The milk bubble has popped too

How many more bubbles are going to pop? And, apparently, the US government is going to attempt to re-inflate every bubble with taxpayer money. Everyone is considered a victim, and the US government is coming to every victim's rescue. When will it end?

From the NYT:

The Agriculture Department has committed to buying 111.6 million pounds of milk powder at 80 cents a pound, for roughly $91 million, which includes some handling fees. Before October, the last time the government bought milk powder was in June 2006, and it was eventually used in government nutrition programs, given away as animal feed or sold on the open market, said Steve Gill, director of commodity operations for the department.

He said the agency has not decided what to do with the cache of milk powder in California.

Some critics of farm subsidies argue that price support programs are antiquated and allow farmers to continue producing even when the economics make no sense, as taxpayers will always buy up the excess production.

“They don’t want to downsize or respond to the market signal. They want to keep producing,” said Kenneth Cook, president of the Environmental Working Group, a Washington research organization that has long been critical of the government’s farm policy. “Once you get in a jam like this, it becomes our collective problem.”

The government purchases come after what the department calls a “euphoric period of record prices and booming exports” for the American dairy industry. Since 2003, dairy exports have increased from $1 billion a year to about $4 billion this year, with exports of powdered milk increasing sixfold during that period. Milk powder is an attractive product to export because it does not require refrigeration, has a long shelf life and can be used to make numerous beverages and foods.

http://www.nytimes.com/2009/01/02/business/02dairy.html?pagewanted=1&ref=business