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The Ethanol Bubble Pops in Iowa: More evidence the fuel makes little economic sense.
The Wall Street Journal ^ | April 18, 2009 | Max Schulz

Posted on 04/18/2009 2:54:42 AM PDT by Scanian

In September, ethanol giant VeraSun Energy opened a refinery on the outskirts of this eastern Iowa community. Among the largest biofuels facilities in the country, the Dyersville plant could process 39 million bushels of corn and produce 110 million gallons of ethanol annually. VeraSun boasted the plant could run 24 hours a day, seven days a week to meet the demand for home-grown energy.

But the only thing happening 24-7 at the Dyersville plant these days is nothing at all. Its doors are shut and corn deliveries are turned away. Touring the facility recently, I saw dozens of rail cars sitting idle. They've been there through the long, bleak winter. Two months after Dyersville opened, VeraSun filed for bankruptcy, closing many of its 14 plants and laying off hundreds of employees. VeraSun lost $476 million in the third quarter last year.

A town of 4,000, Dyersville is best known as the location of the 1989 film "Field of Dreams." In the film, a voice urges Kevin Costner to create a baseball diamond in a cornfield and the ghosts of baseball past emerge from the ether to play ball. Audiences suspended disbelief as they were charmed by a story that blurred the lines between fantasy and reality.

That's pretty much the story of ethanol. Consumers were asked to suspend disbelief as policy makers blurred the lines between economic reality and a business model built on fantasies of a better environment and energy independence through ethanol. Notwithstanding federal subsidies and mandates that force-feed the biofuel to the driving public, ethanol is proving to be a bust

(Excerpt) Read more at online.wsj.com ...


TOPICS: Business/Economy; Culture/Society; Technical; US: Iowa
KEYWORDS: bhoenergy; biofuels; energy; ethanol; ethanolfaults; verasun
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1 posted on 04/18/2009 2:54:42 AM PDT by Scanian
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To: Scanian
...I saw dozens of rail cars sitting idle.
What a waste of good corn liquor, which is basically what was being produced.

The Ethanol Fallacy: Op-Ed
So why not build corn liquor stills on an industrial scale and use the output to power our cars and trucks?
That’s exactly what this country has been doing for the past several years. Some 134 ethanol plants are now in operation, consuming close to 1.6 billion bushels of grain, about 15 percent of our total corn production.

2 posted on 04/18/2009 3:03:36 AM PDT by philman_36 (Pride breakfasted with plenty, dined with poverty, and supped with infamy. Benjamin Franklin)
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To: Scanian; philman_36

The entire ethanol debacle is a great case example to illustrate the folly of government intervention in the free markets.


3 posted on 04/18/2009 3:19:45 AM PDT by Red Dog #1
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You can’t fool Mother Market.


4 posted on 04/18/2009 3:21:20 AM PDT by D-fendr (Deus non alligatur sacramentis sed nos alligamur.)
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To: Scanian; philman_36
From the article: could process 39 million bushels of corn and produce 110 million gallons of ethanol annually.

And from philman_36's post:

...consuming close to 1.6 billion bushels of grain, about 15 percent of our total corn production.

An a little math by theymakemesick:

If 39 million bushels of corn produces 110 million gallons of ethanol annually,then 110,000,000 / 42 = 2,649,047 barrels annually. We consume about 20,000,000 barrels of petroleum per day in the USA. That plant produces about 13% of what we use in one day. 1.6 billion bushels total / 39 million bushels = 41. 41 X .13 = 5. So, we consume 15% of our annual corn production to offset 5 days worth of our petroleum consumption. This does not include the petroleum required to farm, fertilize, water or transort the corn. Great use of natrual resorces, not.

5 posted on 04/18/2009 3:26:25 AM PDT by theymakemesick (You may be a terrorist if you went to church last Sunday or think "shall not be infringed" means it)
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To: theymakemesick
That plant produces about 13% of what we use in one day.

I meant to say "that plant produces in one year about 13% of what we consume in one day".

