Thursday, August 30, 2007

Raising the intellectual level...

Perhaps like some of us, you never really understood Einstein's Theory of Relativity. Afraid to admit it, weren't you?
Well, good news, citizen. Here's an explanation in words of four letters or less.
Say you woke up one day and your bed was gone. Your room, too. Gone. It's all gone. You wake up in an inky void. Not even a star. Okay, yes, it's a dumb idea, but just go with it. Now say you want to know if you move or not. Are you held fast in one spot? Or do you, say, list off to the left some? What I want to ask you is: Can you find out? Hell no. You can see that, sure. You don't need me to tell you. To move, you have to move to or away from ... well, from what? You'd have to say that you don't even get to use a word like "move" when you are the only body in that void. Sure. Okay. Now, let's add the bed back. Your bed is with you in the void. But not for long -- it goes away from you. You don't have any way to get it back, so you just let it go. But so now we have a body in the void with you. So does the bed move, or do you move? Or both? Well, you can see as well as I that it can go any way you like. Flip a coin. Who's to say? It's best to just say that you move away from the bed, and that the bed goes away from you. No one can say who's held fast and who isn't. [More]
I'm glad we had this little talk.

Next week: how they get the cream filling in Twinkies.
Where autumn is...

I have used the Windows XP-supplied screen saver "Autumn" on my laptop for a couple of years. Like others I was struck by the beauty and composition of the shot.



Somebody tried to find out where it was photographed. A great story followed.

[Re-post for Arlen]
The further adventures of Contextor...

Born on a strange planet in rural Illinois - the very edge of known space - this mysterious stranger wages a never ending battle to place misleading statistics in context.

Today's Episode: Wind Farms and Homes

One day, Contextor noticed whenever wind farms are mentioned, the most prominent number used to describe their size is "how many homes their electricity would power":
Power firm E.ON said the development five miles (8km) off the Humber estuary would be capable of providing electricity to almost 200,000 homes. [More]
and
Wind power plants, or wind farms as they are sometimes called, are clusters of wind machines used to produce electricity. A wind farm usually has dozens of wind machines scattered over a large area. The world's largest wind farm, the Horse Hollow Wind Energy Center in Texas, has 421 wind turbines that generate enough electricity to power 230,000 homes per year. [More]

"Gosh!" Contextor thought, trying to imagine what 230,000 houses would look like. That's mucho electricity.

Isn't it?
In 2005, wind machines in the United States generated a total of 17.8 billion kWh per year of electricity, enough to serve more than 1.6 million households. This is enough electricity to power a city the size of Chicago, but it is only a small fraction of the nation's total electricity production, about 0.4 percent. The amount of electricity generated from wind has been growing fast in recent years, tripling since 1998.
Contextor was puzzled why the overall impact of wind energy was not more clearly spelled out. Doesn't it imply we can just windmill the US to plentiful cheap energy like the good old days of hydroelectric development?

Contextor brooded and decided one reason could be the economics are struggling with the virtue of the idea. Wind energy just seems so wonderful it just has to work.
Reasonable people can disagree on the merits of putting turbines on Nantucket Sound, as proposed by a private company. Though costs have come down to 4.5 cents per kilowatt hour from 6.1 per KWH in 1999, the technology is still not balancing out as cost-effective for some areas. Last week, Long Island scratched its plans to build a wind energy center in the Atlantic when costs were running up toward $800 million. Projects in windy Texas have also been scrapped over cost considerations.

But advocates often tout renewable energy not for its economics, but because it's virtuous. Many of those who are willing to impose the costs of various environmental schemes on other Americans based on "ideals" suddenly have started looking more closely at the tradeoffs when something they hold dear would have to be sacrificed, like a nice view. Wind energy is never going to be anything but a bit player in meeting the world's energy needs. The Nantucket tempest is useful mainly as a real-world test of whether some of the world's most privileged liberals wear their ideals all the time, or only when it suits them. [More]
Contextor looked hard at the glowing press releases and the total energy statistics. "Hmm, wind energy looks like a good thing, but a very high-cost, low-yield good thing to Contextor"

Stay tuned for our next semi-exciting episode wherein Contextor muses: "Why does Contextor refer to Contextor in the third person? Could Contextor have a Pronoun Problem?"

Wednesday, August 29, 2007

Hey - I owned 5 of these cars!...


The World's Ten Ugliest Cars. The infamous AMC Pacer above. What a chick magnet!

Make mine RW scotch...

While opponents of genetic modification uniformly warn of health and environmental consequences that must inevitably follow, that's not how things seem to turning out. We now have years of real-world consumption of GM products to point to as reassurance of the safety and efficacy.

In fact, one form of genetic manipulation - radiation breeding - isn't all that far removed from cartoons by anti-nuclear protestors.
Though poorly known, radiation breeding has produced thousands of useful mutants and a sizable fraction of the world’s crops, Dr. Lagoda said, including varieties of rice, wheat, barley, pears, peas, cotton, peppermint, sunflowers, peanuts, grapefruit, sesame, bananas, cassava and sorghum. The mutant wheat is used for bread and pasta and the mutant barley for beer and fine whiskey.

The mutations can improve yield, quality, taste, size and resistance to disease and can help plants adapt to diverse climates and conditions.

