TDetroit’s ramblings and nonsense

Here’s theory for you.

 If you create competition between humans and cars over who get’s to use the agricultural products as fuel, you cn expect the prices to go up.

I get a real entertainment thrill when I watch the news struggle with simple concepts.  Simple economic concepts.  Then they interview the worlds dumbest economists who just don’t know the answer.

Earlier today, I saw on the news an economist who thought wheat prices are rising because the third world nations are becoming more wealthy and the people are more able to buy food.  Where to start with this one?  Well, if they are wealthier, why do they not have the money to pay back thier loans?  I mean if you have money, pay your bills. 

If they have more money, why do we have so many people in this country complianing about poverty in those other countries?

It is true, however, that they do have a little more money, and it does contribute a little to the wheat prices, but not much.

Now I am watching a news program where the economist thinks the price of wheat is up 100% in the past 12 months because of a drought in Australia, and rains in Europe.  Let’s start with the fact that prices started rising last year.  The drought and rains didn’t start until this year.  So, FAIL!  In the US and Canada, where most of the world’s wheat is grown, prices are still high and there is no problem growing the wheat.

Yes, the drought and rains are contributing to the price rises this year, but that is not the reason for the increased wheat prices.

So what is the real reason? 

Ready?

Ethanol.  Yup, that stuff that is finding it’s way into our cars’ fuel tanks.  The farmers have switched to corn.  Last year, they planted normal.  Then the PResident made his State of the Union speech, remember when he talked about pushing ethanol.  Corn prices spiked because everyone new it would drain the corn out of the economy.  The farmers responded by planting corn in their second planting and even more this year.  Look for corn to fall in the middle of next year.

In the mean time, there is less wheat in the American and Canadian fields, as the farmers are trying to capture the high prices of corn.  Look for soy  to also be high, as well as many other crops.

It is very simple. 

Problem, no one wants to give credit to the President for trying to reduce America’s dependence on oil.  Supposedly he is a racist, anti-environement, bigoted idiot.  To give him credit for anything good, destroys that list, so therefore, they have to find economists who are willing to embarrass themselves by avoiding the truth and the simple supply and demand economics.

There you go, another case of politics in your evening news.

It’s about time.  

I grew in a carpenter family.  Economics is second nature to people in the residential construction industry.  We are first to get hit.  So getting a BA in Finance and taking all of my business electives in economics only made sense.

We can always tell the direction of the economy by whether we have work.  I am out of the industry, but keep in touch with everyone.  We’ve been slowing down for over a year now.  That’s why we find it amazing that the Fed is just now gettting the hint that they raised rates too many times.  As a college grad, who specialized in the subject, I can tell you, the Fed looks at all the wrong data, and they are too impatient.  

Think about this, it takes at least 3 months for an interest rate hike to have an effect on the economy, yet the Fed makes their decisions every 6 weeks.  Clearly they are not taking time to see what effect the last hike has had before making another decision to raise rates again.  

Also, it would be a good idea for the Fed to consult with the Pres and suggest he use what little discretionary power he has over the economy instead of rate hikes from time to time.  But that never happens.

Anyway, someone is finally getting the message, and the rate will come down this coming week.  Prob too late for the people who are already in foreclosure, but to agreat relief to those on the edge.  This will solidify their ownership, and create future wealth which will translate into a better economy in the near future.

Now if we can only get the message out about American cars.  Fact is, they are better than Japanese cars.  the press will never tell you that.  GM has over 30 models with 30+ MPG, GM is light years ahead of the Toyota and Honda in alternative fuel technology (though the cars, irrespective of maker are just to expensive to make a compelling business arguement, and the numbnuts went ahead and put them on the road anyway - I feel sorry for the idiots who have purchased them), AMeerican plants are much more environementally friendly than foreign plants, and quality of American brands is better (using comeback data instead of survey data - comeback data is whether the car came back to the dealer, survey data is when the owner is asked if the quality is good - duh!, what did you think the answer would be?)

So, buy American, not because you are a patriot, but because it is better!