US Feds issue 38 million Dollar Sugar bailout

 :: News :: News

View previous topic View next topic Go down

US Feds issue 38 million Dollar Sugar bailout

Post by Ericwt on Tue Jun 25, 2013 3:55 pm

Of all the misguided economic policies that interventionists promote in failed efforts to manipulate the market, none are more foolish than price-fixing schemes. Prices are signals sent by consumers that indicate the level of demand for a specific product. When governments subsidize or bail out certain industries in an effort to pump up prices, those signals get distorted, confusing investors as to the legitimate level of consumer demand for the products in question.
The Minneapolis Star Tribune is reporting that the US Department of Agriculture is about to issue a $38 million bailout to the sugar industry in an effort to boost sugar prices. The government claims this is necessary because it made the mistake of loaning somewhere north of $800 billion in taxpayer funds to sugar producers, who will default on these bad loans if the sugar price isn’t driven up to unnatural levels. Throwing good money after bad won’t save the sugar industry, but it will make the inevitable crash more extreme when it finally happens. Why is the government pushing up food costs when families are already struggling to afford rising grocery prices?
One Bad Bailout to Fix Another
Sugar is a widely-used product with enormous demand. Most investors are aware of its commercial utility. As such, it defies logic for the government to issue loans to sugar producers. However, the policy has been to do so, and, as such, farmers produced more of it than the market dictated, which pushed the price down unnaturally. Now that the price has dropped, sugar producers’ are struggling to pay back their loans.
This is to be expected. When the government issues loans with no concern about the profitability of the investment, the result is an unnatural shift in price. Producers boost production accordingly, causing the price to drop to a level that no longer jives with the terms of the original loan. If the loans had never been issued, the bailout would be unnecessary.
A Near-Billion Dollar Boondoggle
The government loaned out hundreds of millions of dollars to sugar producers, who predictably used it to produce more sugar. Any economist should have realized that this would put downward pressure on sugar prices. Now, in an attempt to “fix” this problem, the USDA is going to purchase sugar directly, hoping to force prices upward.
Instead, the same outcome could have been accomplished by never issuing the loans in the first place. Rather than spending nearly a billion dollars in an effort to push sugar prices down and then right back up to the same level, the feds could have simply stayed out of the market and allowed it to achieve the right price on its own, for free.
In fact, any time a loan is issued by the government in an effort to push prices down in an unnatural way, the loans will necessarily become impossible to pay back when the price drops, barring some fluke event like a total supply collapse emerging in another country. Price fixing policies can’t work from a mathematical standpoint. No individual human understands and thus can successfully manage the pricing mechanism of the marketplace — it is a sophisticated, real-time reading of the wants and needs of all the world’s consumers.
- See more at: http://silverunderground.com/2013/06/price-fixing-feds-to-issue-38-million-dollar-sugar-bailout/#sthash.lxTxUDg5.dpuf
Of all the misguided economic policies that interventionists promote in failed efforts to manipulate the market, none are more foolish than price-fixing schemes. Prices are signals sent by consumers that indicate the level of demand for a specific product. When governments subsidize or bail out certain industries in an effort to pump up prices, those signals get distorted, confusing investors as to the legitimate level of consumer demand for the products in question.
The Minneapolis Star Tribune is reporting that the US Department of Agriculture is about to issue a $38 million bailout to the sugar industry in an effort to boost sugar prices. The government claims this is necessary because it made the mistake of loaning somewhere north of $800 billion in taxpayer funds to sugar producers, who will default on these bad loans if the sugar price isn’t driven up to unnatural levels. Throwing good money after bad won’t save the sugar industry, but it will make the inevitable crash more extreme when it finally happens. Why is the government pushing up food costs when families are already struggling to afford rising grocery prices?
One Bad Bailout to Fix Another
Sugar is a widely-used product with enormous demand. Most investors are aware of its commercial utility. As such, it defies logic for the government to issue loans to sugar producers. However, the policy has been to do so, and, as such, farmers produced more of it than the market dictated, which pushed the price down unnaturally. Now that the price has dropped, sugar producers’ are struggling to pay back their loans.
This is to be expected. When the government issues loans with no concern about the profitability of the investment, the result is an unnatural shift in price. Producers boost production accordingly, causing the price to drop to a level that no longer jives with the terms of the original loan. If the loans had never been issued, the bailout would be unnecessary.
A Near-Billion Dollar Boondoggle
The government loaned out hundreds of millions of dollars to sugar producers, who predictably used it to produce more sugar. Any economist should have realized that this would put downward pressure on sugar prices. Now, in an attempt to “fix” this problem, the USDA is going to purchase sugar directly, hoping to force prices upward.
Instead, the same outcome could have been accomplished by never issuing the loans in the first place. Rather than spending nearly a billion dollars in an effort to push sugar prices down and then right back up to the same level, the feds could have simply stayed out of the market and allowed it to achieve the right price on its own, for free.
