Jul 17, 2009
COMMENTS Insanity rages on

Just think about it, our new, very young presidential administration, with the aid of a House of Representatives that has burned out nearly all their brain cells and a Senate that can do pretty much whatever the leadership wants, is wreaking havoc on the American economy. Let’s not forget that the Republican Party has also lost nearly all credibility for their lack of effort on fiscal issues and has been eagerly spending our tax dollars to buy a vote. They have also had a hand in this government spending insanity.

A bad bill is one thing, but the volume of bad legislation pending will change the world as we know it. Let’s start with the stimulus plan passed in February, the one that was supposed to cap unemployment at 8.5 percent. Now we’re approaching 10 percent unemployment. The administration said they underestimated the problem, but we need patience to let the stimulus work. The effectiveness of this massive federal spending bill has failed by most accounts. Most businesses and families don’t have the luxury of patiently waiting for stimulus dollars to trickle down to Main Street. Spending it was bad enough; how they are spending has taken the power out of the plan. To add insult to injury, Congress is already talking about another stimulus spending package, since the first one did so well. Next we have cap and trade, or environmental cleanup legislation. This little piece of fantasy is expected to have a dramatic effect on the cost of energy which will place economic burdens on families and businesses. Never mind that the cap and trade concept has failed in other countries. The president and Congress are determined to pass this bad bill regardless of the damage it will do to our economy.

The Senate is the only organization that can save us from this economic bomb. Then there’s health care reform legislation. Granted, some things need to be fixed, but the intent of Congress is to suck another $1 trillion out of the economy. Everyone will be required to have some health coverage. A small business with a payroll under $250,000 will be exempt from the requirement to provide health insurance for their employees.

Businesses that don’t comply, or are unable to comply, will be subjected to an 8 percent penalty on payroll. The problem can be solved without creating another huge burden on the economy.

Then you can look at the clean water bill and a host of other pending legislation that threatens the stability of our economy. It’s beyond me why the legislators won’t allow our high-powered economy to run, which would create the wealth required to solve many of these issues. It’s clearly more difficult to compete with both arms tied behind your back and this legislation does just that by compounding the economic troubles we already face. Thinking that government can fix all the issues we face is insanity of the highest degree. There are far too many examples of what government shouldn’t do that it boggles the mind. Perhaps there is some common sense on the horizon, but right now, it appears to be in very short supply in the political world.

Now, you’re probably wondering what this has to do with the cattle business. It actually has a lot to do with the cattle business. We know that beef demand hasn’t been what we would like it to be. We’re halfway through summer and have yet to see more than 700,000 head of cattle processed in a single week. Two weeks ago, the industry processed 699,000 head, which is the most for 2009 so far. We have a lot of beef to sell and it’s simple economics.

No jobs, less spending, and a slower economy equals less money to buy beef. Even for a guy like me, this isn’t rocket science.

Cattle feeders are buying feeder cattle at very high prices, even though they are buying into razorthin margins. It has been a good market for heavy yearling cattle, but how long can feeders continue to buy into negative margins? Feeders have already lost over $5 billion in equity over the past two or three years, and I wouldn’t think there is a lot of slack left in their balance sheets. There are only two things the industry can do—sell more, or produce it for less. The legislative agenda at hand is making it difficult to perform either task. But, with our legislators’ perspective of economics, they aren’t interested in producing opportunities to sell and produce.

We’ve got to get a handle on how legislators are handling the future of America. What you have to do is start writing the letters and making the phone calls to your representatives. Tell them to stop the social engineering and fiscal insanity. — PETE CROW