Epidemic pulls pork prices higher

The African Swine Fever could cause prices in China to spike 70% or more this year. The highly infectious disease is spreading throughout Asia and could lead to a large increase in the price of pork here at home as well. Before you ask, this highly infectious virus, while deadly to pigs, is not harmful to humans. The problem is that when even one pig is tested positive, the entire herd needs to be slaughtered as quickly as possible. There is no cure. The government is taking this epidemic seriously, and well it should. Tough new government rules have been implemented this month in Chinese slaughterhouses and processing plants to identify and test for the virus. The Chinese are the world’s largest consumers of pork, accounting for 49% of all pork consumed. Domestic hog production, prior to the epidemic, was roughly 700 million pigs. To date, only about a million pigs have been infected, but those figures may be understated. A Shanghai-based consultant company, JCI, is forecasting that pork production will fall by almost 16% this year to 8.5 million metric tons. That would leave roughly a 7 million metric ton shortfall in supply. The government’s inspection efforts have slowed down business and reigned in demand, at least temporarily. But given the popularity of pork in China, most producers are believed to have large stockpiles of pork supplies, most of which are in cold storage. As such, Chinese producers are dipping into their cold storage supply to satisfy demand and keep prices somewhat reasonable, at least until the second half of the year. Given the severity of the epidemic...

The cost of rebuilding God’s house

Sometimes a tragedy can bring people together. In the case of the devastating fire that swept Paris’ Notre Dame Cathedral, the world wept. But even before the fire was completely extinguished, the business community was already making plans to rebuild the 850-year-old edifice. The price tag will likely be in the multi-billion-dollar range. A preliminary assessment of the damage thus far includes two-thirds (about 100 meters) of the roof and the destruction of a spire, which the world witnessed on television. At least a 62-foot expanse of stained-glass windows was also severely damaged. What we don’t know as of yet, is how the 800-pipe organ, one of the largest in the world, faired through the fire. Much of the art work has been saved thanks to the 400 firefighters, who, in addition to battling the blaze, carried artwork and priceless relics, such as Christ’s crown of thorns, to safety. In a stroke of luck, an additional 16 ancient religious statues had already been removed last week for cleaning. Many architects worry that the fire could have weakened the stonework of the cathedral. Hand-carved, over 200 years of construction, the ancient stone can turn to dust in extreme heat through a process called calcination. Pouring cold water on that hot stone can also cause it to weaken and crack. The two rectangular bell towers were saved, despite the fire‘s spread into one of them, and credit for that accomplishment should go to the French fire fighters, who battled the blaze for 15 hours. Before the last smoke cleared, business leaders were already pledging their support to re-build. Within 24 hours...

Does our debt really matter?

The country’s national debt hovers at historically record highs, as the nation’s budget battle begins. It’s a pretty safe bet to expect another budget-busting compromise as well as a hefty increase to our already-overwhelming debt load. At times like this I wonder whether Americans are facing the prospect that someday the United States could be the world’s largest impoverished nation, and if so, does it really matter? Last week’s column examined the subject of debt, both private and domestic, and how large it has become. This week, I begin by asking why debt matters at all? On a personal level, we know the answer, but what about the nation? Debt has been a popular whipping boy for economists and politicians in this country for decades. At times, one or the other political party has found it expedient to become a champion of economic sobriety. Of course, once they recapture control of the government purse strings, they pretend amnesia. The Republicans, for example, spent eight years fighting the Democrats under President Obama on every dollar of proposed spending, except defense. Their argument back then was that any spending would increase the public debt and make it impossible to balance the budget. Republicans even refused to approve funding for our national debt limit and actually shut down the government in defense of what they called fiscal responsibility. Fast forward to 2016-2018, when the same party (and the exact same politicians) added more debt to the country than at any time in our history, while throwing the budget into the red by trillions of dollars. The president’s recent budget proposal only adds...

A nation united in debt

About a month ago, the national debt topped $22 trillion for the first time. What’s more, it only took a year to tack on another $1 trillion. Unless we do something soon, we could see those kinds of yearly borrowing double within the next decade. Let’s define U.S. debt as the sum of all outstanding debt owed by the federal government. Two-thirds of this debt is held by you and me. It is called public debt, while one-third is held by various inter-governmental departments and agencies such as Social Security and other trust funds. We have the distinction of being the world’s largest debtor, although the European Union is a close second. We now have more debt on our books than we produce in goods and services in a year. If you and I were in the same boat (and most of us are), we might have a problem repaying that debt in the future. If interest rates begin to rise, we might need to cut back on our spending just to make the monthly payments. As you might imagine, your debt and the government’s have a lot in common. Using the nation’s debt practices as our model, we find that more and more Americans are accumulating debt. And, what’s more, we are dying with that debt on our books. About 73% of Americans who die have unpaid debt that totals much more than their funeral expenses, according to Experian PLC, a large credit card reporting bureau; the average amount of that debt is about $62,000. As you might expect, unpaid mortgages account for 37% of those liabilities, followed...

Veterans are on the receiving end of the Trump Administration

In the 2019 fiscal budget, the Department of Veterans Affairs received over $200 billion in spending. That’s a 6% increase over last year and counts as the largest amount ever received by the VA. The money will go a long way in implementing an array of much-needed reforms. There will be $400 million ear-marked for preventing opioid abuse. As you might imagine, Veterans are a high-risk group since opioids are used extensively in treating war-time casualties. An additional $1.1 billion will jump-start the overhaul of the VA’s electronic health records, while $1.75 billion will go to implementing the VA Mission Act. That money will revamp and re-write the veteran’s community care programs, which allows for an entire array of new health care choices for the veteran. This will boost the vet’s ability to access private health care at taxpayers’ expenses. On the education front, the Veterans Benefits and Transition Act will help to right some past wrongs inflicted on Post-9/11 GI bill users. Last year, there was a series of technology glitches at the Department of Veterans Affairs that resulted in delayed and inaccurate payments for many thousands of vets attending college. In many cases, the government was not paying the tuition costs, or if they were, the payments were delayed. GI students were being hit from all sides. Schools were charging them late fees, preventing them from access to campus facilities, or were not allowing them to register for their next semester. As vets scrambled to pay the tuition shortfalls, money for mortgage and rents were in short supply causing even more late fees to accrue. Some schools...

Economic prosperity in the United States

The stock market is once again approaching historical highs. Unemployment is at multi-year lows. Interest rates and inflation, if not at record lows, are close to it. The president claims we are enjoying the strongest economy in our nation’s history. Is that true? The short answer, according to a recent study by Bloomberg, would be no, not even close. They went back over the course of the last 43 years and measured the nation’s economy under three Democratic and four Republican presidents. They found that in all but one case both the economic and financial performance of the U.S. was better than it is now. Bloomberg used 14 different gauges to measure a wide range of economic activity. Everything, from manufacturing jobs to the value of the greenback versus other currencies, was included. All the traditional variables such as GDP, unemployment, wages productivity, etc. were also analyzed. It turns out that the economy under the last seven presidents saw the greatest improvement under President Bill Clinton between 1993 to 2001. Ranking number two was Barack Obama. President Obama, readers may recall, took office in 2009 during the worst recession since the 1930s. By the time he departed in 2017, he handed Donald Trump an economy that saw the second-best performance of all seven presidents. Ronald Reagan only ranked number three, followed by George H.W. Bush, Jimmy Carter then George W. Bush (who presided over the largest financial crisis in 80 years). President Trump settles in at the number six place, not quite as bad as George W., but clearly lagging Jimmy Carter. Even though it is early days, with...