The original mystery meat...

Is still shrouded in obscurity about its origins and contents.

 U.S. rules requiring meat and fresh produce to be labeled by national origin are falling short of lawmakers' aims, leaving shoppers in the dark about where mixed vegetables, steaks and Spam come from, some lawmakers say. [More]

 COOL has met its match.

Or maybe we can't handle the truth.

How can we miss...

A severe bout of inflation in the next decade?

The Federal Reserve will pump an additional $630 billion into the global financial system, flooding banks with cash to alleviate the worst banking crisis since the Great Depression.

The Fed increased its existing currency swaps with foreign central banks by $330 billion to $620 billion to make more dollars available worldwide. The Term Auction Facility, the Fed's emergency loan program, will expand by $300 billion to $450 billion. The European Central Bank, the Bank of England and the Bank of Japan are among the participating authorities.

The Fed's expansion of liquidity, the biggest since credit markets seized up last year, came hours before the U.S. House of Representatives rejected a $700 billion bailout for the financial industry. The crisis is reverberating through the global economy, causing stocks to plunge and forcing European governments to rescue four banks over the past two days alone.   [More]

As I set transfixed watching the market freefall yesterday in North Dakota before a speech, I began to notice what the talking heads were not saying.  Over three hours I did not hear the word "inflation" once.

It is the lesser of several evils now, and I believe virtually assured to devalue the gigantic debt we are creating right now.

Look at the size of that one...

The big reason your don't hear Rachmaninov more often.



[via arbraoth]

Why commercial paper is the next problem...

The credit crisis. Episode Eight.  While your bank may be okey-dokey, since the board and management have never been excited about exotic investments, we often forget how commercial paper infiltrates our lives.

Commercial paper essentially can be compared as an alternative to lines of credit with a bank. Once a business becomes large enough, and maintains a high enough credit rating, then using commercial paper is always cheaper than using a bank line of credit. Nevertheless, many companies still maintain bank lines of credit to act as a "backup" to the commercial paper. In this situation, banks often charge fees for the amount of the line of the credit that does not have a balance. While these fees may seem like pure profit for banks, if the company ever actually needs to use the line of credit it would likely be in serious trouble and have difficulty repaying its liabilities.

Currently, more than 1,700 companies in the United States issue commercial paper. Financial companies comprise the largest group of commercial paper issuers, accounting for nearly 75 percent of the commercial paper outstanding at mid-year 1990. Financial-company paper is issued by firms in commercial, savings and mortgage banking; sales, personal and mortgage financing; factoring; finance leasing and other business lending; insurance underwriting; and other investment activities. The remaining commercial paper outstanding at mid-year 1990 -- over 25 percent -- was issued by nonfinancial firms such as manufacturers, public utilities, industrial concerns and service industries. [More]

For example, banks may be shifting to honor their backup position for the failing commercial credit market.  And it is indeed struggling.

 When the credit crisis started to unfold last summer, the key area of weakness within commercial paper was mortgage-related asset backed instruments tied to the already declining U.S housing market. But now, the sag in issuance by financial firms is a sign that the whole commercial paper part is succumbing to broad lending markets stress and endangers the the whole economy, analysts said.

"These declines in some ways carry more weight than those of a year ago, when the market was purging issuers with mortgage-related exposures," wrote Crescenzi. "This time the purge is broad and is impacting issuers with far more predictable cash flows--regular run-of-the-mill companies in need of working capital," he wrote.

As the global credit crisis deepens, banks' distrust of lending to each other has worsened in interbank markets, with many hoarding cash for fear that some short-term loans might not get repaid. A similar dynamic is roiling the commercial paper market, analysts say.

Money market funds have diverted hefty amounts out of commercial paper and other non-government instruments into the ultra-safe haven of Treasury bills, after a money market mutual fund broke the buck, or fell below $1 per share value last week, triggering investor fears about the safety of short-term paper from banks, insurers and companies.

"The declines reflect the seizing up of the credit market and withdrawals of monies from money market funds, which held $700 billion of commercial paper at the end of the second quarter," wrote Tony Crescenzi, chief bond market strategist, Miller, Tabak & Co. in New York in an email note. [More]

The freezing of commercial credit stops business in its tracks and could trigger order cancellations and layoffs.  In fact, for businesses already struggling a month ago, loss of commercial paper affords a gold-plated opportunity to downsize and shift the blame elsewhere.

“The credit at risk extends well beyond mortgages. It includes automobile loans, college loans, credit cards, small-business loans. Businesses need credit to grow, and without that they will stagnate, which could cause layoffs or business closures. Thus, while global capital markets and short-term funding seems a world away from Arizona, no one is insulated from the impact. The tightening of credit in the wider market is just the beginning,” said Tanya Wheeless, CEO if the Arizona Bankers Association. [More]

We should know by today what the bailout rescue plan will look like, and by this evening whether it is pacifying investors overseas. The big risk here is a package emerges and nobody cares.

The canary is coughing...

This message from a loyal reader is anecdotal, but perhaps it indicates how the credit crunch will reach out and touch farmers - even with strong prices.

For the last 5 months there has been an auction sign on an adjoining
farm for which I have had my eye on for nearly 50 years. Tried to have
my financial house in order and was working with several lenders over
the last months on who was most interested in working with us. Had
several offers with attractive interest rates and the cash flow was
there even based on $4.50 corn and $11.00 beans. Just learned yesterday
that the interest rates are up over 2% in 2 weeks and we can not lock in

just yet. This does change everything for us. Still glad however that
God is still in control. We have been praying that God would guide this
decision and that He did have our permission to stop us if this is not
for us. A very secure place to rest. 

I know I'm checking with my local banker today.  Anybody else seeing credit issues?

Update on The Test...

If you took the Political Compass test and got an answer you did not expect, check out their very helpful FAQ page.

You think your state road workers are goof-offs...

Imagine what they would do if they had vodka.



Russian road striping.

Take the test...

Where do you stand politically?  Valid or not, here is my result from a now-typical online test.

Try it yourself.

[Thanks, Jan]

Not good enough...

The Paulson plan is fatally flawed, I believe, and I now stand with many economists who warn against enacting this too-much-too-fast panic reaction.

 Comments I agree with (My emphasis):

The sums involved are staggering. As a comment that Greg Mankiw, the former White House economic adviser, posted on his blog asked, "Has more money ever been given with fewer restrictions on how it is used? Ever?"

In 1932, at the height of the Great Depression, the government created the Reconstruction Finance Corp. to make loans to banks, railroads and others. President Hoover asked for $2 billion--equivalent in today's money to $30 billion--and spent just under that amount in the RFC's first year. The country then was in the midst of an economic catastrophe. Economic output had dropped 45 percent. Production of steel and autos were each down by three-quarters. Unemployment was 24 percent, and so on.

The allocation sought by Paulson is 23 times bigger. And it is in addition to the tens of billions pledged to back loans to Bear Stearns, Fannie, Freddie and A.I.G.

America's economy does not face an emergency--only its financial system does. This is a distinction lost on the bankers in Washington, but it is one worth remembering. On Main Street, unemployment is 6.1 percent. Home prices are down close to 20 percent and presumably headed lower. These numbers are not pretty, but they do not add up to an economic Pearl Harbor or even close.

