"Couldn't you find anything cheaper?" was asked Elizabeth.

"Well, of course...but I didn't have time to pay much attention...and besides how often will we come here...how often do we go anywhere?"

We could tell from the tone of her voice that this issue was not worth pursuing. Besides, we are used to being shocked by prices in Europe. We're shocked so often, in fact, that we'd be shocked if we weren't shocked. Still, occasionally, we got a major shock in the restaurant. The breakfast buffet was $49; we almost decided we could wait to eat until we got home.

At the table next to us was a group of Americans, a hearty, trim man in his 60's, with one nice-looking woman in her 40's...and two young women, obviously his daughters, in their 20's. They all looked so wholesome, dressed in jeans and sweaters...the girls with blond hair, blue eyes and straight, sharp noses.

In foreign countries, we often imagine that the people near us cannot understand English and speak more freely than we might at home. Usually, this is a mistake. There is always someone nearby who speaks English - practically everywhere, and especially in Geneva. In this case, we understood every word they said.

We wondered what brought them here. This was not a tourist hotel...Geneva is not really a tourist town. And these people were purely American, Midwesterners, probably...not like the Euro-Americans who have spent so many years on the continent that they have picked up the affectations of the local people.

"Oh Daddy, I wish you'd buy me another watch," said one of the girls. "I think I left my Cartier watch at the beach house. I can't find it. It's probably lost."

The conversation about watches continued for a while. Then, the subject of ethanol came up.

"Are we still in ethanol?" one of the girls asked.

"Yes...we've done real well with it too. But I'm not putting any more money in. People are wising up..."

"What do you mean?"

"Well, ethanol doesn't really make any sense economically...it's too expensive to produce per unit of actual energy. Not really competitive with oil. And it doesn't make sense environmentally either. By the time you figure out all the damage to the environment done by planting corn...harvesting it...transporting it...and then turning it into fuel, it's more than you get from oil. No...ethanol only makes sense politically. Iowa votes early. And Iowa raises corn. No politician wants to oppose ethanol."

"Well, how did we make money in ethanol if it doesn't make sense?"

"Just 'cause it doesn't make sense doesn't mean there's no money in it. The government's been subsidizing ethanol on the one hand...and inflating the dollar on the other... The subsidies make producing ethanol very attractive for that partnership we're in. And then, with the dollar going down, the price of oil goes up - and the price of ethanol too. That's why we've done so well...thanks to the politicians."

"Then, why don't we stick with it?"

"I don't know...I just smell a change coming on. People don't like to think about kids starving in Africa and Asia while we're burning corn in our gas tanks. And the whole economy is going soft...which could cause the price of oil to go down. I tell you, we had a very good run...we should be happy with it...and let it go at that."

"Well, Daddy...will you buy me another Cartier watch to replace the one I lost? You can use some of the money we made from ethanol."

Bill Bonner
The Daily Reckoning Australia

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