Bailout Nation

An interesting article in the New York Times:

“For the government to print money at the expense of taxpayers as opposed to requiring or going about a receivership and wind-down of any insolvent institutions should be troubling to taxpayers and regulators alike,” said Josh Rosner, an analyst at Graham Fisher & Company and an expert on mortgage securities.

“The Fed has now crossed the line in a very clear way on ‘moral hazard,’ because they have opened the door to the view that they are required to save almost any institution through non-recourse loans — except the government doesn’t have the money and it destroys the U.S.’s reputation as the broadest, deepest, most transparent and properly regulated capital market in the world.”

Food for thought...

Maybe that's why the pork industry isn't quite as nervous as it should be with respect to expansions and new builds here in Indiana, despite the gloomy forecasts experts have been giving it:

"Excessive pork production combined with feed price escalation has the North American pork industry on pace to suffer the most damaging financial year ever, said a Purdue University expert."

Thing is, if they're expecting help (or bailouts) this time, they best not be looking toward the taxpayer, because word on the street is they're Fed up. (yeah, poor pun - but I couldn't resist)

What is our Govt. saying about the future for ag?

Check out this recent forecast put out in December 2007 by the USDA:

USDA Agriculture Predictions to 2017: "Pacific Rim nations and Mexico are key markets for long-term growth of U.S. pork exports. Higher income countries of East Asia increase pork imports as their domestic hog sectors are constrained by environmental concerns. Mexican pork imports rise rapidly, driven by increases in income and population. Brazil is constrained in its pork trade by the presence of foot-and-mouth disease, but continues to be a major pork exporter to markets such as Russia, Argentina, and Asian markets other than Japan and South Korea."

Did you notice something odd in the above quote?

Please permit me to highlight this:

"Higher income countries of East Asia increase pork imports as their domestic hog sectors are constrained by environmental concerns."

If I understand correctly, East Asia's hog sector is constrained by environmental concerns, ergo they'll import more from countries where, say, there are maybe less environmental concerns and/or constraints?

~ shaking my head here ~

Maybe it doesn't make you pause for thought, but I have to admit, it struck me as an odd thing to say by the USDA.

Anywhooooo, here's another important reason why taxpayers won't be too sympathetic toward government handing out subsidies, grants, etc. with respect to larger farms in the years ahead:

"Although net farm income initially declines from high levels of 2007 and 2008, it is projected to remain historically strong throughout the projection period, and reach record levels beyond 2011. Growth in export demand contributes to increases in agricultural commodity prices and gains in farm cash receipts. Increases in corn-based ethanol production also provide a major impetus for this strong income projection. Higher commodity prices lower government payments for price-dependent program benefits, although annual CRP payments increase. With lower government payments, the agriculture sector relies increasingly on the market for its income. Cash receipts represent more than 90 percent of gross cash income in the projections, up from about 85 percent in 2005."

Keep in mind... "The report assumes that there are no shocks due to abnormal weather, further outbreaks of plant or animal diseases, or other factors affecting global supply and demand."

Since our Fed is pretty thin from bailing out the billionairs in recent weeks, I'm guessing they won't have much available to help in any upcoming catastrophes ...like the massive floods swirling throughout the midwest these past few days (and prior).

In other news, I spoke to a friend of mine down in southern Indiana today. He told me about the Michellen (sp?) tire plant layoffs (and other shut downs going on in his area).

Thousands of jobs disappearing in his area...

Times are tough.

Money's tight.

So please don't ask taxpayers to dig deeper.

Thank you.

Meanwhile, while most will be watching the Markets, I'll probably be staring up at the skies on Thursday night searching for a hint of the Auroras this spring equinox.