Dr. Lagoda takes pains to distinguish the little-known radiation work from the contentious field of genetically modified crops, sometimes disparaged as “Frankenfood.” That practice can splice foreign genetic material into plants, creating exotic varieties grown widely in the United States but often feared and rejected in Europe. By contrast, radiation breeding has made few enemies.

“Spontaneous mutations are the motor of evolution,” Dr. Lagoda said. “We are mimicking nature in this. We’re concentrating time and space for the breeder so he can do the job in his lifetime. We concentrate how often mutants appear — going through 10,000 to one million — to select just the right one.” [More]
While obviously competing with other forms of genetic manipulation, it is hardly surprising that "mutant breeders" would try to open an imaginary space between themselves and GM. But who's fooling whom?
Lagoda who irradiates plants to produce mutants is being somewhat disingenuous when he says, "I’m not doing anything different from what nature does." True, mutations occur in nature all of the time, but it seems somewhat doubtful that plants out in a field experience anywhere near the number of uncharacterized mutations produced in a lab by gamma rays.

If anti-biotechies are so afraid of genetic changes in their foods, why aren't they out protesting varieties produced by means of mutation breeding? After all, most biotech crops merely change agronomic characteristics, whereas many irradiated varieties have different nutritional profiles.

The point here is NOT that mutation breeding is inherently dangerous. Given a solid record of 80 years of safety, it's not. The point is that the more precise methods of modern gene-splicing are even safer and should therefore be subject to even less regulation than crops produced by mutation breeding. [More]
Breeders have the right to try to position themselves however they want to gain some market advantage, but it looks to me like any market advantage will be slim and temporary. GM works, and we're getting better and better at it.

Tuesday, August 28, 2007

We're not the only ones with a bumper crop...

Say what you will against the ol' Taliban in Afghanistan, but at least it kept the poppies mowed.
Yesterday the U.N. announced that opium production in Afghanistan hit a record level this year. You may feel as if you've read this news before: Opium production in Afghanistan also hit a record level last year. This year 193,000 hectares of poppies were cultivated, up 17 percent from last year's 165,000. Thanks to favorable weather that led to high yields, opium production rose even more, from about 6,700 tons in 2006 to about 9,000 tons this year, an increase of 34 percent. The U.N. says Afghanistan's opium now represents 93 percent of the world total, compared to 92 percent last year. [More]

The explosion of opium trade indicates to me why the "war on drugs" is just about as as successful as some other conflicts we are stuck in. Unless you are willing to deal with the demand for illicit drugs, there is little evidence you can stop the production.

Then again, legalizing, taxing, and regulating the drug trade could deflate the profits, crime and policing costs while arguably having little effect on consumption.
China hasn't caught on yet, but ...

On a global level the economic miracle that is modern China is far more involved than immediately apparent.
Like the NIMBY affluents they are, the developed world has been happy to let China become the nineteenth-century Pittsburgh of the world, hosting nasty, smelly polluting facilities and shipping the products out.

China has become so good at being the forge of the world, the rate of pollution is literally breath-taking.
But just as the speed and scale of China’s rise as an economic power have no clear parallel in history, so its pollution problem has shattered all precedents. Environmental degradation is now so severe, with such stark domestic and international repercussions, that pollution poses not only a major long-term burden on the Chinese public but also an acute political challenge to the ruling Communist Party. And it is not clear that China can rein in its own economic juggernaut.

Public health is reeling. Pollution has made cancer China’s leading cause of death, the Ministry of Health says. Ambient air pollution alone is blamed for hundreds of thousands of deaths each year. Nearly 500 million people lack access to safe drinking water.

Chinese cities often seem wrapped in a toxic gray shroud. Only 1 percent of the country’s 560 million city dwellers breathe air considered safe by the European Union. Beijing is frantically searching for a magic formula, a meteorological deus ex machina, to clear its skies for the 2008 Olympics. [More of a brilliant NYT article]
Free-trade foes should ponder how much we want those dirty jobs back. While employment for undereducated Americans was a godsend when our industrial age was dawning, pushing Americans to get more education and shift to non-manufacturing jobs isn't all bad either. Our economy demonstrates this positive aspect of globalization.

But factories and power plants have to be somewhere, and I think China is awakening to the fact that what we have really outsourced to them is our environmental problems.

It has implications for their ag sector as well.
Perhaps an even more acute challenge is water. China has only one-fifth as much water per capita as the United States. But while southern China is relatively wet, the north, home to about half of China’s population, is an immense, parched region that now threatens to become the world’s biggest desert.

Farmers in the north once used shovels to dig their wells. Now, many aquifers have been so depleted that some wells in Beijing and Hebei must extend more than half a mile before they reach fresh water. Industry and agriculture use nearly all of the flow of the Yellow River, before it reaches the Bohai Sea.

The surge in US pork exports to China that experts attribute to Chinese swine disease problems and Beijing Olympic stage-dressing could be just the first indicator of an important trend. We saw something like this as the Soviet ag sector crumbled, but this time the customer is loaded with cash.

Monday, August 27, 2007

Why we won't move to a "warm climate"...

My father's generation of farmers at least, placed great stock in being warm. The attraction of a winter home where the sun never failed and the temperature never made water a solid was irresistible to them. So off they embarked to places made habitable only by air-conditioning.

