Thursday , June 17 2021
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Tag Archives: Markets

Why Is the Vaccine Distribution So Difficult?

Imagine if food were allocated and distributed by the government. Wouldn’t this prevent hunger and famines, which have certainly killed more people than epidemics in the history of mankind? Most students of economics should have a ready answer. The opposite approach—that government allocation is more efficient than the anarchy of the market—is illustrated by the story of the Russian official who, shortly after the collapse of the Soviet Union, asked British economist...

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Why Shortages Are Not More Widespread

Many grocery items are still in shortage in the sense that they are absent from the shelves even if some buyers would be willing to pay more to have them available. The Wall Street Journal asked the question last week, “Why Are Some Groceries Still So Hard to Find During Covid?” The newspaper’s big-data analysis concludes that at least half the grocery shortages persist: During the peak shopping spree at the end of March, stores ran out of 13% of their items on...

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“Our Most Fundamental American Values”

A Wall Street Journal story reports about an “anarchic market” and “grey market” in personal protective equipment or PPE (masks, gowns, and such) because, it suggests, there is “little gear coming from the U.S. government” (“A Chaotic Gray Market Determines Who Gets Coronavirus Gear-and Who Doesn’t,” May 8, 2020). As if government allocation of goods were normal. Welcome to the country of free enterprise. In this area, America is not worse than most other countries...

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A $10 Trillion Response to the Global Pandemic

This week I was introduced to a board game called Pandemic. In the game, players are up against the clock to find the cure to viral outbreaks and contain them before they spread across the entire globe. What makes Pandemic especially unique is that, unlike most games, it’s cooperative. Players are not opponents, as they are in, say, Monopoly. Instead, they must work as a team to eliminate the viral threat, or die trying. The real-life situation involving COVID-19 is very much the same....

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Cash Is King, Not Gold, Not Bonds

Exactly one month ago, on February 20th, the SP500 made an all-time high and reversed its trend to the downside. What a wild ride the last month has been across virtually all asset classes. Out of all the major indexes, commodities, and currencies, only one asset and trade moved higher. It’s no surprise given the title that cash or the US Dollar is the asset of choice having rallied over 9% while everything else fell with bonds down 22.75%, stocks 30%-40%, gold miners 58%, and crude down...

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Should You Buy the Panic?

If anyone has the right to say “I told you so,” it’s Bill Gates. Two years ago, the co-founder, former CEO and now former board member of Microsoft urged governments to step up their preparedness in the event of a modern global pandemic. Such an event, Gates warned, could conceivably be more dangerous than any other threat facing humanity today, including nuclear proliferation, due mainly to the fact that we’ve become so interconnected. Because new vaccines take time to develop and deploy,...

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When Bubbles Pop, Only the First Sellers Escape Being Bagholders

One often overlooked characteristic of the current stock market bubble is the extremely small exit for sellers trying to avoid becoming hapless bagholders. Bubbles always present small exits because once sentiment turns, buyers vanish and so price goes over the waterfall and crashes on the rocks below (accompanied by the screams of all the punters who reckoned they’d exit at the top). But modern markets have characteristics which have diminished the exit to a tiny hole in...

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The World Is Awash in Oil, False Assurances, Magical Thinking and Complacency as Global Demand Careens Toward a Cliff

Since markets are supposed to discover the price of excesses and scarcities, it’s a mystery why everything that is in oversupply is still grossly overpriced as global demand slides off a cliff: oil, semiconductors, Uber rides, AirBNB listings and many other risk-on / global growth stories are still priced as if pre-Covid-19 demand was still guaranteed. Punters are still buying semiconductor stocks based on out-of-touch projections that are the equivalent to counting the...

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Markets Against the Mob’s Purpose

Caleb Brown of the Cato Institute reminds us that yesterday would have been the 201st birthday of Frederick Douglass, a slave who escaped Maryland in 1838, thereby valiantly breaking the law.  The Economist of January 25 contains two articles apparently unrelated, but illustrating, each one in a different way, an important feature of free markets. This feature is known to economists since Gary Becker’s work. One of the Economist’s articles is about brands: “It Has...

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Capitalism is making the Chinese both better and happier

I recently discovered a long essay by Jean Fan on progress in China. Here is a small excerpt, but I’d encourage you to read the entire piece: As soon as I walked out of Shanghai’s Pudong International Airport last March, something felt different. The cleanliness of the airport had always given way to the messiness of Chinese cities. But although I braced myself for the unavoidable chaos, it never came. The cities I visited that year—Shanghai, Wuhan, and Xiangyang—were...

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