Organic dairy farmers to look at oversupply

from: capitalpress.com

“The oversupply of milk will be one issue at center stage when the Western Organic Dairy Producers Alliance meets for its annual conference and trade show Oct. 13-14 at the Red Lion Canyon Springs hotel in Twin Falls.

The organization is bringing together a processor panel to discuss strategies for effective milk supply management, said David Roberts, a Preston, Idaho, producer and conference chairman. The session is set for Oct. 13 at 1:30 p.m.

“The biggest issue facing organic dairy producers right now is an oversupply of organic milk,” he said. “We need to figure out what our voice needs to be and how we respond. We need to get a consensus on that.”

Full Article Here

A Cash for Clunkers Hangover

The Cash for Clunker program, invented by Washington politicians, has been completed and it is time to assess the results.  The program included $4,500 rebates to new car purchasers at a total cost of approximately $3.1 billion dollars to taxpayers.

While 700,000 vehicles were sold under the program, many would have been sold irrespective of the rebates as older cars got trashed.  Now the automobile manufacturers and dealers are left with a hangover since the Cash for Clunker program robbed from future sales, as indicated in September’s numbers published in the Wall Street Journal:

• This September’s new car sales were only 746,000 units, compared to 965,000 a year earlier.
• General Motors (Government Motors) September sales fell 45%, while Chrysler’s sales, the other recipient of government bailout funds, dropped 42%.
• Ford, the only remaining big three that did not accept a bailout dropped only 5%.
• The transplanted Japanese companies, Honda and Toyota, dropped only 20% and 13% respectively.

Some clear conclusions can be made from the numbers.  First, the Cash for Clunkers program cost the taxpayers dearly, but offered little long-term benefit to the economy.  In fact it will end up causing more problems giving the disruption to inventories relating to the one time sales boost.  In addition, the two American companies that received bailout funds continued bleeding market share, with GM’s falling from 29% to 21% and Chrysler’s from 11% to just over 8%.  The government’s bailouts were not a good taxpayer investment.

The Cash for Clunkers program is another example of the failure of governmental intervention in the markets.  Even if the politicians were competent in economic theory, the markets are too complex for interventions to succeed.  They inevitably will create disruptions and more problems than what the interventions were designed to cure.  But don’t expect the government to learn from its failures.  Instead, it will come up with other incentive programs in an effort to artificially stimulate demand when the economy is in fact requiring a rebalance of supply and demand.

The activists who believe in government intervention into markets should carefully consider history.  Interventions played a role in creating the mortgage crisis and related housing bubble.  They have also propped up poorly managed automobile companies, leaving too much supply (factories) for the demand of automobiles.  This has hurt the entire industry.  Now, these same folks want to follow these dismal failures by taking over America’s healthcare system.  That sure sounds like the definition of insanity!

The Republicans' Newfound Opposition to Deficit Spending

I find it alternately amazing, amusing, and annoying that the Republican Party has suddenly decided that deficit spending is bad.  We’ve had Republican presidents for 20 of the last 29 years. During that time, they practiced Herbert Hoover’s trickle-down economics of helping the rich get richer. At the same time, they borrowed what was needed to run our national programs, ran up our national debt, and made paying the interest  on that debt one of the largest programs – and certainly the most wasteful program – in our government.

Ronald Reagan cut taxes on the wealthy, borrowed and spent, and tripled the national debt within four years. It was “morning in America,” there was pie in the sky, and we could borrow forever. He sold our soul to Japanese banks and was reelected in one of the largest landslides in American history. The lesson the Republican Party learned from Mr. Reagan was that voters don’t care about deficits.

The first President Bush inherited the huge Reagan debt and the Savings and Loan Crisis. Eventually, to head off a complete economic collapse, he broke his popular but unrealistic campaign promise of “No new taxes.” As a result, he was voted out of office after one term. The Republican base deserted him,  apparently believing that he should never have cared about deficits regardless of the consequences.