6 posted on 04/18/2009 3:33:33 AM PDT by theymakemesick (You may be a terrorist if you went to church last Sunday or think "shall not be infringed" means it)
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To: D-fendr

I would have to disagree. Mother Market loves bailouts and stiumulus. Mother Market appears to have been bought and paid for by the democrats.


7 posted on 04/18/2009 3:37:26 AM PDT by momincombatboots (The last experience of the sinner is the horrible enslavement of the freedom he desired. -C.S. Lewis)
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To: Red Dog #1
Needed to produce one gallon of gasoline...

Needed to produce one gallon of ethanol...

Strictly illustrative...Bioenergy Conversion Factors

8 posted on 04/18/2009 3:38:30 AM PDT by philman_36 (Pride breakfasted with plenty, dined with poverty, and supped with infamy. Benjamin Franklin)
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To: theymakemesick

See #8.


9 posted on 04/18/2009 3:39:39 AM PDT by philman_36 (Pride breakfasted with plenty, dined with poverty, and supped with infamy. Benjamin Franklin)
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To: theymakemesick

Hmmm. Wasted resources should be used, not fresh corn. Thanks for doing the math.


10 posted on 04/18/2009 3:39:53 AM PDT by Big Giant Head (I should change my tagline to "Big Giant penguin on my Head")
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To: D-fendr

but politicians can sure fool the foolish public!


11 posted on 04/18/2009 3:44:26 AM PDT by junkman_106 (The ACLU can have arial intercourse with a rotating glazed pastry!)
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To: Red Dog #1
The entire ethanol debacle is a great case example to illustrate the folly of government intervention in the free markets.

...and the iron law of unintended consequences.

12 posted on 04/18/2009 3:45:30 AM PDT by Lonesome in Massachussets (The age of 0bama: the transient ischemic delusions of adequacy decade.)
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To: momincombatboots
I have to further disagree. Bail outs are government intervention and interference in markets.

Fannie and Freddie would never have gotten so awful if their debt did not come with implicit taxpayer backing. When we, the people, elected these awful buffoons in Congress over the past decades, we signed up for the bail outs.

13 posted on 04/18/2009 3:51:30 AM PDT by Lonesome in Massachussets (The age of 0bama: the transient ischemic delusions of adequacy decade.)
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To: Scanian

If ethanol was so great it would require no subsidies of any sort, just like with gasoline.


14 posted on 04/18/2009 4:02:48 AM PDT by pnh102 (Save America - Ban Ethanol Now!)
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To: theymakemesick

22 bushels of corn to produce 1 gallon of ethanol,corn juice not a good idea.


15 posted on 04/18/2009 4:09:31 AM PDT by Vaduz
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To: Scanian

And the Ethanol scam is a drop in the bucket compared to the man made global warming scam. The loss of wealth is going to be staggering.


16 posted on 04/18/2009 4:12:43 AM PDT by DB
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To: Scanian
Rush always says, "follow the money" Click for more information...
17 posted on 04/18/2009 4:18:06 AM PDT by WVKayaker ( God said, 'Cancel Program GENESIS.' The universe ceased to exist.- Arth. C. Clarke's shortest story)
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To: Scanian
Ledt out by bad html...

... At least 43 percent of ADM's annual profits are from products heavily subsidized or protected by the American government. Moreover, every $1 of profits earned by ADM's corn sweetener operation costs consumers $10, and every $1 of profits earned by its ethanol operation costs taxpayers $30

18 posted on 04/18/2009 4:19:47 AM PDT by WVKayaker ( God said, 'Cancel Program GENESIS.' The universe ceased to exist.- Arth. C. Clarke's shortest story)
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To: WVKayaker

Iowa voted for Obama, right?

Well they got what they paid for. 4000 lost jobs, higher food and fuel bills and in the end the investors of the bankrupt company probably got bailed out.

Happy Iowa?


19 posted on 04/18/2009 4:37:53 AM PDT by EQAndyBuzz (I am a right wing extremist. God Bless America)
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To: EQAndyBuzz
"Happy Iowa?"

