Agricultural Committee Prefers Cuts to Food Stamps VS Farm Subsidies

...most large commercial farmers report an

average annual income of $200,000,

well in excess of the national average

Chairman Frank Lucas, R-Okla., has reported $445,714 in

 political contributions from the agricultural industry during

the course of his career, and ranking Democrat Collin Peterson

 of Minnesota reports $809,097 in career donations.

It appears Food Stamp recipients do not contribute enough

to their elected representatives

National Journal
by Tim Fernholz
March 21, 2011

The House Agriculture Committee endorsed a letter this week to Budget Chairman Paul Ryan arguing that the Supplemental Nutrition Assistance Program, which helps low-income Americans purchase food, would make a better target for cuts than automatic subsidies to farms.

The move comes as food prices are rising -- the Department of Agriculture expects overall food prices to rise 3 percent to 4 percent this year -- making it harder for the beneficiaries of SNAP to stretch their existing benefits, even as farmers profit from the tightening market. Critics across the political spectrum have called agricultural subsidies wasteful and unnecessary, and they question the logic of maintaining them as lawmakers hunt for budget cuts.

"Conspicuously missing from the list of mandatory spending cuts the Agriculture Committee has made or is proposing to make are commodity subsidies, and specifically the $4.9 billion in direct payments that are automatically paid out each year regardless of whether a person farms,” said Jake Caldwell, the director of agricultural policy at the left-leaning Center for American Progress. “It is shortsighted of the Committee to suggest cuts to SNAP, particularly as food prices are on the rise, Americans are spending more than 10 percent of their household budget on food, and more people are enrolled in the food stamp program than ever before."

President Obama has endorsed cuts in agricultural subsidies as a way to lower the deficit without targeting essential programs, and lawmakers from both parties, like Ryan, R-Wis., have expressed similar opinions.

But the Agriculture Committee is dominated by members of Congress from farm states; Chairman Frank Lucas, R-Okla., has reported $445,714 in political contributions from the agricultural industry during the course of his career, and ranking Democrat Collin Peterson of Minnesota reports $809,097 in career donations.

The budget letter, endorsed by both Lucas and Peterson, argues that subsidies need to be in place for when record-high prices “inevitably” fall, and that higher prices have actually increased risks for farmers. But not even all farmers agree -- the Iowa Farm Bureau voted its opposition to direct payment subsidies earlier this year. Brian Riedl, a fiscal policy expert at the conservative Heritage Foundation, said that most large commercial farmers report an average annual income of $200,000, well in excess of the national average.

A Republican aide says the letters’ main message was a request that the budget committee be allowed to review its programs before final budget decisions are made, and that the programs under the committee’s jurisdiction not be cut disproportionately. Criteria for program reviews have yet to be determined.

The letter emphasizes recent reductions in the committee’s budget due to renegotiated insurance deals and higher food prices, which have reduced or temporarily eliminated the cost of some conditional subsidies. But it argues that SNAP -- which grew more expensive during the recession as unemployment increased the number of people who were eligible and as Congress expanded benefits under the economic stimulus law -- could be a target for cuts. SNAP makes up the bulk of the USDA’s budget.

Democrats stripped out some of the program’s expanded funding last year to pay for other programs, including child nutrition legislation. Now, the committee says, it will review the remaining stimulus expansions, which expire in November 2013, to see if the funds can be diverted for deficit reduction.

Democrats and Republicans are split on the value of the SNAP expansions, with the president and his party generally endorsing higher levels of spending than the GOP, which worries about a too-comfortable safety net (the program provides a monthly benefit of about $200 a person to households at or below 130 percent of the poverty level).

Anti-hunger advocates say the move to reduce food aid comes at just the wrong time. A report released by the Food Research and Action Center earlier this month said almost 1 in 5 Americans struggled to afford food for their families in 2010, with some of the highest rates of food hardship occurring just last fall.

The stock market is overbought and is losing momentum (this is not a test)

In summary, the current excitement about

the market reminds us of the

extreme bullishness exhibited near the

tops in early 2000 and late 2007.

The outcome is likely to be the same.

Comstock Partners
February 3, 2011
The stock market is at a highly vulnerable point, both fundamentally and technically. Fundamentally, the current rate of economic growth is unsustainable and the valuation of the S and P 500 is significantly above its long-term average. Technically, the market is overbought and is losing momentum. We cite the following points.

