Professor Mark J. Perry's Blog for Economics and Finance
What do ethanol and the subprime mortgage meltdown have in common? Each is a good reminder of that most powerful of unwritten decrees, the Law of Unintended Consequences - and of the all-too-frequent tendency of solutions imposed by the state to exacerbate the harms they were meant to solve.
Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan. Perry holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University near Washington, D.C. In addition, he holds an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota. In addition to a faculty appointment at the University of Michigan-Flint, Perry is also a visiting scholar at The American Enterprise Institute in Washington, D.C.
8 Comments:
Absolutely, The current crises in the financial markets is going to lead to a hyper-inflationary depression in 2010 due to government attempts to prop up overvalued assert prices. It's coming and the adults left the playground years ago.
Corn Falls on Speculation Support for Ethanol May Be Fading
President George W. Bush told the International Renewable Energy Conference this week that plans for increased use of the corn-based fuel face challenges. Federal Reserve Chairman Ben S. Bernanke on Feb. 28 said that eliminating a U.S. tariff on ethanol imports would help ease food-price inflation.
``The increase in food prices is beginning to garner more attention in Washington,'' said Sid Love, president of Joe Kropf and Sid Love Consulting Services LLC in Overland Park, Kansas. ``There is a slight breeze in Washington for a possible change in U.S. policy,'' which mandates ethanol use while subsidizing its production and limiting imports, Love said.
Corn futures for May delivery fell the exchange limit of 20 cents, or 3.5 percent, to $5.4725 a bushel in Chicago. The most-active contract dropped 1.7 percent this week, the first weekly decline since the end of November.
The price, which reached a record $5.7425 on March 5, had gained 34 percent in the past year before today on record demand for use in ethanol and livestock and poultry feed.
Feeder-cattle futures dropped to a five-week low yesterday and are down 13 percent from a record in September. Corn costs may be discouraging U.S. feedlots from refilling empty pens after sending fattened cattle to slaughter, said Mark Schultz, senior vice president for Northstar Commodity Investments LLC in Minneapolis.
``This week's rise to a record has just broken the backs of a lot of livestock producers,'' Schultz said. ``We may see liquidation of 3 percent to 5 percent across the livestock industry in the next several months.''
Corn is the biggest U.S. crop, valued at a record $52.1 billion in 2007, followed by soybeans at $26.8 billion, government figures show.
http://www.bloomberg.com/apps/news?pid=20602013&sid=aZdJZ4xb0WLo&refer=commodity_futures
We can only hope that this is true and corn based ethanol is going to be limited to current facilities.
Well thanks to the federal government having far to many ignorant bureaucrats and their psuedo science of global warming we now have the following problem: Utilities canceled or put on hold at least 45 coal plants in development last year, according to a new analysis by the US Department of Energy's National Energy Technology Laboratory in Pittsburgh. These moves – a sharp reversal from a year ago, when the industry had more than 150 such plants in development – signal the waning of a major US expansion into coal...
Meanwhile we have 9,033 billion bbls oil equivalent that will probably sit around doing no one any good...
The amount of fresh water that the production of ethanol uses up is staggering. There places in this country that have been suffering from severe water shortages (like the southeast)and yet plans to continue building ethanol facilities persist.
Vulcanhammer...you don't have to worry about a shortage of water. The feds are going to connect your toilet to your drinking tap in a few years.
They have a new facility that is daily transforming 70 million gallons of treated sewage into drinking water for 2.3 million residents of coastal, central and northern Orange County.
Mmmmm...nothing like a little toilet water to go with dessert;)
You can brew approx. 500 gallons of ethanol with the water required to brew ONE GALLON of Beer.
Minnesota's ethanol plants account for about 1/5 of one percent of the Dairy State's water usage. I think Mn ranks behind only Iowa in number of ethanol refineries.
Just imagine how few ethanol plants would be blighting the landscape if it weren't for federal social engineering...
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