Photo That Worked For My Day...



[More]

I need to post new shots more often.

Sounds like a resolution to me.

Hobbling the competition...

In true farm-lobby fashion, producers outraged that a legislative good deal is being exploited by ordinary citizens have managed to insert some serious curbs on 1031 land exchanges.

As part of the bill, the Senate is proposing to change the 'like-kind' standard to provide that “unimproved agricultural real property” is not like-kind to “improved real property”. “Unimproved agricultural real property” is defined as agricultural land that is enrolled in certain farm subsidy programs, unless the agricultural land is permanently retired from the farm subsidy programs prior to the date of an exchange transaction. Much of America's agricultural land is subject to these subsidy programs. What does this mean for exchanges of agricultural properties? It prevents farmers, ranchers and owners of agricultural property from exchanging out of improved agricultural property (livestock facilities, grain elevators, machine sheds, fence, tile etc.) and into the subsidized agricultural land. It also prevents farmers and ranchers from exchanging the subsidized agricultural land for any improved real property, including commercial, residential and tenancy-in-common (TIC) properties. Finally, it prevents owners of commercial and residential investment properties from exchanging into the subsidized agricultural land. Most likely, these provisions will result in agricultural land owners having limited choices in exchanging their farm or ranch land. If they decide they'd like to reinvest their land sale proceeds into an improved investment property they will be forced to pay the tax or exchange and lose the land's future ability to qualify for subsidies (thus potential reducing the value in the land). As you can see, this provision will have a significant impact on those that work with agricultural land and on those communites that are located in agricultural-based areas. [More]

The two sides here are interesting combatants. First, there is the 1031 industry of accountants, realtors, and financial advisors along with landed farmers close to retirement. These folks are driven by the rule that most Americans will spend $0.99 to save $1 in taxes.

In the other corner are farmers hoping to buy without having to compete with "outside" money. Tax-free exchanges have time limits and the feeling is that desperation in the last few days of the swap period drives land prices way beyond sanity.

My thought is most legislative inhibitions on free market action tends to come back and bite your own behind. Plus in the long run they tend to be futile as the restrictions get priced into the assets.

Still, for an industry that has worked to insert bizarre little goodies into any legislative package within reach, agriculture seems to be strangely unprepared for the same from other special interests.

My preference would be for capital gains taxes to be reduced to about 8%, at which point owners, buyers and the government could all be winners.

It could be all farmers...

In the land market from here on in. Consider this comment from Barrons:

The most imminent threat is the housing meltdown. Leuthold says that, historically, a convulsion in one part of the realty market eventually has affected all others.

In the agricultural sector, ranchland and recreational farmland already have been quietly hit, having peaked in 2006, according to brokers. Jack Horton of Vale, Ore., who has been selling rangeland for 36 years, says prices are down 10% on average, and as much as 20% to 30% in some areas of his state. Recreational plots, bought by sportsmen, have also tanked, he adds. The drought in the West also is hampering demand for working ranches, as is the high cost of cattle feed, resulting from -- what else? -- the ethanol boom.

BROKERS TOOK HEART WHEN Louis Bacon of Moore Capital Management spent $175 million recently on the 250-square-mile Forbes Ranch in Southern Colorado for a holiday retreat. "It's the American dream to own part of the West," Doug Hall of Hall & Hall a multi-state brokerage company located in Billings, Mont., says. "There are an awful lot of people who made a lot of money who want to enjoy it while they have it." But smaller places -- under 5,000 acres -- away from the mountains are harder sells, he acknowledges.

John Stratman, a broker for the Mason & Morse Ranch Co. in Glenwood Springs, Colo., concurs that the lower end of the market has slowed. "I don't think the buyers have gone away. They're on the sidelines because of all the negative publicity about the residential and subprime markets; and they're sitting there waiting to see which way the economy goes."

If the economy does teeter into a recession, that would make continuation of the farmland boom all the harder. At this stage, any investor should be wary of betting the farm on a farm. A Miami condo might be a better deal. After all, you can buy a nice one now for just 60% or so of what you would have had to shell out three years ago. [More , maybe - due to firewalling and temporary availability]

Farmers are definitely pouring profits into the land market, and for good reasons, I think. Slowing development pressure will decrease 1031 money, and advice like this could temper pure investment plays as well. But the hard truth is there is much more wealth to be invested than good places to put it right now. Farmland (about $2T) represents a small fraction of asset values here in the US.

The question is not so much if farmland is the best place to put money, but how much worse are all the other choices?

With my apologies...

Several requests came in after our Christmas show on US Farm Report for more information on the song lyrics I read at the close of the show. The trouble is, like many of you, I still haven't learned all the changes on the new AgWeb and I had no idea people were commenting there.

So while it's too late for your Christmas services here are the lyrics to "Bring Us Peace", a SATB (or 2 part) anthem by Craig Courtney with words by Pamela Martin. The music is about level 3-4 with optional treble (children) choir or solo. You can purchase the music here (catalog number 10032590) and listen to it here (Real Audio).

Bring peace to each person and peace to each heart,
Bring peace to the loved ones from whom we're apart.
Bring peace to each home and to husband and wife,
Bring peace to the families living in strife.

(Refrain)
Prince of peace, Child of peace, Dona nobis pacem
Fill us with your true gift of love for one another.
Prince of peace, child of peace, bring us peace we pray.