Didn't Iowa just receive the gift of happy marriages?

20 posted on 04/18/2009 4:50:30 AM PDT by Paladin2 (Big Ears + Big Spending --> BigEarMarx, the man behind TOTUS)
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To: thackney

ping


21 posted on 04/18/2009 4:50:53 AM PDT by raybbr (It's going to get a lot worse now that the anchor babies are voting!)
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To: EQAndyBuzz
Iowa voted for Obama, right?

If you're going to blame presidents then it is the two before Obama to blame for this fiasco.

22 posted on 04/18/2009 4:56:45 AM PDT by decimon
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To: Scanian
"Even if we plowed under all other crops and dedicated the country's 300 million acres of cropland to ethanol, we would displace just 15% of our oil demand with biofuels."

No problem. Simply pass a law mandating 300 mpg automobiles,200 mpg semi-trucks, and R-1000 insulation in all homes, and all will be well.

23 posted on 04/18/2009 4:59:10 AM PDT by norwaypinesavage (Global Warming Theory is extremely robust with respect to data. All observations confirm it)
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To: All

This whole thing was a typical liberal proposition and a scam from day one.

The envirowhackos loved it because no matter the math, we were going to begin to get away from the hated “Big Oil”.

The farmers loved it because it was a market they could grow crops for.

The companies producing ethanol loved it because they were getting big breaks and subsidies to produce ethanol.

The politicians of all stripes loved it because they could pander to the envirowhackos, farmers, companies, Europeans and liberals with no negative effects.

The only people standing up and actually saying anything were the skinny crackpots with scraggly hair, suspenders and slide rules who actually took the time to analyze the whole thing and tried to tell the emperors they had no clothes. They were ridiculed and told to sit down.

Personally, I was too damn busy with other things to pay much attention to this issue, and remembered thinking “Hey, this is small potatoes here...even if it is wasteful, it is a piker of a program compared to other things.” Then, the next time I looked, I read about how everything from gas station pumps and tanker trucks to car engines had been involved in the process due to the destructive nature of the ethanol, and that HUGE plants with boxcars full of corn on specially built train tracks were making this stuff!

Then, I realized it was no coincidence that the price of a lot of other products such as milk, beef and cereals had been steadily rising for some time.

This whole thing was a typical liberal proposition and a scam from day one.

And it is TYPICAL of ANY government run program, replete with profligate waste, unintended consequences and unaccountable politicians. So this is what we want to do with our health care and industry?

We must put a stop to this.


24 posted on 04/18/2009 5:17:41 AM PDT by rlmorel ("The Road to Serfdom" by F.A.Hayek - Read it...today.)
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To: philman_36

Making corn into ethanol subtracts value.

Unless you can drink the stuff and then it adds a whole lot of value!


25 posted on 04/18/2009 5:22:49 AM PDT by SBprone
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To: Scanian
A while back I was in a place where two libs were going on about how ethanol is a great fuel, saving the earth and all that.
I told them ethanol is a horrible fuel unless you were talking about some fondue pot or a modified Bunsen burner.
After the ranting and blubbering subsided, I managed to say that at least in the case of internal combustion engines, the quality of any fuel is measured by the heat that can easily be released from a given quantity. I suggested they get a thimble of ethanol and a thimble of gasoline and stick a match to each one. Easy science project with easily noticeable results.
They were not persuaded, my argument did not fit the lib logic.
26 posted on 04/18/2009 5:28:47 AM PDT by ExSafecracker (. .CHANGE !! . . Jimmy Carter is no longer Americas worst President.)
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To: Scanian

This op-ed is an accurate depiction of what many of us in farm country already knew. Unfortunately, it was not politically correct to say so. McCain got hurt in the Corn Belt because of his opposition to ethanol subsidies - one of the positions I agreed with. In fact, the only family I know personally that had an Obama sign in the yard feeds heavily at the government trough via farm programs, and supported Obama solely because of ethanol subsidies...

hh


27 posted on 04/18/2009 5:30:01 AM PDT by hoosier hick (Gotta go, millions of Obama supporters are counting on me to pay their mortgages)
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To: EQAndyBuzz
Iowa voted for Obama, right?

