal-Mart is evil, why it must be eradicated
At 06:16 AM Tuesday 12/2/2008, Alberto Monteiro wrote: Julia Thompson wrote: The only place in the USA I know is LA. I think I could live there. See Austin first before you make up your mind. :) That was a remote hypothesis, back in Bush I government. Clinton's xenophobic government closed all doors for foreign workers. Barring a major cathastrophe (like Brazil being occupied by Russia/Venezuela), or a major breakthrough in human science (like the cure of death) I think I will live here forever. Alberto Monteiro It would seem like the latter breakthrough would be a necessary part of that . . . Unless Of Course You Were Employing Hyperbole Maru . . . ronn! :) ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: Wal-Mart is evil, why it must be eradicated
On 29 Nov 2008 at 10:32, Nick Arnett wrote: I suspect that what we've seen in oil, housing and other bubbles is that we have created a system that amplifies fear and greed. In an essentially unreal market, why are we surprised we have largely psychological resonance and positive feedback loops? AndrewC ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: Wal-Mart is evil, why it must be eradicated
On Tue, 2 Dec 2008, Alberto Monteiro wrote: Doug Pensinger wrote: Not by climate. Not by access to a diverse environment (beach in Austin? Mountians?) And by the way, I hate LA and I'd consider Austin before I would LA. Well, maybe... The only place in the USA I know is LA. I think I could live there. See Austin first before you make up your mind. :) Julia ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: Wal-Mart is evil, why it must be eradicated
At 09:53 PM Sunday 11/30/2008, John Williams wrote: I've never been to North Carolina. Then you've missed some mighty nice mountain scenery in the western part. Some People Like The Ocean On The Eastern Side Too Maru . . . ronn! :) ___ http://www.mccmedia.com/mailman/listinfo/brin-l
RE: Wal-Mart is evil, why it must be eradicated
I'll add one thought that keeps coming to me. If free markets reliably regulate prices, how the heck did we have such a crazy spike in oil prices recently? It's rarely as simple as portrayed in economics 101, 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. Now, you might think that folks could see this and enough farmers would counter-trend in order always make money, and thus smooth things out. Indeed, the futures market was created to help with this, my father-in-law regularly sold future harvests on the futures market to lock in prices and to decrease fluctuation. It's really critical with oil, because bringing a new field on line can take 10 years. That means that folks have to guess what the prices will be in 5-10 years. I can't talk out of school, but it's fair to say that no-one would start oil fields expecting 100 dollar/barrel oil to work. The Saudi's prince's comment that the price needs to be in the 70-80 dollar/barrel range seems close to target. Surely neither supply nor demand changed much in such a short time. No, but when both are quite inelastic when it comes to prices, one can see wild swings. For example, back in '98, oil dipped below $10/barrel, while natural gas was flirting with $2.00. As a result, gas wells were considered worthless, and new oil production plans had to be profitable at $15/barrel over the long term. Since then, demand has taken off. Just look at the last few years, while prices have been rising rapidly. World demand was still growing, rising 4% between 2004 and 2007, during which time the average price rose . Even comparing the second quarter of 2008 to the second quarter of 2007, we see that the demand was still rising (only 0.4%, but that's when prices were spiking above to $140+/barrel. This shows how demand is insensitive to prices. It took a global recession to slow this down. And while the demand forecast for next year is fairly flat, if the world economy recovers in 2010, then oil demand will continue to go up. If oil stays below $60/barrel for a while, then some planned production will be postponed, and there will be another squeeze. Now, those aren't the only factors involved. The drop in the dollar was part of the rise in dollar oil prices (the rise in Euros was smaller), and herd mentality among traders contributed to the volatility. But, those who speculated on future rising prices got killed in the market, so they hurt themselves more than anyone. Oil is a funny thing; some fields in the Middle East can still produce at a cost of under $10/barrel, while the new US oil plays (like the subsalt Gulf of Mexico) require much higher oil prices to be at all profitable. Alternative energy is still more expensive, so with low oil prices, you can either kiss that goodbye or expect every country in the world to voluntarily And I haven't seen anybody argue that any sort of government intervention was responsible. I suspect that what we've seen in oil, housing and other bubbles is that we have created a system that amplifies fear and greed. 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? Dan M. ___ http://www.mccmedia.com/mailman/listinfo/brin-l
RE: Wal-Mart is evil, why it must be eradicated
