Saturday, November 15th, 2008
Yes, the economy is in a bad way, and we’re all worried. No, things are not good. It’s not a sellers market for much of anything. Buyers might find lots of bargains for certain goods once over valued.
In my neighborhood a house bought six years ago for 350K could be on the market for 5 or 550k. Even these days houses show a great deal of market value in my small town. This is all absurd. We know that the Monopoly money deals have revealed problems with how value is defined in a market with or without controls. How much, for example, is the 700B in Paulson’s chest actually worth. That depends, right?
I’m not an economist but it seems to me that the value of most market items is up for grabs in the transfer system. For example, how much is an average 20k auto actually worth? Doesn’t this depend on the cost of smelting equipment and labor? How much is labor worth? If pay is not proportional to the cost of necessary goods vs luxuries, then what is the worth of the luxury market with its limited cycles (you know, cell phones, TVs).
At the moment, chicken and butter are really expensive. But what is the value of butter?