Thursday, September 08, 2005

In response to hurricane relief criticisms

This post is in response to hurricane relief donations criticisms: Roberto's criticism of the NYSE and Peter the speculator's criticism of oil and gas company contributions.

There are good reasons why the people who are giving the most have the least to give. It is tough to get ahead if you are bleeding out anytime somebody else could use some money. I can't say I blame Grasso, but it doesn't matter anyway. The public will have a shot at his money after he passes away and it is taken in estate taxes and piddled away by inheritees.

We all contribute to this disaster relief whether we want to or not with tax money and higher energy prices. I'm helping out by driving my car 5-20 mph slower than I used to, this gives a small relief to energy prices even if I can only convince a few other people to do it. Doing this has improved the gas mileage of my 3000GT VR-4 by 20%.

"Don't buy gas if you don't need it." -- President Bush

P.S. Liquid markets provide the most efficient resource distribution, think about it like an auction. Price controls create major shortages in markets and lead to rationing. You don't want people in dire need of a resource and the money to pay up for it to not have it available because "it got bid up too high". I can't think of a case where completely eliminating liquidity is a good idea.

P.S.S. I can tell that Peter likes it when liquidity disapears and he's on the right side of the squeeze, the url of his blog is in reference to the futures markets price controls.


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At 11:40 AM, Blogger uclatrader said...

Sweet ride:)

At 8:41 AM, Blogger Richard said...

Did I understand correctly that you helped the current disaster by driving your sports car slower?

At 12:16 PM, Blogger jontait said...

Richard I wonder if you know about a concept in economics called adverse selection. As it applies here, the people most likely to get their hands on your contributions are the people who can least effectively deploy it as you intended. And the people most likely to receive it are the most likely to squander it. Now I'm not against contributing aid to people in need, but I believe this should be done with no less attention and preparation than you would take in selecting stocks for your portfolio.

And let me add, I'm out of town right now, and if my home city gets nuked or flooded or whatever while I'm gone, I'm not going to be homeless and starving. It is no accident either. So tell me in who's hands money is better off?

In my opinion social aide is very much another aspect of money management. If you can give a little bit and help a family today, great. But are you better off waiting if you can take that same money, and after 20 years of compound returns help 100 families? I would argue yes.

At 11:25 PM, Blogger Richard said...

Very interesting and thought provoking. I don't think I think of things on your level of consideration. I have been hungry and I have been homeless. I tend to believe if you don't give to one there is probability you won't give to 100 until your dead. and then who is to say the state will divey it up the way you might have wanted. You could really go round and round with these concepts. I would want someone to send now. while im thirsty. Thanks for the thought provoking response.


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