Obama’s Hunger Games

By on August 15, 2012
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I have written about the corn ethanol fuel scam before, and how this drought we now find ourselves in is helping to make corn scarce and food prices rise.  But it is worth writing about it again because it affects all of us, and I don’t just mean us here in the States, but hundreds of millions of people in other parts of the world as well.

Why would this be?

Because US-grown grains--which include corn, soybeans, and wheat--have seen their prices rise steeply since the beginning of the summer.  Corn prices are up 38%, Soybeans 24%, and wheat 45%.  Since the US is the world’s largest agricultural food exporter, those nations that rely on US grains to feed themselves face potentially dangerous shortages going into next year, the United Nations has recently warned.

That’s why the green debate writ large is such a big deal.  It pits human welfare against the supposed welfare of Planet Earth. In the Leftist, “earth first” environmental movement, guess who loses?  Ah, but this administration puts people first, right?

Right.  No question about it.  Absolutely.  A no-brainer, for sure…

Green politics over human beings

The only fly in the green tea is that the bigger problem in rising food prices and shortages at the moment isn’t Mother Nature. Rather, it’s Father Stupidity, and he currently resides at 1600 Pennsylvania Avenue.

The Obama Administration’s fixation with adding ethanol to our gasoline means that in 2012 alone, 13.2 billion gallons of corn-based ethanol will be produced.  That’s over 40% of the US corn crop going out our exhaust pipes rather than into the mouths of people.  Clearly, Obama’s hunger games are more about feeding his “green” ideological cravings than feeding Americans and other people around the world.

This is not only stupid politics, but it’s also immoral (a word I rarely use), but there is no other that describes such actions.  Of course, I have suggested, as others have, that reducing or even eliminating the corn-based ethanol fuel additive in a time of shortage, rising prices and falling wages might be a smart thing to do, both politically, economically, and as it happens, morally.  This just about guarantees that it won’t happen unless the president’s poll numbers become lower than his moral code, which will take some doing but is not out of the realm of possibility.

Why would cancelling ethanol production be a smart thing to do?

Well, the trade-off is pretty straightforward; it would create less ethanol in exchange for dropping corn prices.  It would also increase corn stock into food production, which, by the way, includes livestock feed.  It all means more food produced at lower prices for everyone.

Of course, it also means theoretically marginally higher carbon levels out the exhaust pipe; but with the price of a gallon of gas at 4 bucks and rising, people will be driving less.  It’s a fair bet that the net effect would be a wash. And even if it isn’t, who cares?  This isn’t rocket science, is it?

The more interesting question is why hasn’t the administration quit ethanol?  The president says he’s for the middle class; if that were true, then he would take very basic steps toward helping the middle class.

Think about it; corn crops are failing, causing shortages and price spikes all over the world.  Even though fuel prices are up over 50% since Obama took office; they are now rising due to higher corn prices.  This means rising ethanol prices, i.e. higher gasoline prices.  How does any of this help the middle class?

But if we follow the food chain, you’ll see that it gets worse from there. Not only is a corn shortage causing higher fuel costs, which also drives up food costs, but farmers are having to slaughter more animals earlier than they would usually, because they can’t feed them.

In the near term, this pushes meat costs lower because more of it is on the market.  And what will happen when it’s gone?  Meat prices will soar as supplies run low.  The administration’s solution to lower meat prices today?  Buy up the meat from the ranchers, causing prices to rise.  And their solution for tomorrow’s meat shortage?  There is none.

Playing hunger games

Did you catch that?  So not only is the administration delivering us rising grain prices and higher gas prices, but higher meat prices and a future shortage as well.  What are they thinking?

Here’s what their game is:

A) Subsidize the poor with more welfare so they don’t feel the hit of high prices.  Half of American households get some kind of welfare already; so there’s no political pain there, just gain.   Then,

B) Subsidize the farmers so they don’t take the hit of falling meat prices today, and again, there’s only political benefit there.

C) By keeping the biofuel ethanol mandate in place, he gets political cover from the environmental Left.  And, finally of course,

D) Hit the entrepreneurial American middle class with higher taxes to pay for it all.  Let the middle class pay for it through the nose.  And sure, tax the rich more, but there aren’t enough of them to make a difference. Most of the money is in the middle class—or used to be.

The next thing you know, more than half the electorate depends upon you to put food on their tables.  It’s nice to wanted and needed, isn’t it?

The administration knows how to play the hunger games; they’re their games, after all.  They know that people will vote their wallets--or their stomachs--as the case may be, every time.   But bringing hunger to the land of plenty is a dangerous game to play for political advantage.  Sometimes things don’t go just the way one planned them to go.  Sometimes, as Bob Marley observed, “a hungry man is an angry man.”

And those are…The Gorrie Details.

 

 

About James R. Gorrie

James R. Gorrie spent over eighteen years in financial services as an industry recognized investment financial advisor, advising clients on investment planning, trusts, business succession … Read Full Bio »

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