Bring peace between neighbors who live side by side,
Bring peace to city, each village and tribe.
Bring peace between nations, peace near and afar,
Bring peace that will blossom wherever we are.

(Refrain)

Peace for each morning, each step of the way,
Peace that remains at the end of the day.
Help us to see that for peace to begin,
First we must find that true peace from within.

(Refrain)

Prince of peace, Child of peace, bring us peace today.

Again, I'm sorry I did not see your requests. I'll be checking the comments daily from now on.

You know, re-reading this, it works for me as a New Year's prayer as well.

OK - this is a little late, too...


It's A Wonderful Life.

In 30 seconds.

Enacted by bunnies.




What?

How bad is it?...

A. Really bad.

As the credit paralysis stretches through its fifth month, a chorus of economists has begun to warn that the world's central banks are fighting the wrong war, and perhaps risk a policy error of epochal proportions. [More]

B. Not so bad

As the U.S. savings and loan crisis worsened in the 1980s, analysts tried to top each other's estimates of the debacle's cost to the federal government. Much the same thing is happening now with losses linked to subprime mortgages, with figures of $300 billion to $400 billion being bandied about. A more realistic amount is probably half or less than those exaggerated projections -- say $150 billion. That's hardly chicken feed, though not nearly enough to sink the U.S. economy. [More]

So how are you betting? My guess is most farmers are mildly amused bystanders, and will be until a crisis forces some change in farm policy via subsidies or energy mandates.

As for the credit crisis, I believe it will get much worse, and interest rates could fall below the historic lows of just a few months ago.

Predictions for 2008 (Load #3)...

Environmental issues:

"Green" Continues to Grow: Public health and environmental concerns will remain a major issue. Continued attention on global warming, lead-based paints and the contamination of goods will drive businesses toward environmentally friendly packaging, recyclable products and the enforcement of trade regulations pertaining to the use of toxic electrical and electronic components. The concept of having a green supply chain will move from being a public relations strategy to a necessary means of deriving real economic value and improving compliance. As companies focus on supply chain and product lifecycle management initiatives in this environmental light, concepts that will be embraced include the designing of products derived from recycled materials; striving for "zero waste" from a product at end-of-life; and employing sourcing and fulfillment strategies based on less fuel consumption and the environmental practices of supply chain partners. [More]

Movies:

June 20: Myers is back with "The Love Guru," his first grown-up comedy since 2002's "Austin Powers in Goldmember." But he must topple Carell in Warner Bros. adaptation of "Get Smart." Advantage: "The Love Guru." [More]

Technology (IT):

Windows XP's Reprieve

Microsoft will announce an extension until the end of 2008 for Windows XP availability, instead of cutting it off on June 30.

In September '07, the company pushed the extension from the end of January until June after corporate users complained. Not to mention that many companies had decided to put off moving to Vista. The migration will continue to be slow for at least the first half of 2008. [More]

[Many more tech predictions here]

Which party will take the White House?

From the Iowa Electronic Markets (which has been shown to be remarkably accurate)




The Top 8 Health Issues

6. Michael Pollan It was difficult to discuss food this year without bringing up Michael Pollan, whose bestselling book "The Omnivore's Dilemma" hit a nerve in the debate about our food system. By the end of 2008, we could be saying the same of "In Defense of Food: An Eater's Manifesto". Set for release on Jan. 1, Pollan's newest book follows up on a New York Magazine article from 2007 and argues that we're focusing too much on individual nutrients and losing site of the value of -- and delight in -- real food. Pollan's American paradox -- "the more we worry about nutrition, the less healthy we seem to become" -- is made all the more interesting by the increasing popularity of functional foods, or foods that are said to have added health benefits, with consumers and the food industry. [More]

It's 11:30 PM. Do you know where your satellite is?...


Find it here.

[Thanks, Greg]

Road trip...

Across America in about 10 minutes.

[via Mefi]

Nope, still not working...

Ethanol proponents can't wrap themselves in the flag tightly enough these days while trumpeting energy security (and less frequently now "energy independence").

Well, mandates are making corn farmers like me richer, helping food prices inflate (not the only cause, I know), and giving the livestock industry headaches. For all these side-effects what are the numbers on our "energy security"?

Not promising.

[Note: I have not mastered how to insert tables - bear with me. The BGO total is from the red countries. I wasn't sure about Algeria, but what the hey.]

Crude Oil Imports (Top 15 Countries)
(Thousand Barrels per Day)

Country Jan - Oct 2007 Jan - Oct 2006

CANADA 1,867 19.9% 1,771 18.6%
SAUDI A 1,422 15.2% 1,414 14.9%
MEXICO 1,420 15.1% 1,622 17.1%
VENEZU1,133 12.1% 1,158 12.2%
NIGERIA 1,053 11.2% 1,052 11.1%
IRAQ 494 5.3% 565 5.9%
ANGOLA 511 5.4% 504 5.3%
ECUADO 202 2.2% 278 2.9%
ALGERIA 478 5.1% 368 3.9%
BRAZIL 175 1.9% 131 1.4%
COLOMB 134 1.4% 158 1.7%
U KINGD 108 1.2% 134 1.4%
KUWAIT 180 1.9% 173 1.8%
RUSSIA 124 1.3% 113 1.2%
LIBYA 83 0.9% 66 0.7%
BGO 3,790 40.4% 3,744 39.4% (BAD GUY OIL)
TOTAL IMPORTS 9,384 9,507
Annual Ethanol Bgal 6207 (e) 4855

If there is any trend in "dependence on evil furrin orl" is the the wrong way. Seems like I mentioned this possibility a few times before.

