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Issue Home December 8, 2010 Site Home

Letters to the Editor Policy

Hazardous Enough

According to one snarky wag of a columnist, the only cure for thwarted presidential ambition is formaldehyde. What’s more, that rapscallion goes on. After injection, it takes three days for full effect. It’s possible that, by some unearthly twist of fate, Senator John McCain, you’ve just begun reading this letter. With regard to all that, I would make book on two appertaining consequences.

One, you’re now chuckling. The other, you shall presently regard most of the following with askance. For my part, I’ll own up to being both snarky and tongue in cheek with the following speculation.

In your case, the major symptom seems to be your recent declaration of intent to thwart President Barack Hussein Obama junior with a filibuster. Neither your success nor failure in that regard would damage the country at large too terribly much. I and the rest of your colleague Americans - well, the vast majority of same at any rate - will make do just fine.

By the bye, that reminds me about the slogan brandied about in your presidential campaign. “Country First,” was it not?

For my part, I should like to think that slogan carries, for you my dear Senator, such implicit significance as to be appended as a footnote to the Bible’s Ten Commandments. In that spirit, put this United States of America above naked partisan shenanigans.

Call upon your fellow Arizona Senator John Kyl to permit passage of START, otherwise known as the STrategic Arms Reduction Treaty, before the end of 2010. Our world, in which both we and our posterity must live, is more than hazardous enough already.

A Alexander Stella
Susquehanna, PA

Would You Believe It?

In the Wall Street Journal of November 27, former VP Al Gore is quoted having told a group of green energy financiers in Greece that corn ethanol isn’t such a good deal. “It is not a good policy to have these massive subsidies for first-generation ethanol.” Good God Almighty! Who would have imagined that!! The benefits of ethanol are “trivial,” he added, but “it’s hard once such a program is put in place to deal with the lobbies that keep it going.” I almost dropped my teeth in my coffee when I read this. Here is elitist Mr. Inconvenient Truth telling us peasants what we already intuitively knew. We’re paying 42 cents a gallon subsidy for that corrosive crap and he further tells us “one of the reasons I made that mistake is that I paid particular attention to the farmers in my home state of Tennessee, and I had a certain fondness for the farmers in the state of Iowa because I was about to run for President.” Folks, have you ever seen a clearer picture of government in action? This whole climate change scam is about running for President, sucking up to special interests, wealth redistribution on a global basis, crippling our economy to the point that government employees and unions take to the streets and our country falls into the hands of the Radical Left (read Socialists, Communists, anarchists and other opponents of our Republic). Note: When running to be the Democrat candidate for President in 2008, Hillary Clinton identified herself as a turn of the century Progressive. Watch out for 2012.

We don’t have the luxury of placing blind trust in the politicians as we have foolishly done in the past. Most are self-serving at best and are agents of Progressivism at worst. Progressives believe that our Founding documents are flawed and America needs a transformation. How is that working out for you, you unemployed Pennsylvanians? Here is the hard part - there appears to be little that Born Again Republicans (read: newly elected GOP candidates who espouse Conservative principles) can do beyond stopping the spending train. It will take another two years before there will be enough change to take the train in a different, hopefully responsible, direction. Remember the words of Dietrich Bonhoeffer, a Christian Hero of the Nazi German era, “not to act is to act” when you hear the Progressives (Dems or GOP) and the Administration charge that the Republicans are a “Do Nothing Congress.” Not to spend is quite a bit different than doing nothing.

I say again, you must educate yourself concerning what is really going on in Washington. The conventional media is not going to tell you what you need to know. You must find the truth. Seek and you shall find. You must be patient. Failure to do so will leave you as pawns in the hands of those who wish to enslave you. Do not let ignorance and laziness deprive you of the greatest form of government ever known.

Joe McCann
Elk Lake, PA

Lots Of Criticism

There has been a lot of criticism if not outright slander leveled against the notion that dairy farmers need a farm milk price that reflects the average cost of producing milk, specifically the Federal Milk Market Improvement Act of 2009 (S1645). Some call it welfare. Others call it anti-competitive or un-American or complain that it would guarantee a profit for dairy farmers and stifle innovation. Still others say it would raise dairy product prices so high that people won’t buy them or that it would take food out of the mouths of the poor.

First of all, S1645 is no guarantee of profitability. It uses national average cost. Some producers have a higher cost and some have a lower cost. It would not stifle innovation. Farmers still want to be profitable. It is not welfare any more than minimum wage is welfare. Anti-competitive? Dairy is already a controlled industry.

To put cost of production into historical perspective, in 1980 the total economic cost of production was $12.64 per hundredweight (cwt) while the gross value of milk was $12.95 per cwt. In 1990, the total economic cost of production was $14.73 per cwt. while the gross value of milk was $13.70 per cwt. In 2000, the total economic cost of production was $18.02 per cwt. while the gross value of milk was $12.63 per cwt. In 2009, the total economic cost of production was $22.28 per cwt. while the gross value of milk was $12.81 per cwt. Bruce Krupke, Executive Vice President of Northeast Dairy Foods Association, Inc., said, “anyone with basic economic understanding knows that if you operate a business, costs are not guaranteed.” It seems clear to me that no business is sustainable under these conditions. I have sat in Federal Order hearings where processors have argued that Make Allowances must be high enough to cover manufacturing costs in the highest cost regions. Perhaps this industry mentality causes Krupke to interpret S1645 as covering high cost producers.