When I visited my folks in Florida, I came away with a feeling of escaping from a future too ghastly for contemplation. It persists today.

Perhaps its because I have had the advantages of fleece winter coats, four-wheel drive SUV's and reliable central heating, but I have never been tempted to yank up roots to simply experience more summer than I feel nature intended.

It could be more than that. Aging occurs differently in different places.
Years ago I learned something about aging -- that it wasn't so much the date of your birth but the place you were living in that determined whether or not you were old. There was a geography of aging in America. I began to notice this when I moved from Manhattan to Los Angeles in the nineteen seventies and stayed there through the nineties working as a script writer for various studios. I don't have any East Coast snobbery about the culture or lack of it in LA: nice, sentient, intelligent, art loving, caring people actually live there -- but it became clear to me that every time I returned home to New York to visit my folks I felt ten years younger, and every time I stepped out of the terminal at LAX I aged a decade. At first I didn't have a clue as to why that was happening -- I figured that it wasn't just because my parents still viewed me as their youngest child in New York it was the LA experience. I eventually learned that one became an official senior citizen at fifty in Los Angeles, and New York was holding fast to sixty five. Sure, I could get into movies cheaper, but in LA people canvassing in malls failed to ask my opinion on any topic -- I was outside the cherished demographic of 18-40. Then it happened. When I reached fifty nine, my important LA agent called me into his office and sadly, gently fired me -- noting that although I had many awards for writing, indeed too many which gave away the length of my career, and I was a helluva nice guy, he couldn't sell me to the studios or the networks. The message the agent conveyed was that I was old news... out of touch with the zeitgeist... incapable of understanding or creating what America wanted -- an America dominated by the young, and the youth worshipers. As the father of two young sons I was stunned by this -- I felt I knew more about how young people felt and acted than most young people. But the tide was too strong to fight it, and I soon went to Germany to work on a film, and later managed to do a series for the BBC. [More]

It is very likely I am deeply in denial and time will reverse my prejudices, but the idea of NOT dying in the cold is repugnant to me.



I've been to North Dakota too often methinks.
Is the cork screwed?...

When I was in Portugal with the US Grains Council in 1998 (?), we visited a corn farmer there who revealed his real cash bonanza crop was cork. It seems champagne makers were desperate for stoppers for all those bottles of bubbly for the Y2K celebration.

Years have passed and tastes and budgets have changed. Suddenly the idea of (gasp!) screw-top wines bottles is gaining acceptance.
Camp and bad French aside, the lighthearted marketing video articulates a watershed moment in the global wine industry: after hundreds of years of tradition, more and more winemakers are turning away from cork closures — and oenophiles are finally getting used to the idea. Bonny Doon, a boutique winery south of San Francisco, had used Portuguese cork for 19 years, but was losing 0.5% to 2% of its wine to "taint" — the unmistakably moldy or musty smell and taste of a contaminated wine, caused by a compound called TCA, which is sometimes found in cork. So, the winery decided to make a change in 2002. "It's not a lot, but it's enough," says Burke Owens, Bonny Doon's marketing director, of the switch to screwcaps. As the sommelier puts it: "The days of the cork are numbered." [More]

That would be my fault.

Yup. Your loyal correspondent has stooped to E-Z open grape juice. My favorite is a piquant little sauvignon blanc from Middle Earth called Zeal. They carry it at Sam's for about - gosh, I don't really know, but it has to be below $12 because I never buy anything over that.

Anyhoo, it has a screwtop, and this engineer is on board with the trend. We should have done this years ago. But in the face of the obvious efficiencies (one less feature on your Swiss army knife), efforts to make cork harvesting look more "earth-friendly" are afoot.

Big whoop. I just like the juice and the ease of getting to it.

Sunday, August 26, 2007

Limited shelf life...

Just when you think high-fructose corn syrup (HFCS) is out of the woods...
High fructose corn syrup (HFCS) has been singled out as having special properties that make Americans fatter than sugar and other energy sources with identical calorie contents. But an analysis by the University of Maryland Center for Food, Nutrition, and Agriculture Policy (CFNAP), now appearing online in Critical Reviews in Food Science and Nutrition, says there isn't enough research to conclude that high fructose corn syrup contributes to weight gain any more than any other energy source, including sugar and fructose. [More]
something like this pops up.
Sodas sweetened with high fructose corn syrup contain high levels of a potentially dangerous compound often found in the blood of diabetics, a new study concludes.

It could be cause for concern, experts say, because the "reactive carbonyls" in these sugary drinks could bump up diabetes risk, particularly in children. [More]

This ongoing medical witchhunt could eventually stumble onto a witch, but for the time being let's just juxtapose this debate with another:
Bottled water sales in the U.S. have skyrocketed in recent years, and with it consumers aren't making a concerted effort to recycle, adding more plastic to the nation's garbage dumps.

An environmental movement is mounting in some states against the one-and-done nature of bottled water, and negative myths about tap water quality. [More]
Sometimes you just get a feeling that that a certain "lameness" or un-fashionability has seeped into a product or even an idea - that it is soo over, ya know.

I'm getting that feeling on both these.
I think the odds are rising...

