[QUOTE=garo;318630]This stupidity is precisely the reason why I never supported Paul. America is a democracy. Do you think it fair to deprive people of the necessities of life due to a hurricane simply because they cannot afford extortionate prices? Barry ad an excellent post about this.

[url]http://www.ritholtz.com/blog/2012/11/why-does-odd-evengas-rationing-work/[/url][/QUOTE]

Paul's point was that even though everyone could afford the price (mostly), there was hardly any gas to sell at that price, so the end result was the same -- almost no one had gas, unless you paid $20/gallon on the "black market". Not fixing the price would have made the shortage last shorter (as it were), or so the argument goes. (Edit: The difference was that the average person had [i]hope[/i] to buy gas -- even though in the long run they were worse off. The hope, OTOH, prevented mass rioting.)

[QUOTE=garo;318630]This stupidity is precisely the reason why I never supported Paul. America is a democracy. Do you think it fair to deprive people of the necessities of life due to a hurricane simply because they cannot afford extortionate prices? Barry ad an excellent post about this.

[url]http://www.ritholtz.com/blog/2012/11/why-does-odd-evengas-rationing-work/[/url][/QUOTE]

You seem to be confused about the nature of both democracy and free markets, and it's clear you didn't read past the headline. We are not talking about a commodity in which a single entity has an effective market monopoly. Despite the short-term supply interruption caused by the hurricane, there was plenty of gasoline for true necessities, and many places still selling gas, just with a no-longer effectively unlimited supply. If seller X decides he wants to charge $20 per gallon, seller Y is free to undercut him.

Also note, pricing collusion to form an effective monopoly has long been illegal. So assuming those existing laws are being enforced, what business does government have to tell a private seller what he can charge? Especially since operating a gas station - as with many other businesses - may have been a very challenging thing to do in the aftermath of the storm. If I own a gas station and I and my employees have to risk our necks to drive through flooded areas to get to work, you're damn right I'm going to want to be able to charge more than usual.

As to Barry's piece, in every single analogy he uses - banking, mortgage markets, healthcare - government intervention and the resulting price distortions, "unanticipated" consequences and moral hazard are fully at work. (In each case, I shall also offer at least one free-market-compatible alternative):

o Banking: Overly generous FDIC backstops encourage banks to take excessive risks with deposited capital and then to stick the taxpayer with the bill if things blow up. An alternative is actual rigorous enforcement of bank capitalization standards and less-than-infinite leverage limits.

o Mortgages: Government policy to "spur the ownership society" led to ridiculous subsidies for homebuyers and encouraged speculative price bubbles, at the same time that govt allowed insane levels of full-frontal mortgage issuance and securitization fraud to corrupt the entire system, and entities such as RBS and the other TBTF banks to grow to systemically-dangerous-behemoth size. An alternative is to return to private mortgage financing without government backstops, no special tax breaks for home-owers vs renters, and actual rigorous enforcement of bank capitalization standards and less-than-infinite leverage limits for the institutions engaged in financing.

o Healthcare: Government distortions aplenty here. The desire to proved "Healthcare access for all" but to piggyback it atop private medical industry leads to laws like EMTALA, which then requires special government exemptions to allow hospitals to engage in the resulting cost-shifting. Once cost of care thus gets divorced from any semblance of a market-based pricing system, costs shoot through the roof. At the same time, laws are written to benefit the Big Insurance, Sickcare-for-profit and Big Pharma lobbies whose influence on the legislative process continues to go unchecked. Do you think it is an accident of history that the cost of simple procedures such as uncomplicated hospital childbirth has risen tenfold (in inflation-adjusted terms, no less) in the past 50 years? Alternatives: Government-run clinics provide a minimal standard of care - but far from Cadillac care - for all. No special tax breaks or for for-profit medicine, pricing must be transparent (i.e. cost-shifting again made illegal for healthcare, as it is for any other non-specially-designated business). USPTO stops granting "bullshit patents" for non-novel tweaks of the kind which Big Pharma loves to use to extend patent coverage of existing drugs. Buyers are free to go anywhere - including across the border - to buy FDA-approved medicines, if the cost is lower there. Overpricing due to rampant abuse of the tort law system are curtailed, via overhaul of malpractice statutes. Government spurs a massive shift in medical-system emphasis from sickcare to preventive care. The latter includes a reconnection of people with the costs of their medical care, at all levels. If you are morbidly obese, those government clinics will provide emergency gastric-bypass surgery, but that will be accompanied by mandated eating-disorder counseling. Food stamps will only be allowed to be used for specially labeled nutritionally sound staples - no more government-provided Twinkies.

