money is not just money

My former employer
Even as the new year begins, there is no stopping of gloom coming from the financial world. My former employer, once hailed as a great global bank that made one of the most extraordinary take-overs of ABN Amro, now "rank as one of the worst and most ill-timed takeovers in history", is in a terrible mess. As of today, 70% of RBS is owned by the British treasury. 6 months ago, it was boasting to be one of the most profitable banks in the world. Today, they will announce the largest loss in British corporate history.


Price
In economics, one reading of a market price is that price signals opportunity cost. That is, to buy a bottle of Coke for $1, means you are forgoing the next best use of that $1, say 2 bags of potato chips (or crisps in the UK). Meaning, the cost of the bottle of Coke is the 2 bags of chips you forgo.

In that light, it is just bewildering that Manchester City Football Club are putting in a bid to buy Brasilian football star Kaka for a good GBP108m. With that amount, you would probably would have bought 5 Robbie Keanes. Is Kaka really as worth 5 Robbie Keanes? I know some might disagree on the prowess of Liverpool star Robbie Keane's abilities, but still, Kaka is 5 times the footballer Keane is? It is hard, even by any wayward criteria to reach that conclusion. But if you factor in the merchandise and non-football revenue one can churn from Kaka's potential arrival at Manchester City, then perhaps is not all that appalling. Football isn't just about football.


Fair comparison? I don't know either.
And then further on my bewilderment with money. Japan has reportedly donated US$10m as humanitarian aid to Gaza. Compare that to the GBP108m that Kaka is purportedly worth, Japan's aid to help the dying and needy in Gaza seems peanuts. I know its not technically right to compare the two, since these are two different markets we are talking about.

But just on the possible argument that prices reflect the intrinsic worth of objects (like gold is more intrinsically valuable than say silver, and therefore you pay more for gold), then Kaka seems to be worth far more than the dying and needy in Gaza. Drawn out I admit, but a possible reading.

You decide. I'm just bewildered by money. And something just doesn't sit right with my intuition, about how this money is spent on a single football player whilst peoples in Gaza suffer. Money is not just money I guess.


Uncle T