Of course, potentially several million Americans face home foreclosure. That is a crisis, but it is a slow-developing one, for which the normal legislative process--as distinct from a shotgun corralling of Congress--will suffice. And the Paulson plan does not help homeowners.  [More]

Another from a whole bunch of brains:

As economists, we want to express to Congress our great concern for the plan proposed by Treasury Secretary Paulson to deal with the financial crisis. We are well aware of the difficulty of the current financial situation and we agree with the need for bold action to ensure that the financial system continues to function. We see three fatal pitfalls in the currently proposed plan:

1) Its fairness. The plan is a subsidy to investors at taxpayers’ expense. Investors who took risks to earn profits must also bear the losses.  Not every business failure carries systemic risk. The government can ensure a well-functioning financial industry, able to make new loans to creditworthy borrowers, without bailing out particular investors and institutions whose choices proved unwise.

2) Its ambiguity. Neither the mission of the new agency nor its oversight are clear. If  taxpayers are to buy illiquid and opaque assets from troubled sellers, the terms, occasions, and methods of such purchases must be crystal clear ahead of time and carefully monitored afterwards.

3) Its long-term effects.  If the plan is enacted, its effects will be with us for a generation. For all their recent troubles, Americas dynamic and innovative private capital markets have brought the nation unparalleled prosperity.  Fundamentally weakening those markets in order to calm short-run disruptions is desperately short-sighted.

For these reasons we ask Congress not to rush, to hold appropriate hearings, and to carefully consider the right course of action, and to wisely determine the future of the financial industry and the U.S. economy for years to come.  [More]

 and the final word for me:

Just when I was starting to feel disillusioned in my profession, the Stiglitz/DeLong/Edlin edited Economists' Voice lashes out against the Paulson bail-out. Just let me add: If we've learned anything from the Iraq War, it's that it's a good idea to calmly review the facts before taking drastic action. [More]

This administration has squandered its last benefit of the doubt. The biggest suckers have been fiscal conservatives like me. No more.

In fact, this evening some dots sort of connected.  Even if there are merits to the Paulson Plan, they are about to fall victim to the issue I have considered to be an underlying fault in our economic surge: inequality.

The issue of executive compensation alone may doom the bailout, and it will be driven by a tide of resentment from people whose incomes have stagnated while CEO compensation soars.  In this one chance, the populace is reasserting the right of democracy.  Even if it shoots their own feet, folks are tired of seeing economic benefits accrue to only a tiny number - deserved or not.  Of all the criticisms of the bailout, this one has ignited the fury of voters most.  Sec. Paulson's political tone-deafness astonished many in Congress, and is now the subject of some furious back-pedaling.

Free marketers - and I count myself one - can rail against the illogic of such actions but this only proves their ignorance of our brains, where fairness is apparently hard-wired.  Attention must be paid to avoiding extremes between "haves" and "have-nots", not because it optimizes economic returns, but because it diminishes the possibility of what is about to happen, I fear.

Many are ready to let the ship sink in order to drown the first-class passengers. In the long run, perhaps economists will start factoring this outcome now.

Obviously they are not talking about the price...

Scientists have almost accidentally discovered a type of ammonium nitrate that will not explode.  The Department of Homeland Security should be ecstatic.

Industrial manufacturer Honeywell said Tuesday it has developed a new nitrogen-based fertilizer that is difficult to ignite — a discovery that could reduce criminals' ability to make explosives used in major terrorist attacks like the Oklahoma City bombing.

Honeywell International Inc. said its patented fertilizer combines ammonium sulfate with ammonium nitrate, providing the nitrogen and sulfur needed for plant nutrition but making it largely useless as a fuel for explosives. The company said that when mixed with substances such as fuel oil — a volatile combination often used to make bombs — the new fertilizer did not detonate.

"The unique composition of this new fertilizer makes it extremely difficult to turn it into a weapon," said Qamar Bhatia, vice president and general manager of Honeywell Resins & Chemicals, in a statement. "Ammonium nitrate has long been an excellent fertilizer, but this technology makes it safer." [More]

Of course, this is not great news for the mining industry necessarily.  Diesel fuel and ammonium nitrate (ANFO) has been the staple explosive for quarries and mines for decades.  It is cheap, reliable and relatively easy to use.  What I suspect is a dual stream will emerge for the two major uses, and regular ol' ammonium nitrate will be tracked like yellowcake, while agriculture may get easier access to this type of fertilizer.

Easier - but not cheaper, of course.

Meanwhile, in another part of town...

For reasons too complicated to explain and too boring to relate, I find myself at a meeting of the International Newspaper Group.  (I know, I know - it makes no sense, but here I am).  It is perhaps from the perspective of complete outsider (I felt like a wedding crasher at the cocktail reception this evening - even while loading up on some fantastic coconut shrimp thingies on a stick and chicken quesadillas) that I find my eyes opened to what the credit crunch means to folks who don't own rapidly appreciating assets like farmland.

Basically, credit for businesses has dried up. Even rock-solid business plans can't attract loans.  And the newspaper industry is anything but that category.

I'm sure you've heard about the troubles newspapers are facing these days: ad revenues in free-fall, circulations plummeting, classifieds going to craigslist and the cost of newsprint going up because — and this is crazy — apparently more people are reading newspapers in India and China! Go figure.

...

Reporters and editors are dropping like flies. Just look what's happening at The Los Angeles Times. They fired so many reporters there, some of them finally got pissed off enough to sue their corporate owners for running the paper into the ground.

Connecticut's newspapers are in a world of hurt too, and could really use a lifeboat. The New Haven Register, the once-proud daily with a 200-year history, is poised to go belly up. Its delisted stock was trading at half a penny this week. What is that, a shilling? The Hartford Courant, the nation's oldest continuously published daily, lost a quarter of its newsroom staff in a single devastating round of buyouts. Even the beloved New London Day had to fire a bunch of reporters and editors to make ends meet. It's really that gloomy. [More]

Sooner or later - no wait, make that "sooner" - jobs are going to be shed wholesale.  When businesses can't borrow to expand or upgrade or simply compete, they fail.  Agriculture - or at least cash grain farming - has been floating along in a little bubble and may be somewhat detached from the angst of our fellow Americans. No longer.

The dream is dying for many.  To be sure it was a fantasy to begin with, fueled by easy credit and unearned income.  But it was that boom that underwrote the generous government largess we consider our patriotic right as farmers.

But if a free-spender like Sen Obama can grasp there will not be cash to toss around after this financial disaster grinds to an ugly halt, I think it is safe to say desperate petitioners for federal dollars will not be so eager to fork pork to me in the future.  America is about to get fiscal religion, and we farmers are among the lost.

No touching picture of homespun goodenss will melt the hearts now being seared by job losses and retirement fund wipe-outs.  No appeals to patriotic food will move resentful grocery shoppers.  No bucolic simplicity will open their wallets again, I believe.

Worst of all, our bankers will be looking for proof of performance, not just proof of fortuitous asset selection.  In short, we won't be partying while the rest of the nation shrivels.  We will be connected by friends whose careers are ruined, children who become dependents again, and neighbors who no longer smile as much.

Mnay in our industry will shrug and say we went through the same in the '80's and it's "their turn".  But few will vote to subsidize these fellow citizens like we were supported then.

Tonight I listened to the anxious voices of an industry which is shriveling.  More farmers should.

Here I was worried about the potholes...