Sorry, I hit send before getting a number Since then, demand has taken off. Just look at the last few years, while prices have been rising rapidly. World demand was still growing, rising 4% between 2004 and 2007, during which time the average price rose about 75%. Dan M. ___ http://www.mccmedia.com/mailman/listinfo/brin-l
RE: Wal-Mart is evil, why it must be eradicated
Dan M wrote: Oil is a funny thing; some fields in the Middle East can still produce at a cost of under $10/barrel, while the new US oil plays (like the subsalt Gulf of Mexico) require much higher oil prices to be at all profitable. Here in Brazil we call it pre-salt (pré-sal); geologists think that we start in the center of Earth and go upwards, so anything below the salt is before it. Alberto Monteiro ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: Wal-Mart is evil, why it must be eradicated
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
RE: Wal-Mart is evil, why it must be eradicated
-Original Message- From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED] On Behalf Of Nick Arnett Sent: Monday, December 01, 2008 10:34 AM To: Killer Bs (David Brin et al) Discussion Subject: Re: Wal-Mart is evil, why it must be eradicated 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. 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. The reasons I pointed out later are dependant on supply and demand. If immediate demand exceeds available supply, the law of demand means that prices will rise until demand falls to meet the prices. 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. Well, I've been around the oil patch for over 25 years, and have, from time to time, been able to discuss the question of future prices with folks who have been privy to the best understanding of some of the biggest non-governmental players in the field. It is clear to me that these players have a very hard time predicting future prices. For example, the rise in prices over the last 10 years can be traced, mostly, to the rise of emerging market demand and the self destruction of oil production potential in countries such as Iran and Venezuela, and the effects of the long term civil unrest in Iraq (as well as the far more decayed pre-war oil infrastructure in Iraq than expected). Of these causes, the decline of Venezuelan production on the supply side and the rise of Chinese demand stand out, with the rise in Chinese demand seen as the largest unpredicted factor. If one looks at the total failure of the five big investment banking houses, as well as the rating and insurance companies to anticipate the bursting of the housing bubble, I think one would see that these folks failed miserably to predict the future. I'm not saying that insider trading doesn't exist, but the big players in both oil and finance have been too wrong for one to reasonably suppose that they had inside information. Rather, knowing what happened, I'd argue that the investment bankers had inside misinformation. :-) 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. OPEC is trying now, and they are probably the only people with a shot at it. I agree that wild fluctuations are in no one's best interest, it leads to wasted money...but there is no means of regulating demand by the wide variety of countries in the world. 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. ;-) Well, there is a bit of truth to that, but not enough to explain anything but the prices in the exurbs. I was sent a link (which I can't find now, sorry) of a comparison of the change in price of two downtown condos in Dallas and LA. Given the locations, and equal prices at the start, and given the faster rise in the DFW population, one would think a downtown condo would appreciate more in the city that was growing faster. But, it was the LA condo that rose more in price, far more. When did we vote against affordable housing? No, it was actually done in a lot of little ways. In this particular example, someone saw the rise in LA prices and wanted to build a high rise condo in the neighborhood of the LA condo in question. The had a location where some 50 some year old 2 story apartments were located. After years of effort, they gave up when the 2 story apartments were declared historical landmarks. There was nothing remarkable about them. Rather, the board that was voted in by local land owners was strongly influenced by those landowners desire to keep housing prices rising. So, they found ways to stop new housing from being built. This works for the short and medium term, but it is
Re: Wal-Mart is evil, why it must be eradicated
Dan M wrote: 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? Because (apologies for bluntness and to those who _do_ like the climate) WTF wants to live in Houston (or Dallas)? Doug ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: Wal-Mart is evil, why it must be eradicated