In fact, any time a loan is issued by the government in an effort to push prices down in an unnatural way, the loans will necessarily become impossible to pay back when the price drops, barring some fluke event like a total supply collapse emerging in another country. Price fixing policies can’t work from a mathematical standpoint. No individual human understands and thus can successfully manage the pricing mechanism of the marketplace — it is a sophisticated, real-time reading of the wants and needs of all the world’s consumers.
- See more at: http://silverunderground.com/2013/06/price-fixing-feds-to-issue-38-million-dollar-sugar-bailout/#sthash.lxTxUDg5.dpuf
Of all the misguided economic policies that interventionists promote in failed efforts to manipulate the market, none are more foolish than price-fixing schemes. Prices are signals sent by consumers that indicate the level of demand for a specific product. When governments subsidize or bail out certain industries in an effort to pump up prices, those signals get distorted, confusing investors as to the legitimate level of consumer demand for the products in question.
The Minneapolis Star Tribune is reporting that the US Department of Agriculture is about to issue a $38 million bailout to the sugar industry in an effort to boost sugar prices. The government claims this is necessary because it made the mistake of loaning somewhere north of $800 billion in taxpayer funds to sugar producers, who will default on these bad loans if the sugar price isn’t driven up to unnatural levels. Throwing good money after bad won’t save the sugar industry, but it will make the inevitable crash more extreme when it finally happens. Why is the government pushing up food costs when families are already struggling to afford rising grocery prices?
One Bad Bailout to Fix Another
Sugar is a widely-used product with enormous demand. Most investors are aware of its commercial utility. As such, it defies logic for the government to issue loans to sugar producers. However, the policy has been to do so, and, as such, farmers produced more of it than the market dictated, which pushed the price down unnaturally. Now that the price has dropped, sugar producers’ are struggling to pay back their loans.
This is to be expected. When the government issues loans with no concern about the profitability of the investment, the result is an unnatural shift in price. Producers boost production accordingly, causing the price to drop to a level that no longer jives with the terms of the original loan. If the loans had never been issued, the bailout would be unnecessary.
- See more at: http://silverunderground.com/2013/06/price-fixing-feds-to-issue-38-million-dollar-sugar-bailout/#sthash.lxTxUDg5.dpuf
Of all the misguided economic policies that interventionists promote in failed efforts to manipulate the market, none are more foolish than price-fixing schemes. Prices are signals sent by consumers that indicate the level of demand for a specific product. When governments subsidize or bail out certain industries in an effort to pump up prices, those signals get distorted, confusing investors as to the legitimate level of consumer demand for the products in question.
The Minneapolis Star Tribune is reporting that the US Department of Agriculture is about to issue a $38 million bailout to the sugar industry in an effort to boost sugar prices. The government claims this is necessary because it made the mistake of loaning somewhere north of $800 billion in taxpayer funds to sugar producers, who will default on these bad loans if the sugar price isn’t driven up to unnatural levels. Throwing good money after bad won’t save the sugar industry, but it will make the inevitable crash more extreme when it finally happens. Why is the government pushing up food costs when families are already struggling to afford rising grocery prices?
One Bad Bailout to Fix Another
Sugar is a widely-used product with enormous demand. Most investors are aware of its commercial utility. As such, it defies logic for the government to issue loans to sugar producers. However, the policy has been to do so, and, as such, farmers produced more of it than the market dictated, which pushed the price down unnaturally. Now that the price has dropped, sugar producers’ are struggling to pay back their loans.
This is to be expected. When the government issues loans with no concern about the profitability of the investment, the result is an unnatural shift in price. Producers boost production accordingly, causing the price to drop to a level that no longer jives with the terms of the original loan. If the loans had never been issued, the bailout would be unnecessary.
A Near-Billion Dollar Boondoggle
The government loaned out hundreds of millions of dollars to sugar producers, who predictably used it to produce more sugar. Any economist should have realized that this would put downward pressure on sugar prices. Now, in an attempt to “fix” this problem, the USDA is going to purchase sugar directly, hoping to force prices upward.
Instead, the same outcome could have been accomplished by never issuing the loans in the first place. Rather than spending nearly a billion dollars in an effort to push sugar prices down and then right back up to the same level, the feds could have simply stayed out of the market and allowed it to achieve the right price on its own, for free.
In fact, any time a loan is issued by the government in an effort to push prices down in an unnatural way, the loans will necessarily become impossible to pay back when the price drops, barring some fluke event like a total supply collapse emerging in another country. Price fixing policies can’t work from a mathematical standpoint. No individual human understands and thus can successfully manage the pricing mechanism of the marketplace — it is a sophisticated, real-time reading of the wants and needs of all the world’s consumers.
- See more at: http://silverunderground.com/2013/06/price-fixing-feds-to-issue-38-million-dollar-sugar-bailout/#sthash.lxTxUDg5.dpuf
Of all the misguided economic policies that interventionists promote in failed efforts to manipulate the market, none are more foolish than price-fixing schemes. Prices are signals sent by consumers that indicate the level of demand for a specific product. When governments subsidize or bail out certain industries in an effort to pump up prices, those signals get distorted, confusing investors as to the legitimate level of consumer demand for the products in question.

