Meat Buying Sprees & Corn Subsidies – The Inevitable Failure of Government Programs

According to recent news reports the president pledged to purchase meat from so called drought stricken farmers:

President Barack Obama, campaigning in Iowa Monday, announced $170 million in government meat purchases to help farmers struck by drought, helping to send hog prices to a one-

The purchase of as much as $100 million of pork, $50 million of chicken, and $10 million each of lamb and catfish come on top of $30 million in assistance announced last week. Farmers and ranchers are struggling with the worst combination of heat and dryness since the 1950s, the administration said.

Obama said he also directed the Defense Department to speed up purchases and hold the meat for later use. The buying will help farmers, and the government will get a better price on products than if they were bought later, he said.

“We’ll freeze it for later — but we’ve got a lot of freezers,” Obama told supporters in Council Bluffs as he kicked off a three-day visit to Iowa, a swing state that is also the country’s leading producer of pork, soybeans, corn and ethanol. “That will help ranchers, you know, who are going through tough times right now.”

More than half the counties in the U.S. have been declared natural disaster areas by the Department of Agriculture, and 69 percent of the Midwest last week had moderate to exceptional drought, government data show. The price of corn, the main ingredient in livestock feed, has surged 57 percent since mid-June, reaching an all-time high of $8.49 a bushel on Aug. 10 on the Chicago Board of Trade.

These are of course old school vote buying tactics and the people he’s talking to know that.

Some more background on the development of corn and meat prices:

Corn Long Term:


Corn Short Term:


Corn prices have most recently reached record highs and so have beef prices. Corn prices and beef prices are linked because beef in the US is mostly corn fed.

High corn prices have recently impelled farmers to slaughter more cattle than normal in order to avoid having to buy corn to feed them.

What’s behind the ever rising corn prices? Simply put, it’s government subsidies. But those have existed for a while, and have of course, coupled with sugar tariffs, lead to virtually universal use of corn syrup in processed food in the US, leading to a globally unmatched obesity epidemic.

So what has happened recently to step it all up a notch? Sure, we hear a lot about a nature made drought. However, those who dig a little deeper will find shocking numbers:

But nature is not the biggest factor in this crisis — the government is. Specifically, the federal government’s ethanol mandate, which requires that 13.2 billion gallons of corn-based ethanol be produced in 2012.

Thanks to the ethanol mandate, more than 40 percent of the nation’s corn crop now goes into the production of a useless fuel that hardly anyone would buy if the government didn’t require it. That’s up from just 17 percent in 2005, before the mandate went into effect. Only 36 percent of the corn crop now goes for feed, and 24 percent goes for food.

Here is the EPA’s own wording on the Renewable Fuel Standard

The RFS program was created under the Energy Policy Act (EPAct) of 2005, and established the first renewable fuel volume mandate in the United States. As required under EPAct, the original RFS program (RFS1) required 7.5 billion gallons of renewable- fuel to be blended into gasoline by 2012.

There you have it. Today 40% of all US corn production goes towards the production of ethanol fuels. It’s certainly a profitable racket for the Big Corn, but as it always goes with government programs – they make the majority poorer and poorer (and in this case unhealthier and fatter), while making the connected minority richer and richer.

Regarding the government’s efforts to buy up commodities in times of hardship, I would like to remind my readers once again of my post The Great Depression – Now and Then, in particular the Hoover administration’s until then unprecedented government spending programs that were instrumental in bringing about The Great Depression:

  • In June 1929, the Agricultural Marketing Act is passed, establishing the Federal Farm Board (FFB), furnished with $500 million by the Treasury to make all-purpose loans to farm cooperatives at low interest rates and to establish price stabilization corporations with the objective to artificially keep up farm prices
  • On October 26th 1929 the newly established FFB launches a program to lend $150 million to wheat coops and establishes the Farmers’ National Grain Corporation with $10 million capital; as farm prices continue to fall, the Farmers’ National itself begins to buy up wheat to keep up prices; the inevitable fall of prices is thus postponed as farmers are encouraged to keep producing surpluses; in 1930 prices continue to fall as the FFB keeps accumulating wheat surpluses
  • In spring of 1930 Hoover acquires from Congress an added $100 million in order for the FFB to continue lending and buying and establishes the Grain Stabilization Corporation (GSC) to replace Farmers’ National and redouble price stabilization efforts
  • By June 30 1930 the GSC has accumulated over 65 million bushels of wheat held off the market; prices continue to fall
  • On November 15, the GSC is authorized to purchase as much wheat as necessary to stop any further decline in wheat prices and buys up another 200 million bushels until mid 1931; prices continue to fall
  • The FFB finally decides to dump the excess stock abroad and prices fall even more drastically, the entire operation significantly postponed the necessary correction and prolonged the depression
  • By the end of the Hoover administration the FFB has incurred cotton and wheat losses of over $300 million
  • Other programs launched by the FFB that either failed in the same manner or proved impractical from the outset: Cotton Stabilization Corporation, National Wool Marketing Corporation, National Livestock Marketing Association, California Grape Control Board

Those who don’t learn from history are doomed to repeat it.