If President Bush follows through on his tough line on health insurance for children, it leaves him less room to accommodate a farm bill he doesn't like and is strangely funded, I think.
Mr. Bush comes to this fight with an understanding of how Schip has played out in the states, which is why his administration recently instituted reforms to the program that aim to restrict eligibility to those it was originally intended to serve -- the truly needy -- and not provide an incentive for middle class parents to drop their private health insurance. Moreover, he has threatened to veto federal legislation that would allow states to expand their Schip programs.

It would be easy for Mr. Bush to give in on this fight. He is, after all, in the twilight of his administration. But next month, he'll square off against Congress to oppose an incremental advance of socialized medicine. We are fortunate he is today willing to do so at a time when Republicans in his home state were quick to abandon the fight. [More]

I mean, think about a"legacy" of scrimping on kids and porking it out to farmers - which is how political opponents will certainly frame it. And I still think his pattern of rewarding loyalty will help him back up Sec. Johanns - who has carried the White House message faithfully - with a farm bill veto unless it contains significant reform.
Must-read stuff...

Sterling Liddell, the economist (actually an econometrician) I referred to in my post this week has made his presentation - Where do we go from here? - available on the Iowa Farm Bureau website. (Click on the market Advantage 2007 box.)

While PowerPoint presentations lose some of their impact when simply read, this one at least uses complete thoughts instead of cryptic clues I favor to keep people from reading ahead during a speech, so you can extract much of his logic.

Recommended reading!

[Update: another link for the presentation is here]
OK, you win...

I thought I had seen some crop damage from yahoos in a field, but this Dutch field may be the winner.



A driver who was high on cocaine destroyed an entire cornfield in an attempt to escape from the police. Four police cars were destroyed before the 35-year-old crashed into a ditch and was arrested, near the village of Dussen in the south of the Netherlands.

[Bear in mind, in Europe "corn" means the main local grain crop (looks like barley or wheat here). Maize is the their designation for corn]
The dwindling power of the press...

Current farm policy and especially the non-existent reform efforts by Congress have been savaged by all sides of the mainstream media - not to mention several creeks. A typical example:
It goes against the grain for farm subsidies to be handed out to the rich. But that's precisely what the House version of the next farm bill does -- it continues big handouts to wealthy farmers and landowners. It's going to be up to the Senate to get it right when Congress resumes next month.

Under the current farm bill, which expires this year, subsidies to farmers are cut off if their yearly incomes are above $2.5 million. The $286 billion, five-year House bill lowers that limit to $1 million -- an improvement, but far higher than the $200,000 limit suggested by President Bush and the $250,000 cap contained in a "Fairness Amendment" that was defeated on the House floor. Speaker Nancy Pelosi didn't support tougher reforms because she was trying to protect some first-term farm-state Democrats. [More]

It goes against the grain for farm subsidies to be handed out to the rich. But that's precisely what the House version of the next farm bill does -- it continues big handouts to wealthy farmers and landowners. It's going to be up to the Senate to get it right when Congress resumes next month.

Under the current farm bill, which expires this year, subsidies to farmers are cut off if their yearly incomes are above $2.5 million. The $286 billion, five-year House bill lowers that limit to $1 million -- an improvement, but far higher than the $200,000 limit suggested by President Bush and the $250,000 cap contained in a "Fairness Amendment" that was defeated on the House floor. Speaker Nancy Pelosi didn't support tougher reforms because she was trying to protect some first-term farm-state Democrats. [More]


Gosh, golly - you'd think with all this editorial outrage Congresshumans would be scrambling to build a better farm policy. Well, citizen, you would be wrong. As we saw in the House, reform is the last thing on Senate leaders' minds.

There is no change in the big ticket item in this farm bill cycle: $26 billion in direct payments, a leftover from "freedom to farm" payment contracts begun in 1996 that will be made, regardless of crop prices, over the next 5 years. Chairman Harkin has repeatedly criticized direct payments as "hard to justify" when crop prices are high, as they are now, and farmers will be making good money (in some cases record money) in the marketplace.

But with this draft he formally endorses continuing those very payments at the same level. He (suddenly) indicated he would do this a few weeks ago, just after Speaker Pelosi's House farm bill did the same.

They're simply accepting the reality that this is what every major farm and commodity group wants. And that's probably the most important take-away from this farm bill cycle. [More]

Regardless of your position the sheer immobility of farm policy would seem to demonstrate some powerful lessons:

  • There are more people than just farmers benefiting from those billions. The idea that a few hundred thousand voters who split their votes unpredictably can reliably raid the Treasury would be mildly believable if we were cunning financiers, but we're farmers, fer crying out loud! My theory is the farm lobby is so whackin' huge it has become the tail that wags the dog. Indeed, an interesting economic study could be made of the net proceeds to farmers after the effort of feeding these K street mouths is subtracted.
  • If you need proof of the dwindling readership and clout of the print media, this is Exhibit A. Following this argument the slow motion train-wreck that is the Chicago Tribune is hardly a surprise.
  • If change should miraculously come, it would be shattering to a number of institutions and arguably due to on-line campaigning for change. Not this blog, necessarily, but a much wider spread network of reform activists who have finally found a outlet.
And yet, despite all the frantic exchanges, my sense of industrial producer attitudes from conversations this month across the Corn Belt is mild disinterest. I think they have wisely realized staring at Washington for indications of the future will designate you as potential roadkill on the ethanol-fired expressway of farm evolution.

