Category Archives: Market inefficiencies

The Decline in Market Liquidity

While the Fed isn’t worried about the fall in market liquidity, experts argue that if investors make abrupt changes in their portfolios, the lack of liquidity could produce a crisis.

Godzilla vs. Mothra vs. You: The Health Care Industry Consolidates

Causes and consequences of consolidation in the health care industry

John Helmer: Tulip Sanctions – Russia Busts the Dutch Flower Trust, Almost

The Dutch flower market is a monopolist under assault. A case study of an economic and political struggle.

Perry Mehrling: Flash Crash Explained by HFT

The official report on the October 15, 2014 “Flash Crash” raises some questions which unfortunately it does not answer.

Wolf Richter: Microsoft Tallies the True Costs of the M&A Boom: Layoffs, Write-Offs, Shut-Downs, and Economic Decline

Microsoft illustrates the real-world fallout of letting corporate executives, either out of desperation or out of finding deal making more fun than the grind of making businesses perform better, follow the siren song of M&A mavens.

Cringley on How the Bogus Shareholder Value Theory is Wrecking the Computer Industry (and America Generally)

Why the bogus idea that managers should focus on “maximizing shareholder value” is driving the American IT industry into the ditch.

Wolf Richter: “Smart Money” Prepares to Profit from Bond Market Rout

“If I had an easy way and a non-risk way of shorting a whole lot of 20- or 30-year bonds, I’d do it,” said our favorite uncle Warren Buffett on CNBC. These kinds of bonds have been on a terrific bull run ever since Paul Volker, as Chairman of the Fed, cracked down on inflation. But now, even the avuncular face of capitalism would bet against them.

Rajiv Sethi: Spoofing in an Algorithmic Ecosystem

A London trader recently charged with price manipulation appears to have been using a strategy designed to trigger high-frequency trading algorithms. Whether he used an algorithm himself is beside the point: he made money because the market is dominated by computer programs responding rapidly to incoming market data, and he understood the basic logic of their structure.

Why the Claims Neoliberals Make About Markets Are Wrong

Economists generally, and especially neoliberal economists, take Jevons’s “proof” that markets maximize utility for all participants at face value, and have exalted it into a principle for the organization of society. The proof doesn’t stand up to close examination.

Two New Papers Say Big Finance Sectors Hurt Growth and Innovation

In a bit of synchronicity, two new papers confirm the long-held suspicion that Wall Street is sucking the life out of Main Street.

LinkedIn’s “Economic Graph” as Algorithmic, Global Labor Brokerage and Panopticon

Silicon Valley labor law violator LinkedIn has a vision — “the Economic Graph” — and it’s sponsoring a $25,000 contest to find “researchers, academics, and data-driven thinkers” to help them make it a reality.[1] Here’s the vision in short form: There are approximately 3 billion people in the global workforce. LinkedIn’s vision is to create […]

Matt Stoller: Why We Need to Break Up Amazon – and How to Do It

Yves here. The main way that those of the left-leaning persuasion see Amazon as a bad guy is for its treatment of warehouse workers, who work in physically-taxing conditions and are paid what is barely a living wage for a single person.

As Matt Stoller describes in this piece, Amazon’s ambitions are monopolistic, and they’ve already gone a long way towards achieving that ambition in a large number of markets. They regularly engage in predatory pricing to crush competitors and gain market share. Their dominant position then allows them to chose how to extract more profit, which is usually a combination of squeezing suppliers and raising prices.

Antitrust has become close to a dead letter in the US. Amazon makes for a worthy object for reviving it.

How the AMA’s Price Fixing Distorts Health Care Delivery and Pricing

Medicare prices are set by the AMA’s Relative Value System Update Committee, which incentivizes procedures instead of primary care, leading to greater costs and more invasive care.

UK Rail Shows Pitfalls of Natural Monopoly Privatization

Railway privatization was sold to the public on the basis it would “provide better value for money for the public who travel by rail.” Who could have predicted it wouldn’t work out?

Summer Rerun: Lazy Corporate Monopolies Are Why America Can’t Have Nice Things

This post first ran on January 7, 2013 By Matt Stoller, who writes for Salon and has contributed to Politico, Alternet, Salon, The Nation and Reuters. You can reach him at stoller (at) gmail.com or follow him on Twitter at @matthewstoller Throughout much of the United States, cell phone service is terrible (so is broadband, […]