State Tax Revenues

If the U.S. is experiencing economic growth (the end of recession by necessity is determined by economic growth) then why are state sales and income taxes down by record amounts in the first 3 quarters in 2009?

For the same reason you should let ME keep score should we ever play a round of golf together - never let reality stand between you and what someone wants to hear.

Economic growth and declining states tax revenues? These are mutually exclusive events, if one outcome is true than the other outcome cannot be true.

If you read on in the story you will find where most of the "stimulus money" went - it went to pay off state budgets in states that supported the current administration. This is not an attack on Obama - had McCain won he would have done the very same thing. This is an attack on our system (and those that actually believed that Obama had the chutzpah to really change anything).

The states are going broke because their tax revenues are declining while their payroll and pension benefits for municipal employees are rising. This is not a hard X and Y graph to configure, and its outcome is ineluctable.

And the hits keep coming...

The price of Oil is now back above $80. I read many reports that $80 is the magic number that will cause the U.S. to tip over into recession... well, sort of. The number the journalists where trying to put their pea brains around was the percentage of GDP spent on petroleum. As any reader of the AEC knows, total availability of Oil is down around 10% peak to trough (if you include ethanol as petroleum), and it was true that at the peak of availability $80 Oil would do the trick... my bet is that that number is now $88 per barrel or so (and if actual supply is not the culprit).... Oil is $83 now, so we are certainly in the danger zone.

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Every where you turn in the film media there is a new film, documentary, T.V. production... on the apocalypse. The History Channel has been running one depressing show after another all week about this, that, and the other thing one should do when the system breaks down. Its "2012" and "The Road" in the movies (2012 was good for some pop corn popping silliness; "The Road" did not do justice to the book and was so very disturbing and depressing - don't bring a date to that one as it will certainly kill any and every carnal desire).

It seems to me that there certainly is something in the air. A catch in the back of our collective throat, some kind of primal or animal instinct that is finding its relief in the media... What a fitting way for a fat, soft, bunch of weenies to express themselves in order to cope with some very adverse upcoming circumstances coming our way.

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Sorry, back to the data...

Tax revenues don't lie.

Grass Fed Beef - Its what's for dinner

The rate at which the corn to ethanol processing industry has scaled up is nothing short of the kind of thing the U.S. did for armaments in WWII.

(I highly recommend Michael Pollan's "Omnivore's Dilemma". It provides an excellent history and prospective on U.S. farm policy and food production.)

My best guess is that number 2 Field Corn, directly or indirectly, provides over half of the calories Americans consume. Meat, milk, and eggs are primarily corn derivatives... as is most of the caloric content of processed foods. All this talk about grass fed beef and other meats? Though a very good idea, the long and short of it is that at the pace we are going there will be no alternative.

There is a collision in here somewhere. Going from ZERO to 787,000 bpd of ethanol in less than 5 years, consuming 42.5% of the U.S. corn crop in the process, is a rather brisk rate of change - particularly when talking about a nation's food supply. Of course, the U.S. has some wiggle room as it is still an exporter of corn. But that is on an absolute basis - the issue will be the effect on price... particularly in a nation where 1 in 8 depends on food assistance from the federal government.

The USDA is NOT the U.S. Department of Energy. The USDA is charged with assuring America's food supply is secure and safe. To say that they have been derelict in their duties does not begin to describe the situation.

You see, the risk to our food supply was, is, and always shall be THE WEATHER. The USDA seems to be OK with a "Just In Time" delivery and inventory of U.S. grain crops. This is BEYOND dangerous. If the U.S. experienced a 1936 style drought and heat wave during the next growing season the consequences would be catastrophic.

The administration has its eye on the money supply rather than the food supply. They are playing with fire.

Libertariananimal (at) gmail (d0t) com

Christmas is over, and business is business. Let's out the new new Anti-Christ

I know I have called Government Sachs the Anti-Christ in the past. I find that I must now demote them to common "evil doer", or maybe a triumvirate in the Wall Street axis of evil... as soon as I figure out who the other 2 are...

Anyway, the NEW NEW Anti-Christ, "AC" for short, is the USDA (With the FDA as its Dark Arch-Angel). The U.S. Department of Agriculture. It is going to take several, perhaps even many posts to flesh this out - it is just not possible to heap enough scorn on these Sc*m B*gs in a single post.

The U.S. faces some SIGNIFICANT food insecurity. I know the loonies on the web have been pumping this for several years... but they got it wrong for the right reasons. Just kidding... they just got it all wrong.

The U.S. food supply depends on Corn and Soy Beans.

U.S. Corn production 2006 = 270,000,000 Metric Tons. That's 10,530,000,000 Bushels. 28,431,000,000 gallons (at 2.7 gallons per bushel), 676,928,571 Barrels per Year - 1,854,599 barrels per day (feel free to check my math). Even if the U.S. could consistently produce 300,000,000 metric tons, the barrels per day would only rise to 2,060,665.

THIS IS IF WE STOPPED USING CORN FOR FOOD AND ONLY FOR FUEL.

During the most recent 4 week period the U.S. Dept. of Energy says that ethanol production was 787,000 bpd! In other words, the U.S. is currently using 42.5% of its corn crop to produce ethanol. Worse, while I have not found the smoking gun, it is my sense that I will find we have been drawing down our stocks of corn here in the U.S. If that turns out to be true... I'll skip the hyperbole (for now).

So where is the USDA in all of this? Have you seen any warning shots fired across the bow in the media? NAFC. The USDA is our first line of defense for food security - there is NO national security without food security.

More soon