The Minneapolis Star Tribune is reporting that the US Department of Agriculture is about to issue a $38 million bailout to the sugar industry in an effort to boost sugar prices. The government claims this is necessary because it made the mistake of loaning somewhere north of $800 billion in taxpayer funds to sugar producers, who will default on these bad loans if the sugar price isn’t driven up to unnatural levels. Throwing good money after bad won’t save the sugar industry, but it will make the inevitable crash more extreme when it finally happens. Why is the government pushing up food costs when families are already struggling to afford rising grocery prices?
One Bad Bailout to Fix Another

Sugar is a widely-used product with enormous demand. Most investors are aware of its commercial utility. As such, it defies logic for the government to issue loans to sugar producers. However, the policy has been to do so, and, as such, farmers produced more of it than the market dictated, which pushed the price down unnaturally. Now that the price has dropped, sugar producers’ are struggling to pay back their loans.

This is to be expected. When the government issues loans with no concern about the profitability of the investment, the result is an unnatural shift in price. Producers boost production accordingly, causing the price to drop to a level that no longer jives with the terms of the original loan. If the loans had never been issued, the bailout would be unnecessary.
- See more at: http://silverunderground.com/2013/06/price-fixing-feds-to-issue-38-million-dollar-sugar-bailout/#sthash.lxTxUDg5.dpuf
http://silverunderground.com/2013/06/price-fixing-feds-to-issue-38-million-dollar-sugar-bailout/

Ericwt
Legally Resident
Legally Resident

Posts : 124
Join date : 2013-06-23

Back to top Go down

Re: US Feds issue 38 million Dollar Sugar bailout

Post by de Heydon on Mon Jul 01, 2013 3:24 am

Is it any wonder, why the United States is a bankrupt nation ?
avatar
de Heydon
Visa Applicant
Visa Applicant

Posts : 46
Join date : 2013-06-23

Back to top Go down

Re: US Feds issue 38 million Dollar Sugar bailout

Post by Rock Private Office on Mon Jul 01, 2013 5:05 am

I agree with the article, but what if the industry was energy or defense for example? Would you apply the same argument and let your domestic defense industry fail because it is cheaper to buy from China? Is it OK to allow domestic electricity companies fail and then be reliant on a foreign country to supply your electricity? Is it OK to allow IP and skills that have been developed over decades if not centuries to be lost in a generation because there is no demand today?
avatar
Rock Private Office
Legally Resident
Legally Resident

Posts : 132
Join date : 2013-06-23
Age : 55
Location : Shanghai

http://www.rockprivateoffice.com

Back to top Go down

Re: US Feds issue 38 million Dollar Sugar bailout

Post by de Heydon on Mon Jul 01, 2013 8:57 pm

Rock Private Office wrote:
Would you apply the same argument and let your domestic defense industry fail because it is cheaper to buy from China?

Is it OK to allow domestic electricity companies fail and then be reliant on a foreign country to supply your electricity?

Is it OK to allow IP and skills that have been developed over decades if not centuries to be lost in a generation because there is no demand today?

With the possible exception of 'defense', my answer would be, YES !

Along the same lines of reasoning, why aren't we subsidizing 'buggy whip' manufacturers, or makers of 'flintlock rifles' ?

The point is, once you start subsidizing there is NO END TO IT.

But that's okay by the politicians, if they can buy votes by 'subsidizing', they will damn well do it.
After all, they're NOT spending their money to accomplish this, are they ?



avatar
de Heydon
Visa Applicant
Visa Applicant

Posts : 46
Join date : 2013-06-23

Back to top Go down

Re: US Feds issue 38 million Dollar Sugar bailout

Post by Rock Private Office on Tue Jul 02, 2013 6:24 am

I agree in principal also. I just wander where a line is drawn and how a government decides when it comes to a sovereign state's ability to defend itself or provide energy.

It may be cheaper to import but what happens when the political landscape changes and the skills and infrastructure have already been lost at home.
avatar
Rock Private Office
Legally Resident
Legally Resident

Posts : 132
Join date : 2013-06-23
Age : 55
Location : Shanghai

http://www.rockprivateoffice.com

Back to top Go down

Re: US Feds issue 38 million Dollar Sugar bailout

Post by Sponsored content


Sponsored content


Back to top Go down

View previous topic View next topic Back to top

- Similar topics

 :: News :: News

 
Permissions in this forum:
You cannot reply to topics in this forum