Ethanol mandates are the political will of the people, so it doesn't really matter what any stoopid facts prove. But they are clearly not helping our alleged "energy dependence".

In fact, using this data, a little crude calculation would suggest getting to 15 Bgal of ethanol would increase our dependence on BGO by about 2-3% of total use.

Hmmm - obviously we need a bigger mandate.

Countdown to ugly...

How long until your favorite TV show runs out of new episodes?

Bad news for us Big Bang Theory fans.

[via Dumptrumpet]

Hand-picked, Cage-free Predictions for 2008 (Load #2)...

Credit markets:

Shares are thus the default asset of choice. But defaults of a different kind could be the big issue of 2008. If you want to mug up on jargon for the year ahead, then the business of insuring against bond defaults known as credit default swaps, or CDSs, would probably be the best place to start. [More]

Estate taxes (my call is this issue will heat up BIG TIME for farmers):

Dusting off my crystal ball, here is the prediction: If the Democrats win both the Presidency and control of both houses of Congress, the compromise will be to extend the 2009 rates and exemption level: a $3.5 million exemption and a flat 45% rate. If the Republicans win both the Presidency and control of the Congress, the compromise will be a $5 million exemption and a 35% rate. While the Republicans would prefer repeal or, at a minimum, lower rates (a la McCain), that would be too expensive in terms of revenue loss. If the Democrats and Republicans split control of the White House and Congress, the compromise will still fall within this range.” [More]

Weather for 2008:

The National Oceanic and Atmospheric Administration or NOAA has predicted above-average temperatures for the United States this winter. The national temperature average will be 4 percent warmer than the 30-year normal. This prediction for warmer temperatures is similar to last winter. A moderate La Niña has been detected and will continue into the first part of 2008. The La Niña effect will cause higher precipitation in the Pacific Northwest, Northern Rockies, Great Lakes and Ohio and Tennessee Valleys. There will also be above-average temperatures in the Mid-Atlantic and Southeastern states, continuing a long term warming trend for the region. NOAA predicts drier conditions in the Southwestern and Southeastern states, continuing the current drought conditions. [More]

Transportation trends:

The coming world decline in oil production, once started, will go on for decades and each year we'll see less oil produced than was produced the year before. As oil production declines liquid fuels will become more and more expensive. Therefore the use of diesels for commuting will be a transitional phase. In the long run I expect diesel cars to be used almost solely for longer trips and for freight hauling. For people who do average commutes (less than 40 miles per day) I expect rechargeable hybrid electric and pure electric cars to become the mainstays. [More]

More coming.

Better than the hurricane forecast...

After the embarrassing miss on the 2007 hurricane season, some forecasters are looking for better methodology.

Paul Smokov doesn't need radar or other high-tech equipment to forecast a major snowstorm on the prairie. He consults pig spleens. "It looks like a normal year with no major storms," said the 84-year-old Smokov, peering at two of the brown, glistening, foot-long organs on his kitchen counter like a Gypsy gazing into a crystal ball. "That's what the spleens tell me." [More]

Must-not-tell-"gut-feeling"-joke...

[via Arbroath]

Word of the day: champerty...

One thing we know how to do here in the US of A is litigation. Populated with lawyers over (over 4 times as many as industrial farmers) these hard-working citizens need stuff to do, but the economics of long delays in the courts often cause litigants to do the wrong thing and settle.

Meanwhile, venture capitalists need places to invest billions and earn juicy returns now that the CDO market seems to have vaporized. Enter good ol' American/English entrepreneurship.

Profiting from other people's lawsuits, a practice known as champerty, is illegal in some jurisdictions and risks accusations of ambulance-chasing, but Juridica is concentrating on backing business plaintiffs, where the practice is better established and more accepted.

Some well-known investors, including Invesco Perpetual and Jupiter, are backing the company and Cenkos is the nominated adviser.

Pursuing legal claims can be frighteningly expensive. Plaintiffs have to commit management time and cash years into the future with no certainty of success. Getting an outside investor to share some of the financial pain can be very attractive. So can tapping their litigation experience. While most large companies are well resourced with in-house lawyers, few have litigation experience. [More]

While this could be just a curious legal footnote, it could also seep into lawsuits farmers have more investment in - such as environmental litigation against large targets like agribusinesses or government. Or anti-development suits. Cost has always been significant deterrent to plaintiffs as cases drag on regardless of outcome probabilities.

[via h&r; MR]

Stuff you think you know...

But really don't. I am a client of Roach Ag Marketing and his market memo today had this very helpful gem.

Jerry from Iowa asked, “…..perhaps you could explain who the futures buyers/sellers are sometime. My uninformed mind doesn't really grasp who are the speculators and the index funds and the corporations. When you guys buy for us, are you one of the speculators? Other than the agribusiness giants, how much participation does the ag. sector really have in the markets (like when we buy thru you or our elevator)? Is it mostly dominated by financial gurus?”