Talk to your road commissioner about adding your favorite tunes to local avenues.  F'rinstance, the Lone Ranger Theme:



(Play it twice - it helps)


[via abroath]

I think this also applies...

To the current economic crisis.  Here's how a car crash goes down, and how computers and humans react.

All over in the blink of an eye

This is a reconstruction of a crash involving a stationary Ford Falcon XT sedan being struck in the driver's door by another vehicle travelling at 50 km/h.

One millisecond equals 1/1000th of a second.

0 milliseconds - An external object touches the driver's door.

1 ms - The car's door pressure sensor detects a pressure wave.

2 ms - An acceleration sensor in the C-pillar behind the rear door also detects a crash event.

2.5 ms - A sensor in the car's centre detects crash vibrations.

5 ms - Car's crash computer checks for insignificant crash events, such as a shopping trolley impact or incidental contact. It is still working out the severity of the crash. Door intrusion structure begins to absorb energy.

6.5 ms - Door pressure sensor registers peak pressures.

7 ms - Crash computer confirms a serious crash and calculates its actions.

8 ms - Computer sends a "fire" signal to side airbag. Meanwhile, B-pillar begins to crumple inwards and energy begins to transfer into cross-car load path beneath the occupant.

8.5 ms - Side airbag system fires.

15 ms - Roof begins to absorb part of the impact. Airbag bursts through seat foam and begins to fill.

17 ms - Cross-car load path and structure under rear seat reach maximum load.
Airbag covers occupant's chest and begins to push the shoulder away from impact zone.

20 ms - Door and B-pillar begin to push on front seat. Airbag begins to push occupant's chest away from the impact.

27 ms - Impact velocity has halved from 50 km/h to 23.5 km/h. A "pusher block" in the seat moves occupant's pelvis away from impact zone. Airbag starts controlled deflation.

30 ms - The Falcon has absorbed all crash energy. Airbag remains in place. For a brief moment, occupant experiences maximum force equal to 12 times the force of gravity.

45 ms - Occupant and airbag move together with deforming side structure.

50 ms - Crash computer unlocks car's doors. Passenger safety cell begins to rebound, pushing doors away from occupant.

70 ms - Airbag continues to deflate. Occupant moves back towards middle of car.
Engineers classify crash as "complete".

150-300 ms - Occupant becomes aware of collision. [More]

In times of turmoil, one of our strongest instincts is to shut out the world and wait for it all to be over. Other cataclysms happen too fast for us to react at all.

This moment in history could be both.

My share of the fallout...

Agriculture will not go unscathed in financial crisis, although my investigations lead me to suspect the consequences are not immediately obvious.  After reading reams of stuff about what the heck is going on in Washington and New York, maybe these links and guesses will help.

Some possible results of this debacle:

• Kiss an estate tax repeal goodbye.   In his superb explanation of what is happening and why Jim Manzi points out tax revenues are going to be desperately needed by the government to fund the amazing amounts of new debt.

Time will tell, but likely medium-term implications include higher government interest payments, worse deficits and higher taxes. This certainly reduces the probability of making the Bush tax cuts permanent in a couple of years, no matter who is in the White House. [More of the best summary of the situation I have read to date]

• Oddly, I look for land prices to continue to march upward, driven by comparative safety and predictability.  Admittedly, the actions on the food-fuel battleground will have considerable effect, but considering all the places investors don't want to park money, farmland still looks pretty good.  Additionally, it seems commerical real estate may be attracting more sovereign wealth fund (SWF) money, and some spillover effect into farm real eastate should not be discounted.

Sovereign wealth funds may increase investment in commercial properties to a net $725 billion by 2015 as they diversify their holdings from stocks and bonds, according to CB Richard Ellis Group Inc.

The funds will probably raise the proportion of money they invest in real estate to 7 percent from 4 percent in the next seven years, the world's largest commercial-property broker said in a report published today. Abu Dhabi, Norway, Saudi Arabia, Singapore and China have the largest funds, CB Richard Ellis said.  [More]

• Widespread screening for wealth.  It has not gone unnoticed that the bad guys in this meltdown have also been ultra-rich.  I can foresee the use of means tests for entitlements becoming far more common and limiting.  One entitlement that will likely be re-targeted for actual reform is farm payments.  Another will be Medicare and Social Security, I suspect.
• The consolidation of small banks. The action to bring investment banks under closer federal regulation and convert them to deposit-based lenders will explode the demand for deposit-rich bank corporations to the point owners will be hard-pressed to say no.
• A trillion-dollar deficit.  I think we can do this folks.  Combine massive bailout borrowing with lower tax receipts from investment bankers for one example and we could see our first 12-zero annual shortfall which might bring about...
• A new low for the dollar.  Borrowing of this scale tends to debase a currency, and it might be enough to spook wary currency traders to pull out of greenbacks until some turnaround is in sight.
• No end to commodity volatility.  So look for a few big winners and many small losers as producers try to avoid risk and a few bet the farm.

Commodities have been slammed in the last two months due to the dollar rally. But we are now nearing a time of hyperinflation when the Feds paper over any and all problems with reckless abandon. As the market comes to realize this, commodities and other inflationary hedges will begin their bull market anew. [More]

We'll know more soon.  And we probably won't foresee many of the strange blowbacks from this historic (and perhaps histrionic) action until we are looking backwards.

Like I keep saying.  Make some notes to tell your grandchildren.

Waves of applause...

Seemed to have carried public silence away.  As a choirmaster, I have always struggled with applause after an anthem, but fellow church members think me a stuffy old curmudgeon, I suspect.  At least it was good to see I'm not alone in missing the silence of an assembly.

I suppose politicians are suspicious of silence because it allows people to think for themselves. It has power. And nowhere is it more powerful than in a church. That is why religions talk of "inner silence", and "a silent mind freed from the onslaught of thoughts". Not an empty mind, note.

Besides, silence can fill a room in a way that applause never can. It can also provide us with a sense of communion with those around us and a feeling of harmony with ourselves. Perhaps it is reflection we are afraid of, then. Perhaps this is why we surround ourselves with sound - in our kitchens, in our cars, even as we are walking from the station with our earphones attaching us to our iPods.

Theatres always ask audiences to switch off mobile phones before a performance begins. I don't see why concert halls can't do the same, gently reminding people that it might be considerate to others not to applaud until the work is over. The same could apply to churches. But perhaps it's just me. I'd also ban that excruciating moment in a service where you are supposed to turn to your neighbour and shake hands. [More]

While I don't mind being the last of a species sliding into extinction,  after a while applause may lose its power to acclaim. Consider the infamous SOTU (State of the Union) address, where applause-scoring forms the modern substitute for actual analysis by commentators and the cadence of great oratory has been sacrificed for political preening.

As a speaker I think I've reached a point where if I had to choose between applause and silence, I would choose silence.  A dead hush means they definitely heard what you said.

Barbara Ehrenreich's suggestion we are lamenting the loss of public means of expressing joy could be valid.  Perhaps all the clapping is an attempt to replace communal celebrations we are all too busy or tuned out to participate in anymore.

Just one question...

Will The Big Bailout work?  The answer: No.  Yes. Doubtful. It all depends.

While many Americans are taking NYSE numbers as the evidence a solution is found, I can't make the connection between saving lenders and investment banks form collapse and the fundamental problem underlying this emergency: home prices are falling.

