Mad Cow Recession.Canada's mad cow problem will require a large US bailout
The year was 1996 and Britain's cattle industry had collapsed under the pressure of the dreaded Mad Cow disease. A link was formed between this devastating animal disease and its debilitating human counterpart Creutzfeldt-Jakob disease (CJD). In order to solve the problem in its entirety the European Union invested $400 million a year for six years. Over the course of those six years a total of 15,000 cattle were slaughtered every week. The EU accepted the responsibility of helping Britain curtail its Mad Cow disease problem; will Canada ask us to do the same?
The situation in Canada has the potential to completely devastate the United State's economy Canada's beef industry is a US$7.5 billion a year business. Over 70% of Canadian beef exports end up in the U.S. If the Canadian's turn to the U.S. to bail them out of their Mad Cow problem, the U.S. taxpayers may find themselves with an additional $200 million to $400 million, annual deficit.
With our recent tax cuts, Iraqi war expenses, and weaker US dollar our country could never afford to help Canada out at the price tag of US$200-$400 million annually, like the EU helped Britain. Unfortunately, we may not have a choice. We can't afford to rush bringing Canadian beef across the border without raising the ire of many US cattle ranchers about the potential Mad Cow threat.
The President has a serious dilemma on his hands, domestic or international interest. Many major corporations think they know the answer and they are now protecting themselves from wild fluctuations in cattle prices by hedging with options and futures.
Noble DraKoln is the author of the best-selling books Futures For Small Speculators and Single Stock Futures For Small Speculators, available on http://www.amazon.com. He is also a well-known Southern California educator through his Small Speculators investing seminars. He has been a futures investor, broker, and analyst for almost 11 years. You can subscribe to his free monthly newsletter at http://www.liverpoolgroup.com.
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