Deutsche Bank’s Sense of Justice

As the rule of law declined in parallel with growing government intervention over the past few decades, Leviathan acquired the habit of threatening large companies, especially those who depend most on their reputation capital, with fines and judicial proceedings, counting that they will pay quickly and obediently in order to get the bureaucrats off their back. As Willie Sutton explained when asked why he robbed banks, “that’s where the money is”. Continue reading

Why Prices Are Not Clearing the Market after Sandy

Numerous press reports (see, for example, the Wall Street Journal and the Financial Times) describe shortages of gasoline in New York City. These are real shortages, that is, waiting lines to obtain insufficient supplies. Economics teaches that prices would rise until quantity demanded decreases (and, with a lag, until quantity supplied increases), thus clearing the market and eliminating the shortage. Only temporary high prices would remain, and at those prices, anybody could get as much gasoline as one wants. Why is this mechanism not working? Continue reading