The CFTC reports the trading activity of 4 different groups each Friday. You can see Friday’s report at: http://www.cftc.gov/marketreports/commitmentsoftraders/index.htm The graph I included in Yesterday’s report shows the two speculative groups reported on each week by the CFTC. One is called “spec funds” and the other is called “index funds.” Speculative funds is not actually the correct name for one of the groups, but many of us use this term. The CFTC actually calls this group “large non-commercial traders” which include funds (professionally managed pools of money similar to an actively managed stock fund in the stock market) and any other large speculative trader with a reportable position size.

The second group the CFTC reports is “commercial traders.” This group consists of commercial grain firms that are hedging their purchase or sales needs. This will include coop elevators, merchandisers, processors, and other users and handlers that have positions that are of a reportable size.

The third group that the CFTC has been reporting on since January is index funds. Index funds are pools of money that are designed to “track or mimic” a specific group of commodities. This would be similar to an index fund in the stock market that tracks a specific stock index such as the Dow Jones index or S & P 500. Each year many of the index funds must rebalance their positions so they have the “correct percentage” of money invested in each commodity. Traders expect index funds to liquidate some of their ownership in wheat and beans early in the New Year while building a larger long position in corn.

The fourth group is made up of everybody that does not have a position of a reportable size. That includes everybody else whether they are hedging or speculating. Most farmers are in this group. I believe the biggest influence farmers have in the market is their cash selling activity. When a farmer sells, that sale is almost always quickly transferred to the CBOT. Farmers are the only market participant that never buys back (OK occasionally they do) their sale. Farmers need speculative buyers to get high prices, but we hate speculators when they are selling.

A little extra familiarity with this subject could be very, very handy in the years to come, methinks.

[Thanks, John]

"Turn the lights out, fer cryin' out loud!"*...

I have learned that natural darkness has a powerful effect on people unused to its experience - which includes most urban dwellers. But between the energy price inflation and a "dark-sky" movement, that could be changing.

In a trend that has been accelerating in the last five years, hundreds of cities, states and federal governments have enacted laws that address light pollution or retrofitted streetlights, the Arizona-based International Dark-Sky Association reports. Twenty-eight states have passed or are debating laws limiting light encroachment.

Grass-roots groups are pushing the fight. The Dark-Sky Association has seen its membership grow from about 600 a decade ago to 11,000 worldwide this year. Lights Out America has brought its campaign to dim the lights for an hour and install low-watt bulbs to several major cities this year, and it is planning events in Chicago and other cities in March. [More]

While it gets little credit, the presence of true quiet and natural darkness contribute strongly to the desire of city-dwellers to move out by us. I suspect these ingredients nurture a sense of security hard to duplicate with gates and guards.

I know they soothe my spirit. And more darkness would be a step forward to a better future.

* Direct quote from my late father, usually followed by, "Do you think we own the power company?"

Farm and fortune...

One of my more fatuous ambitions has been to be linked to by the Big-Time Bloggers like Andrew Sullivan.

Result!!*

Sort of.

* The view from our kitchen window at sundown.

Great game for Grandpa and the kids on Christmas Day...

Find all the numbers. Play.

[via RGS]

Hard to tell how this will end...

I have been watching the raw-milk flap for a few years, but apparently it may be gathering some momentum. 2 Blowhards have a good summary.

A little background: In most states, it's against the law to sell or buy raw (ie., unpasteurized and unhomogenized, straight-from-the-cow-or-goat) milk because of fears of contamination. Yet some people feel that raw milk isn't just ultra-tasty (having tried raw milk, I agree wholeheartedly with this verdict), it also benefits their health.

So: Perhaps the sale of raw milk should be strictly prevented on public-health grounds -- public-health grounds that we're justifiably proud of, and that we should be completely unyielding about. After all, in pre-pasteurization days, tons and tons of people used to get sick because of milk-borne infections. On the other hand, why shouldn't freedom and liberty prevail whenever possible? Provided that the public is made aware of the risks, why shouldn't people be allowed to conduct business as they see fit? After all, if we permit the sale of cigarettes ...

The controversy seems to be emerging as a newsworthy one. (Here, here.) An informal coalition of hippies, home-schoolers, health buffs, libertarians, local-farming fans, and foodies are pushing the freedom-and-raw-milk cause, while governments are cracking down so hard on the raw-milk scene that they're beginning to make some people think, "Good lord, it's Waco all over again." And editors and policymakers are beginning, if reluctantly, to take note. Whee! [More]

I am always leery of gushing claims for "alternative food". Organic fruits/veggies haven't impressed me. (In fairness, fresh from a garden stuff does.) But I agree this can be seen as a nanny-state intervention into lives that is both unneeded and market-distorting.

However, milk marketing in the US is already a sad display of market perversion firmly controlled by firms who defend the status quo via political power. It could be a narrow issue like this one, made possible by wealthy, picky consumers constitutes an asymmetrical challenge to the hegemony granted by marketing orders and allotments.

Isn't that Darrell Good?...



I've been worried about Darrell ever since his nearly enthusiastic outlook on grain prices. It's good to see him still able to kick back.

I've always wondered about this...

I am not a country music fan, partly because like the plots of most romance novels, many of the songs deal with the same life situations over and over again. Granted they are common scenarios, but country music zeroes in almost exclusively on the depressing ones: drinking, divorce, heartbreak, etc.