Original Message: - From: pencimen [EMAIL PROTECTED] Date: Mon, 01 Dec 2008 22:05:13 - To: brin-l@mccmedia.com Subject: Re: Wal-Mart is evil, why it must be eradicated Dan M wrote: 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? Because (apologies for bluntness and to those who _do_ like the climate) WTF wants to live in Houston (or Dallas)? I understand that sentiment, and I admit that there are far more enjoyable places to live than Houston. When Teri gets her call, I hope to move to one of them. But, LA isn't much better than Houston or Dallas. Austin is clearly better than LA. Further, the direct comparision that is so critical is _the rise_ in price of real estate in LA vs. Dallas. Since Dallas grew faster over the time period, by your theory, it's prices should rise faster than LA. In the last 7 years, the metro population rose 19.4%. LA went up 4%, and DFW went up 18.6%. Austin and San Antonio, IIRC, have even faster growth. So, California seems to be peaking. I'd guess, when the bubble shakes out, places like Palo Alto will see another factor of 2 drop in price. Dan M. ___ http://www.mccmedia.com/mailman/listinfo/brin-l myhosting.com - Premium Microsoft® Windows® and Linux web and application hosting - http://link.myhosting.com/myhosting ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: Wal-Mart is evil, why it must be eradicated
On Mon, Dec 1, 2008 at 2:05 PM, pencimen [EMAIL PROTECTED] wrote: Because (apologies for bluntness and to those who _do_ like the climate) WTF wants to live in Houston (or Dallas)? Which reminds me of a story I heard recently of somebody who sold their house here and bought a 5,000 SF house in the Houston area for much less money... then was startled to begin receiving $900/month electric bills. That makes up for a lot of mortgage savings... and mortgage interest is deductible! Around here, $200 for electricity is pretty high, especially in my home town of Santa Clara, which has its own power company and the lowest rates in the state (so much for government always doing a worse job than private industry). But I think prices here are also high because a lot of people have made a lot of money around here. It is crazy how many millionaires we have around here. Nick ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: Wal-Mart is evil, why it must be eradicated
Dan wrote: I understand that sentiment, and I admit that there are far more enjoyable places to live than Houston. When Teri gets her call, I hope to move to one of them. Cool, I know you were reluctant to move there in the first place. But, LA isn't much better than Houston or Dallas. Austin is clearly better than LA. Not by climate. Not by access to a diverse environment (beach in Austin? Mountians?) And by the way, I hate LA and I'd consider Austin before I would LA. Well, maybe... Further, the direct comparision that is so critical is _the rise_ in price of real estate in LA vs. Dallas. Since Dallas grew faster over the time period, by your theory, it's prices should rise faster than LA. LA is maxed out. They're overcrowded. That's why people are building homes where they shouldn't and they get destroyed by fires and mudslides. They've actually been on the decline for a long time so comparisons with LA aren't really a true measure. In the last 7 years, the metro population rose 19.4%. LA went up 4%, and DFW went up 18.6%. Austin and San Antonio, IIRC, have even faster growth. So, California seems to be peaking. I'd guess, when the bubble shakes out, places like Palo Alto will see another factor of 2 drop in price. Palo Alto is a bad example. http://www.mercurynews.com/lauriedaniel/ci_10957727 (click on the map) I think home values went down about 2% in PA over the last year or so and not much at all before that. Doug ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: Wal-Mart is evil, why it must be eradicated
Original Message: - From: Doug Pensinger [EMAIL PROTECTED] Date: Mon, 1 Dec 2008 18:17:51 -0800 To: brin-l@mccmedia.com Subject: Re: Wal-Mart is evil, why it must be eradicated Dan wrote: I understand that sentiment, and I admit that there are far more enjoyable places to live than Houston. When Teri gets her call, I hope to move to one of them. Cool, I know you were reluctant to move there in the first place. But, LA isn't much better than Houston or Dallas. Austin is clearly better than LA. Not by climate. Not by access to a diverse environment (beach in Austin? Mountians?) And by the way, I hate LA and I'd consider Austin before I would LA. Well, maybe... Further, the direct comparision that is so critical is _the rise_ in price of real estate in LA vs. Dallas. Since Dallas grew faster over the time period, by your theory, it's prices should rise faster than LA. LA is maxed out. They're overcrowded. That's why people are building homes where they shouldn't and they get destroyed by fires and mudslides. They've actually been on the decline for a long time so comparisons with LA aren't really a true measure. But, LA prices rose 80% from 2000 to 2007, even though population remained steady. There are ways to build affordable condos in the area, they are just sucessfully resisted by folks who profit from the rise in prices. What is amazing is after all the talk on this list about worldwide conspiricies to stop the electric car by big oil (including Japan which has no big oil but lots of big electronics corporations), I have to push the obvious. Ineffecient use of land is protected in California because, in the short term, it seems to benefits the voters. Palo