[Egad - another runaway metaphor!]
A sad commonality...

I have friends in Denmark, and have visited several Danish farms. The farmers there have always impressed me with their skills and professionalism, as well as being warm and hospitable. I was somewhat surprised to see they struggle with the same safety issues as the US, although they apparently had one very bad year recently.
Tragic accidents on the farm were all too common last year, claiming the lives of 19 people, according to statistics from the Danish Agricultural Advisory Service and the Agricultural Working Conditions Board.

The 2006 figure is equal to the number of deaths from 2001-2005 combined. Among the 19 deaths were three children.

‘It is often older workers that lose their lives, but the farmers’ children are also killed on occasion by the heavy machinery,’ the board’s joint secretary, Anne Marie Hagelskj√¶r, told employee union 3F. ‘The sharp increase in the number of agricultural accidents is extremely worrying.’

The four principle causes of farm accidents are falls, unattended children, machinery and farm vehicles in traffic. [More]

One of the responses listed by the farm employees union to the report was stricter licensing for farm machinery operators. This strikes me as a good idea.

Check "Perspective" in Top Producer magazine for more soon.

Saturday, August 25, 2007

I think I hear the school bus honking...

If September is near, thoughts are turning to school and, as helpful as I find the college rankings at US News and World Report, this one might be more useful to most of us. From Radar magazine, the Ten Worst Colleges in the US:
To be fair, we excluded community colleges, technical schools, and the kind of places that advertise in subway cars, limiting our search to accredited four-year institutions with brick-and-mortar campuses. We started by gathering statistics on academic offerings, admissions, and student life from a diverse array of sources, including Princeton Review, U.S. News, and the U.S. Department of Education. Then we factored in criteria like low SAT scores, incompetent professors, rock-bottom admissions standards, unbridled alcohol and drug consumption, rampant criminal activity, and dubious alumni. To complete the picture, we added reviews from online outlets like Students Review, Campus Dirt, and College Prowler. Finally, we tallied up the numbers in a variety of categories, ranging from worst Ivy to worst party school, and of course, the very worst college in the country. (Hint: The Moonies are involved.) Below, the nine colleges that made our dishonor roll. [More of a great read]

(Hint - not good news for Spartans)

Friday, August 24, 2007

I think I've been phished...

If this e-mail I got this morning is legit - which I am convinced it is not - the IRS is out of its bureaucratic mind.
After the last annual calculations of your fiscal activity we have determined that you are eligible to receive a tax refund of $268.32. Please submit the tax refund request and allow us 6-9 days in order to process it.

A refund can be delayed for a variety of reasons. For example submitting invalid records or applying after the deadline.

To access the form for your tax refund, please click here

Regards,
Internal Revenue Service
© Copyright 2007, Internal Revenue Service U.S.A. All rights reserved.

Further note: the sender address is service@irs.gov

This is a pretty good try by current scam standards.


As phishing schemes become more sophisticated I take great comfort in knowing the ultimate defense of my wealth lays in two barriers:
  1. It's almost all land.
  2. The meager amount of cash is guarded by people who know how I write my name, spend my money, and sound like on the phone. Heck, I took square-dancing lessons with the bank president. (Very funny - HER name is Connie).
In this case, I'll just wait for the letter the IRS must send. Besides I make sure the IRS never owes me money.

Thursday, August 23, 2007

How "McGyver" is this?...



Turn A PENCIL Into A LIGHT ! - video powered by Metacafe


Amaze your friends with your resourcefulness! Make an emergency light bulb!

[via RandomGoodStuff]
For the guys in Iowa...

When I spoke this week to folks in IA, I promised to post some links to sources I mentioned. This is one for finding out your life expectancy.
The web of finance...

Although Cargill has long been an advocate for their large food and feed customers (remember, grain growers - you are their supplier, not their customer) by moving slowly on ethanol expansion, their recent call to build an "escape clause" into any RFS increase places them on a collision course politically with most corn growers.
The US is reviewing its federal Renewable Fuel Standard, which calls for the production of 7.5bn gallons a year of alternative fuels by 2012. This is expected to be reached well ahead of target, and the Bush administration has called for a benchmark of 35bn gallons by 2017, about half of it from ethanol.

Bill Veazey, Cargill's chief financial officer, said there needed to be "some kind of waiver" in any state-backed mandate. "There needs to be escape mechanisms so that you don't distort the food markets," he told the Financial Times.
But it gets more complicated than that simple premise, although it is certainly a concern. Cargill is in many businesses other than grain, and one of them is "asset management" Or more crudely put, owning stuff.

That part of their business, like most similar enterprises has seen recent financial turmoil dim the prospects for the future, especially should assets suddenly be devalued by deflating the real estate bubble. Guess which other branches of Cargill would have to pick up the slack?
Cargill said three of its five divisions delivered record results, and played down the importance of its asset management business, which has been the largest contributor to earnings in recent years.

"What we have is a broader and more diversified earnings' stream than last year," said Mr Veazey, pointing to the restructuring of the financial services business into two standalone entities, which have secured third-party investors to reduce Cargill's exposure.