I'm not alone.

Will it work: The jury is still out, although experts are cautiously optimistic the plan will help the housing crisis.

The plan will help banks shore up their balance sheets by removing hard-to-value assets. This would address the seemingly endless rounds of writedowns and capital raising that have been rocking the financial sector.

Without these bad loans weighing on their books, banks may be more willing to lend. Or at least that's the goal.

The problem is that the bailout will not automatically make banks profitable, nor will it stop the slide in home values that is wreaking havoc on the economy.

Will it help homeowners: It's unclear at this point. If the government buys an entire securitized loan, it could opt to help struggling homeowners by modifying the terms. This could include reducing a loan's interest rate or principal balance.

But it could prove difficult to snap up all the securities sold on a mortgage, experts said. And as long as investors still hold a piece, they could block any changes to the loan.

If the plan doesn't stem the tide of foreclosures, home prices will not stabilize and the economy will not recover, experts said. [More]

Much of the problem for the housing industry was overpricing to the point that almost any mortgage was questionable by former financial standards.  Most people could not afford most homes. Instead the expectation of rising prices meant today's dubious lending would be justified a few months from now.

So how can having the US Treasury hold those largely under-secured and mostly unserviceable (folks simply can't afford the payments) loans solve the problem?  It's all in the details of how they buy the securities and how much they pay.

Any analysis of the plan was hamstrung by a lack of details. Economists warned that the spending splurge could put enormous strain on an already weak economy by raising interest rates and creating inflationary pressures. Many are also concerned that the plan does little to address the underlying problems in the housing market, which continues to sink, putting heavy pressure on American consumers. [More]

Two reasons we don't know how much this effort will cost is we don't know what the US government will pay for the pile o' mortgages and what they will be worth in say, two years.  In other words, our government could either look like a shrewd housing speculator or will have become our largest landlord.

The person who will be on that cover is someone we've all heard of, Ben Bernanke. As Andrews points out, Bernanke is selling treasuries to buy the assets that Karabell thinks are undervalued. Meanwhile, the market is falling all over itself to go in the opposite direction.

The best case scenario is that the U.S. government hedge fund makes a big profit for the taxpayers over the next few years. The worst case scenario is that house prices go into free fall and the taxpayers take a loss. But in that case, you could argue that the Fed's actions were at least countercyclical.

The accounting issue is a tough one. When the market prices are obviously right, then firms that refuse to mark to market so they can keep adding to their risk are a menace. The S&L crisis is the notorious example.

When market prices are obviously wrong, then mark-to-market is a bad thing. Karabell makes that point eloquently.

I think that market prices are more likely to be right than wrong, and it is particularly difficult to identify when they are obviously wrong. Even now, when I think the odds favor the Bernanke hedge fund making a profit, that's just my opinion. Others think that he is going to take a bath, perhaps an awful one. Ken Rogoff, in the piece I linked to yesterday, seems to be in that camp. So, I still think that, in an imperfect world, mark-to-market is the best choice. [More]

As you can tell, our best economic minds are all over the board on this one, but most fall into the camp that doing nothing could have produced this century's Great Depression. I'm not so sure we have truly avoided it, nor am I convinced our hard-pressed national credit rating will support more efforts like this.

The beginning of what's possibly ending...

It is difficult to overestimate the staggering effect the printing press had on civilization and our western culture.  Since listening the The Middle Ages lectures, I found this website explaining how printing arose and spread an absorbing read.  The atlas itself is fun to mess around with.

While few records remain pertaining to the daily operations of the early printing workshops of 1450-1500, it is possible to reconstruct a general picture. Early printing was a complex process involving many different kinds of materials and skills. In order to print written material on paper, a printer needed to create or obtain type, compose the text by arranging the type into lines of words, placing the arranged type onto a wooden press, and using this intricate mechanism to apply pressure on the inked type to impress it into dampened paper. Print shops housed one or many presses, depending on the size of the operation, with each press requiring two pressmen for optimal production. The variety of tasks called for many workers, including typefounders, typesetters or compositors, ink makers, and printers. It is estimated that the work day consisted of 12-14 hours of grueling physical labor under poor conditions in comparison to current standards. Estimations about printing output vary, but it is thought that 300 sheets or 600 folio pages could be printed in a shop each day. In addition to books, print shops printed ephemera, including broadsides and indulgences. [More]

As I drool over a Kindle to take over my reading mechanics, it is hard not to wonder if the ol' printing press is slip-sliding away.

Hey, the TomTom just went blank!...

Want to drive from North America to South America?  Seems there is a 54-mile problem.

You might have wondered if it's possible to drive between North and South America - for surely there must be a road between these two continents! Well, as it turns out, there is absolutely NO ROAD connecting them, and all travel advisories clearly says "Don't Go", even if you feel somewhat suicidal. I am talking about the wild and wildly dangerous Darien Gap. [More]

Send me a postcard.

So what's this gonna cost?...

As near as I can tell, government action to restore normalcy in the financial markets is going to cost taxpayers:

• Less than we think.  

So what's the real cost to taxpayers for all these interventions? No one can say for sure, and probably won't be able to for some time. The Savings & Loan crisis of the early 1990s cost taxpayers a net of $124 billion in 1999 dollars, according to the FDIC - more than initially estimated but below projections made during the height of the crisis.

But one thing is certain: The price tags on today's bailouts bear "no direct translation to the taxpayer cost," said Lyle Gramley, a former Fed governor now with the Stanford Group, a Washington policy research firm.

Indeed, he said, "None of us knows yet if there'll be any cost to the taxpayer at all." [More]

•  $500,000,000,000  (or half a trillion, if you are tired of counting zeroes)

The proposal to create a massive facility to buy mortgage-backed securities could cost as much as a half-trillion dollars and would involve the purchase of both private-label and government-guaranteed mortgages, according to an administration official. [More]

• $2,000,000,0 - oh, never mind: $2 TRILLION

There were growing fears today that the financial-industry bailout being worked out by US authorities could take a heavy toll on the American economy, with cost estimates as high as $2 trillion (£1.09 trillion).

Treasury Secretary Hank Paulson and Federal Reserve chairman Ben Bernanke hope to unveil their proposals on Monday, with the most likely option being to establish an $800bn fund to purchase so-called failed assets, and a separate $400bn pool at the Federal Deposit Insurance Corp to insure investors in money-market funds.

They say they will need legislative support for their scheme, and key US politicians have pledged to pass any necessary measures within days.
But questions are being raised over whether even the US government's pockets are deep enough. Estimates of the eventual price the US taxpayer will have to pay to end the credit crisis vary from $500bn to $2 trillion. [More]

• The good life

So much for the American Dream and the politicians who not only promised a chicken in every pot but a Viking Stove to cook it on and a granite counter top on which to place the warming tray. Perhaps this is the catharsis we needed to understand that not everyone should own a house or other bought on credit goodies beyond our means. It may be the only way out of this nightmare where we end up on the ground like Kong with no one capable of administering CPR.

The pursuit of happiness has cost us dearly. [More]

I'm glad we cleared that up.

Next question, please. 

I'm here to help.

Only 42 more shopping days to Halloween...


Pencil Face from James Griffiths on Vimeo.

Do you know what's in your desk drawer?

[via rgs]

How our brains got us into this mess...