 

The second President Bush reinstated Reaganomics, cut taxes on the wealthy, borrowed and spent, went unnecessarily to war in Iraq on a credit card, sold our soul to Chinese banks, and doubled the national debt. His administration didn’t believe in government regulation and refused to deal with his huge deficits. Before he could get out of office, we had the biggest stock market crash since the Reagan Era, the biggest bank collapse since the Reagan Era and also in American history (Lehman Brothers, Sept. 14, 2008), and the near meltdown of the global economy.

Now that President Obama is using deficit spending to get us out of all these messes, the Republican extremists are stirring up their followers to protest the deficit! Where were all these people during the last eight years or during the twelve years of Reagan-Bush? Why didn’t they care when we needed them? They seem to have already forgotten that we are now in the Bush-Cheney Great Recession and that we need to avoid a second Great Depression.

Franklin Delano Roosevelt (Democrat) inherited the Great Depression from Herbert Hoover (Republican) and offered the people a New Deal. Relief, Recovery, and Reform were the three primary issues that he faced. His Relief and Reform efforts were so successful that they have saved us from disaster time and again when some of his successors practiced irresponsible policies. However, the New Deal was less successful in Recovery, and it would take World War II to restore the nation to full employment.

The biggest mistake that FDR made during the 1930’s was pulling back on deficit spending during his second term. It threw the country back into another economic downturn. President Obama should not make the same mistake. Deficits are bad when they are used at the wrong time and must be dealt with, but not now!

by David Offutt
A version of this essay was published September 18, 2009, in the El Dorado News-Times as a letter to the editor.

'Economic Benefits of Hosting Olympics Are Few'

From the Wall Street Journal:

There are actually lots of reasons not to play host. The most apparent one is that the positive economic effects tend to be negligible — if they even exist.

…Athens said hosting the games there would cost $1.6 billion. It ended up being about $16 billion. Beijing predicted $1.6 billion but current estimates say that’s more like $30 to $40 billion. And the 2012 games in London, originally expected to cost less than $5 billion, may now come with a price tag of around $19 million, Zimbalist noted in a paper he co-wrote with the University of Alberta’s Brad R. Humphreys.

Click here to read the full article.

Welcome to the daily debate. I have star...

Welcome to the daily debate. I have started this blog in an attempt to stimulate interesting and thoughtful conversation about scintillating topics of the day. Too often in our modern world we limit ourselves to talking to, listening to, and reading only people we know we are going to agree with. Too many times we immediately brush off opposing viewpoints as insane or laughable. I hope this blog will become a source for open discussion welcoming all various opinions on as many topics as possible. Thank you and I hope you chime in!

Virtual Currency in China- threat to real economy

………..Pratik Shah

I was zapped to hear that there is a parallel currency in China which was originally intended to fund online gaming transactions and has now integrated with the real economy. The virtual currency in China is now being used to buy goods and services in real economy. This is a cause of intense concern for the Central Bank of China and the Chinese Government, The virtual currency is posing a real threat. Lot of attempts to restrict usage of these currency have not yielded the intended results. China has nearly 340 million netizens who traded almost 2 billion dollars in virtual currency last year, according to the China Internet Network Information Center. The Chinese government is a little worried about how much virtual cash is being traded in the country. In fact some virtual currency, like the QQ coin, is actually affecting the market for the renmibi, China’s actual currency.

 Much of the $2 billion in virtual currency is used to play games, but significant chunks are now being traded for real physical goods, like clothes, food and services.The shift of using virtual currency to pay for real products is part of what’s worrying the Chinese central bank. The virtual life of Chinese citizens have reached unprecedental heights and few social groups have tried to prevent this mania by hosting Internet addiction camps and lobbying with the regulator for stricter regulations on online gaming market. The Gen Y of China are mad after online gaming.  The Ministry of Culture and the Ministry of Commerce jointly issued new regulations on the use of online currency to fight online gambling and disputes over virtual currency. On June 4, 2009, the Ministry of Culture (”MOC”) and the Ministry of Commerce (”MOFCOM”) of China jointly issued a Circular on Strengthening the Administration of Virtual Currency for On-line Gaming. The Circular was intended to regulate the issuance and trading of on-line game virtual currency and indicates the government’s strong desire to strengthen supervision of the rapidly growing on-line gaming market in China. Virtual currency is a virtual exchange tool created by the on-line game operator and sold to game players to be used to exchange for online game services provided by the operator. It may be presented in the form of prepaid amount or points but does not encompass virtual items earned within the game world. An operator proposing to issue on-line game virtual currency (an “Issuing Operator”) or to operate a platform facilitating trades of on-line game virtual currency (a “Trading Operator”) will have to comply with the prudential requirements set in by the guidelines. The Circular also provides that virtual currency may be used to purchase services from the issuer only and must not be used to purchase real goods or exchange for products or services from any company other than the original issuer. This is a bold step taken by the Chinese Government to stop illegal use of virtual currency. There are concrete plans to regulate the online gaming industry and have stricter entry norms for game operators.