However, Cargill's heavy investment programme - which it will continue to fund internally - and the potential volatility of financial services income have prompted ratings agencies to shift their outlooks for the group to negative in recent months. [More]
I have no criticism of the Cargill position. Their defense of animal agriculture should certainly commend them to many farmers. But even this laudable effort can get entangled with cross purposes of other divisions. It's one reason you seen the conglomeration strategy come and go in modern business management. Diversification contributes to a loss of clear purpose even while reducing risks.

The larger question though is the fallout from mandates. Mandate supporters think they can force the market to obey, but our species is far too devious to put up with those kinds of coercion forever. Ethanol needs to reduce its reliance on this barely legalized extortion methodology as soon as possible.


And the best way IMHO, is a carbon tax.

Tuesday, August 21, 2007

Let's see now...

Canadians, a "roadboat", a failed transcontinental crossing...



Nope, nope... nothin' funny there..

When credit heads south...

I'm not totally convinced the financial world is ending, but there is a very real problem of foreclosing on millions of homeowners all across the nation. The argument can be validly made that these borrowers should never have gotten mortgages in the first place, but after you make that rather sanctimonious judgment answer this:

How many of the daisy-chained consequences of this unwinding are you personally willing to bear?
While Mr Paulson sought to reassure Americans yesterday that the economy was strong, Mr Dodd warned that up to 3 million people were in danger of losing their homes in the fallout from the sub-prime mortgage crisis. "I would urge every possible step to be taken to keep people in their homes," said Senator Dodd, describing the likely rate of foreclosures as "deeply, deeply troubling".

For many new homeowners, low-interest "teaser" rates fixed in 2004 and 2006 will expire later this year. Senator Dodd said that in some cases, repayments would leap from $400 to $1,500 a month. He added that when a home is repossessed in an economically vulnerable area, the value of nearby properties slumps by up to $5,000. "Think of all the ripple effects," he said. "If we don't deal with this, it could spill over and become more serious." [More]

This "ripple" could be as understated as Mr. Bernanke's assurances of "containment" were overstated.
Already-battered U.S. auto sales could be the next victim of the problems with mortgages, declining home and stock prices as potential car buyers delay purchases due to uncertainty.

Industrywide U.S. auto sales in August could be off 10 percent from a year ago, according to an early read from sales tracker Edmunds.com. That follows July sales that were 19 percent below year-earlier levels.

Jesse Toprak, executive director of industry analysis for Edmunds.com, said that the downturn in home values and credit issues that were seen in the July numbers could be an even bigger factor this month.

"I think the issue is becoming more pronounced," he said. [More]

We all enjoyed the booming economy propelled by home-equity-loan-fueled consumer spending. The government enjoyed record tax receipts, retailers rejoiced, and employment surged.

So if you think this is all going to stop in poorer neighborhoods with strapped borrowers, you may be in for a surprise.

Apparently Ben was.
Straight from the Crop Tour...

Some frontline video from the Eastern leg of the John Deere ProFarmer Midwest Crop Tour. Note Roger Bernard's discovery of aphids about 20 miles from my farm.



Somebody hold me...


[Thanks, Eric!]
The stealth wealth...

Our privileged lives help us to overlook the most important source of wealth for our nation: intangible wealth.
The World Bank study defines natural capital as the sum of cropland, pastureland, forested areas, protected areas, and nonrenewable resources (including oil, natural gas, coal, and minerals). Produced capital is what most of us think of when we think of capital: machinery, equipment, structures (including infrastructure), and urban land. But that still left a lot of wealth to explain. "As soon as you say the issue is the wealth of nations and how wealth is managed, then you realize that if you were only talking about a portfolio of natural assets, if you were only talking about produced capital and natural assets, you're missing a big chunk of the story," Hamilton explains.

The rest of the story is intangible capital. That encompasses raw labor; human capital, which includes the sum of a population's knowledge and skills; and the level of trust in a society and the quality of its formal and informal institutions. Worldwide, the study finds, "natural capital accounts for 5 percent of total wealth, produced capital for 18 percent, and intangible capital 77 percent."

Social institutions are most crucial. The World Bank has devised a rule of law index that measures the extent to which people have confidence in and abide by the rules of their society. An economy with a very efficient judicial system, clear and enforceable property rights, and an effective and uncorrupt government will produce higher total wealth. For example, Switzerland scores 99.5 out of 100 on the rule of law index and the U.S. hits 91.8. By contrast, Nigeria gets a score of just 5.8, while the war-torn Democratic Republic of the Congo obtains a miserable 1 out of 100. The members of the Organisation for Economic Co-operation and Development-30 wealthy developed countries- have an average score of 90, while sub-Saharan Africa's is 28. "Rich countries are largely rich because of the skills of their populations and the quality of the institutions supporting economic activity," the study concludes. According to Hamilton's figures, the rule of law explains 57 percent of countries' intangible capital. Education accounts for 36 percent. [More of a great interview]
[Whole 208-page report here]

This staggering advantage we take for granted becomes most apparent when it is missing. Listen to Americans talk about foreign countries - especially under-developed ones - and the idea of social institutions that don't work hits home first.

As farmers we are very late embracing the idea of wealth that cannot be hauled in a truck. Buy as Hernando de Soto pointed out in "The Mystery of Capital" without the basic ability to prove something is yours, hidden capital sits unused. Such everyday fixtures of order have real value, and the World Bank helps to point out why the US has much to be grateful to our forebears for and much to protect.
The Switchgrass Flim-Flam, Part XVIII...