We really have trouble escaping the "right now" aspect of of life.  This is a good thing when you need to stay alert to stay alive in the African savanna, but not when we contemplate years-long commitments like mortgages.

This discovery has important implications. (A more recent paper by the Cohen lab extends the theory.) For starters, it locates the neural source for many of our financial errors. When we opt for a 2/28 mortgage, we are acting like experimental subjects choosing the wrong gift certificate. Because the emotional parts of our brain reliably undervalue the future - life is short and they want pleasure now - we end up delaying saving until tomorrow (and tomorrow and tomorrow.) George Loewenstein, a neuroeconomist at Carnegie Mellon University and a collaborator on the Cohen paper, thinks that understanding how we make decisions will help economists develop better public policies: "Our emotions are like programs that evolved to solve important and recurring problems in our distant past," he says. "They are not always well suited to the decisions we make in modern life. It's important to know how our emotions lead us astray so that we can design incentives and programs to help compensate for our irrational biases." [More]

Of course, we have been ignoring our rational brain (or taking advantage of others' emotional brains) for millenia, but watching it unfold on an fMRI scan, I think somehow makes it more real than before. The other complicating factor is the wide array of pleasures on sale right now.  A consumer driven economy after all competes to engage your attention and dollar immediately - not at some appropriate future moment.

Many of the "braking tools" to control our emotional impulses were previously embodied in cultural strictures (a penny saved...yadda, yadda).  With the demise - or the at least diminution - of the power of popular mores, we have not constructed either formal rules or folk wisdom to replace these tools to balance our choices between future and the present.

What does this mean for your farm?  I think it is simple: continue to plan a generation ahead. If this means foregoing rewards right now, it could likely be such a price will will be small for the security and paybacks decades ahead.

They should try Wagner and pinot noir...

The louder the music the more we drink.

One study by Gueguen et al. (2004) found that higher sound levels lead to people drinking more. In a new study published in Alcoholism: Clinical & Experimental Research, Gueguen et al. (2008) visited a bar in the west of France to confirm their previous finding in a naturalistic setting. Here, they observed customers' drinking habits across three Saturday nights, in two different bars in the city.

The level of the music was randomly manipulated to create the conditions of a true experiment. It was either at its usual volume of 72dB or turned up to 88dB. For comparison: 72db is like the sound of traffic on a busy street while 88db is like standing next to a lawnmower.

Sure enough when the music went up the beers went down, faster. On average bar-goers took 14.5 minutes to finish a 250ml (8 oz) glass of draught beer when the music was at its normal level. But this came down to just 11.5 minutes when the music was turned up. As a result, on average, during their time in the bar each participant ordered one more drink in the loud music condition than in the normal music condition. [More]

 Well, duh!  It's not like you could actually talk instead.

AIG and CDS - OMG!!...

$85B is serious money, even by 21st century standards.  So, why are taxpayers coughing up that sum for a (formerly) private insurance company?  Because of some thing I wrote about last February and am still more than a little hazy on: credit default swaps (CDS).

Credit default swaps are insurance-like contracts that promise to cover losses on certain securities in the event of a default. They typically apply to municipal bonds, corporate debt and mortgage securities and are sold by banks, hedge funds and others. The buyer of the credit default insurance pays premiums over a period of time in return for peace of mind, knowing that losses will be covered if a default happens. It's supposed to work similarly to someone taking out home insurance to protect against losses from fire and theft.

Except that it doesn't. Banks and insurance companies are regulated; the credit swaps market is not. As a result, contracts can be traded — or swapped — from investor to investor without anyone overseeing the trades to ensure the buyer has the resources to cover the losses if the security defaults. The instruments can be bought and sold from both ends — the insured and the insurer.  [More]

So how big is "too big to fail"?  Apparently somewhere around $62,000,000,000,000.

More or less.

If A.I.G. had collapsed — and been unable to pay all of its insurance claims — institutional investors around the world would have been instantly forced to reappraise the value of those securities, and that in turn would have reduced their own capital and the value of their own debt. Small investors, including anyone who owned money market funds with A.I.G. securities, could have been hurt, too. And some insurance policy holders were worried, even though they have some protections.

“It would have been a chain reaction,” said Uwe Reinhardt, a professor of economics at Princeton University. “The spillover effects could have been incredible.” [More]

The scope of the intervention should make clear how deeply shaken is our financial system. And while we marvel at the strange things happening around us, we are often unaware this is what truly historic times look like in realtime.  Like many Big Moments in History, this one is not about good things happening, I fear.

I'm not sure why I think this, but I have waning confidence in our ability to avoid these oft mentioned catastrophes.  It seems like we're simply slowing the chain of events down to allow a stately sinking of our economic ship.  Oddly enough, some people at the very top are not much more confident.

"Ben, you are playing a very unique role in world economic history," Hale recalled telling Bernanke, an expert in the Great Depression. "You are the first central bank governor of the United States to preside over a recession with no decline in commodity prices."

Bernanke could hypothetically limit inflation in commodities by raising interest rates, a policy that would restrict the flow of money but potentially lead to an avalanche of bank failures. At a financial conference in Florida on Tuesday, Hale, a Chicago-based economist for investment managers, hedge funds and multinational companies, paraphrased the Fed chairman's response.

"We have lost control," said Hale, quoting Bernanke. "We cannot stabilize the dollar. We cannot control commodity prices."

If efforts to stop a recession sent commodities to record levels through July, then the realization that a recession could be imminent has sunk oil prices by almost 40 percent during the past two months. For all the debate about foreign demand and financial speculators, one overlooked aspect of commodity prices is the health of the American economy. [More]

All bets are off.  And I think that's what the stock market is trying to tell us.  So what's my strategy? Well, first I reserve the right to panic.  It's a perfectly good instinct that has served us well for for about 2 million years, so let's not throw away all that adrenaline thoughtlessly.  Besides, I'm tired of all talking heads saying "This is no time to panic".   OK, when is a good time?

Second, I'm going to catch my breath and clear my desk and finish my plate.  What is coming needs my full attention, and I'm too unfocused right now.  Third, I going to see what I can do for friends and family.  No real reason, except I can imagine unlooked-for assistance of any kind right now would be doubly welcome.

Finally, I'm going to keep all my partners up and down my production chain informed - starting now with the news I have no idea what is happening but plan to fulfill my commitments absolutely.  Updates will follow as I know more.

You realize I consider all of you my partners, right?

Apple does it again...

Apple released six new and HUGE updates to my iMac last week.  Everytime my computer tried to download the files, I tripped the bandwidth limits and got slowed to dialup speed for 24 hours. 

Again.

So I'm getting up at 3 am. to start the downloads by hand when there are no bandwidth restrictions on Hughesnet.

More posting soon.


Gotta call my stock broker (heh).

It's going to be tough...

To remold Americans into savers after this round of economic moves.

Indeed, a year ago, a six-month certificate of deposit earned, on average, 3.53%, according to Bankrate.com (RATE). Today, that's down to 2.03%. A one-year CD that earned 3.75% at this point in 2007 was offered for as little as 1.92% in April, before inching up to its present 2.38%. It's hardly a secret that banks are only able to pay out such pittances thanks to depositors' knee-jerk desire for security: "Hey, I might be earning crumbs on my cash, but at least I'm not losing money."