The Chinese Government is planning to impose limits on virtual currency to stop the practice of ‘gold farming’ which is a practice of selling virtual gold earned from playing online games to rich people. The government also plans to tax virtual currency to ensure that there is no revenue leakage to the exchequer.

Though virtual property does not have recoginition in law, they are being used as a legal tender. The key problem for crimes in the virtual world is how to define and protect virtual property as so far there is no clear definition in law. Recently there were few cases in China where complaints have been registered for hacking of virtual property and the law and judiciary does not know how to take action on a stolen property which does not have any legal recognition. However, plans are in place to recognise the virtual property for the purpose of judicial machinery and protecting the interests of the citizens.

The craze is catching up in the United States as well. In the United States the virtual gaming market is starting to undergo a similar boom. Zynga, creators of the Mafia Wars Facebook game, is due to rake in somewhere north of 100 mio $ this year on its virtual offerings. Competitor Playfish has seen 100 million installations of its games in little more than 18 months.China’s online gaming pioneer Shanda Games priced its IPO offering of 83.5 million shares at the high end of its $10.50 to $12.50 range this morning, becoming the largest stateside IPO by a Chinese Internet company on NASDAQ.

To conclude, Virtual currency as a concept is really good in terms of having an independant currency for gaming transactions. But, when such illegal and unconstitutional currency start becoming legal tender then it is a big whistle blower for the Central Bank of any country. It will devalue the country’s legal currency and pose problems for liquidity management. Chinese governemt has banned the use of Virtual currency for purchase of goods and services and this step should render positive results for the government.

Uh-Oh! Enforced Open Textbooks

I find this new bill pretty scary:Durbin Open Textbook Bill Finally Introduced!.  I don’t have anything against Open Textbooks.  The ones I’ve seen so-far haven’t been very innovative, and I do wonder if it’s a viable model. People deserve to be paid for their effort, and higher quality effort should result in greater pay. That’s the economic force that encourages better materials. Part of what this bill does is fund development of Open Textbooks, and I think it’s a great thing to develop that model.

The scary part of this bill is the enforcement that everything (”curricula and textbooks”) funded by the National Science Foundation must be open source:

In General- Notwithstanding any other provision of law, educational materials such as curricula and textbooks created through grants distributed by Federal agencies, including the National Science Foundation, for use in elementary, secondary, or postsecondary courses shall be licensed under an open license.

I suspect that most science education innovations in the United States get some part of their funding from NSF.  I am quite confident that most of those innovations in computing education are. Alice, Media Computation, DrScheme — all of them had NSF funding. Under this bill, none of those could be published commercially.

By selling books through a publisher, we (authors, but also the teaching community) get a dissemination mechanism and a support mechanism. I’ve talked to teachers (including university faculty) who won’t use a book unless it’s offered by a publisher — they want to know that it won’t go out of print while they still need it, and that it will be updated as long as there are customers.

As an author, I’m glad that Pearson has a sales staff that goes out and tells people about my books. I want those people to get paid. I don’t know if Pearson can still make money if a percentage of their market decides to simply deal with the PDF and Pearson can only sell to those who don’t trust the author’s website or who want hardcopy.

Under this bill, a commercial publisher can’t put good, well-assessed curricula in a textbook and then disseminate it via a salesperson and bookstore distribution network. How does one get high-quality, sustainable change if you can’t ever pay authors, salespeople, bookstores, and publishers?