Friday, January 05, 2007

"Lead on Fair Value!" Prices Follow Fast

The first 100 howls of the Pelosi regime, drumroll and trumpet fanfare please- a rise in the minimum wage. Oh jiffy! George will has a few very sensible words.

Perhaps most sensible: "Labor is a commodity; "

Some other commodities, oil, grains, cocoa, coffee, gold, pork bellies, ("It was the Dukes! It was the Dukes.")

Not a commodity-common sense. Suppose I decree that all plastic handled chisels ought to be priced according to the width of the blade, $.15 to the quarter inch. A 3 inch Marples chisel is now reduced in price to $1.80. Is this a good thing? If yes, for whom? If not, same question. Anyone who has been to an auction should understand simple economics. Competitive bidding raises the price on that 3 inch, wooden handle, mint condition Greenlee chisel you must have.
If I decree that henceforth, bidders at auctions must make successive lower offers, the Greenlee chisel just dropped to $0.00. The price dropped. What happened to the value? How long will Colonel's Bell & Bay stay in the auction business? The Dutch cut flower auction/commodity market is very interesting. (From here.) "The Dutch auction is also known as an open-outcry descending price auction, and is sometimes referred to as a "clock auction." The seller or auctioneer starts at a high price and subsequently lowers the price repeatedly as time passes. This is sometimes done by having a clock which ticks down the price second-by-second. The first bidder who communicates that he will accept the current price wins the item at that price. "

Interesting, no? Here's another paragraph.

"The name, “Dutch auction” can refer to an auction enterprise, such as the Aalsmeer Flower Auction, that is located in the Netherlands. But the name is more commonly used to denote the type of auction that is used to sell flowers and pot plants at Aalsmeer and other such auction houses. This is a decreasing price clock auction that works as follows. A Dutch price clock at Aalsmeer starts at, what for a specific product is known to be, a high price, The hand on the clock starts at the top, at the beginning price, and moves counter-clockwise to lower prices. Whenever a bidder stops the clock, by pushing a button, a sale occurs at that price. Immediately after stopping the price clock, the buyer speaks into a microphone to inform the auction staff of his desired quantity at the price on the stopped clock. Then the price clock momentarily runs clockwise, to a slightly higher price, before resuming its counter-clockwise path to lower prices. The next bidder who stops the price clock buys at his chosen price, and so on until the lot of flowers or pot plants is completely sold and the auction subsequently proceeds to sell another lot. When flowers or plants are actively being auctioned, transaction prices are formed about once every four seconds on each price clock. Thus the Dutch flower auctions are very fast, which is an important feature of an auction used to sell a highly perishable commodity such as cut flowers. Indeed, the Aalsmeer Flower Auction has 13 clocks in five auction rooms, with each price clock yielding a transaction price every few seconds. "

Interesting, no? That "known to be a very high price"...known by people who know flowers. Like people who know that a mint condition 3 inch Greenlee chisel, with the box might go for $40-50 on eBay. I paid $14 plus shipping for my so-so 2 inch, handleless Greenlee. The bevel was ground too low, 20 degrees instead of 25-30 degrees. Does Ms. Pelosi have experience with chisels? Ha! What then do the Dhims, or any Federales know about what a seasonal seller of Waffle cones and deep-fried cheese curds ought to pay his first job, eager, 16 year old help at the 2007 Minnesota State Fair to scrub out the fat vats at 10:00 PM?

I once heard a story about a collector, a saver of things maybe useful, maybe not. This saver of junk kept old tires. "Got to be a bit of life in 'em." This was in 1940. The bit of life in 'em soared in 1942 when all new tires went to war. The value soared, the prices followed fast.

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