I'm speaking today and tomorrow in Iowa for the IA Bureau and I followed Sterling Liddell who gave a long range outlook. Super presentation. He has all the flamboyant showmanship of an economist, but still strangely likable.

Anyhoo, somewhere toward the end of his talk someone asked about switchgrass. He was far more discrete in his skepticism of this "energy solution" than I have been, but he mentioned an issue I had not heard of before:

Rats.

I can't google up anything tonight, so I will cross-examine him tomorrow but coupled with this story, it struck me as interesting.
Now comes another woe, this one as icky as a biblical plague: millions of mouse-like rodents called voles feasting on everything from beets to potatoes in an infestation that has prompted a desperate, scorched-earth policy in one of Spain's agricultural heartlands.

Farmers unions say the Castille-Leon region in north-central Spain is crawling with an estimated 7.5 million voles, and the local government is baffled: It doesn't know the cause — or the solution. The invasion began gently 10 months ago but has snowballed to stunning proportions.

Spanish television aired footage of scores of voles darting in and out of holes in what would normally be rich, healthy farmland, or quivering in the throes of death brought on by pesticide. Some of the critters have even made it into gardens of homes in the region's main city, Valladolid, according to news reports. [More]

I'll keep looking - but is it me or is getting a little "Nostradamus" around here? What's next - a plague of frogs?

Monday, August 20, 2007

Warning - loose money!...

The queasiness on Wall Street could surprise LaSalle Street.
Commodity investors may never have a better time to buy corn, cotton and sugar instead of oil and copper.

Sugar, the world's primary source of ethanol, is the cheapest it has ever been relative to crude oil. Corn this year dropped the most since 1998 after U.S. farmers planted the biggest crop since World War II. Cotton is the worst commodity investment over the past three years.

Goldman Sachs Group Inc., the world's biggest securities firm, is recommending corn after correctly predicting a rally earlier this year. Former hedge fund manager Jim Rogers and Marc Faber, who told investors to sell U.S. stocks a week before the 1987 crash, also say agricultural commodities are the ones to buy. Wheat, coffee and corn this month outperformed almost all commodities in the UBS Bloomberg CMCI index. Oil tumbled 8 percent and copper fell to the lowest price since March as loan losses hurt consumer demand. [More]
A price decline in copper would be a welcome relief for many as "copper security" is becoming a major industrial problem.
The culprits were not the typical ones — heat waves, fires or drought — but thieves, who have been stripping the copper wires out of irrigation systems throughout California. The rampant thefts have left farmers without functioning water pumps for days and weeks at a time, creating financial loss and occasional crop devastation in a region still smarting from a spectacular freeze last winter.

Theft of scrap metal, mostly copper, has vexed many areas of American life and industry for the last 18 months, fueled largely by record-level prices for copper resulting from a building boom in Asia. Common in developing counties, metal theft is now committed in nearly every state, largely by methamphetamine users who hock the metal to buy drugs, the authorities say.

Thieves have stripped the wires out of phone lines, pulled plaques off cemetery plots, raided air-conditioning systems in schools and yanked catalytic converters from cars, all to be resold to scrap metal recyclers.

But perhaps no group has been as been as consistently singled out as California farmers, who provide roughly half of the nation’s fruits and vegetables. Irrigation systems, a treasure trove of copper, tend to be in remote places, out of the eyes of farmers and, until recently, law enforcement. [More]

We have wealth splashing around the globe like beer in a plastic cup.

Somebody should drink it just to prevent spillage.

(Sometimes my metaphors get a little surreal.)
Yet another reason to hate eggplant...

And zucchini. And squash. And...

[More]

Maybe it's just a cheese-nightmare.

[via Presurfer]

Sunday, August 19, 2007

Energy Independence: Update...

As the pushback from ethanol mandates becomes fiercer, the winning argument seems to be wrapping the biofuel industry in the Stars 'n Stripes under the guise freeing us from dependence on "furrin orl". This seemed unlikely last year, and even more so today.

While this is all fashionably xenophobic, not only is there no evidence to suggest we are decreasing our oil imports from bad people by making more ethanol, it would seem we are doing THE OPPOSITE.

Crude Oil Imports (Top 15 Countries)
(Thousand Barrels per Day)
Country May-07 Apr-07 YTD 2007 May-06 Jan - May 2006

CANADA
SAUDI ARABIA
MEXICO
VENEZUELA
NIGERIA
ANGOLA
ALGERIA
IRAQ
RUSSIA
ECUADOR
UNITED KINGDOM
KUWAIT
BRAZIL
NORWAY
COLOMBIA
[More]

Please compare the last column with the third. If we lump Saudi Arabia, Iraq, Algeria, and Venezuela (I forget - is Russia on our side now or not?) together as "nasty oil" then we are importing 3.458 million BPD now compared to 3.400 million BPD during the same period last year.
Other interesting notes:
  • we are getting less from Iraq than in 2006
  • we are getting more from Russia
  • we are getting more from Algeria
  • Saudi Arabia has replaced Mexico as #2
  • Mexican production is slumping seriously.
And finally, all this happened while we were massively ramping up ethanol production. My take on this is simple. Ethanol will not deliver anything close to US energy independence. Domestic production increases won't either. Using much less energy may be the only way.

