I still cried...

It doesn't get any better than this: Star Trek Action Figure Opera

(Sniff)

[via adultswim]

The recession hits insurance...

And the blowback will affect farmers. While many eyes are focused on newly unemployed folks losing medical insurance, other parts of the industry are seeing the effects of consumers under strain.

To some extent, auto insurance is recession-resistant because drivers have to have coverage. But Allstate Corp. officials confirmed Thursday that the recession is causing its auto insurance policyholders to look for ways to reduce premiums.

"They are dropping collision [coverage], going to higher deductibles, going to lower limits," George Ruebenson, president of Allstate Protection, said during a conference call to discuss the company's fourth-quarter financial results.

A premium is the price an insurer charges for coverage. Collision coverage pays for the damage to a policyholder's car in an accident, while a deductible is the amount of the loss that's paid by the policyholder. A limit is the maximum amount of coverage paid for a particular loss.

"We're seeing a change from a lot of platinum sales at Your Choice Auto to more of value, where people take a lower-premium policy," Ruebenson said. [More]

This time the meltdown in asset values and investments doubles the whammy of customers with less to spend, and more immediate fears to allay than most insurance policies cover.   Long-term care insurance seems like a luxury when you're having trouble making car payments.

"The financial crisis has hit the life insurance industry hard," said Terence Martin, analyst at Conning Research & Consulting.

The company projects results for 2008 to indicate a drop in ending surplus plus AVR of about $75 billion to $237 billion -- a 24% decline from 2007.

“The volatile equity markets and interest rates are challenging the investment and hedging skills of insurers,” Martin said. “Several large insurance companies, particularly individual annuity companies, have seen significant decreases in assets and surplus, resulting in an urgent need to raise capital at a time when capital markets are constrained."

"There is a great deal of volatility surrounding our projections for 2008-2010," said Stephan Christiansen, director of research at Conning. "The setting of reserves, the recognition and timing of asset impairments, and the impact of hedging can each have significant effects on financial results. From the perspective of life insurers, the financial crisis began in earnest in the fourth quarter of 2008. So some of these issues may affect 2008 results, while the effect of others may be delayed until 2009 or 2010, and the timing and impact will vary by company. That said, 2008 will be a watershed year, and we predict a significant consolidation of the industry." [More]

With the strong funding reliance on insurance by state Farm Bureaus,  some are also struggling to adapt their business model. 

FBL Financial is laying off 76 employees nationwide, with most of those cuts affecting the West Des Moines home office. CEO James Noyce says the move is necessary, so the company can focus on long term vitality under the current economy and financial markets.

FBL Financial is also looking for other ways to reduce costs, other than staff reductions. It has already eliminated positions that are open and frozen officer-level salaries. For most of the laid off workers, today will be their last day on the job. [More]

Farm Bureau has enjoyed a robust lobbying presence thanks to brilliant decisions by farmer boards many decades ago to get into insurance.  I have always considered FB to be the most professionally staffed, and competently run insurance subsidiary in the nation. Unlike membership-funded farm organizations like Corn Growers, the massive FB revenue stream from well-managed insurance companies provided ample revenue, laughably low dues, and curiously perverted membership numbers. Only the USB can match their funding prowess - but (ahem) that has become a whole 'nother story lately.

Like so many cash cows, insurance companies are being drained by eroding investments as a first attack.  But with more low-end ("legal-for-less") competition and freshly impoversished customers, there maybe a sea change in how we view the risks and trade-offs from insurance as a whole. "Walmarting" car and house insurance may be a play.

This marketing challenge could not come at a worse time.  With low returns from investments, premiums may have rise to cover more of the actual cost of insurance, unlike the happier days of plummeting life insurance premiums due to rich investment revenues.

Will whole-life fade in favor of term?  Seems plausible.  Will minimum coverage become the norm? I think we're headed there now, and will accelerate as our cars age (we're not buying new ones, remember?) It sure seems that way looking at TV ads, anyway.


The Great Recession.  You can run, but you can't hide.