And it made some economists wonder:

This article assesses the link between country music and metropolitan suicide rates. Country music is hypothesized to nurture a suicidal mood through its concerns with problems common in the suicidal population, such as marital discord, alcohol abuse, and alienation from work. The results of a multiple regression analysis of 49 metropolitan areas show that the greater the airtime devoted to country music, the greater the white suicide rate. The effect is independent of divorce, southernness, poverty, and gun availability. The existence of a country music subculture is thought to reinforce the link between country music and suicide. Our model explains 51% of the variance in urban white suicide rates. [More]

One can only speculate on the effect of Wagner. Or Manilow.

The Apple turnover saga...

Yet more adventures in my move from Windows PC's to Macs.

• I added a MacBook to round out our set of computers. Once again the lack of a two-button mouse was irritating so I added a small Bluetooth mouse for it just like my iMac. Prob solved.
• I tried all day Sunday to get USFR to play on both iMacs without success. It seemed to almost work, but neither loading Windows Media Player 9 for Mac nor the plug-ins to make the files play on Quicktime produced results. Until this morning. (Don't ask me!) Seriously, I tried again this morning and the shows loaded and ran fine on QT with the plug-ins. Still not going perfectly on Jan's machine, but I can see progress.
• I added a 160GB USB hard drives to each computer for backup with Time Machine. After years of semi-successful preventative efforts, finally one that works. The drives were recognized immediately, the Mac asked if I wanted them to be the Time Machines and that was it. The slickest backup setup I've ever seen - and not a minute too soon. I was finishing up my budget (cashflow) spreadsheet for my annual bank visit when I stupidly erased some off-the-edge formulas and numbers that I though were no longer needed. Buried in amongst them was a crucial reference that caused references all over the sheet to fail. Worse still, for some reason the "undo" didn't save me. I went to Time Machine, found the file as it was less than an hour ago, and restored it instantly, with only a few changes that had to be repeated. Love it!
• Jan fooled around with Garage Band to make podcasts for her gardening broadcasts. Not only is it simple, the quality is very good. You can even add a sound track behind the talking that mutes automatically to match the vocal track. Also you can insert photos as well. We're just starting to fool around with this, but this tool has promise.
• Jan is learning to use Pages and Keynote - the Apple versions of Word and PowerPoint - because MS Office won't let her run any programs while I'm using any MS programs. (I loaded both computers with the same copy of Office savagely violating the MS copyrights. Another friendly MS gesture. Hey Bill, how 'bout this gesture?

After two weeks a solid approval from both Jan and I. I don't think I'll miss Microsoft.

Bad math hurts...

An engineer's guide for understanding the subprime mortgage mess.

Investors love these higher interest low risk bond packages. So the banks start to put together more of them. And they realize that they can cobble together even higher yield bundles if they cascade them: they take a bundle of 10 different kinds of s--- loan bonds, and turn them into high risk loan meta-bonds. Then bundle 10 different high risk loan meta-bonds (which were formed from the s--- loans) into medium risk meta-meta-bonds. Then bundle 10 different medium into a low. And so on. So now you've got something labeled as "high quality, low risk" which is formed completely from a collection of s---. But, by golly, it's marketed as high quality, and it's got a nice rate of return! And it's really low risk, because you've distributed the risk into a bunch of independent places, and you're only in trouble if they all fail. (This is bad math point number one: false independence. This scheme only works if there is truly no connection between the failures of the components.)

You bundle them together according to a complicated scheme called tranching to make them look like they're really, truly safe. And you take out insurance, so that if something goes wrong, it's all insured. [More of a helpful - albeit scatological - explanation of the credit crunch trigger]

I have read several articles trying to explain simply what happened as mortgages were massaged into more exotic investment packages. This one helped more than most.

I can see for miles and miles...

Great 2008 predictions for your consideration:

Subject: The Internet

While major internet service providers like AT&T, Verizon and Comcast all plan to upgrade their backbones, it will be a year or two before improvements begin to show. By then, internet television will be in full bloom, spammers will have multiplied ten-fold, WiFi will be embedded in every moving object, and users will be screaming for yet more capacity.

In the meantime, accept that surfing the web is going to be more like travelling the highways at holiday time. You’ll get there, eventually, but the going won’t be great.

Subject: Commodities

Within the grains sector, we expect corn and wheat to continue to deliver the best returns, while in materials and fibres, we continue to believe the prospects for US cotton prices are good.

We remain bullish on the oilseeds sector, particularly the soybean crop. Demand - especially from China - is anticipated to continue to exert pressure on supply.

Subject: US economy

With US growth barely positive through mid-2008, even a small shock will push the economy over the edge

For the past two years, Global Insight has been saying that it would take two or more shocks to trigger a US recession. There is a growing risk that such a scenario may be about to unfold.

The combination of the housing/subprime crisis and higher oil prices could be enough to push growth into negative territory. If oil prices continue to fall, and end up in the $75-80/barrel range early in 2008, the US economy will probably be able to escape recession.

Subject: Media

Daily newspapers begin to redefine the word "daily." At least one U.S. newspaper in a top-100 market will stop taking "daily" literally and drop its (historically thin) Saturday print edition. Other papers in smaller markets also do so, in some cases going further by dropping print publication on another day as well.

More as I find them.

Unnecessary Christmas carols...

Some MP3 tracks of carols you don't hear over the PA at Walmart.

• C3PO Christmas
• Blue Christmas (Porky Pig)
  
• Little Drummer Boy (Surfer Version)
• Little Drummer Boy (Marlene Deitrich)
• Merry Christmas, Neighbor (Cast of Bonanza)
• The world’s worst version of Oh Holy Night (Unknown)

Way too many more here.

