dsrtwriter

Why I'm Not Worried About the Market

I agree with the comments about the Ag sector, although it is probably becoming overpriced.The irony of the whole ethanol fad is that it is simply transferring the increased cost of petroleum fuels in the form of increased food prices. I bought a five pound bag of flour this week for $4.41.The same brand was $2.25 at the same store last Fall.No free lunch in alternative fuels,that is for sure.

The tragedy of government's love affair with alternative fuels is that it ignores the reality that petroleum products are actually more cost effective, when all costs are taken into account, and also pretty darn clean burning with current technology. But I would not want to confuse the global warming people with the facts.

Fertilizer is booming as farmers dump phospates on the land to grow crops for ethanol, and the "dead zone" in the ocean off the Mississippi delta grows.So just a transfer from theoretically less greenhouse gases to phosphate destruction of sea life.

Regarding the declining dollar, and its supposed advantage for us in terms of exports, I have to lump that in with the theoretical advantages of free trade (which has not helped our trade deficit with China) as two of the favorite chesnuts of economists. As a top student in Economics years ago, I parroted back this stuff to the professors, since it was "obviously" correct.

Thirty years of experience later, it is more clear to me that a declining currency is more reflective of a country heading for second or third world status. Exports from Bangladesh have also been cheap for years, as their wage rates and currency were cheap.

We have lost our industrial base to China as we "graduated" to a more "sophisticated" service economy, and our dollar has dropped. All good things according to economists. I guess we were supposed to retrain fired manufacturing workers to become rocket scientists, but too late, since the Chinese can do that also , thank you very much.

Sorry for the rant, but the truisms of the advantage of a cheap currency and no trade barriers have not proved out over time. Free trade has made goods cheap for "the consumer", at least until that American consumer's own job finally evaporates and goes overseas or to Mexico.Sure, tariffs were bad in the old days, protecting "inefficient" industries. But when we have free trade we have just exported intolerable working conditions and toxic waste issues to our trading "partners" as we all wait for our pink slips at work.

Oh, but I forgot, Barak Obama is going to give us all jobs rebuilding the roads and infrastructure,finance... by the government from some fictional tax base.

I feel much better now.