Friends don't let friends...

Buy $900 DAP.  I'm trying to find a marginally acceptable way out of the fertilizer pricing mess we seem to have found ourselves in. I like my dealer and I respect the right of the fertilizer industry to make business plans for their own ends. But it has become glaringly obvious what the industry wants to force customers to do: underwrite their unfortunate business decisions.

As the boys at Purdue delicately put it:

Fertilizer markets are adjusting now to a dramatically different economic situation after prices reached 
unprecedented levels last year.  With prices in flux, the wholesale prices paid by agricultural retailers vary 
dramatically, depending greatly on the fertilizer source and when they were purchased.  Correspondingly, 
retail fertilizer prices can be much different from dealer to dealer this year. As in any year crop producers 
should check pricing with more than one dealer, but also especially this year get a good feel for the assurance 
of supply when you will need fertilizer this spring.  Also, carefully weigh the value and possible future benefits 
of maintaining a good working relationship with your agricultural supplier.  [More]

"Somebody, by God, is going to buy this overpriced inventory of mine", they seem to be demanding. Dire warning of yield drops and inability to get product in time are transparent scare tactics.  And they know a few good-hearted souls will honor our previous contracts and miscalculate that our share lease at least splits the pain with some hapless landlord.

But what never seems to cross the minds in the boardroom is farmers know there is a sale coming this summer. The presumption we are slaves to habit and will pony up because we always have may be partially right, but it will not include this producer.  They seem to forget I have my own bad decisions to rectify. I'm not in the mood to solve their problem.

I value my relationship with my retailer, and I suspect he is the sacrificial pawn in his company's effort to make regional and local dealers be the fall-guys for corporate misjudgments. And I will honor my 2008 contracts and prepays for NH3 with a pretend smile on my face.

But someone else can overpay for P & K this spring.  I think I can apply twice as much this fall for the same money.  In fact, I wonder if I can prepay it right now.

I have seen the earning guidance given by fertilizer manufacturers desperate to look profitable in front of extremely skeptical stock analysts.  (Do they think we can't find this stuff on the Internet?) And we all have read/heard the stories of same-county competitors $500+ apart because only one was choking on overpriced inventory.

This is not the year to go into any market place with "demands".  Not for producers.  Not for fertilizer sellers.  Conflict with customers is soooo 2008.

Smoke in the wind?...

I think something is tickling my alarm sensors concerning the farm program.  It may be because Republicans are out of power and seem to be searching for a theme to counter the Obama political clout, but the right may be concentrating on spending and entitlements like farm payments.

“This was not a drive-by P.R. stunt, and I actually thought it might be. It was a substantive, in-depth discussion with our conference, and he’s very effective. He knows that the debt and the deficit are huge long-term problems as well and he made a compelling case. He sounded, frankly, a lot like a Republican,” -  Representative Zach Wamp, Republican of Tennessee.
As I said, the GOP should do its best to pare the worst of the social spending out of the stimulus bill; but they should save their fire for entitlement reform, just as important for long-term fiscal health. Obama will be their ally on that. [Link]

Now consider the conservative think-tank, The Hudson Institute, and a guy who used to do a lot of speaking to farm groups, Dennis Avery.

Did global warming dump U.S. Airways flight 1549 into the Hudson River by attracting more geese to New York airports? Time Magazine says yes. Time notes a four-fold increase in airplane bird strikes since 1990, and blames global warming and destruction of wild bird habitat for the increased collisions.


Time reached the wrong conclusion. Research indicates we should blame the prosaic corn harvester—and perhaps our attempt to expand corn production for biofuels. Canada geese numbers have increased five-fold since 1970 for one overwhelming reason —farmers’ expanding use of those big corn picker-shellers. The big bright-colored harvesters now roar across the fields every autumn, picking the ears and shelling the corn kernels. With millions of tons of loose corn, some inevitably trickles to the ground, where the geese cheerfully snack it up.  [More of an interesting take on  geese, corn and ethanol.]