Maybe the legs don't go first...

The more we discover about our brains, the more we can trace other problems back to them as the initial causes. For example, I have always thought the drink-lots-of-water to be a health fad perhaps instigated by bottled water purveyors. Besides, if we need water, we'll get thirsty and drink some , won't we? Maybe not - especially as we age.

As Australia faces another hot, dry summer, scientists from Melbourne’s Howard Florey Institute have warned that elderly people are at risk of becoming dehydrated because their brains underestimate how much water they need to drink to rehydrate.

Dehydration occurs when the body does not have enough water and this can happen rapidly in extreme heat or through exercise. Symptoms of dehydration can include headaches, lethargy and hallucinations. In extreme cases, dehydration may result in death.

Florey researchers Dr Michael Farrell, A/Prof Gary Egan and Prof Derek Denton discovered that a region in the brain called the mid cingulate cortex predicts how much water a person needs, but this region malfunctions in older people.

Dr Farrell said they infused old (age 65 to 74) and young (age 21 to 30) research participants with salty water to make them thirsty and then allowed them to drink as much water as they wanted.

“Although all participants had the same level of thirst, the older people only drank half as much water as the younger subjects,” Dr Farrell said.

“Using PET imaging we found in the older people, the mid cingulate cortex was ‘turned off’ much earlier by drinking small volumes.”

“This discovery helps explain why the elderly can become easily dehydrated,” he said. [More]

Such insights will doubtless lead to corrective strategies and even pharmaceuticals. In fact, it seems we're not waiting for aging as an excuse to pump up our brains with helpful chemistry. Brain doping could be the follow-up to sports doping, only more ethically confounding.

These drugs haven't been tested extensively in healthy people, but their physiological effects in the brain are well-understood.

They are all just precursors to the blockbuster drug that labs are racing to develop.

"Whatever company comes out with the first memory pill is going to put Viagra to shame," said University of Pennsylvania bioethicist Paul Root Wolpe.

Unlike anabolic steroids, human growth hormone and blood-oxygen boosters that plague athletic competitions, the brain drugs haven't provoked similar outrage. People who take them say the drugs aren't giving them an unfair advantage, just enabling them to make the most of their skills.

In the real world, there are no rules to prevent overachievers from using legally prescribed drugs to operate at peak mental performance. What patient wouldn't want their surgeon to be completely focused during a life-or-death procedure?

"If there were drugs for investment bankers, journalists, teachers and scientists that made them more successful, they would use them too," said Charles Yesalis, a doping researcher and professor emeritus at Penn State University. "Why does anyone think this would be limited to an athlete?" [More of a great - and unsettling - article]

As we push back the threats of heart disease and cancer, many of us now dance with thoughts of outliving our brains. Along with research into improving brain function, other scientists are working on mitigating the aging process itself. [You think Social Security is in trouble now!] Their discoveries have produced one unexpected result.

Everything comes with a price. Research in lab animals suggests that drugs designed to rejuvenate mitochondria (the “power generator” component of living cells) could fend off many of the diseases we associate with ageing and senescence, like Alzheimer’s, cancer, heart disease and so forth. The pay-off? It appears that when death finally does arrive, it does so with little or no warning, and seemingly no reason. [More]

This sounds like a win-win treatment to me. I think I read somewhere there is a theory our hearts have so many beats in them. When they are used up, they quit. The argument proceeded to wonder if runners with slow heartbeats break even because their heart rates are so much higher when exercising. Still, I found the idea of my heart just stopping to be the lesser of many other endings.

Regardless, the promise of living longer, smarter, and umm, thristier could bring about radical changes in our values and cultures. I suspect many will find this line of enhancement deeply troubling and compelling at the same time. Like all major scientific leaps, it could take a couple of generations before acceptance is widespread - unless the critics are using live-prolonging technology surreptitiously, keeping them on the scene even longer.

Come to think of it, baseball may be a good analogy after all.

Last second addition to my Christmas list...

Been waiting for this all my life:

Toshiba has developed a new class of micro size Nuclear Reactors that is designed to power individual apartment buildings or city blocks. The new reactor, which is only 20 feet by 6 feet, could change everything for small remote communities, small businesses or even a group of neighbors who are fed up with the power companies and want more control over their energy needs. [More]

Wait - weren't we all supposed to have our own similar fuel-cell generators by now?

Update: Another entry in the home-nuke category.

Now what, indeed...



All the king's horses, etc.

[via Presurfer]

If only the White House would give us a sign, some hint...

Acting Secretary Connor speaks about the possibility of a farm bill veto at the Press Club.

Again to be clear, because some people are in the habit of perhaps parsing words and looking for an opening in every one of these words: to be clear that without fundamental change, the President's senior advisors, of which I am one, will strongly recommend that he veto the farm bill. Now, only the President makes that final call. He will be the one to decide ultimately what to do on this package. But please do not make the mistake of misunderstanding -- of not hearing the very, very clear message coming from me, coming from every one of the President's senior advisors, -- that this if this farm bill looks anything like what we've seen coming out of the House and the Senate -- the very strong recommendation to the President of the United States is to simply veto, go back and do it again and send us another bill. [More]

I'm sensing a subtle subtext here.

This is starting to feel like a Mel Brooks movie now.

