Market Process Blog

My co-author Christopher Westley send me this interesting article from the DC Examiner on Tyler Cowen We were suppose to have Tyler Cowen speak as part of the BB&T Free Market Speaker Series this month, but he had to cancel. We hope to have him as a speaker in the near future. The article talks about his blog the Marginal Revolution and his new book Discover Your Inner Economist, which is a worthwhile read.

NYT reports that several states have exhausted or are close to exhausting their unemplyoment insurance funds. Most notablly, Michigan is already borrowing from the federal government. Michigan has had an unemployment rate of aproximately 7% for the last 5 years, but beginning in May 2008 has increased. Thus, it would seem as if it is more than just the big three automakers that are looking for a bailout in Michigan.

The NYT reports two stories today that are strikingly similar. The first is that the US bailout of the auto industry would include a Car Czar. The second story is how Russia is using the current crisis to reclaim private industries. So the question that remains is that are we getting more like Russia, or are they getting more like us?

This is an amusing take on bailouts! Is this where we are heading!

Somali Pirates in Discussions to Acquire Citigroup
By Andreas Hippin November 20The Somali pirates, renegade Somalis known for hijacking ships for ransom in the Gulf of Aden, are negotiating a purchase of Citigroup.

The pirates would buy Citigroup with new debt and their existing cash stockpiles, earned most recently from hijacking numerous ships, including most recently a $200 million Saudi Arabian oil tanker. The Somali pirates are offering up to $0.10 per share for Citigroup, pirate spokesman Sugule Ali said earlier today. The negotiations have entered the final stage, Ali said.

“You may not like our price, but we are not in the business of paying for things. Be happy we are in the mood to offer the shareholders anything,” said Ali.

The pirates will finance part of the purchase by selling new Pirate Ransom Backed Securities. The PRBS’s are backed by the cash flows from future ransom payments from hijackings in the Gulf of Aden. Moody’s and S&P have already issued their top investment grade ratings for the PRBS’s.

Head pirate, Ubu Kalid Shandu, said: “We need a bank so that we have a place to keep all of our ransom money. Thankfully, the dislocations in the capital markets has allowed us to purchase Citigroup at an attractive valuation and to take advantage of TARP capital to grow the business even faster.”

Shandu added, “We don’t call ourselves pirates. We are coastguards and this will just allow us to guard our coasts better.”

*CITI IN TALKS WITH SOMALI PIRATES FOR POSSIBLE CAPITAL INFUSION

*WILL REQUIRE ALL CITI EMPLOYEES TO WEAR PATCH OVER ONE EYE

*SOMALIAN PIRATES APPLY TO BECOME BANK TO ACCESS TARP

*PAULSON: TARP PIRATE EQUITY IS AN `INVESTMENT,’ WILL PAY OFF

*KASHKARI SAYS `SOMALI PIRATES ARE ‘FUNDAMENTALLY SOUND’ ‘

*Moody’s upgrade Somali Pirates to AAA

* FED AGREED OCT. 29 TO TAKE `WHATEVER STEPS’ NEEDED FOR SOMALI PIRATES

USA Today has an article that explains that we need to be weary of falling price i.e. deflation. Citing one of the problems is that it creates price wars and competition. With a different view point Doug French ask Should We Worry About Deflation?

“Can you get your head around the idea of each taxpayer receiving back in the next few months every dime they have paid in income taxes for 2008?” This is the economic stimulus package idea put forth by Rep. Louie Gohmert of Texas. If that does not work for you how about a tax holiday? Gohmert suggest not paying withholding of federal income tax for January and February of 2009. I would like to suggest removing withholding all together. Withholding was part of the Revenue Act of 1942. Paying taxes takes on a whole new meaing if everyone had to write a check rather than receive a refund.