• Consumer spending has been outpacing the ability to spend. Spending has exceeded income in five of the last six months. During this time nominal spending has increased 2.8%, compared to only 1.9% in personal income. In order to accomplish this, households took their savings rate down to 5.3% of income from 6.3% six months earlier. As we have pointed out numerous times, household debt is still near record levels and consumers still have a long way to go in deleveraging their balance sheets.
• Housing remains a major weak spot with a rising pipeline of coming foreclosures, excess inventories and falling prices. In addition rising bond rates are causing mortgage rates to climb. (UPDATE: 30 year mortgage rate jumped to 5.05% this past week from 4.81% prior week)
• States and local governments are slashing budgets through a combination of raising taxes and cutting spending. This, obviously, is a major drag on the overall economy.
• Private jobs have increased at an average of 112,000 a month over the past year, but about half of that has been in low-paying health care, social services and temporary employment. (UPDATE: on 2/4/11, BLS reported a net +36,000 jobs in January)
• QE2 is scheduled to end in five months. Just as the anticipation of QE2 in August led to a substantial rise in the market, the anticipation of its ending may well have the opposite effect, combined with the other factors we mention.
• With commodity prices soaring and consumers unable or unwilling to accept price increases, a large number of corporations will undergo major cost increases that will squeeze profit margins, a factor not calculated into current earnings forecasts. (UPDATE: Kraft Foods states revenue growth will be from higher prices versus higher volume)
• Europe's sovereign debt problems have not been solved and the crisis will continue to fester. Any real solution will not be friendly to economic growth.
• The crisis in Tunisia and Egypt are not random exogenous events. Soaring food prices, high unemployment and wealth disparities are as much a factor as repressive governments. People tend to tolerate dictatorships more when they aren't hungry.
• China is a bubble waiting to burst. Think back to the late 80's when everyone was as optimistic about Japan as they are about China today.
• At today's closing price the S and P 500 is selling at 19.2 times cyclically smoothed reported earnings, compared to a historical average of about 15. (UPDATE: the S and P 500 is up another 34 points/2.7% as of the close on 2/11/11)
• In addition to the above fundamentals the market is technically vulnerable. It has climbed about 95% over the last 23 months and 30% since the July low. Sentiment has become heavily bullish while the market is losing momentum as fewer stocks are moving higher on each successive top. Volume for advancing stocks is dropping while volume for declining stocks is rising. The number of new daily highs is also dropping as is the percentage of stocks making new 50-day highs.

In sum, the current excitement about the market reminds us of the extreme bullishness exhibited near the tops in early 2000 and late 2007. The outcome is likely to be the same. Add'l Posts/Articles by Comstock Partners

Dylan Ratigan and Bill Fleckenstein Discuss Bernanke's Devastating Impact from Money Printing

Dylan Ratigan and Bill Fleckenstein discuss the impact of U.S. money printing is having on the poorest people on the globe including paying 80% of their income for food. Bernanke and the Federal Reserve will not admit to their mistakes and continue to print money in an effort to cover up the bailout of the banks and Wall Street. The U.S. government continues to inflate bubbles; dot.com, housing and now commodities including food.

Just take a minute and ponder the impact on our way of life if we in the U.S. had to spend 25% of our income to feed our family let alone 80%.

Visit msnbc.com for breaking news, world news, and news about the economy

Import Prices and Inflation (Michael Pento)

Wednesday, January 12, 2011
By: Michael Pento

In keeping with the tradition of believing the Emperor Has New Clothes, the U.S. consumer must try to just imagine that inflation isn’t a problem. The cost of goods imported into the U.S. rose in December, led by higher prices for commodities such as fuels and food. Import prices surged by 1.1% last month after jumping by a revised upward 1.5% gain in November.

For all of 2010, import prices were up 4.8%. However, the costs of imported food and petroleum were both up over 13% last year. The U.S. dollar is down about 10% on the DXY, since it achieved a cyclical high on June 7th of last year. The weakness in the U.S. currency has helped send the cost of imported goods higher.

The Labor Department will release data on Producer Prices tomorrow and Consumer inflation on January 14th. Official inflation data should be on the rise as food, fuel and rental prices continue to escalate. In fact, the USDA is expected to confirm today that stock piles of grains are the lowest in years. The price of oil is now holding above $90 per barrel and food prices are surging across the globe. And Bernanke still looses sleep over deflation!?

Michael Pento, Senior Economist at Euro Pacific Capital is a well-established specialist in the “Austrian School” of economics. He is a regular guest on CNBC, Bloomberg, Fox Business, and other national media outlets and his market analysis can be read in most major financial publications, including the Wall Street Journal. Prior to joining Euro Pacific, Michael worked for a boutique investment advisory firm to create ETFs and UITs that were sold throughout Wall Street. Earlier in his career, he worked on the floor of the NYSE.

Global Food Prices AT Record High and Yet U.S. has No Inflation

Ben Bernanke on QE-2: "The Fed needs to take the action

 because unemployment is too high and

inflation is too low, signs of a still-troubled economy".

BBC News

1/5/2011

Its Food Price Index went above the previous record of 2008 that saw prices spark riots in several countries.

Soaring sugar, cereal and oil prices had driven the rise, the report said.

The index, which measures monthly price changes for a food basket composed of dairy, meat and sugar, cereals and oilseeds, averaged 214.7 points last month, up from 206 points in November.

It stood at 213.5 points at the high of June 2008.

However, despite high prices, FAO economist Abdolreza Abbassian said that many of the factors that triggered food riots in 2007 and 2008 - such as weak production in poor countries - were not currently present, reducing the risk of more turmoil.

But he added that "unpredictable weather" meant that grain prices could go much higher, which was "a concern".

Australian floods

Last year a drought forced Russia to suspend wheat exports.

And recent floods in Queensland, Australia are already beginning to hit prices of key exports - which are critical for food supplies to markets in Asia, particularly India, Bangladesh and Japan.

Australia has cut its forecast for sugar exports this year by 25% as flooding has reduced the sugar content of the cane, while wheat crops have also been hit.

The news came amid concerns about inflation in the prices of other key commodities.

The International Energy Agency (IEA) said on Wednesday that the current high price of oil would threaten economic recovery in 2011.

Oil import costs for countries in the Organisation for Economic Co-operation and Development had risen 30% in the past year to $790bn (£508bn), it said.

And copper prices went into 2011 at record highs - in a rally driven by increased demand from the global economic recovery and that fact that most countries are holding low stockpiles.

How to Control Inflation...actually quite simple
(sorry retirees, no Soc. Security Cost of Living Increase)