Forget the dominoes...



Fireworks, old tires, OSHA-disapproved apparatuses - what's not to love?

[via Presurfer]

Update: needs a sound track - maybe Pink Floyd or Tammy Wynette (I get those groups mixed up often)

This time for sure...

Pessimistic (or realistic, depending on your point of view) economists are sputtering the r-word in almost every sentence lately. I think they are right. But I thought they were right last year, too. And the year before that...

But the jeremiads are getting terser.

This recession will be deeper than the shallow contraction earlier in this decade. The dot-com-led downturn was set off by a collapse in business capital spending, which at its peak in 2000 accounted for only 13 percent of the country’s gross domestic product. The current recession is all about the coming capitulation of the American consumer — whose spending now accounts for a record 72 percent of G.D.P.

Consumers have no choice other than to retrench. Home prices are likely to fall for the nation as a whole in 2008, the first such occurrence since 1933. And access to home equity credit lines and mortgage refinancing — the means by which consumers have borrowed against their homes — is likely to be impaired by the aftershocks of the subprime crisis.

Consumers will have to resort to spending and saving the old-fashioned way, relying on income rather than assets even as mounting layoffs will make income growth increasingly sluggish. [More]

And while those of us on farms are not unconcerned with the rest of the economy (what if the kids lose their jobs and move back in?), let's face it - we're more fascinated with our income tax problem. This ag-disconnect is part of the "uniqueness" ethos we have elevated into our basis for entitlement. In our minds, farms are a special little part of America, deserving their own special considerations.

But how much overlap is there? If the US slides downhill big-time, could it mean bad news for our recently hatched boom?

I don't think so. Ag (well, some of us) has legislated itself a fortress of government-protected privilege. Looking at the political appeal of mandates and the effective way of hiding costs from the taxpayer/consumer; the failure of any meaningful reform to date, and the tiny portion of the economy that farms represents (1% of GDP), I think we are bulletproof.

But that's our real problem. If I can figure this out, you bet the CEOs of agribusinesses that sell to and buy from us can too. Not to mention the holder of the scarcest asset - land.

So, whether national income grows, recovers, plummets, stagnates - pick one - the effect will be muted for my farm. Sure, interest rates could go down/up, but that is not the killer cost like the recent fertilizer doubling. And if meat consumption (loosely linked to income growth) stumbles, we'll just make more ethanol.

Nope, our problems will be 1) inputs, and 2) each other. With a deal this good and secure, farmers will pay about anything to get/stay in the game. We're seeing that already. My prediction is if you look back to your gross profit levels from about 2005, you'll be seeing similar numbers by 2009.

We are already ordering machines, pushing rents, buying land, and competing for inputs which inflates the prices for all these. The equilibrium point should be about the same: if I would grow corn in 2005 for $120/A gross profit (sales + subsidy - variable costs - rent), why wouldn't I grow it for $120 in 2010? Only with much bigger numbers to add and subtract.

The trick will be to maximize the windfall between now and then. Three year rent contracts signed in 2006 would help (although renegotiating for more years is worth a look). Not buying steel during this Iron Rush might be a good idea, but likely negated by higher prices later and it could take a long time to see machinery cool off.

I don't see any sure-fire ways to prolong this brief era before costs rise. As usual, the best strategy would be to own a time machine, and travel back to 2005 to change some decisions. The only other useful advice I have is to bring your "A-game". People will be working hard to to get in on a sure thing or make their sure slice is bigger before the crunch. We may not have an ag recession, but we're going to have a decimation of farmer numbers, I'll bet.

But (long ago) I was talking about a general recession. Is one coming? Who knows?

Better yet, who cares?

Gifts That Will Shock and Awe...(Entry #12)

[More]

Velveteen vest. (Made from the infamous rabbit, I presume) $30

Also, these. Jan loves 'em.

It's important to think of every possibility...



This video reminds me of our current terrorism overreaction.

The odds are similar too.

[via Optical Poptitude]

Pick a conclusion - any conclusion...

Consider the following table:


As we argue over inequality, perceptions rule, while facts can be disregarded. Partly I believe this is because we are hard-wired to notice and resent inequality, and lord knows the media sure like to point out what's going on with the rich folk.

But after noticing how the top is slurping up the income and paying the taxes, their grasp on the wealth of this nation is pretty stable.

[More]

Granted, the upper tier owns a lot of America - but it would seem they always have.

But one lesson I draw from this is we don't know how much tax the rich can pay without losing significant wealth share, so why not have a very progressive (soak-the-rich) tax scheme?

The answer may be at some point the creation of wealth stalls as the reward to generate more at the top disappears. Stable shares of a stagnant pile of wealth could be worse than a diminishing share of growing wealth for the 99-per-centers.

None of this is intuitive or particularly clear even after scrutiny, which is why debate rages over economic equality.

One interesting note: without the estate tax, we would not have a way to measure wealth shares, as was done in the above study. Eliminating the "death tax" would be a double bonus for the rich.

I think I would include Mike Johanns in this group...

It's way too soon to tell how the race will turn out, but former Ag Sec. Johanns could be one of the group of Bush administration officials whose reputation has been diminished by working for the President.

"I'm very discouraged, as most Americans are, with Congress and our leadership not getting things done while other nations are making a lot of progress," said Raimondo.

Raimondo says job creation and revamping health care would be his priorities.