Alto is a bad example. http://www.mercurynews.com/lauriedaniel/ci_10957727 (click on the map) I think home values went down about 2% in PA over the last year or so and not much at all before that. OK, I didn't realize that Palo Alto is still outside of the SF fall back to earth. So, let me rephrase that. Palo Alto is due for a gigantic drop (60%?) in home prices because the people who live there can't afford to buy houses. At http://www.paloaltoonline.com/com_info/by_the_numbers.php we see that the median home price in 2006 was 1.4 million. With one of those fancy 0% down mortgages and 6% interest (that combination won't be seen again for a while), this results in 84k per year in interest payments. The median income in Palo Alto is 90k per year. This leaves 500 per month for everything else, including real estate taxes. By rights, one should not have housing costs of more than 30% of income. Thus, most folks are priced out of the housing market by more than a factor of 3. That's not sustainable. Something has to give. I realize that many people can afford their houses because their mortgage and their taxes are tied to the price when they bought it years ago. But, as we all grow older, it's our kids who are looking at buying houses. (My eldest is a homeowner now, with a small affordable house). Eventually, prices will have to come back to earth. Dan M. mail2web.com What can On Demand Business Solutions do for you? http://link.mail2web.com/Business/SharePoint ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: Wal-Mart is evil, why it must be eradicated
Dan M wrote: I'll add one thought that keeps coming to me. If free markets reliably regulate prices, how the heck did we have such a crazy spike in oil prices recently? It's rarely as simple as portrayed in economics 101, 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. Now, you might think that folks could see this and enough farmers would counter-trend in order always make money, and thus smooth things out. Indeed, the futures market was created to help with this, my father-in-law regularly sold future harvests on the futures market to lock in prices and to decrease fluctuation This is called the Cobweb Theorem, first articulated by Kaldor. But there is another issue here, less well understood, and that is the part about Economics 101. The book that led to modern economics, The Wealth of Nations, first laid out the idea of the invisible hand which supposedly proves that markets are always efficient at setting prices and maximizing output while minimizing prices. While this is a very useful, it critically depends on the conditions of perfect competition to be true. While this market form was fairly common in Adam Smith's day, it decidedly less common today (see Shepherd, 1984, for instance). When markets are dominated by large firms, many with significant market power, relying on Smith's results is essentially stupid. Sadly, all too many Economics 101 classes ignore that (or, which is only slightly better, give it passing mention in the context of an overall worship of markets.) In markets of this kind, you absolutely cannot assume that markets will either produce optimum levels of output or the best possible prices. When you are in a doctoral program in economics, one of the things you are drilled in is that the assumptions you make in developing your models are often the most significant factors in the results you make. That is why grad students and their profs all have large repertoire of jokes in which the punch-line involves an economist making an assumption (e.g. Assume a can opener.) In the case of perfect competition, the assumptions include: 1. Numerous buyers and sellers 2. Homogeneous product 3. Perfect information in the market 4. No barriers to entry or exit For all of these reasons I am not one to subscribe to the quasi-religious faith that markets are always the optimum solution. But in the case of the gasoline market, there is in fact some fairly persuasive evidence that there is a pretty high degree of competition. It is the fact that prices do move around a lot, and in both directions. When firms have a large amount of market power, you definitely do not observe this kind of price movement. Firms with power set prices, and control those prices, so as to maximize their profits. You just don't see a lot of price movements. But with gasoline you see prices move on a frequent, even daily basis. Regards, -- Kevin B. O'Brien TANSTAAFL [EMAIL PROTECTED] Linux User #333216 People call me feminist whenever I express sentiments that differentiate me from a doormat or a prostitute. -- Rebecca West ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: Wal-Mart is evil, why it must be eradicated