Sure you are. Wholesale inflation has soared 9.8% in the past 12 months, the highest clip since 1981. The more widely cited consumer price index jumped to 5.6%. In other words, while your saved buck was adding 2 cents or so on one end (and even less after taxes), three times as much was getting singed off the other end of that dollar bill. "Inflation is just deadly to savings," says David Gitlitz, chief economist at TrendMacrolytics, an investment adviser. Gitlitz observes that, taking into account the hit from inflation, rates haven't been this negative since the dreary 1970s. (That, in turn, gave way to an early '80s that saw the worst inflation in U.S. history since the Civil War.) "It steals your purchasing power and sets less and less of an incentive to keep money in the bank." [More]

Despite the pounding savers have been taking it is being erroneously translated, I believe, into a moral tale  centered on the virtue of money as the ultimate asset.  Money, especially fiat money such as ours, is an odd choice for such adoration.  It's primary quality is liquidity, the ability to turn it into assets that actually are something well, real.  It is also easily evaluated - the appraisal value is right on the bill, of course.

The two characteristics make it the darling choice for wealth in the financial sector.  But those attributes don't mean the world has to share their high opinion.  Money will always possess an allure for those who are nervous about how to store wealth, but this apprehension, which mounts in uncertain times like this, often leads to less than optimal asset allocation.

Once again, for about the fortieth time in my life, the calls are out that cash is king.  Based on the rocky condition of alternative investments, pessimistic economic advisers are standing by the bunker door.  Meanwhile, I see all kinds of reasons why inflation and interest rates are pointing the other way.

My concern is the steps we are taking, and especially the debt we are generating will make cash the last place you want to store wealth.  Perhaps the inflation of the 70's has faded in memory, but the real return to cash is struggling to reach positive ground.

The money pouring into farmland is not a wild guess on the next windfall, but a reasonable choice to protect wealth.  Even if the return slows, as the cost squeeze intensifies for farmers, I don't see investors fleeing simply because other choices will be much worse.

To teach Americans to save would require a reversal of our consumerist training (note the monthly hype over retail sales and the urging to spend your tax rebate).  It will also need a huge benefit such as a sharply curtailed money supply and broad deflation. Again, I don't hear many policy makers mumbling about either.


We all have biases, and certainly mine is emotionally and perhaps irrationally against an essentially artificial form of wealth.  I'll stick with land.

Hmm - office expenses seem to be a little high this month...



[via presurfer]

The real problem with ethanol...

Observe this graph.  Now listen to this outstanding, straightforward explanation* why corn-based ethanol is not the answer to our energy problem.

I'm not saying it isn't the answer to our farm income problem (short term), it's just not a faintly viable alternative to oil.


It's not oil price.  It's not government policy. It's not bad guys in the MidEast.

It's too much effort for too little reward. 

Oil is like nothing else in the world. We just don't appreciate how much good living is packed in every barrel.


*Actually the whole "Crash Course" is very well done.

[via oildrum]

Walk like a [Amish] man...

Wonder why you rarely see an obese Amish person?  Count the steps.

The Old Order Amish Bassett studied in southern Ontario don’t talk much about exercise, he says.

“The Amish don’t exercise like we do or talk about exercise,” Bassett noted. “They talk about work. It’s hard physical labor. It’s done for the purpose of putting food on the table or raising a barn. There’s a purpose to it beyond burning calories.”

But burn calories they surely do, as his study in the January edition of Medicine and Science in Sports and Exercise demonstrates.

The 98 Amish adults Bassett surveyed wore pedometers for a week. The men averaged 18,000 steps a day. The women took an average of 14,000 steps.

The men spent about 10 hours a week doing heavy work like plowing, shoeing horses, tossing hay bales, and digging. The women spent about 3.5 hours a week at heavy chores. Men spent 55 hours a week in moderate activity; women reported 45 hours a week of moderate chores like gardening and doing laundry.

The obesity rate among the participants was 4 percent, as determined by body mass index, or BMI. The current obesity rate among the adult American population is a whopping 31 percent. [More]

Simply making short trips by foot could make all the difference in our weight problems, it would appear.  Of course, that might require have our pickups surgically removed from our posteriors.

[via future pundit]

The last hot commodity...

May be potash.  There is a significant chance of a looming potash shortage as potash mine workers take advantage of labor shortages (thanks to the energy boom) to demand their slice of the much-publicized potash profit pie.

Managers at Potash Corp. of Saskatchewan restarted operations at the fertilizer giant's Allan mine on Monday, the largest of three potash mines where workers have been on strike since Aug. 7, a spokesman said Tuesday.

The company has not determined how much potash it will be able to produce from two shifts at the mine, which normally runs on four shifts, spokesman Bill Johnson said.

The Allan mine produced 1.744 million tonnes of potash in 2007, or 19 per cent of the company's total output.

It is still too soon to gauge whether the strike by about 500 mine workers will affect Potash Corp.'s ability to meet its sales commitments, Johnson said. [More]

As I posted earlier this summer, until potash production capacity rises demand will be pushing prices until usage is curtailed.  This seems to be happening in the minds of stock analysts as fertilizer stocks have dropped back sharply from recent stratospheric highs.

In early August, close to 500 United Steelworkers union members walked off the job at three Potash Corp. mines after contract negotiations broke down. The workers had been without a contract since April. As of Monday, there weren't any talks scheduled between the union and the company. Potash Corp. has plans to increase capacity at their mines by 76% by 2012, and is still expecting to go forward

As of now, Potash has managed to start up one of the mines, at least in a limited fashion. While the strike has affected deliveries of the mineral to Potash Corp.'s industrial customers, farming season demand has yet to hit - look for headlines to scream of a potash shortage, and spot prices to rise, if the strike continues on into October. (That all could be good news for Mosaic, of course, which is the key competitor in terms of potash production.) [More] with those expansion plans. Of course, increasing capacity without actual miners to turn that into capacity utilization ...

The rumor in my corner of the Corn Belt is probable rationing of around 80% on at the dealer level. Of course those are the same hysterical voices who last year said seed corn could hit $300/bag.

Wait a minute, here...

Sorry about the problem...

I just noticed when my posts are copied to the AgWeb site from blogger, the links and special formatting has been lost greatly decreasing the information and intent of the words, as well the deepth the links can provide for more info.  Sorry about that.  We're working to correct.

If you see them missing (there is almost always at least one link) head to johnwphipps.blogspot.com  or click on the "Keep reading" at the bottom.

What's at stake...

The bailout of Freddie Mac and Fannie Mae seemed like a sideshow diversion compared to hurricanes and elections, but it could actually have been the biggest news of the week.  Untold (really - nobody knows!) billions of dollars will be required from taxpayers to maintain the company solvency.

While shareholders (including a surprising number of small banks) are out of luck, debt holders are sort of protected.  And as Tyler Cowen explains, this is a regrettable but necessary thing.

