Category Archives: Market inefficiencies

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, […]

Wolf Richter: Is the IPO Bubble About to Burst? Banana Republic Trots Out ‘Startup Guy’ Look

Banana Republic thinks there’s enough exuberance left out there to sell this “Startup Guy” look to millions of non-startup guys. That’s rather a lot of exuberance.

Corporate Bond Trading a Casualty of QE and ZIRP

The Financial Times has an article on how corporate bond dealers are going to create a new trading hub to try to preserve their market position while “boosting liquidity” in the market. Narrowly speaking, there’s nothing wrong with the piece as a description of investor unhappiness and planned bank responses. But it curiously missed how Fed policy has helped generate conditions that are reducing corporate bond market liquidity.

Satyajit Das: Flash Boys’ HFT Mumbo Jumbo

Satyajit Das reviews Michael Lewis’ book Flash Boys. Das finds it to be deeply flawed,: deficient in its understanding of HFT and not very well written.

Philip Pilkington: Keynes’ Liquidity Preference Trumps Debt Deflation in 1931 and 2008

Why defining “liquidity trap” precisely matters in understanding crisis dynamics, and Keynes, and not Krugman, got it right.

Marshall Auerback: When is a Bubble a Bubble?

Bubbles have become a major focus of discussion in today’s financial markets. But very few people actually define what they mean when describing this financial phenomenon.

Servaas Storm: Secular Stagnation, Green Shoots or What?

The Obama administration and the mainstream media are now talking up an imminent recovery, perhaps even a modest boom. There is no reason why we should be optimistic now.

Amar Bhidé on How Following Hayek Leads to Regulating Banks Like Utilities, Looking Askance at Liquidity and Securitization

I highly recommend this short interview by John Authers of the Financial Times with Amar Bhidé, a professor at Tufts, in which he argues that a proper reading of Friedrich Hayek would lead to considerable skepticism about whether most of the changes in finance over the last three decades actually represent progress.

Why You Should Learn to Love the Brave New World of Low Liquidity

The Financial Times reported earlier this week (hat tip Scott) how banks are cutting the size of corporate bond trading desks and reducing the size of trading inventories, all as a result of big bad regulations. As a result, the banks would like us to know, investors might be hurt by a lack of liquidity! Horrors!

Why It’s Absurd that America Doesn’t Tax Wall Street’s Transactions

Yves here. The post below from Paul Buchheit makes a persuasive layperson’s case for a financial transactions tax. There is an equally sound case to be made from a financial markets viewpoint.

David Dayen: A Revealing Episode in DC Groupthink

So this week I got an education in the mentality of “official” Washington.

Last week I was asked by a DC-based publication to give a comment on Corker-Warner, the flavor-of-the-month proposal to abolish Fannie and Freddie and reform mortgage finance. I basically take the same position as Yves on this issue: all of these GSE 2.0 plans assume a private label MBS market the way the proverbial economist on a desert island assumes a can opener.