DISQUS

That's it? That's all you have to say on this issue?

It is pretty doubtful that the United States is heading for the hyper-inflation of Argentina (or Turkey, which experienced it for a decade).

But you seem to be suggesting that the fall in the dollar is something that the U.S. Government can easily resist, rather than it being the result of market players loosing faith in the ability of the U.S. economy to yield superiour returns. The United States cannot force the world to hold dollars; indeed, many citizens and banks have been shifting more of their portfolio towards the euro and pound sterling for several years.

If America is concerned about other countries buying up its assets, that process started long ago when it went on a consumption spree financed by willing overseas lenders.

You assert that the "dollar devaluation is a MUCH more serious problem in the long-run". Please explain. The fall in the value of the U.S. dollar against other currencies is a response to many factors, and is an unavoidable and necessary correction. There will be winners and losers. Among the losers will be foreigners holding credit instruments and securities denominated in American currency. Among the winners will be sectors of the economy that export.

I am much more conerned about self-inflicted damage, such as ethanol subsidies and mandates, which cost taxpayers and consumers dearly -- and not only consumers in the United States, but in urban slums in places like Haiti and Africa as well.

Asserting that ethanol subsidies share none of the blame for rising food prices is outrageous. Mr. Ochterski should know better. Only a year ago (when corn was trading at $4), the USDA was crediting the subsidized and mandated diversion of corn into ethanol as having raised the grain's price enough that price-linked subsidies (e.g., marketing loan payments) no longer had to be paid out.

The world's population did not surge, nor did Chinese change their diet, overnight. The surge in the use of corn for ethanol -- 75% of the increase in production over the last three years -- was much more sudden. By citing the expected 8% (or greater) decline in corn production this coming crop year as proof that corn is not the dominant ethanol feedstock, Mr. Ochterski shows a breathtaking ignorance of the market. The problem is that federal mandates require a 25% increase in biofuel (mainly ethanol) use this year.

Hmm. Could rising demand and falling supplies possibly be driving up prices? Naaaaw.

Thank you for posting this interview. One correction, though. Strictly speaking, a rise in the price of sugar or ethanol would NOT inspire Brazilian sugar-cane growers to cut down more rain forest to grow sugar cane. Cane doesn't grow well in the Amazon, and hence the expansion of the industry has been mainly into the Cerrado, Brazil's vast (and biodiverse) savanna. However, reduced plantings of soybeans in the United States (largely as a result of increased plantings of corn) IS helping to fuel the clearing of rain forest for soybeans, which do grow there very well. See this story on Mongabay, for example.

Thank you for posting this interview. One correction, though. Strictly speaking, a rise in the price of sugar or ethanol would NOT inspire Brazilian sugar-cane growers to cut down more rain forest to grow sugar cane. Cane doesn't grow well in the Amazon, and hence the expansion of the industry has been mainly into the Cerrado, Brazil's vast (and biodiverse) savanna. However, reduced plantings of soybeans in the United States (largely as a result of increased plantings of corn) IS helping to fuel the clearing of rain forest for soybeans, which do grow there very well. See this story on Mongabay, for example.

Well said, Stan. And here is a link to the study mentioned in the Rolling Stone article. The GSI is a program under the IISD, by the way:

http://www.globalsubsidies.org/

There was an error in the link for "over $100 billion". Here it is.

It is not just a problem of the new subsidies. Last October we published a major study of the numerous federal, state and even local subsidies supporting production and use of ethanol and biodiesel in the United States: "Biofuels--At What Cost?".

Back in February we pointed out also the huge cost to the U.S. Treasury of subsidizing the achievement of President Bush's 35 billion-gallons-a-year "alternative fuels" target for 2017:
">over $100 billion over the next 11 years.

So, if you are looking for rigorous analysis of subsidies, including subsidies to biofuels, watch this space:

www.globalsubsidies.org