Fancy That, Speculation Aids Markets

More specifically, speculation aids price discovery in markets:

Purely financial market participants improve spot market performance
Akshaya Jha, Frank Wolak 14 August 2019

Futures trading should make spot markets more efficient. The column uses the introduction of purely financial traders in the California energy market to show that their presence reduced average price differences between day-ahead and real-time markets. The introduction of financial trading in high-demand hours saved $23 million in fuel costs and reduced emissions and pollution.…

See More

Gordon Brown Still Doesn’t Understand Markets, Does He?

Brexit is going to be very terrible, so the One Eyed Viking tells us:

Yet if no deal goes ahead on Thursday 31 October, it will be nothing like Norway or Switzerland. By the following day – what Brexiteers will call “Freedom Friday”- there will be long queues at Dover and by Saturday 2 November many of our motorways will be at a standstill. By that Sunday, food prices will be going up – a 10% rise is the latest estimate – and by Monday the pound will be sharply down on its pre-Brexit value.

See More

The Confusion Of The Modern Left

Economics isn’t everything of course but when we’re discussing the structure of the economy it’s pretty much everything. Which makes the British left rather more than usually confused. For they’ve really not grasped the subject at all:

There is a dawning recognition that a new kind of economy is needed: fairer, more inclusive, less exploitative, less destructive of society and the planet. “We’re in a time when people are much more open to radical economic ideas,” says Michael Jacobs, a former prime ministerial adviser to Gordon Brown.

See More

Black Markets Work – They’re Just Markets Without Bureaucrats, Right?

For the past forty years, the majority of policy-makers in Iran have been arguing for more government intervention in the economy. They think it is necessary to regulate and control the prices down (or up) to a desired point. Hence, we have multiple organizations for price control in the country. Some of them try to come up with the correct price for each and every good and service. Others, try to enforce the set prices and root out the wrongdoers.…

See More

Heavy Lyft-ing

The future, so they say, is with the new economy. New ways of doing things will replace all the old ways in short order. But to do this, you’ve got to displace the existing system. Sometimes innovation brings something never seen before (think Amazon) or provides new ways of doing the same ol’ thing.

That last is the challenge facing the new breed of taxi companies. Sorry, they don’t call them that. They’re different. They’re the future.…

See More

Chickens coming home to roost?

Well, well, well. Scaremongering and doomists have been predicting the end of Britain once we Brits leave the European Union—and a double dose of hell if it happens without a deal. We’re doomed, as Jamie Frazier would say.*

Then we read the following in the Financial Times:

Brussels rejects plea for dual-listed London shares trading

EU asset managers warn they could move to UK because of commission’s stance Brussels has rebuffed calls from EU asset managers who want to continue trading dual-listed shares in London after a no-deal Brexit, in an indication of the European Commission’s tough stance on financial services.

See More

Polly Toynbee Still Doesn’t Understand Competition, Cooperation, In The NHS

Actually, Polly Toynbee doesn’t understand competition and cooperation in anything at all, let alone the National Health Service. Which is a pity as that’s what she’s decided to shout at us all about today. And it is true that if you’re going to soapbox us all about how things should be then you have a certain duty to understand how things are.

Markets are a form of cooperation. I undertake a market exchange – as I’m about to do in the supermarket to get lunch – then I am cooperating with whoever I exchange with.…

See More

Algorithms Are Better Than We Thought – They Can Collaborate Into Cartels

There’s a strain of thought which insists that cartels, monopolies, oligopolies, can only exist where there’s evil intent. Another where it’s just the logical outcome of a certain set of incentives. If it’s possible to do it, if coordination can be managed, then collaboration will be managed and the cartel exist.

It appears that the second is closer to the truth for algorithms seem to manage it:

Artificial intelligence, algorithmic pricing, and collusion
Emilio Calvano, Giacomo Calzolari, Vincenzo Denicolò, Sergio Pastorello 03 February 2019

Antitrust agencies are concerned that the autonomous pricing algorithms increasingly used by online vendors may learn to collude.…

See More

Sparks Will Fly

Isn’t it lovely to see how this dismal science we’re so fond of ignoring comes back and bites us in the posterior? And we’re not talking the kind of Chihuahua nip here, no you should think more Rotweiller mauling.

Well, the story goes—and we must thank (h/t) the Streetwise Professor for this as we’re not natives of the Big Apple. Yeah, we’ve been there once or twice but we live on the east side of the big pond where, well, if we are honest, we’re doing the same nonsense as those nice politico types in Albany led by Governor Andrew M.…

See More

The Basic Problem With Modern Socialism

The basic problem with modern socialism is that it’s not actually socialism – it’s anti-marketism. Socialism itself, the idea that the people doing the producing should own the productive assets used to do the producing, well, why not? As long as it’s all voluntary who gets hurt by the existence of John Lewis? Anti-marketism is an entirely different thing and one that condemns us all to penury.

So, why conflate the two? As, in the problem, all too many do.…

See More