A bit RBC but…..

Truth to it all the same:

Prices clear markets. If there is a recession, something is wrong with prices.

6 thoughts on “A bit RBC but…..”

  1. Prices clear markets. But what about that house in Portugal that you’re unable to sell? That market isn’t clearing. Maybe something is wrong with your price….

    Tim adds: Indeed, we could even say that my reservation price (ie, the price at which I’m quite happy living in it) is higher than the market clearing price.

    Happens quite a lot too: happens to everyone who lives in a house instead of selling it actually.

  2. yes but what does that “cleared market” look like? If we don’t like the look of it, are the prices “wrong” that are preventing us from being in this state we do not wish to be in?

  3. But but but – to the ECB the Euro is not overvalued. It’s floating just nicely against the USD and markets are clearing in Germany (well, more or less), which is most of the Eurozone’s economy, really. The real problem is a Euro in Greece doesn’t have the same value as a Euro in Germany, but no-one – least of all the ECB – wants to admit that let alone do anything about it.

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