Other observers with more intellectual heft than this minor-leaguer are drawing similar conclusions.
This is nonsense. As my colleague Robert J. Samuelson demonstrated this week, biofuels will barely keep up with the increase in gasoline demand over time. They are a huge government bet with goals and mandates and subsidies that will not cure our oil dependence or even make a significant dent in it.

Even worse, the happy talk displaces any discussion about here-and-now measures that would have a rapid and revolutionary effect on oil consumption and dependence. No one talks about them because they have unhidden costs. Politicians hate unhidden costs.

There are three serious things we can do now: Tax gas. Drill in the Arctic. Go nuclear. [More]

The numbers may not matter in the short run. Ethanol seems like it should reduce our need for imports, so if we keep saying it long and loud enough, maybe a miracle will happen. But every year as we re-examine our oil import numbers, the illusion will be harder to support.

For producers, the key to maintaining support for mandates could be to install a large and powerful political base in as many states as possible and to keep the costs hidden.

That's pretty much a mirror of our farm program political strategy. And it is hard to argue with the success of that political effort.

Hence my cash rent bids.

This would explain Packer fans...

Having bad dreams? You know, the kind where you realize you are standing naked on the floor of the Board of Trade and suddenly your second-grade teacher shows up with a hippopotamus...

No? Well, never mind...

Part of your problems could be eating cheese.
The chemistry of dreams goes back to before biochemistry began.

Scrooge blamed his nocturnal ghosts on a "crumb of cheese", and I know what he meant. I find it almost impossible to get an undisturbed night's sleep after eating the stuff and - worse - after drinking red wine.

The effect is very real - the last time I tried a refreshing bottle of red late at night I ground my teeth so hard that I smashed a molar.

Now the substances behind such unwanted nightmares are being tracked down. Tyramine, the main culprit, is based on the carbon ring of Kekulé's dream, and is broken down by the same enzymes as those hard at work during paradoxical sleep.

Aged cheeses, like Stilton, and heavy red wines are most to blame, while soy sauce and smoked fish are both rich in the stuff. [More]
But wait - it gets even better. You can choose your dreams.

85% of females who ate Stilton had some of the most unusual dreams of the whole study. 65% of people eating Cheddar dreamt about celebrities, over 65% of participants eating Red Leicester revisited their schooldays, all female participants who ate British Brie had nice relaxing dreams whereas male participants had cryptic dreams, two thirds of all those who ate Lancashire had a dream about work and over half of Cheshire eaters had a dreamless sleep.

Commenting on the study, Neil Stanley, PhD Director of Sleep Research HPRU Medical Research Centre at the University of Surrey says: "The Cheese and Dreams study conducted by the British Cheese Board is the first study of its kind and suggests that eating cheese before you go to bed may actually aid a good night’s sleep.

What is particularly interesting is the reported effect different types of British cheese have on influencing the content of dreams. It seems that selecting the type of cheese you eat before bedtime may help determine the very nature of often colourful and vivid cheese induced dreams”
[More]

This is all well and good for the Brits. But my question is will a Double Cheese Whopper make me dream about Carol Drinkwater and me surfing off Baja California?

It's all about science, ya know.




What??...

Saturday, August 18, 2007

A brief, but helpful explanation...

I "Google" instead of actually thinking anymore, it seems. Here is how it works.

[via 3 Quarks]

[Update: This link requires serious RAM. My bad. I forget I scrimp on cars and splurge on computers.]

Friday, August 17, 2007

And this was the "adult swim" period...


A day at the pool with a few close Japanese friends. The guy in the blue trunks on the left is my nephew's old roommate.

Boy, would that be a relief after those crowded Japanese trains!

Thursday, August 16, 2007

Of course you knew that...

We amateur economists - which comprises about everyone - often use phrases that we think we understand when we don't have a clue. F'rinstance, we have heard much serious blather about the Fed injecting money into the economy or market. But how 'zactly does that happen?
With huge short-term loans. The Fed auctions off these loans to the banks willing to pay the highest interest rates. The borrowers use their government bonds as collateral, buying them back from the government after a period of at most two weeks. In the meantime, the banks have more cash to lend—to each other, to corporations, to anyone who's buying a house or car. [More of a short, helpful explanation]
Another phrase that most take way too literally is "printing more money". Think about it. To put actual dollar bills into the supply, how would you distribute them? Just hand some our to friends or people standing by the mint? Again, this shorthand phrase is too often taken literally. Indeed, by confusing currency with money, whopping economic misjudgments are made.
In the U.S., as of December, 2006, M1 was about $1.37 trillion and M2 was about $7.02 trillion. If you split all of the money equally per person in the United States, each person would end up with roughly $4,550 ($1,370,000M/301M) using M1 or $23,320 ($7,020,000M/301M) using M2. The amount of actual physical cash, M0, was $80 billion in 2006, roughly one third of the $261 billion in cash and cash equivalents on deposit at Citigroup as of the end of that year and roughly $266 per person in the US. [More]
Just a little awareness raising in support of a hassled Federal Reserve System.
C'mon, we've all done it few times...

Miss your exit?



No biggy.


[via Arbroath]