Before 2008 government programs lead to record home prices. When the crash came, people were told that government programs were needed to fix the crisis.

When the new commodity bubble that has been blown up by all the current dumb-ass government programs bursts, prices will come crashing down much more severely than they would right now if bureaucrats were to allow peaceful and voluntary individuals qua their own actions to direct producers how much of what they actually need produced, you know, this thing called the market.

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The Truth About Obamacare, Mandates, and Health Care in the US

As expected, the US Supreme Court today once again honored its job description which is to serve as an enabler and facilitator of the expansion of federal government powers.

Some interesting comments on Obamacare from Freedomain Radio:

Its destructive effects on healthcare aside, those liberals who are now cheering and celebrating the Supreme Court Decision on Obamacare (a law by the way that has been written in large parts by the pharmaceutical industry) conveniently ignore the floodgates that have been opened for other kinds of mandates that conservatives will inevitably shove down their (and unfortunately all our) throats in the future.

And those who are cheering the loudest right now, will be the most vociferous ones crying out in outrage then, because that’s simply the way useful idiots “function” in the world of mob rule, aka “Democracy”.

I’ve said before that under the Affordable Care Act health care will become less and less affordable to Americans. And it has. Premiums have gone up two-,three-fold, maybe even more for some. The inability to charge more for pre-existing conditions simply results in higher charges for everybody, regardless of condition, or in bankrupting insurers (a welcome excuse for the all out nationalization of health insurers at some point?). Meanwhile the root causes of rising health costs have not been addressed at all.

But has that bothered any of the oh so caring and concerned people supporting this law today? Of course not. Why? Because to them it’s not about making health care more affordable, it’s not about actually understanding what the consequences of this law will be; no, it’s about deluding themselves into being on some kind of winning team on some kind of issue, so long as it supports their emotional political inclinations and upsets those with opposing inclination on that same spectrum.

And while the thoughtful among us can lay the groundwork for reasonable fixes to the problems with healthcare in the US, the chaotic herd of dizzy, annoying, loud, patronizing, boring, bigoted, and mindless drones will have to run its stubborn course until the system collapses of its own accord, as I pointed out years ago.

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Spanish Government Bans Transactions over EUR 2500

The creeping progression towards all-round state control under one soviet style European Union has hit a new low as Spain Bans Cash Transactions Over 2,500 Euros:

The Prime Minister, Mariano Rajoy, has announced on Wednesday that the plan to combat tax evasion on Friday approved the Cabinet prohibit the payment in cash transactions of over € 2,500 and which at least involved a businessman professional.

During the control session the Government in the House of the Congress of Deputies and in response to a question about the tax amnesty made by the general coordinator of IU, Cayo Lara, the Prime Minister has revealed that those who violate the ban will face fines of 25% of the payment made ​​in cash.

The Government had already advanced the plan to combat fraud limitations include the use of cash for certain operations, although he had not yet specified which would place the threshold (yes at the time there was talk that it could be 1,000 euros for self-employed).

I highly doubt that this is in line with one of the supposedly fundamental pillars of the European Union, namely the unrestricted mobility of capital. Spain might as well exit right now and get it over with.

As everyone with half a brain knows and as we have been arguing here for a long time now: Government intervention leads to problems that will be combated with more government intervention until a complete breakdown of trade, credit, and the monetary system becomes inevitable.

We are witnessing the inevitable and accelerating downhill ride that is being aggravated and prolonged by one failed government intervention after another.

What’s next? All round capital controls, baby!

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ACLU: “Obama will forever be known as the president who signed indefinite detention without charge or trial into law”; Why Obama’s Presidency Has Been a Great Success

The ACLU writes President Obama Signs Indefinite Detention Bill Into Law:

“President Obama’s action today is a blight on his legacy because he will forever be known as the president who signed indefinite detention without charge or trial into law,” said Anthony D. Romero, ACLU executive director. “The statute is particularly dangerous because it has no temporal or geographic limitations, and can be used by this and future presidents to militarily detain people captured far from any battlefield. The ACLU will fight worldwide detention authority wherever we can, be it in court, in Congress, or internationally.”

As I’ve argued since the beginning of the Obama presidency, the more disillusioned young people get with who they thought was for sure going to be their savior, the better it’ll be for the ideas of peace and liberty, and the more devastating it’ll be to the dying concepts of governments and nations in the long run.

Thus Obama’s election and tenure have indeed been a great success in helping push our ideas and we could have hardly asked for any more.

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