GDP, M&A, EBITDA, P/E, NASDAQ, Econo-thread Part 14

[TCO]

Originally posted by el freako
Even your example of gold trading is not a perfect market, arbitrage opportunities exist - otherwise there would be few speculative traders in the market, which is not the case.

How big are the arbitrage opportunities in gold, pounds and euros? The market does all it can to eliminate an arbitrage opportunity here. That there are people driving the arbitrage towards zero is not surprising. But seriously, how much arbitrage is really there?

[TCO]

Look dude, obviously transport prices, differences in local production costs, differing tastes, etc. will drive different prices for the same good in different regions. If we had matter transporters, those prices would equalize. Same thing with ****s if the whores had magical brooms. of course, they don't and of course the price is different. Yet we do have a matter transporter for dollars and euros. They are freely traded with the punch of a button. So if a **** in France costs 100 Euros. And a **** in the US costs $200 and a Euro is worth $1.2, then the French **** is worth $120. It's just too easy to get laid there. Like ice in the arctic. Now, you have to add volume in there as well (I heard those Frogs are real bunnies)...and you've got the total production value of ****s in each country.

[TCO]

There may even be some use in the whole PPP thing...but I still enjoy shoving some micro up a macro persons azz. Plus the wuren talk has got me...sad.

[el freako]

The point is that it is there at all, if there are abitrage opportunities then the market is imperfect.

If the market is imperfect you will not get the relative-price equalizing effect that you seem to be expecting (but which almost never happens in reality).

If the market is imperfect even in the forex and gold markets, both with massive liquidity and ease of trading then how the hell can it be perfect everywhere? (which would be true if your assumptions follow thorough logically).


You argument about ice in the Arctic and Sahara is ludicrous

For ice to continue to exist in the sahara requires refrigeration so in the sahara you are buying ice and the refrigeration costs - your attempt to claim that the two are the same is absurd.
The two cost a different amount because they are different products - and in PPP valuations they would be counted as such.


wuren talk?

[TCO]

Originally posted by el freako
The point is that it is there at all, if there are abitrage opportunities then the market is imperfect.

If the market is imperfect you will not get the relative-price equalizing effect that you seem to be expecting (but which almost never happens in reality).

If the market is imperfect even in the forex and gold markets, both with massive liquidity and ease of trading then how the hell can it be perfect everywhere? (which would be true if your assumptions follow thorough logically).


You argument about ice in the Arctic and Sahara is ludicrous

For ice to continue to exist in the sahara requires refrigeration so in the sahara you are buying ice and the refrigeration costs - your attempt to claim that the two are the same is absurd.
The two cost a different amount because they are different products - and in PPP valuations they would be counted as such.

A servant in the US and a servant in Mexico are different things also. You have to pay for that person sneaking accross the border. Same thing with ****s, you have to pay for the greater difficulty in corrupting an American girl.

I don't have to prove the market is "perfect". You have to prove why we should us an artificial construction. And you never answered my question on the size of gold arbitrage opportunities. Look at some data. It is well under a percent, big guy. So, given that you are worried about things in the region of a percent, that is good enough for me.

[TCO]

Originally posted by el freako

You argument about ice in the Arctic and Sahara is ludicrous

It's cool...

For ice to continue to exist in the sahara requires refrigeration so in the sahara you are buying ice and the refrigeration costs - your attempt to claim that the two are the same is absurd.
The two cost a different amount because they are different products - and in PPP valuations they would be counted as such.

Well...are you absolutely sure that your PPP model contains that ice correction factor? See, I don't need to bother with such central planning silliness if I just rely on the market price.

wuren talk?

When you're older, Uncle Roland will have a "talk" with you.

[el freako]

Nice attempt to twist my words there - shame it was so lame.

So gold varies by under a percent, even something as homogenous as a Mig Mac can vary by as much as 100% to 200% when converted into a common currency - so, no it's not differences of under 1% i'm worried about it differences of 2 or 3 fold

And if the arbitrage opportunities on gold are that big then imagine how much bigger they are in much more illiquid markets.


You asked why we should use an artificial construction, well here is why:

Forex rates can change by 20% to 30% in a year, how does this relate to the underlying economy - answer almost not at all.

The dollar has fallen against the euro and yen recently, but are americans poorer - only if they spend all their money in euro's or yen, which they don't (except for a small smattering of expats) - some of the fall will feed through into higher import prices but they will affect only a small percentage of good/services whereas if you use the x-rate for comparing between economies will affect the whole income calculation.

With the x-rate jumping around like that you are going to have no idea what the relative positions of the economies are, when exchange rates were fixed under the bretton woods system there was less need for PPPs than there is now that we live under a floating system.

Maybe you should ask yourself why all the professionals use PPPs to compare the relative positions of economies - it is because it gives a truer picture than x-rates does.

[el freako]

Originally posted by TCO
When you're older, Uncle Roland will have a "talk" with you.

How much older do I have to be? I'm 34 now

[TCO]

Get a sense of humor, dude.

[TCO]

My points on arbitrage stand. A movie costs more in Manhattan so it is worth more.

[Kidlicious]

Originally posted by The Mad Monk
So, all it requires is for us to think happy thoughts and we're there?

Only if it were possible to believe that we were truly happy. It's not so easy when money is on the line.

[el freako]

Originally posted by TCO
Get a sense of humor, dude.

Sorry, that was an attempt at humor.

We are obviously incompatible humorists

[TCO]

Was anything useful just posted? I don't want to look.

[TCO]

Originally posted by el freako


Sorry, that was an attempt at humor.

We are obviously incompatible humorists

That was better. I was worried that you were like Mr. Fun or something.

[Kidlicious]

Originally posted by TCO
A movie costs more in Manhattan so it is worth more.

Worth is subjective. Normally it's measured as how much someone is willing to pay for something, and it's different with each individual. Price or cost has nothing to do with it.