The Next Bailout-It’s not where you think.

The drought has devastated crops in the bread basket but farmers aren't as concerned as you may think. Buying futures, locking in high prices with sales and government sponsored crop insurance schemes keep the heartland from the mood swings of Mother Nature. Unlike car insurance, where premiums are paid out of pocket for predetermined coverage, crop insurance premiums are subsidized and payouts increase with the crop yield reductions. Many farmers are not happy about the recent rains possibly staving off plowing under.

In scale to financial handouts crop insurance is a "minor" gift. Roughly $10 B will be transferred over from this years problems. The taxpayer gets hit twice in this longstanding farm constituent vote buying handout. The food source cannot be politically created.  Smoothing out the lingering Malthusian fears of the Dust Bowl generation does not garner the anger of the anti-bailout "pundocracy" the way mortgage finance does.

One more question just to solidify our view from neither side: When farmer Brown holds up a rare  ear of corn, will the Prez look up to God and say, "You didn't make that?"

One thought on “The Next Bailout-It’s not where you think.

  1. lwmaus

    I do appreciate your well straddled viewpoint here. As one of the anti-bailout, anti-govt subsidy (fin mkts, agri mkts, whatever) non-microphone-bearing, non-pundits let me add a couple of cents made possible by US govt-subsidized, US govt sponsored Internet communications to wit; the intense inflation built into the US and Global money supplies (courtesy all the CB’s) will be triggered into consumer reality by an event or two, possibly, this US midwest drought thing. Be afraid …

    Vote buying and influence peddling is all around us. Insurance subsidies are pernicious particularly as it seems to benefit only the politically well connected. Example: Ocean ooast line here in the Carolinas is the focus of many a lobbyist in the halls of Columbia and Raleigh. Federal and state insurance subsidies for vulnerable ocean front properties are sought after and won to the detriment of most taxpayers imo. Then to frost the cake, the same lobbyists fight to have ocean sand moving projects undertaken to keep sandy beaches exposed for their weekend getaways.

    Agri crop insurance subsidies that may (may) stabilize food prices seem to be mild compared to the egregious banking and real estate bailout ventures now on the taxpayers ledgers.

    Reply

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