Biofuels Corner: Connecting the Dots-----reflection

Recently I have posted some speeches of the Federal Reserve Chairman, Ben Bernanke, and have also published audio of the recent Common Council meeting regarding the North Prairie Production announcement of temporary suspension of construction of the biodiesel plant due to the large spike upward of soybeans. The purpose of this post is to connect some of the dots. I know some of you might have wondered why I was covering the Federal Reserve.

When The Evansville Observer posted the picture on the right of the blog of Governor Doyle and Mayor Decker announcing that Evansville, Wisconsin was the Soybean Capital of Wisconsin.....it may surprise you to know that very quickly a visitor from Dubai, Saudi Arabia came to view the story. Yes. For a minute, I thought maybe they were looking for something from The Tales from Normal.

Just imagining a little, if one was an investor, a speculator, and yes even an oil titan from Saudi Arabia, one would see that there was a speculation----and also that by driving the price up and profiting, one could also impair the competition. With the free reign that the "Hedge Funds" have been given we have lost the ability to control items of the national interest---energy---and everything is up to speculation. Even our Money Market Funds and pensions have been infiltrated with investments that are not "FIXED" in the traditional sense, but are junk if the public loses confidence in them. This is in stark contrast to a CD which is guaranteed by the Federal Government. But I digress....

The Federal Reserve Chairman, Bernanke was recently questioned after a speech and one Senator asked bluntly whether he in the Federal Reserve knew any more than the investment firms that seems to know so little about their own investments. He replied that they had not done "due diligence." The next step in the story is the new level of reporting required by banks, that will require that banks DETAIL the loans they are carrying and the specific risk of each, rather than aggregate them. Investors, retired folks, etc. who had invested in money market funds etc. had no idea that their investments were at such risk.

Now with the greater "TRANSAPARENCY" of reporting, they will know.

Now moving to the North Prairie Production decision to temporarily suspend construction. If you listen to Pres. Mike Robinson's video on the Observer, you will hear him say the banks could not close the loan because of the "securitization" of the investment, meaning that it was to be packaged to many banks to diversify the risk.----however---with the new reporting rules---if the loan was "non-performing" right at the beginning, investors would balk--and they did.


As I see it: Our nation and our state of Wisconsin have a huge interest in energy independence and stability, and have an interest in protecting emerging industry such as our biofuel industry. It is not a partisan thing. Governor Doyle was there at the ground breaking ceremony---as well as politicians from both political parties. The Governor even brought a check to the ceremony and pledged the support of the State of Wisconsin.

So stay tuned. There is more transparency in the banking system now than there was 6 months ago. That is good. I believe others will step up to figure a way to help our biofuel industry thrive here in Evansville---it is in the State, National and local interest. That is how I see it.