The mess we are in

Dairy farmers are now suffering from the worst farm milk price ever in real dollar terms. If the excuses are to be believed, the cause is the world financial crisis which is still being blamed on the poor people buying more house than they could afford.

In fact, the financial crisis would be one tenth as bad as it is except for derivatives. The Senate Ag committee had a hearing today on derivatives. See: http://agriculture.senate.gov/ click hearings. Some of the testimony is on line.

Lynn Stout, a law professor at University of California, testified, “it is essential to recognize that derivative bets are also ideally suited for pure speculation.”

Michael Masters' testimony is not available at the Ag committee site said, “So U.S. economic output was dropping during the first six months of 2008. During that time, the worldwide supply of oil was increasing and the worldwide demand for oil was decreasing. With the world's largest oil consumer in an economic recession and with supply rising and demand falling, the price of oil should have been falling. Instead, oil defied the economic recession and defied the laws of supply and demand and rose an astronomical $50 per barrel from the mid-$90s to a peak of $147 per barrel in just six months.”

If you take the time to read the testimonies, you will find big business supports a continued ride on the gravy train. You will also learn how the government failed.