Dan wrote: http://www.paloaltoonline.com/com_info/by_the_numbers.php we see that the median home price in 2006 was 1.4 million. With one of those fancy 0% down mortgages and 6% interest (that combination won't be seen again for a while), this results in 84k per year in interest payments. The median income in Palo Alto is 90k per year. This leaves 500 per month for everything else, including real estate taxes. By rights, one should not have housing costs of more than 30% of income. Thus, most folks are priced out of the housing market by more than a factor of 3. That's not sustainable. Something has to give. I realize that many people can afford their houses because their mortgage and their taxes are tied to the price when they bought it years ago. But, as we all grow older, it's our kids who are looking at buying houses. (My eldest is a homeowner now, with a small affordable house). Eventually, prices will have to come back to earth. I'm no statistician, but aren't you comparing apples/oranges here. First of all the median income includes all residents while the median home prices include only homeowners. Second it looks to me that median home prices doesn't include condo prices. Third, you're comparing the 2006 home price with the 2000 median income and finally Palo Alto has a relatively large university and I'm pretty sure that students that live at Stanford are included in the median income figures and _their_ income is probably pretty small. I'm not sure about the last, but I know that in my parent's home town (Santa Cruz) UCSC students vote in the local elections and I would imagine that that makes them residents. Doug ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: Wal-Mart is evil, why it must be eradicated
On Sat, Nov 29, 2008 at 10:32 AM, Nick Arnett [EMAIL PROTECTED] wrote: If free markets reliably regulate prices, What exactly do you mean when you say free markets reliably regulate prices? Surely neither supply nor demand changed much in such a short time. I don't think there was any supply shock. But I have little doubt that demand decreased with the world-wide economic slowdown. I suspect that what we've seen in oil, housing and other bubbles is that we have created a system that amplifies fear and greed. One thing I know is that I have reliably been able to fill up my tank wherever I have been in the US during the last year. Apparently the market is doing a decent job of coordinating tens of thousands of people to prospect for oil, extract the oil, transport the oil across the ocean, refine it to the appropriate regional codes, transport the gas to the stations, stock the gas, and dispense the gasoline I need for my car, all without me having to wait in line or search for a gas station that is not out of gas. That makes me happy. ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: Wal-Mart is evil, why it must be eradicated
On Sun, Nov 30, 2008 at 5:42 PM, John Williams [EMAIL PROTECTED]wrote: On Sat, Nov 29, 2008 at 10:32 AM, Nick Arnett [EMAIL PROTECTED] wrote: If free markets reliably regulate prices, What exactly do you mean when you say free markets reliably regulate prices? Exactly what I wrote. As a corollary, I am suggesting that the spike in oil prices was primarily due to non-market forces. I don't think there was any supply shock. But I have little doubt that demand decreased with the world-wide economic slowdown. That hardly explains a sudden, huge increase in the price. From what I recall from college economics, decreased demand generally depresses prices, all other things being equal. One thing I know is that I have reliably been able to fill up my tank wherever I have been in the US during the last year. Apparently the market is doing a decent job of coordinating tens of thousands of people to prospect for oil, extract the oil, transport the oil across the ocean, refine it to the appropriate regional codes, transport the gas to the stations, stock the gas, and dispense the gasoline I need for my car, all without me having to wait in line or search for a gas station that is not out of gas. That makes me happy. You obviously weren't in North Carolina, where stations were out of gas and prices were the highest in the nation recently (and where my mother was very happy to own a Prius). But what does that have to do with price regulation, by market forces or otherwise? Nick ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: Wal-Mart is evil, why it must be eradicated
On Sun, Nov 30, 2008 at 6:54 PM, Nick Arnett [EMAIL PROTECTED] wrote: On Sun, Nov 30, 2008 at 5:42 PM, John Williams [EMAIL PROTECTED]wrote: What exactly do you mean when you say free markets reliably regulate prices? Exactly what I wrote. So, meaningless. Or so broad as to have no useful meaning. That hardly explains a sudden, huge increase in the price. Oil been coming down for several months now. You obviously weren't in North Carolina, where stations were out of gas and prices were the highest in the nation recently (and where my mother was very happy to own a Prius). I've never been to North Carolina. But I'll bet there were either price gouging laws or credible threats to gas stations who charged prices that were said by some to be too high. But what does that have to do with price regulation, by market forces or otherwise? The prices coordinate the entire process I described. ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: Wal-Mart is evil, why it must be eradicated
