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Non-Tech : Farming -- Ignore unavailable to you. Want to Upgrade?

To: richardred who wrote (550)	3/16/2008 1:58:31 AM
From: Elroy Jetson	Read Replies (3) \| Respond to of 4446

I can guarantee you that all bubbles collapse. A dissembler like Alan Greenspan can claim you can't spot bubbles until after they collapse but, rightly or wrongly, most people would tell you bubbles are pretty easy to spot. For those who require assistance, a good definition of a bubble is "trade in high volumes at prices that are considerably at variance from its cost or economic value." Grain prices are tremendously higher than production costs. Part of this is a bubble and part is a tremendously misguided ethanol policy which is little more than a massive welfare program for wealthy people. As Warren Buffett recently pointed out, "My son was head of the Nebraska Ethanol Commission. He is a farmer. He lives $5 1/2 corn, he loves $12 soy beans, I don't blame him. But I'm not running for anything, fortunately, and, you know, I can call them as I see them. I would say that ethanol is a relatively inefficient way of creating a gasoline equivalent, and it uses a lot of energy in the process of raising the corn that does it. And, it has a by-product of raising agricultural products elsewhere. In economics you can never do one thing. Anytime anybody tells you they're doing something in economics, then you have to say, 'And then what?' And the 'and then what' in the case of ethanol is A, if you use it to plant more corn, you're going to use--in terms of fertilizer and everything, you're going to use a lot of energy. And secondly, you're going to raise the prices, on balance, you'll raise the prices of other agricultural products. So there's no question that it's a fairly correct statement of the problem when you say, 'We have an energy policy backing ethanol that is creating so much inflation that perhaps it would be better to stop the emphasis on ethanol, allowing inflation to come down and the Federal Reserve to cut more? Mankind is being crucified upon a cross of ethanol right now, and it's killing the poorer nations and the people in our country who can't afford anymore to eat chicken or beef.' .