Carpe Diem

Manhattan Housing Boom

NEW YORK (CNNMoney.com)Despite a housing slump across the rest of the nation, home sellers in New York City are selling houses faster with the number of listings reaching a two-year low.

Prudential’s Douglas Elliman reported that inventory in Manhattan fell 31.7% to 5,204 units in the third-quarter from a year-ago total of 7,623 units, while units stayed on the market for 123 days, faster than the 150 days seen in the same period last year.

Corcoran Group reported that the average (mean) price of an apartment in Manhattan jumped to $1.41 million, up 14% from the same quarter last year. Market-wide, a Manhattan apartment sold for between a median price of $815,000 and $895,000 during the three months ended September 30.

Carpe Diem

Is the Marriage Market an Efficient Market?

UPDATE 1: Craigslist removed the original post at the link below, but here are some other links here and here that have reproduced the original post and response.

UPDATE 2: NYTimes has covered this story, see articles here and here.

Here is the opening paragraph of an actual post on New York’s Craigslist, in the Personals section called “Rants & Raves”:

“Okay, I’m tired of beating around the bush. I’m a beautiful (spectacularly beautiful) 25 year old girl. I’m articulate and classy. I’m not from New York. I’m looking to get married to a guy who makes at least half a million a year. I know how that sounds, but keep in mind that a million a year is middle class in New York City, so I don’t think I’m overreaching at all.”

Two responses follow the original post, and both invoke the “efficient markets hypothesis (EMH)”:

“I was taught early in my career about efficient markets. So, I wonder why a girl as “articulate, classy and spectacularly beautiful” as you has been unable to find your sugar daddy.”

“I also do believe in the efficient market theory, and am surprised that $500k hasn’t found you yet. There are plenty of rich lawyers, investment bankers and hedgies to go around in this city. What gives?”

The “efficient market hypothesis” assumes that there are no hundred dollar bills lying around on the sidewalk unclaimed, and would it not also imply that there should be no “spectacularly beautiful, classy and articulate 25-year old women” unattached in Mannhattan?

Actually the market for dating and marriage might not always be efficient, because it operates as a barter economy, and relys on the “double coincidence of wants,” or more accurately the “double coincidence of attraction,” unlike the stock market or currency trading, where barter is replaced by the much more efficient money to facilitate trading, avoiding the inefficient “double coincidence of wants.”

BTW, Eugene Fama at U. of Chicago, who developed the EMH in his Ph.D. thesis in the early 1960s at Chicago, has been mentioned as a likely candidate for this year’s Nobel Prize in Economics. The first 2007 Nobel Prize (medicine) will be announced tomorrow, Monday.

(HT: Sanil Kori)

Carpe Diem

Interesting Web Site of the Day


Planning a family reunion, or meeting 1-3 old friends for a weekend and looking for a place to meet in the middle to equalize travel distance for everybody?

HappyMedian allows a user to enter 2 to 4 towns representing each person wishing to meet, via zip code, or a city-state combination. HappyMedian then finds the most fairly equidistant towns between those entered, and then provides a list of various types of places to meet, from restaurants and bars, to coffee shops and lodging.

What next?

Carpe Diem

NYC Teachers Have a “Jobs Bank” Too

From the NY Post article “Why Is The City Paying 757 People To Do Nothing?”

It’s all in a day’s work on the city payroll.

For seven hours a day, five days a week, hundreds of Department of Education employees – who’ve been accused of wrongdoing ranging from buying a plant for a school against the principal’s wishes to inappropriately touching a student – do absolutely no work.

The Post has learned that the number of salaried teachers sitting idly waiting for their cases to be heard has exploded to 757 this year – more than twice the number just two years ago – at a cost of about $40 million a year, based on the median teacher salary.

The city pays millions more for substitute teachers and employees to replace them and to lease rubber-room space.

Meanwhile, the 757 – paid from $42,500 to $93,400 a year – bring in lounge chairs to recline, talk on their cellphones and watch movies on portable DVD players, according to interviews with more than 50 employees.

MP: One of the problems is that NYC’s public schools are a monopoly, with unionized employees, so heavily regulated that it’s sometimes impossible to fire even dangerous teachers. Here are the illustrated procedures required to fire an imcompetent union teacher in NYC.

Carpe Diem

Free Market Leads to Lower Ticket Prices for MLB

Sites like StubHub may let people sell some World Series tickets for eye-popping prices. But letting the free market work actually leads to cheaper prices for fans.

The fact that there are services like StubHub increases the supply of tickets that can be sold on the secondary market, thus lowering the price.

It also helps that this year, Major League Baseball and more and more states around the country are finally acknowledging that it is in everyone’s best interest to have a true transparent secondary market for ticket sales.

Baseball ticket sales on StubHub soared, and the site is now on pace to sell 5 million tickets this year alone, after selling a total of 5 million tickets in its first six years of existence.

The deal with baseball was beneficial enough to StubHub that it gave the sport something it never granted other teams or sports in its sponsorship deals — a cut of the 25 percent combined commission that StubHub gets from the buyer and seller when a ticket is sold.