Again, I'm not talking about *unregulated* markets - anti-monopoly and anti-price-collusion laws are the kind of long-term-proven common-sense market regulation I fully support, as long as they are consistently and fairly enforced - I'm talking about this kind of "temporary emergency" (New York financial professionals not being able to has up their SUVs, oh my) interventions which invariably lead to the definition of "emergency" gradually being broadened so as to make incessant government intrusion a "normal" thing.

-------------------------------

p.s.: I should add that I am not against anti-hoarding restrictions (especially in times of emergency) - those are the kind of non-onerous "free and fair market compatible" regulations which do not discourage sellers from engaging in their business.

Also, based on his rosy take, I wonder if Barry has actually made much use of cellular and internet service outside the U.S. Although I hear China has a really user-friendly internet firewall. No more worries about nasty internet malware there.

[b]How the Twinkie crumbles:[/b]

[Being made of space-age indestructible polymer-based materials, it's unlikely they crumble at all, but poetic license and all that]

ZeroHedge has some interesting notes about the just-announced (after the bakery workers union rejected a proposed "austerity contract"~-- several $billions in unfunded pension liabilities apparently proved an insurmountable hurdle) [url=http://www.zerohedge.com/news/2012-11-16/hostess-liquidation-curious-cast-characters-twinkie-tumbles]liquidation bankruptcy of Hostess Brands[/url].

My personal opinion is that Hostess Brands is the kind of CrapFood-spewing company the world can [url=http://www.bloomberg.com/news/2012-11-15/diabetes-rates-soar-as-18-states-see-diagnosed-cases-double.html]eminently do without[/url]. (The diabetes stats in that latter article are jaw-dropping).

[b]FHA Hemorrhaging Capital:[/b]

Continuing the theme of government intervention in markets, since 2008 no market has more of this than housing. Which trend now has the government-mortgage-backstopper of last resort, the FHA, [url=http://www.zerohedge.com/news/2012-11-15/guest-post-fha-blowing-bad-news-housing-market]on the brink of insolvency[/url]:
[quote]The Federal Housing Administration is expected to report this week it could exhaust its reserves because of rising mortgage delinquencies, according to people familiar with the agency’s finances, a development that could result in the agency needing to draw on taxpayer funding for the first time in its 78-year history.

Together with Fannie and Freddie, federal agencies are backing nearly nine in 10 new mortgages.

The FHA accounted for one third of loans used to purchase homes last year among owner occupants.

Though the agency guarantees fewer mortgages than either Fannie or Freddie, it now has more seriously delinquent loans than either of the mortgage-finance giants. Overall, the FHA insured nearly 739,000 loans that were 90 days or more past due or in foreclosure at the end of September, an increase of more than 100,000 loans from a year ago. That represents about 9.6% of its $1.08 trillion in mortgages guaranteed.[/quote]

[b]Friday Humor, Saturday Edition:[/b]

o [url=http://www.zerohedge.com/news/2012-11-16/anonymous-hacks-greek-finance-ministry-finds-123456-password-37-all-user-accounts]Anonymous Hacks Greek Finance Ministry, Finds "123456" Is Password For 37% Of All User Accounts[/url]

o [url=http://www.zerohedge.com/news/2012-11-07/greek-brothel-sponsor-broke-elementary-school]Greek Brothel To Sponsor Broke Elementary School[/url]

o Moving the country forward, rich-blowhard-insult-tweet-war style: This week's featured pair of twit-pugilists: [url=http://www.zerohedge.com/news/2012-11-05/comic-interlude-mark-cuban-vs-donald-trump]Mark "Maverick" Cuban vs. Donald "Hairpiece" Trump[/url]

Let us just stay on topic here. Odd/Even rationing worked. Why do we have a problem with that?