On Sat, 29 Nov 2008, William T Goodall wrote: On 28 Nov 2008, at 23:46, Dave Land wrote: Some on this list have opined that religion is a great poison that kills. I believe that a good deal of the damage done in the _name_ of religion is, in fact, done in the name of greed. Worshippers of Mammon? Another false religion Maru Yeah. With some of the religious figures in the US, I think they've forgotten what Jesus said about not being able to serve two masters, and they're actually serving mammon. And fleecing their followers to do so, and telling them that if they only believe, they'll have great riches on Earth. Kinda contradicts the whole lay up for yourselves treasures in heaven thing, all around. (Matthew chapter 6 contradicts a lot of things that people are doing *supposedly* in the name of Jesus.) Julia ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: Wal-Mart is evil, why it must be eradicated
On Fri, Nov 28, 2008 at 3:46 PM, Dave Land [EMAIL PROTECTED] wrote: Greed-addled shoppers crushed to death a temporary worker who was trying to open the doors for Black Friday sales. If the store were open 24/7, then there could be no door-opening stampede. ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: Wal-Mart is evil, why it must be eradicated
On Nov 29, 2008, at 7:50 AM, John Williams wrote: On Fri, Nov 28, 2008 at 3:46 PM, Dave Land [EMAIL PROTECTED] wrote: Greed-addled shoppers crushed to death a temporary worker who was trying to open the doors for Black Friday sales. If the store were open 24/7, then there could be no door-opening stampede. Are you trying to impose your will on Wal-Mart? :-) Dave Wal-Mart Greed is made of PEOPLE! IT'S PEOPLE! Maru ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: Wal-Mart is evil, why it must be eradicated
At the risk of re-igniting a certain discussion... here's a great column, I think, by Paul Krugman, about the current economic situation. http://www.nybooks.com/articles/22151 The most relevant bit: *How did this second great colossal muddle arise? In the aftermath of the Great Depression, we redesigned the machine so that we did* understand it, well enough at any rate to avoid big disasters. Banks, the piece of the system that malfunctioned so badly in the 1930s, were placed under tight regulation and supported by a strong safety net. Meanwhile, international movements of capital, which played a disruptive role in the 1930s, were also limited. The financial system became a little boring but much safer. *Then things got interesting and dangerous again. Growing international capital flows set the stage for devastating currency crises in the 1990s and for a globalized financial crisis in 2008. The growth of the shadow banking system, without any corresponding extension of regulation, set the stage for latter-day bank runs on a massive scale. These runs involved frantic mouse clicks rather than frantic mobs outside locked bank doors, but they were no less devastating.* I'll add one thought that keeps coming to me. If free markets reliably regulate prices, how the heck did we have such a crazy spike in oil prices recently? Surely neither supply nor demand changed much in such a short time. And I haven't seen anybody argue that any sort of government intervention was responsible. I suspect that what we've seen in oil, housing and other bubbles is that we have created a system that amplifies fear and greed. Nick ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: Wal-Mart is evil, why it must be eradicated
- Original Message - From: Nick Arnett [EMAIL PROTECTED] To: Killer Bs (David Brin et al) Discussion brin-l@mccmedia.com Sent: Saturday, November 29, 2008 12:32 PM Subject: Re: Wal-Mart is evil, why it must be eradicated I'll add one thought that keeps coming to me. If free markets reliably regulate prices, how the heck did we have such a crazy spike in oil prices recently? Surely neither supply nor demand changed much in such a short time. And I haven't seen anybody argue that any sort of government intervention was responsible. I suspect that what we've seen in oil, housing and other bubbles is that we have created a system that amplifies fear and greed. I would hold that to be self-evident and supported by market behavior over the last couple of months. xponent The Price Of Oil Today Maru rob ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: Wal-Mart is evil, why it must be eradicated
On 28 Nov 2008, at 23:46, Dave Land wrote: Folks, Greed-addled shoppers crushed to death a temporary worker who was trying to open the doors for Black Friday sales. http://budurl.com/jezv Fscking people: Kimberly Cribbs, who witnessed the stampede, said shoppers were acting like savages. When they were saying they had to leave, that an employee got killed, people were yelling 'I've been on line since yesterday morning,' she said. They kept shopping. Some on this list have opined that religion is a great poison that kills. I believe that a good deal of the damage done in the _name_ of religion is, in fact, done in the name of greed. Worshippers of Mammon? Another false religion Maru -- William T Goodall Mail : [EMAIL PROTECTED] Web : http://www.wtgab.demon.co.uk Blog : http://radio.weblogs.com/0111221/ I think a case can be made that faith is one of the world's great evils, comparable to the smallpox virus but harder to eradicate. - Richard Dawkins ___ http://www.mccmedia.com/mailman/listinfo/brin-l