But let's say that the Treasury did not support the debt of the mortgage agencies.  The Chinese bought over $300 billion of that stuff and they were told that it is essentially riskless.  The flow of capital from them and from other central banks, sovereign wealth funds, and plain old ordinary investors would shut down very quickly.  The dollar would fall say 30-40 percent in a week, there would be payments system gridlock, margin calls at the clearinghouses would go unmet, and only a trading shutdown would stop the Dow from shedding half its value.  Most of the U.S. banking system would be insolvent.  Emergency Fed/Treasury action would recapitalize the FDIC but we would lose an independent central bank and setting the money supply would be a crapshoot.  The rate of unemployment would climb into double digits and stay there.  Many Americans would not have access to their savings.  The future supply of foreign investment would be noticeably lower.  The Federal government would lose its AAA rating and we would pay much more in borrowing costs.  The deficit would skyrocket. [More]

Well, that's certainly happy talk!  Others feel a government default isn't the end of the world and could force more responsible government borrowing. It will certainly be more expensive. (My favorite analysis here)

The other problem is what Cowen points out: China will not be amused.  Can you imagine how our goverment and economy would function if we had to earn our own money instead of importing it?

Finally, in a cruel piece of bad timing, the CBO points out our budget deficit is already zooming out of control.

 In its summer budget update, the nonpartisan budget office said the federal deficit would likely double this year compared with last year, and remain at about 3% of gross domestic product for the next two years.
For 2008 fiscal year (which ends at the end of the month), the CBO forecast a $407 billion deficit, or about 2.9% of GDP. The deficit should rise to $438 billion in 2009 and $431 billion in 2010.
The medium-term projections now assume continued spending on the wars in Iraq and Afghanistan, and also assume that the 2001 and 2003 tax cuts will expire on schedule.
Unlike the February update, which showed the budget roughly in balance through 2018 under favorable assumptions, the September projection now sees deficits totaling $2.3 trillion over the next 10 years. Those projections assume that the 2001 and 2003 tax cuts expire and that the alternative minimum tax is not changed.
If the tax cuts are extended as the White House and the McCain-Palin ticket want, the deficits over the next 10 years would be $4.2 trillion higher than now projected, CBO said.   [More]

What these two events suggest to me is it will be hard to continue to cut (or retain current tax cuts) taxes unless the economy miraculously roars to life.  It also means our additional borrowing will strain available global savings and our interest costs will rise to meed our borrowing needs.

I smell serious inflation in the wind.

Hand me the matches, son...

Of all the accidents I should worry about, I tend to choose the wrong ones.
 

 

[Click to enlarge]

From the most excellent Economist Chart of the Day.

Alas, Iowa...

In my visits to Iowa to speak to farm groups, I have learned first-hand of the remarkable insularity of the Iowan culture. In fairness, if you live that close to heaven, why would you want to trouble yourself with goings-on outside the state borders?

Meanwhile, back in in central Il, the advancing edge of farm development hung over my head.  The relentless competition and pressure to perform made my frame of reference much harsher than my neighbors in IA wanted to contemplate.

Perhaps no longer.

But the tale of the disappearing barn, a building whose purpose shifted, then faded away, tells a bigger story too, of how farming itself, a staple in this state then and now, has changed markedly since those writers drove through.

What had in the 1930s been an ordinary farm here — 80 or 160 acres and a few cows and sheep and chickens — is today far bigger and more specialized to pay for air-conditioned, G.P.S.-equipped combines and tractors, so much fuel and the now-skyrocketing price of farmland.

Competition for land — to rent or buy — has grown cutthroat and overwhelming, a matter of networking and schmoozing (at church, at the local coffee shop, while selling seed) worthy of the corporate boardroom. (Some here tell of people who call the widows of farmers who have died days or hours earlier, hoping to secure land.)

All of that has left some of Iowa’s youngest, newest farmers doubtful that one could make a start in farming anymore without roots and connections and land dating back, say, to the W.P.A. era.  [More]

At the very least, Iowans can't say they didn't see it coming. They had only to visit with farmers in Nebraska or Illinois or Ohio.  But my impression of Iowans are overwhelming positive and overwhelmingly self-centered.  While they were pressuring their legislature and the leveraging the IA primary to build ethanol plants, it seemed it never occurred to them to ponder what prosperity would do to their cherished community values.

Those values were only checkbook-deep, it seems.  And the ethics of yeoman community-centered agriculture are a poor match for the entrepreneurial spirit now commanding the helms of farm management.

Typically, the NYT buys into the old agrarian ideal.  Preserving thousands of old barns strikes many non-farmers as a noble enterprise. But as a farmer the question is begged: Why?

Barns burn easily and often, as older farmers well know.  Abandoned barns are havens for varmints and trash dumping. I can see saving a handful of exemplary buildings but, even nostalgia must have some limits of practicality.

Besides, the owner gets to choose - not the passers-by.

Clearly posted...

The ten most confusing traffic signs.

My favorite.  Although this was a close second.

[via info nation]

New directions, same impact...

If you have not caught my several posts about the direction information technology is headed and why it matters a lot to farmers, consider these two counteracting developments.

The first is something all Internet users like to whine about - speed. While those of us in the country are simply glad to have something better than dialup, even the hyperspeed fiber-optic consumers are running out of bandwidth at times. They are not amused.

Everyone hates their Internet service provider. And with good cause: In the age of ubiquitous Internet access, Web service in America is still often frustratingly slow. Tired of being the villain, telecom companies have assigned blame for this problem to a new bad guy. He's called the "bandwidth hog," and it's his fault that streaming video on your computer looks more like a slide show than a movie. The major ISPs all tell a similar story: A mere 5 percent of their customers are using around 50 percent of the bandwidth—sometimes more during peak hours. While these "power users" are sharing three-gig movies and playing online games, poor granny is twiddling her thumbs waiting for Ancestry.com to load.


The ISPs are certainly correct that there's a problem: The current network in the United States struggles to accommodate everyone, and the barbarians at the gate—voice-over-IP telephony, live video streams, high-def movies—threaten to drown the grid. (This Deloitte report has a good treatment of that eventuality.) It's less clear that the telecom companies, fixated as they are on the bandwidth hogs, are doing a good job of managing the problem and planning for the future. The ISPs have put forward two big ideas, in recent months, about how to fix our bandwidth crisis. We can arrange these plans into two categories: horrible now and horrible later. [This is a superb article worth your time just to find out what the two proposed solutions could look like]

It is important to keep in mind it only takes a relative few bandwidth hogs to slow the system for all users, whether your system is a national behemoth or a very local ISP. I've noticed I can get more stuff done, for example early (5-7 AM) compared to after 4. Not only is this a mildly useful workaround (especially when you're my age and can't sleep in even if you want), it is a straightforward market response to signals.

But more ominous is the direction computing seems to be going. The operating model used to be a consumer buys a computer and buys some software (or more likely, has it thrust upon her i the form of bloatware - although this is changing) and does her little computing stuff all by herself.  Then we started including on-line aspects, such as having all the "Help" information accessed by the Internet instead of rapidly outdated virtual operating manuals contained in the code.

It didn't stop there. The value of connecting to individual computers for extracting information voluntarily and presenting advertising made it possible to give software away.  And not just lame little freebie programs - robust, Microsoft-butt-kicking applications like Firefox and OpenOffice.

Now we take it a step farther.  Enter cloud computing.

A week after Google released a Web browser of its own called Chrome, it's clear that despite the frailty of Chrome's beta code, there's a seismic shift occurring in the computer industry.

The desktop is dying. Long live the browser.

It's not that no one saw this coming. Microsoft (NSDQ: MSFT) anticipated the threat the browser posed to its desktop monopoly when it killed Netscape. But it was too late. Netscape metastasized and Mozilla emerged with Firefox, stronger than its predecessor thanks to the open source movement and its corporate supporters like Google, IBM, Sun Microsystems, and Yahoo.