He says because of Mike Johanns close ties to President Bush, he wants to give Nebraskans a choice in next year's race. [More]

This is not to say Johanns won't win, but comments from farm leaders were tepid at best in support when he announced. While I admire his loyal and determined effort to institute reform into the farm program as doubtless instructed by the White House, I suspect he will be sold out in the end by a presidential signature after tax increases are dodged with more borrowing.

Next example: the scariest Cabinet officer of all: Sec. of Treasury Henry Paulson

Paulson, who stepped down as chairman of Goldman Sachs Group Inc. to become President George W. Bush's Treasury secretary, may fall victim to the same jinx that has tarnished previous administration luminaries. Colin Powell, Paul O'Neill, Donald Rumsfeld and Dick Cheney all had their standing diminished by serving under Bush.

Every presidency produces political stars: Robert Rubin under Bill Clinton; James Baker and George Shultz under George H. W. Bush and Ronald Reagan. Even Richard Nixon, forced from office by scandal, had Henry Kissinger and Peter G. Peterson, the Commerce secretary who went on to co-found Blackstone Group LP.

By contrast, ``I can't think of anybody who has emerged from this White House with an enhanced reputation,'' said Bruce Bartlett, who served as a Treasury Department economist under the first President Bush and a policy aide under Reagan. ``But I can certainly think of lots of people who must rue the day they accepted an appointment in this administration.''

Eighteen months after coming to Washington, Paulson, 61, finds himself fending off an economic storm that includes a squeeze in credit markets, a wave of defaults by subprime borrowers and the growing threat of a downturn. [More]

Of course, it could be that these public servants are simply reaping the rewards of their own bad choices or luck, but they sure looked like capable people going in. But if they are merely incompetent or ineffective, why were they chosen?

True leadership has a characteristic of bringing out the best in those around them. That does not seem to be the case for this administration.

Can you think of an example of someone leaving this administration with an enhanced professional reputation?

Wait - Thought of one - Atty. General Ashcroft, who tried to protect our civil liberties from his hospital bed. And I thought little of him at the beginning.

Overlooking the helpful...

In their zeal to force America to use ethanol, the Ethanol Lobby as a whole ignored one of the more interesting studies to be released recently.

Recent research findings show that mid-range ethanol blends - fuel mixtures most likely between E20 and E30 - can in some cases provide better fuel economy than regular unleaded gasoline, even in standard, non-flex-fuel vehicles.

Previous assumptions held that ethanol's lower energy content directly correlates with lower fuel economy for drivers. Those assumptions were found to be incorrect. E20 and E30 ethanol blends outperformed unleaded gasoline in fuel economy tests for certain autos. The tests were conducted using four 2007 model vehicles: a Toyota Camry, a Ford Fusion, and two Chevrolet Impalas, one flex-fuel and one non-flex-fuel. Contrary to Btu-based estimates of fuel economy for ethanol blends, three of the four vehicles tested achieved their highest fuel efficiency not on gasoline, but on an ethanol blend. Mid-level blends of ethanol E20 (20% ethanol, 80% gasoline) and E30 (30% ethanol, 70% gasoline) offered the best fuel economy in these tests.

* E30 offered better fuel economy than gasoline (a 1% increase) in both the Toyota and the Ford.
* E20 offered better fuel economy than gasoline (a 15% increase) in the flex-fuel Chevrolet.
* The non-flex-fuel Chevrolet more closely followed the Btu-calculated trend for fuel economy, but did experience a significant improvement over the trend line with E40 (40% ethanol, 60% gasoline), indicating that this may be the “optimal” ethanol blend level for this vehicle.

In addition to the favorable fuel economy findings, the research provides strong evidence that standard, non-flex-fuel vehicles can operate on ethanol blends beyond 10 percent. The three non-flex-fuel vehicles tested operated on levels as high as E65 before any engine fault codes were displayed. The Ford Fusion operated without problems on E45, the Toyota on E65, and the non-flex-fuel Chevy on E55. [More]

This study gives me reasons to reevaluate my grudging acceptance of ethanol as a rational substitute for gasoline. And I'm not the only one.

These tests possibly eliminate one of the main critisisms of ethanol, reduced fuel economy. The results were especially promising on the flex-fueled vehicle. If these results can be replicated on other vehicles, especially flex-fueled vehicles, ethanol may be a more viable fuel than many critics believe. Ethanol, plus otherbiofuels, are not the entire answer to our liquid fuel problems, because they could only meet about 30% of our needs (if cellulosic ethanol is included and our food supplies are not to be impacted), but they could be a less expensive solution in the intermediate term until hybrids, plug-in hybrids and all electric vehicles become more affordable - mainly due to decreased costs of batteries in the future. Flex-fueled vehicles are not significantly more costly than standard vehicles. Ethanol still suffers from its capability to absorb water, which makes transportation and storage more difficult.

The report does not posit how the BTU differential is somehow overcome by higher blends, but perhaps further study will uncover the mechanism.

I am fully aware that ethanol proponents may seize on this discovery with I-knew-it-all-along gloating. This is pattern set by stem-cell research opponents after the breakthrough with skin cells.

Fair enough.

But if these guys were all about "sound science", why didn't this make their websites?

The Ethanol Lobby is about lobbying, not science. That doesn't make them wrong, just short-sighted. All the laws in the book won't have the power of real economic returns to consumers buying fuel.