Read the full article here from CNN Money: Why $75,000 Playoff Tickets Are a Good Thing

(HT: Sanil Kori)

Carpe Diem

GM: Market Share Falling, But “Job Share” Rising?

The chart above is from the Level Field Institute’s 2007 report, in which it says:

“Our car-by-car analysis also accounts for differences in market share. In other words, an automaker with 15% market share that employs 20% of U.S. autoworkers is overperforming on jobs, while an automaker with 15% market share that employs just 10% of autoworkers is underperforming.”

That’s a very interesting definition of “overperforming and underperforming on jobs,” isn’t it?

GM has a 23% market share and 29% of the autoworkers and is “overperforming on jobs?” That sounds a lot more like “ineffiency” to me. And Toyota has a 17% market share and 9% job share and is “underperforming on jobs?” That seems more like “efficiency” to me.

After all, corporations don’t exist to create the maximum number of jobs, they exist to serve consumers and shareholders by producing output with the least number of employees.

Carpe Diem

Free Markets Are Good, But Foreign Firms Are Bad?


The Pew Research Center conducts a major international survey about every five years on the general public’s perception of trade and globalization. The most recent study was just released, based on responses from 45,000 people worldwide in 47 countries (more than 2,000 in the U.S.).

From the study: “Overwhelmingly, the surveyed publics see the benefits of increasing global commerce and free market economies. In all 47 nations included in the survey, large majorities believe that international trade is benefiting their countries. For the most part, the multinational corporations that dominate global commerce receive favorable ratings. Nonetheless, since 2002 enthusiasm for trade has declined significantly in the United States, Italy, France and Britain, and views of multinationals are less positive in Western countries where economic growth has been relatively modest in recent years.

Just 59% of Americans say trade with other countries is having a good effect on the U.S., down sharply from 2002, when 78% believed it was having a positive impact.”

Interestingly, these results are consistent with the recent trend reported in the Wall Street Journal that “Republican voters believe free trade is bad for the U.S. economy by nearly a two-to-one margin, a shift in opinion that mirrors Democratic views.”

Notice in the chart above (click to enlarge), that in many countries like the U.S., Canada, UK, France, Germany, Spain, Sweden and Italy, people inconsistently express strong support for both: a) trade and b) free markets, but very weak support for “foreign companies.”

In the U.S., 70% of the respondents have a favorable view of “free markets,” but only 45% have a favorable view towards “foreign companies.” In the U.K. and Italy, those percentages are 72% (free markets) vs. 49% (foreign companies) and 73% vs. 38%, respectively.

What’s up with that? Aren’t “foreign companies” an intergral part of “free markets”? Without foreign companies, we wouldn’t have “free markets,” we would have “closed markets” and a closed economy.

Carpe Diem

Is Wall Street Now Conducting Monetary Policy?

From Larry Kudlow’s very interesting column today “Anatomy of a Fabulous Fed Flip-Flop“:

On the afternoon of Aug. 7, the Federal Reserve chair was an inflation hawk — according to the unchanged FOMC policy statement — fearful of adding liquidity to the markets. By day’s end on Aug. 9, however, he was leading the liquidity charge, initiating a process that would help unlock the credit seize-up that started in late-July.

Using the Freedom of Information Act, Ken Thomas, researcher and lecturer at the University of Pennsylvania’s Wharton school, was able to get Bernanke’s calendar of phone calls and meetings at the time the flip-flop occurred.

Over the next few weeks, Bernanke participated in no fewer than 35 separate conference calls with fellow Fed operatives — a complete departure from his earlier no-conference-call style. And he got the liquidity ball rolling. As we now know, the Fed started pouring liquidity into the system on Aug. 9.

Exhibit A: See the chart above (click to enlarge) showing the significant drop in effective Fed Funds rate on August 9 to 4.68%, at a time the official target rate was 5.25%. During the entire month of August the effective Fed Funds rate was 5.02%, almost a quarter point below the official target. Simply put, the Fed implemented an unannounced “secret” rate cut to 5% in August, under pressure from Wall Street.

But is this a good outcome? Kudlow seems to think so, and says that “the academic Bernanke became a hands-on market participant through his contacts with Rubin, Paulson, the hedgies and others. He reached out to savvy financial-market players, who put him in touch with the real world.”

Doesn’t this call into question the concept of “central bank independence?” Most economists consider it desirable to have central bank decisions insulated from political pressure from politicians seeking short-term political goals, so that the central bank can do what is best for the economy in the long run. But shouldn’t the central bank also be insulated from pressure from hedge fund managers and investment bankers on Wall Street, which is apparently exactly what happened in August? Wouldn’t an official inflation target insulate the Fed from Wall Street pressure?

Comments welcome.

Carpe Diem

Picture’s (Yes, I Know) of the Day: D’oh!

At this middle school in “Floriduh” there are multiple signs with this wording in its parking lots. If you have to make a grammatical blunder, at least don’t make it in front of a school!

Here are a few more…..


Just wondering, are the grammar rules about the proper use of it’s vs. its really that hard to learn? Isn’t that something you are supposed learn in elementary school, maybe about third grade?