Iowa not only voted for Obama, it allowed itself to be intimidated/manipulated in order to allow The Kenyan to get past Hillary Clinton in the caucuses. If that didn't wake the rest of the country up to the fact that we really ARE "idiots out walking around," the homosexual marriage ruling ought to have done the trick.

I had done some research into VeraSun back when their website was all happy and proud to boast that the (then) junior senator from Illinois had addressed a meeting of their shareholders, and that was my first indicator that Comrade Zero's people had successfully infiltrated what would have logically been enemy territory. Unfortunately, big ag is now reflexively statist, and if the government required all of Iowa's firstborns in exchange for a piece of the pie, plenty of people would bundle them up and set them out on the curb to be picked up for dispersal or disposal.

The ethanol plant in Dyersville is a beautiful complex, all shiny, new and efficient. The farmers loved it - well, they loved it until the checks didn't clear anymore - the local truckers loved it, the railroads loved it... in general, all God's chillun loved it except for the locals who put up one helluva fight over putting the plant there in the first place.

Mr. niteowl77

28 posted on 04/18/2009 5:36:27 AM PDT by niteowl77 (You wanted him, and now you have got him. I say, "Good day to you," America.)
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To: ExSafecracker
Tell them to drink the alcohol and pour the gasoline in their hair.

In other words, to quote Walter Matthau and Jack Lemmon in Grumpier Old Men--

Lemon: C'mon, Max, let me in, it's cold out here.

Matthau: Here's a box of matches, set yourself on fire.

Cheers!

29 posted on 04/18/2009 5:38:15 AM PDT by grey_whiskers (The opinions are solely those of the author and are subject to change without notice.)
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To: Scanian

So, if all the gasoline now sold contains 10% ethanol, and it does here, is the price per gallon higher or lower because of the inclusion of subsidized ethanol?


30 posted on 04/18/2009 5:42:12 AM PDT by bert (K.E. N.P. +12 . John Galt hell !...... where is Francisco dÂ’Anconia)
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To: SBprone

Yes, I have found that it is wholly impractical to produce a drinkable beverage from petroleum, but from corn...this is ethanol’s market.


31 posted on 04/18/2009 6:06:43 AM PDT by Sender (It's never too late to be who you could have been.)
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To: Scanian

I have used ethanol/gasoline blends in my vehicles on and off for years. I consistently get about 10% less miles per gallon using an ethanol blend than with using straight gasoline. If the purpose of making ethanol a motor fuel additive is to reduce oil consumption how does a 10% ethanol blend that gives 10% less miles per gallon save anything?


32 posted on 04/18/2009 6:08:05 AM PDT by The Great RJ (chain.)
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1) Mandate use;
2) Subsidize;
3) Apply tariffs


33 posted on 04/18/2009 6:10:55 AM PDT by anglian (0bama's Stealth Reparations: "Mouthfulls of gimme and handfulls of much obliged")
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To: Scanian

The Feds will push the biofuel fantasy until they drive the nation into the ground.


34 posted on 04/18/2009 6:17:41 AM PDT by Iron Munro (Suppose you were an idiot. And suppose you were a member of Congress. But I repeat myself.)
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To: Scanian

Freepers have known this all along. Interesting that some people are waking up to reality.

Typical Democrats, symbolism over substance. Perception over reality. They don’t get it now, they won’t get it in the future. One more reason Democrats should never be elected to a political office.