At least as far back as 2005, there have been credible attempts to de-emphasize the desktop with Web-based media-sharing and application services like TransMedia's Glide. But such efforts have yet to reach critical mass.

Chrome marks the coming of age of cloud computing, or software as a service.  [More]

The upshot of this evolution in personal computing is the exponentially growing importance of high speed connections.  For us in the 5% the FCC doesn't really care about, this has huge implications.  Like Third World countries we will miss out on the enormous productivity gains that our physical isolation makes desperately more important.  Now throw in high gas prices and recalculate what living XX miles from town means to your ability to do business like competitors in EU, for example.

Nor is this merely BSP (blatant self-promotion) because more and more viewers who can watch USFR and AgDay on-line.  The advantages of computing power and data accessible anywhere without having to upload and download manually means partners working in fields miles apart can check the same planting spreadsheet or spraying map, add new info, and make sure the other knows without doing anything any differently than we now do in our overmachined offices.

More importantly, just like Google products such as blogger, the capabilities of the software will almost magically increase as the world's best coders do their thing in California and upgrade the tools for free. Once you have experienced this, you never go back to buying a box in a software store.

I have stopped apologizing for getting foamy at the mouth about the importance of broadband if you plan on farming ten years from now. But I gotta believe somewhere, somehow an ag vendor, grain merchandiser, or farm organization will finally grasp how powerful a marketing tool it would be to have their fingerprints and logo all over the solution to the rural broadband issue.

Just in case, wear clean underwear that day...

Those durn lab-coat wearin' eggheads are nothing but trouble.  Another example.

Critics of the Large Hadron Collider - a £4.4 billion machine due to be switched on in ten days time - have lodged a lawsuit at the European Court for Human Rights against the 20 countries, including the UK, that fund the project.

The device is designed to replicate conditions that existed just a fraction of a second after the Big Bang, and its creators hope it will unlock the secrets of how the universe began.

However, opponents fear the machine, which will smash pieces of atoms together at high speed and generate temperatures of more than a trillion degrees centigrade, may create a mini-black hole that could tear the earth apart.

Scientists involved in the project have dismissed the fears as "absurd" and insist that extensive safety assessments on the 17 mile long particle accelerator have demonstrated that it is safe. [More]

Science is boldly going where many don't want to go.  Luckily, it only takes a few to drag humanity forward.

Country church lament...

After an unsually discussive choir practice and deciding on a unique e-mail for The Mailbag this week, I spent much of my driving time (about 7 hours to Rockford and then South Bend) thinking about our small Methodist church and all the hundreds of similar congregations we have recognized on US Farm Report.  Like other times when I have tried to envision another possible future for this precious (to me, at least) group of people, I cannot avoid the obvious conclusion.

Small churches face a grim future.  I wish it were not so, and over the 35 years or so of my adult involvment, I have tried to tease out the reasons.  Why are mainline churches struggling in rural America and small towns? (Of course, some are not - but the majority are declining).  Some contributing reasons I detect:

• Demographics. Our county loses population each year and has done for decades. But more importantly, we are becoming older and generally poorer compared to urban/suburban locales. These losses have come largely from the small business middle class, which to my memory was the largest segment contributing to our church's membership.  As people choose to congregate (literally and religiously) with similar people, it is rare for a church to span all socio-economic classes.  The Catholic Church probably comes closest, but one reason we have so many Protestant church denominations is, I believe, evidence of natural "clumping" of folks comfortable with each other on many levels - not just religious beliefs.
• Music. I am doubtless over-emphasizing this, but several key changes in how we experience music seriously erode what has been a powerfully attractive attribute to church services.  To begin with, the practice of singing together has been replaced with listening to performers.  Hence the entertainment treatment of the national anthem at public events today. Moreover, our heritage of church music lends itself to old-fashioned music training - being able to read and carry a part.  While this has not been completely lost, newer musicians prefer less structured songs and harmony.  Few young men are ever introduced to SATB singing, for example.  Finally, the explosion of music technology has changed tastes to raise the bar for accompaniment and especially rhythmic skills.  Small churches struggle to find appropriate music within the grasp of choir, musicians, and congregants.  Many of us cannot link our faith experience to this change, and our left with no choice but memories of music that comforted and inspired.  Meanwhile, younger members find church music pathetically out of touch, and can easily vote with their iPod.
• Relevance. The US could simply be pursuing the path of our European cousins, among whom few attend.  It would not be the first time we have followed their example a century or so later. I don't sense that folks are living lives of despair without the church here any more than is so in France or Sweden.  The seeming hope of Christianity  - the megachurch - is running into it's own headwind, as folks drift away from them as well.  Unfortunately, rural church members by nature will not be able to participate in this development - and higher gas prices seal that deal.  Additionally, in my lifetime, church was important for ancillary reasons, mostly to do with socializing.  As I note on this week's show, the church was often the first institution begun by rural settlers.  Community membership and church membership were synonymous, especially for yeoman (Lutheran/Catholic) farmers.  Community inclusion was crucial in turn for cooperative labor requirements, as well as business standing.  The decline in the importance of labor, the rise of cash rents, and the ease of farming across counties and even states evaporated all the wrong reasons that nonetheless made farmers fill the pews nonetheless. If you can be successful without going to church, what's the point?
  
• Economics. The emergence of Sunday as one of the busiest shopping days was a heavy blow to churches - especially in small towns with a vanshing retail sector.  The time to travel to desirable shopping centers displaced time in the pew.  At the same time, the entry of women en masse into the workforce decimated the human capital for tradtional church minstries.  Churches, which are essentially a service industry, struggle with the same major human resource issue as other businesses: the cost of people and their pensions and health care and education... These dollars-and cents realities hobble the best intentions and present a critical mass problem for small churches (affording a full-time pastor)
• Politics.  This could be the cruelest blow.  The gradual and intentional fusion of religion and politics is not only exactly what the founders hoped to avoid, it will IMHO take its sad toll on religion - not politics. Already the bitterness of the many debates that slide from sanctuary to legislative hall has dimmed the differences between the two.  The seemingly irresistable lure of the political limelight has ignited ambitions and acrimony, which is easily avoided by not going to church. The church can not influence politics without becoming politics, it seems.  There is little desire to protect either from the abrasion of the two together.   The critical step was to my mind was the shift by churches in focus to large groups (states, nations, etc.) of people instead of individuals.  While this has been done for centuries of course, the outcome looks like Europe, I would guess.

My church "peaked" by all the usual measures when I was in grade school, I would guess.  I think that was also about the time our population peaked as well.  My entire time then has been a slow diminution of our church capabilities and expectations.  There have been singular successes, of course, but in the back of many of our minds, he thought lingers, "It used to be better."

We have launched literally dozens of efforts and drives, spent ourselves in dedicated outreach and at this time have found little to arrest the decline, but the powerful lessons of loyalty learned there will not let us go.  We cannot change our most sacred commitment, we cannot leave our most hallowed ground, we cannot forsake our pewmates except in death.  Oddly this is more comforting to me than it sounds.

But the worse aspect is we cannot transmit this empowering component in our lives to others today, despite our best efforts.


Things begin, things end.  We are not very good at endings.