I've had a bad feeling about the word Arbitrage since Enron.

I wrote a quick blog entry about reverse auctions that garnered a comment from CountSpin that included a link their own blog entry called “dude, where’s my free lunch?“

I like any business operation that gives customers a choice and increases competition, they cause innovation and efficiency in any operation. But, as I said in the title.. I’ve stopped liking the word “arbitrage” since Enron. I understand it is a risk minimizer for those who use it intelligently.

Based on the blog entry, which states:

I’d imagine the biggest protection is coded into the system to prevent the free-fall in the first place. Any smart business operation would do that anyway. I don’t knock them for creating such a business model protecting check. The KillerStartups entry did not elude to this being a B2B operation, nor did it state that the deals will hit zero, so I certainly didn’t think the deals would become a free lunch. There never is one, opportunity cost is always present. Anyone who thinks the price would hit zero should realize you get what you pay for. Still, some probably will think it is going to eventually hit free. Perhaps that nagging “Free” marker on the countdown ticker makes some think it’s possible.

With the comment; ” In fact, the more participants we have, the higher the ending price[,]” and blog entry in mind that this started out primarily as a distribution method for arbitrageurs looking to resell, I can safely say that this is NOT a reverse auction system in the conventional sense.

Looking through their blog, I found this gem. I haven’t asked, but I’d love to know if the blog entry and photograph sent sales through the roof for the Jorg Gray 6500 Chronograph. If not, you better acquire some.

Good luck CountSpin, everyone loves a deal.