35 posted on 04/18/2009 6:19:28 AM PDT by Morgan in Denver (Barack Hussein Obama: More corrupt than Clinton, more inept than Carter.)
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To: theymakemesick

“This does not include the petroleum required to farm, fertilize, water or transort the corn. Great use of natrual resorces.......”
WATER! The National Academy of Sciences recently published a report titled “Water Implications of Biofuel Production in the United States”. The paper outlines impacts and limitations on both water availability and water quality that would follow the pursuit of a national strategy to replace liquid fossil fuels with those made from biomass. COMMITTEE ON WATER IMPLICATIONS OF BIOFUELS PRODUCTION IN THE UNITED STATES http://www.theoildrum.com/node/3285

In some areas of the country, water resources already are significantly stressed. For example, large portions of the Ogallala (or High Plains) aquifer, which extends from west Texas up into South Dakota and Wyoming, show water table declines of over 100 feet. Deterioration in water quality may further reduce available supplies. Increased biofuels production adds pressure to the water management challenges the nation already faces.

It is equivalent to “mining” the water resource, and the loss of the resource is essentially irreversible.
Existing and planned ethanol facilities (2007) and their estimated total water use mapped
with the principal bedrock aquifers of the United States and total water use in year 2000.(Source USGS) Click to enlarge.
http://www.theoildrum.com/node/3285


36 posted on 04/18/2009 6:22:01 AM PDT by anglian (0bama's Stealth Reparations: "Mouthfulls of gimme and handfulls of much obliged")
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To: anglian

http://www.theoildrum.com/files/ethanol_and_water.JPG


37 posted on 04/18/2009 6:24:05 AM PDT by anglian (0bama's Stealth Reparations: "Mouthfulls of gimme and handfulls of much obliged")
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To: DB
The loss of wealth is going to be staggering.

The loss TRANSFER of wealth is going to be staggering.

The starry eyed true believers might be motivated by fantasies of saving Gaia but the politicians and their financial backers know its about money, and lots of it.

38 posted on 04/18/2009 6:25:32 AM PDT by Iron Munro (Suppose you were an idiot. And suppose you were a member of Congress. But I repeat myself.)
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To: Iron Munro

makes me wonder why Valero bought into this scam.


39 posted on 04/18/2009 6:29:04 AM PDT by Eric in the Ozarks
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To: pnh102
-- If ethanol was so great it would require no subsidies of any sort, just like with gasoline. --

If it was like gasoline, one would have to pay for the right to prospect and extract (lease the field), and then pay a tax for the production, and then pay a tax for the retail sale. And then STILL be competetive with gasoline.

40 posted on 04/18/2009 6:31:23 AM PDT by Cboldt
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To: niteowl77
-- big ag is now reflexively statist --

They have to be to survive short term. The ag business is entirely run by the federal government. IOW, as far as Ag goes, we have been communist for about a generation.

41 posted on 04/18/2009 6:33:45 AM PDT by Cboldt
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Bioethanol's Impact On Water Supply Three Times Higher Than Once Thought ScienceDaily (Apr. 13, 2009) — At a time when water supplies are scarce in many areas of the United States, scientists in Minnesota are reporting that production of bioethanol — often regarded as the clean-burning energy source of the future — may consume up to three times more water than previously thought. Annual bioethanol production in the U.S. is currently about 9 billion gallons and note that experts expect it to increase in the near future. The growing demand for bioethanol, particularly corn-based ethanol, has sparked significant concerns among researchers about its impact on water availability. Previous studies estimated that a gallon of corn-based bioethanol requires the use of 263 to 784 gallons of water from the farm to the fuel pump. But these estimates failed to account for widely varied regional irrigation practices, the scientists say. The scientists made a new estimate of bioethanol's impact on the water supply using detailed irrigation data from 41 states. They found that bioethanol's water requirements can be as high as 861 billion gallons of water from the corn field to the fuel pump in 2007. And a gallon of ethanol may require up to over 2,100 gallons of water from farm to fuel pump, depending on the regional irrigation practice in growing corn. However, a dozen states in the Corn Belt consume less than 100 gallons of water per gallon of ethanol, making them better suited for ethanol production. http://www.sciencedaily.com/releases/2009/04/090413102225.htm
42 posted on 04/18/2009 6:40:55 AM PDT by anglian
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To: Morgan in Denver

They’ll only get it when they finally kill their golden goose. And I think I hear her starting to honk.