The second glaring misconception regards consumer prices. The standard industry scare tactic is that if farm prices go up, retail prices will soar, and consumers won’t be able to afford milk. Of coarse, the industry will do this as an excuse generated by greed and after all, the competition and efficiency doctrines do not apply to them.

Patricia Stroup, testifying at a California dairy hearing last year on behalf of Nestle USA and its division Dreyers Brand Ice Cream Holdings, made the point that raising the minimum farm milk price in California by $0.50 per cwt. would hurt ice cream sales when she knew darn well that the national average retail price of ice cream was just as high in 2009 as it was in 2008 and higher than 2007 in spite of much, much lower cost for whole milk.

Let’s look at some US City Average Retail Prices from Dairy Market News. January 2008, after several months of record high prices, whole milk $3.87 per gallon, butter $3.08 per pound, processed cheese $3.99 per pound, natural cheese $4.62 per pound, and ice cream $4.14 per 1/2 gallon. Compare this with September 2009, after months of farm milk prices 40-50% lower than late 2007, whole milk $2.98 per gallon, butter $2.81 per pound, processed cheese $3.82 per pound, natural cheese $4.61 per pound, and ice cream $4.24 per 1/2 gallon. As you can see, the only real price signal is in fluid milk which varies widely between markets. Manufactured retail milk product prices do not vary much regardless of farm milk prices.

I have no doubt that the “Industry” can actually stifle and control retail sales by maintaining high retail prices. This coupled with imports maintains an “oversupply” and depresses farm milk prices. All that farmers are asking for is a “Make Allowance” similar to what processors already have. The main problem is that farmers have no money or power while processors have plenty of power and all the lobbying money that they need at the farmer’s expense.

Gerald Carlin, Dairy Farmer
Meshoppen, PA

The Lion Roars: Part I

The 15-second warning buzzer for the U.S. dollar sounded November 3. It signaled a coming massive devaluation of the dollar. Eventually, it will cause prices to soar and the world's economies to spiral into a tailspin.

Exactly what happened on that fateful date?

The U.S. Federal Reserve (Fed) announced that it would purchase $600 billion of U.S. Treasuries. If the economy continues to remain weak, the Fed promised an even bigger infusion of dollars. So what's wrong with that? At least everything.

Treasuries - the government's version of IOUs - are sold on the open market. Individuals, companies, nations, buy them on faith that their loans will be repaid plus interest. But selling Treasuries today is like selling a vacation trip to Haiti. The market for Treasuries is drying up.

The average interest rate for all four types of Treasuries is 2.7 percent, far too low to attract a sufficient number of buyers. But upping interest rates is a catch-22. Treasury securities are used to set long-term mortgage rates. Higher interest rates on Treasuries means higher mortgage rates. If the housing market is sick now, a hike in interest rates would flatline it.

But if not enough Treasuries are sold, where is the U.S. going to get $1.3 trillion to pay for this year's near-record deficit? Answer: from the Fed. And where is the Fed going to get the money? That's the scary part; from nothing more than electronic entries on a computer. In Fed speak, it's called quantitative easing. In plain English, it's called inflation.

Here's how it works...

The Fed makes an electronic entry in its ledger and counts the IOUs as an asset. It then electronically transfers this “asset” to banks. The banks then enter this transfer as an asset and electronically lends it to borrowers. The borrower now has a 6 by 2.5 inch chit of green paper representing not value but debt.

It's an electronic money-making machine that the Fed can switch on at will. But every time the Fed flips the switch, the pool of dollars is diluted.

The Fed first turned on the money spigot 2008. It bought $1.7 trillion of Treasury paper to finance the government's debt. It was a desperate attempt to spend the U.S. out of the deepest depression since the '30s. It didn't work. Unemployment rose steadily throughout the year from 5 percent to 7.2 percent.

Printing money did not create jobs in 2008 nor has it in 2010. Flooding the economy with paper dollars merely causes the price of goods and services to rise. Look for inflation to hit new highs early next year. Your paycheck may increase, but your buying power will decrease.

Institutional investors know inflation is coming. That's why they are exchanging dollars for precious and commodities. An ounce of gold in 2000 cost $280. Today it's worth $1,400. In that same year, silver cost $5/oz. Now it's approaching $27. It's not that gold and silver are worth more; it's that the dollar is worth less - inflation.

A barrel of petroleum in 2000 cost $27. Today its more than $80. And petroleum is priced into everything from fuel to fertilizer. The price of everything follows oil. This year commodities such as cotton rose 54 percent, corn by 29 percent, and wheat jumped 36 percent - inflation.

But something else may be following inflation: hyperinflation. If inflation is a lamb, then hyperinflation is a lion. It is not merely pumped up inflation but a different beast altogether.

In both inflation and hyperinflation prices rise but for very different reasons. Inflation is caused when prices rise faster than wages. People want more money, demand higher wages. It's like an auction; the highest bidder gets the merchandise.

But in hyperinflation prices may rise 10 percent in a week. People lose faith in paper currency; they want to get rid of dollars by trading them for products that cannot be inflated. Typically, commodities such as food, grains, lumber, petroleum, metals, or almost anything are used as a substitute for dollars.

The recent spike in commodities is a consequence of the Fed's latest $600 billion ex nihilo, ”out of nothing” money. In time, the two quantitative easings will work their way down to everyday prices and devour the dollar. When that happens...

Watch out for the lion that follows the lamb. Next week, The Lion Roars: Part II.

Bob Scroggins
New Milford, PA

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Thank you, Susquehanna County Transcript

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