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OPINION

Government Intervention Screws Up Markets

The opinions expressed by columnists are their own and do not necessarily represent the views of Townhall.com.

Did you notice the hog market ($HE_F) over the past couple of weeks? When Obama went to Iowa to campaign, Secretary of Agriculture Tom Vilsack announced a huge pork buy from the federal government. October Lean Hogs were trading around 78.50 prior to the announcement. Post, they rallied up to 81.00.

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Today they are trading around 73.00. That big announcement was only one to one and a half days of slaughter. Meaningless pablum to a market in trouble.

The drought has caused livestock producers to send a lot of meat to market, lowering the price. The other force affecting the market is artificial. Ethanol policy. Ethanol production artificially increases the price of grain and that increases costs to production for livestock producers.

The last two weeks have been a microcosm of the entire Obama strategy. Buy votes with stimulus money that means nothing and creates nothing (Ethanol). Then, when market forces start to play out, try to artificially move them to advantage yourself(pork buyback). But, at the end of the day the market always wins.

We were in a rough spot back in October of 2008. Obama engaged in the largest stimulus that the US had ever seen. Over the ensuing years, the Fed supported it with quantitative easing, loose money policies, the twist and the Treasury printed as many dollars as it could. But, the recession still persists. Unemployment is still sky high and we are supposed to believe this is the “new normal”. The market only looks good as long as the government will buy it.

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In general, government is better off doing nothing than sticking their finger in the pie.

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