43 posted on 04/18/2009 6:52:30 AM PDT by Scanian (i)
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To: bert
So, if all the gasoline now sold contains 10% ethanol, and it does here, is the price per gallon higher or lower because of the inclusion of subsidized ethanol?

Looks like May ethanol prices are about $1.57 per gallon versus $1.49 for RBOB gas. If you add the extra expense to transport the ethanol as well as the 51 cent blenders credit on top of the lower energy per gallon of ethanol, the cash price is a little higher per gallon and even higher when measured per mile traveled. And you might as well flush the subsidy down the toilet.

44 posted on 04/18/2009 7:05:32 AM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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To: Cboldt
I'll bet you $1 that ethanol made many a millionaire using Taxpayers dollars. When the house started to collapse, they bailed, and now they are sucking on the public teat on some other hair-brained program.

The other consequence is how many politicians did methanol get elected over the years. The people that tried to talk sense to the public weren't elected.

45 posted on 04/18/2009 7:44:51 AM PDT by Citizen Tom Paine (Sun Tzu "The Art of War")
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To: Cboldt
IOW, as far as Ag goes, we have been communist for about a generation.

The true harvest of people like Henry Wallace and Roswell Garst.

Mr. niteowl77

46 posted on 04/18/2009 10:19:36 AM PDT by niteowl77 (You wanted him, and now you have got him. I say, "Good day to you," America.)
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To: Scanian

LoL. Here is the cherry on top. - “A Bipartisan Group of US Senators Calls on EPA to Refrain From Including Indirect Land Use Change in Biofuel Regulations”
17 March 2009 A bipartisan group of 12 US senators led by Tom Harkin (D-IA) and Chuck Grassley (R-IA) has called on the Environmental Protection Agency (EPA) not to include calculations of indirect land use change (ILUC) effects as contributors to life-cycle greenhouse gas (GHG) emissions for biofuels in the upcoming rulemaking for implementation of the updated Renewable Fuels Standard (RFS-2) enacted in the Energy Independence and Security Act (EISA) of 2007.

The Renewable Fuel Standard (RFS-2) defined within the Energy Independence and Security Act of 2007 requires biofuels to meet specified life-cycle greenhouse gas emission reduction targets to qualify. The law specifies that life-cycle GHG emissions are to include “direct emissions and significant indirect emissions such as significant emissions from land use changes, as determined by the Administrator.”

Depending upon the assumptions and boundary conditions set in the ILUC evaluation, the result can dramatically increase the calculated GHG footprint of a biofuel, far offsetting the presumed greenhouse gas benefits of its use.
http://www.greencarcongress.com/2009/03/bipartisan-group-of-us-senators-calls-on-epa-to-refrain-from-including-indirect-land-use-change-in-b.html


47 posted on 04/18/2009 10:34:39 AM PDT by anglian (0bama's Stealth Reparations: "Mouthfulls of gimme and handfulls of much obliged")
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To: momincombatboots
Mother Market loves bailouts and stiumulus.

Only if you think high inflation is a loving mother's gift.

Mother Market appears to have been bought and paid for by the democrats.

No, no, no. Government is democrats; Mother Market does as She does irrespective of whose hand does the tilling - or the burning.

48 posted on 04/18/2009 11:41:52 AM PDT by D-fendr (Deus non alligatur sacramentis sed nos alligamur.)
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To: Lonesome in Massachussets

“When we, the people, elected these awful buffoons in Congress over the past decades, we signed up for the bail outs.”
////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

Yep, people keep voting for these nutcases when we could pick a name from the phonebook and probably do better.


49 posted on 04/18/2009 1:11:24 PM PDT by RipSawyer (Change has come to America and all hope is gone.)
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To: Iron Munro
That “transfer of wealth” is going to destroy wealth, not just transfer it keeping the total the same. Money is a tool. Generally those who have it know how to use it to produce more wealth. Those who do not know how to use it squander it and produce little with it. Therefore when you take the tools away from people who are productive and give it to those who are not, less is produced and everyone becomes poorer over time.
50 posted on 04/18/2009 2:31:45 PM PDT by DB
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