PS: If you had read much of Barry's blog you would know that he is extremely critical of the state of US infrastructure. And you know what? I have travelled widely enough to know that he is right. Airports and cell phone service and broadband is much better in many countries outside the US.

[url]http://www.chicagotribune.com/business/breaking/chi-judge-hostess-union-agree-to-mediation-20121119,0,2355592.story[/url]


It's not final yet. :) Of course I'm a Little Debbie guy myself. But, I will still be happy if these workers get a reprieve (though I'd be looking for another job if I were them.

Mediation talks between Venture Capital interests and the Baker's Union fell apart already. Perhaps they were unable to reach an agreement on which snack cakes to serve. The Union apparently wanted to eat cake and bake it too, while the Hostess Execs just wanted more bread.

I suspect the union thought the execs were bluffing and tried to call the bluff. Unfortunately, even a blind man could see that this was not a bluff.

The only real hope of a resolution at this point would be for someone to buy the business. If they do, the one guaranteed requirement will be that every employee be terminated and then the company would re-hire whomever they choose.

DarJones

[QUOTE=ewmayer;318650][B]Friday Humor, Saturday Edition:[/B]
...
o [URL="http://www.zerohedge.com/news/2012-11-07/greek-brothel-sponsor-broke-elementary-school"]Greek Brothel To Sponsor Broke Elementary School[/URL]
[/QUOTE]
Wait! how is that even remotely funny when the same line of charity is [URL="http://www.huffingtonpost.com/2012/11/19/lance-gilman_n_2157943.html"]working fine for Nevada government[/URL]?

Latest big news here in Silicon Valley is that which led HP's stock price to plunge to new multiyear lows this week:

[url=www.bloomberg.com/news/2012-11-21/fbi-said-to-be-looking-into-hp-s-allegations-on-autonomy.html]FBI Said to Be Looking Into HP’s Allegations on Autonomy[/url]

If you're wondering "why FBI? Where is the SEC in all this?" - [i]Rolling Stone's[/i] Matt Taibbi has a possible explanation:

[url=www.rollingstone.com/politics/blogs/taibblog/sec-rocked-by-lurid-sex-and-corruption-lawsuit-20121119]SEC Rocked By Lurid Sex-and-Corruption Lawsuit[/url]

And ZH offers an interesting backstory on another legendary SiVal firm which was presented with, and wisely decided to pass on, Autonomy's "value proposition". This one features another legendary (some would unkindly say "notorious") SiVal character, [url=http://en.wikipedia.org/wiki/Frank_Quattrone]Frank Quattrone[/url], who might as well be the poster boy for the DotCom boom&bust funny-money mania:

[url]http://www.zerohedge.com/news/2012-11-21/frank-quattrones-autonomy-pitchbook[/url]

Happy Thanksgiving to our US readers.

[QUOTE=ewmayer;319244]Happy Thanksgiving to our US readers.[/QUOTE]Ah yes, thanks for reminding me.

I believe it's traditional to consume Wild Turkey at Thanksgiving. I must go out and get some.


Paul

[QUOTE=ewmayer;319244]Latest big news here in Silicon Valley is that which led HP's stock price to plunge to new multiyear lows this week:

[URL="http://www.bloomberg.com/news/2012-11-21/fbi-said-to-be-looking-into-hp-s-allegations-on-autonomy.html"]FBI Said to Be Looking Into HP’s Allegations on Autonomy[/URL]

[/QUOTE]

This isn't exactly the first crappy acquisition HP has made. They overpaid. Their auditors didn't do the job. Suck it up and cope! Oh I wish BH had a stake in HP.