Mish's Global Economic Trend Analysis

Posted: 17 Oct 2014 02:52 PM PDT

In response to Obama's Lame Response to Ebola; No Protocols but Lots of Fearmongering one person responded that I was "over-cooking the Ebola crisis".

Amusingly, another reader accused me of "underplaying the crisis".

A third reader asked "what is the free market response?" A similar question arose in a comment to Acting Man's post The Ebola Outbreak – A Black Swan.

Before tackling the free market issue, let's first review the government's response to date.

Airport restrictions but only at 5 airport, not all of them
Temperature taking procedures initiated
In spite temperature worries, a nurse self-reported to the center for disease control that she had an elevated temperature and ebola patient contact, but was told go ahead and fly

Think about the act of temperature taking. Whoever administered the test would have been in close contact with everyone on or entering the plane. Is that a good idea? Do sneezes and coughs happen?

Enough said.

Free Market Response

It's 100% certain the free market response would not have been the government's response to date.

And what about my proposal of flight bans from epidemic countries?

Government mandated is not free market by definition. But, it's entirely possible my solution is what the free market would have arrived at!

Three Questions I Asked Previously

Is there a chance of spreading the disease by coughing or sneezing? Yes.
Would I want to sit on a plane next to someone who was in contact with an ebola patient? No, and neither would anyone else.
Would I want to sit on a plane next to someone from a country where ebola is viral? No, and neither would anyone else.

Those are common sense questions that airlines may have asked themselves. Airports may have asked similar questions. But airlines do not initiate travel bans in this over-regulated society. Neither do airports.

I read a comment that airlines are being greedy. How so? Airlines are not in position to ban flights from specific countries for medical reasons.

And the last thing airlines need is plane decontamination efforts to fill an extremely tiny number of seats from those arriving from select African countries.

I pinged Pater Tenebrarum at Acting Man with this comment "I believe the free market response is that airlines would have banned travel from certain African countries."

He responded "Absolutely, but there are many other ways in which we could expect an unhampered market economy to respond to such a situation. In fact, I intend to take up the challenge and write a post about it."

Was I correct? We will never know.

I simply proposed what I thought the free market solution would be in absence of protocols from the center for disease control. I look forward to reading Pater's response.

In the meantime, we know with absolute certainty the government's response was pathetic. We also know McCain's Proposal for an Ebola Czar is equally, if not more pathetic.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Irony of the Day: Yellen Moans About Income Inequality; Seven Things That Cause Inequality

Posted: 17 Oct 2014 10:30 AM PDT

Those seeking the irony of the day will find it comes straight from the mouth of the Fed Chair. Please consider Janet Yellen Bemoans Rising US Inequality.

Janet Yellen decried rising inequality on Friday in an unusual speech that may lead to accusations of politicising the US Federal Reserve.

Speaking at a conference in Boston, the Fed chairwoman said she was "greatly concerned" by rising income and wealth inequality, and asked whether it is compatible with American values.

Her remarks will delight the Democrats who championed her as Fed chair, but risk a backlash from Republicans, who may feel she is using the platform of the central bank to promote the causes of their political rivals.

It marks a big step in defining Ms Yellen's term at the Fed. She has tried to popularise the role, meeting with unemployed people, and now speaking out on issues beyond monetary policy. Despite recent turmoil in financial markets, Ms Yellen made no reference to economic conditions or Fed policy in her speech.

"The extent of and continuing increase in inequality in the United States greatly concern me," said Ms Yellen. "The past several decades have seen the most sustained rise in inequality since the 19th century after more than 40 years of narrowing inequality following the Great Depression."

Look Inward Janet!

Instead of bemoaning income inequality as "incompatible with American values", the Chair ought to look at the cause of it.

Seven Things That Cause Inequality

Fed-sponsored bank bailouts
Fed interest rate suppression that punishes savers and those on fixed income
Fed QE to goose financial assets (primarily held by the wealthy)
Fed-sponsored inflation that benefits those with first access to money: banks, the already wealthy, and government (via property and other taxes)
Government deficit spending, war-mongering, and other inflationary policies
Government interference in the free markets, especially housing, health care, and education

Is Inequality Always a Bad Thing?

Notice, I said seven but only listed 6. Here's the bonus 7th: Innovation.

Those who invent better ways of doing things (or simply do things better than anyone else) often succeed wildly.

But the 7th is the way it should be. It is the essence of free-market-capitalism. Looked at properly, income inequality is actually a necessity!

It's the way income inequality is achieved that makes it good or bad.

Of seven major things that cause income inequality, four are Fed-sponsored, two are government-sponsored, and one is as it should be.

Which one does Yellen bitch about? The 7th of course.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

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Friday, October 17, 2014

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis

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