Market Process Blog

Clark Howard a consumer advocate in Atlanta and by his own admission not a political guy had an interesting article on the stimulus package yesterday on CNN.com His opening quote caught my eye:

“When it comes to stimulus packages, people want to believe that Washington can just come up with an answer that spreads pixie dust and makes everything OK. That’s just not the case.
This isn’t a knock against the Democrats or the Republicans; it’s just cold, hard economics.”

Ticketmaster will settle with the state of New Jersey after Bruce Springsteen and his fans complained to the NJ attorney general that Ticketmaster directed consumers to the secondary market. Scalping, legal or not, has been going on forever and it is a process that demonstrates to us that consumers are willing to pay more than face value and why tickets often sell out in a manner of minutes for some concerts and events. Now a secondary legal market had emerged at TicketsNow like E-bay and other secondary markets these prices are higher than face value. Ticketmaster will no longer be able to direct customers to the secondary market, which is their subsidiary. Is this an improvement of business practices, or a further failure to realize that their is an efficient secondary market for these tickets?

The “end of bipartisanship” that is now being discussed in the media is laughable. Who cares? It’s easy for republicans to oppose the stimulus plan by voting “no” as a block. Democrats control both houses of Congress. Does this overwhelming opposition by republicans indicate that they have learned their lesson from the election, and that they are rediscovering their conservative values? Almost certainly not. Republicans are betting that there will be a relatively long time between the passage of the stimulus package and a substantive economic recovery. If they are wrong, then democrats and spending will be given credit for turning the economy around.

Below is an interesting quote from an article by Michael Fallon, MP for Sevenoaks and deputy chairman of the Treasury Select Committee in the UK. This seems incredibly similar to what we have experienced in the US. You can find the whole article here

This isn’t a crisis of capitalism. It is governments that control credit through their central banks and control capital through their regulators. It was this Government that encouraged borrowing, neglected saving, and ran up such a huge deficit in the public finances. Gordon Brown was responsible. He took banking supervision away from the Bank of England and ordered it to track inflation without reference to asset prices. His Government signed up to banking capital rules that fuelled the boom and allowed lazy directors to fall back upon self-serving credit rating agencies.

The State and the Post and Courier had articles this week explaining food prices. Our own Mark Witte is the economist trying to shed some light on how these prices function.

Walter Williams has another good article on the recent trends in government, “The Hell With Our Constitution.” In an earlier article, he argues that Americans deserve what they get because they ask politicans to do all they do.

A fellow economist Robert Murphy pointed me to this article from the NY Times and specifically to this quote from Alan Greenspan.

While Mr. Greenspan acknowledges that he could have done something to avert the housing crisis, he contends his hands were tied.
“If we tried to suppress the expansion of the subprime market, do you think that would have gone over very well with the Congress?” Mr. Greenspan said. “When it looked as though we were dealing with a major increase in home ownership, which is of unquestioned value to this society — would we have been able to do that? I doubt it.”

Does this give us reason, as some economists have suggested, that the Fed is not really independent from the congress?