The change in political power could provoke collateral damage in farm policy.  At the very least, we could see stricter payment limits and means-testing, if not outright payment cuts.

The right is looking for issues that make them look less like the spenders they were under the Bush administration.  Political power shifts and continued concentration in agriculture may provide a tipping point for the struggle against subsidies.



Nah...I've fallen for that hope before...


[Thanks, Linda]

If I ever get a gun...

I'll remember these 8 common mistakes from movies.

SHOOTING SIDEWAYS Your gangstas just have to be different. So they aim their handguns sideways and hunch over and kind of glare along their arm in lieu of actually aiming. In fact, when they do this their eyes aren't even looking at the site but at their victim. Intimidating your intended victims is all well and good. But it comes to naught if, when you finally start busting caps, you miss the other guy by six city blocks. There's a reason we hold guns vertically. It's a more natural pose considering that the barrel of a gun is going to leap up and back when each round goes off. It's a lot easier to lower that site back to it's original position than it is to go searching for them over a 180 degree radius. Ever see Davey Crockett hold his flintlock sideways? This way is just plain dumb. [More]

Of course, you can always stick to a slingshot.



As for me, I think I'll bore things to death.

More stimulus thinking...

Brandon writes:

I have to disagree with your opinion that some how infrastructure is possibly a better investment than say tax cuts. I am surprised that somebody with your Libertarian leanings would suggest that the government spending money on something it will ALWAYS own is better than it "spending" money on tax cuts that we can use to buy things that WE all own. I am not saying that tax cuts are always better, but if I get a tax cut it won't necessarily be 'wasted'. Businesses, even small ones, build infrastructure that the private sector will own. In my business infrastructure can be things like land, machinery, houses and IRA accounts. Things that will also have lasting value, just like a state highway.

Well put, Brandon.  But these are perilous days for us libertarians, at least on the economic front.  The tax cuts we championed with powerful data sets were leveraged by seemingly right-thinking politicians to squander on war and by quants to create essentially imaginary wealth (and vast bonuses).  At some point, those of us who deemed government the greater fool have to admit it's only by a photo-finish.

The point I labored to get to was I'm not sure we have good enough data to rank stimulus efforts solely by the bang they produce.  Undoubtedly, the final package will be a mix of tax cuts and spending.  My observation was this could be the last good chance to get a bridge or school in my lifetime (thanks to the ensuing deficits and entitlement claims).

When we have exhausted the legacy infrastructure of our grandparents, we may think otherwise. And I note that the real CBO report estimates faster effects for infrastructure spending than I thought - partly because states have been cutting back for so long already.

Returning money to individuals may speed the recovery slightly faster than repairing roads or building a smart grid. But I do not consider impatience sufficient reason to eventually cripple our economy with infrastructure the private sector does not seem to want to invest in.

Would you ever support spending on infrastructure over lower taxes? If the answer is no, then don't be surprised when countries who do build public works overtake us.

I am not arguing either-or, but a reasonable fraction for rebuilding America.

Monocultures and math...

I finished Outliers by Malcolm Gladwell, and it you liked Blink and Tipping Point, I recommend this one, as well. Gladwell gets up the noses of many economists because he doesn't wait for massive studies with scrupulous academic rigor before suggesting anecdotal information can teach us something.  While his work is not drawn from thin air, I think the popularity of his books arises largely from clever insights delivered in time for real people to use them, unlike say, the Ag Census.

One of the more intriguing arguments he offers is Asian children do better in math in part because their language for numbers makes more sense and because of the astonishingly difficult life of wetland rice farmers.  

By positing that success in mathematics can be correlated strongly to effort - not IQ as much as we think - the rice monoculture provides Asian children with a strong cultural ethos of hard work being rewarded. His description of rice-growing is eye-opening, but my summary would be: rice is a crop that rewards virtually every marginal and long term expenditure of effort with higher yields. More work = more reward. It seems this formula is more consistent than with most other crops - i.e. less weather variability, extremely high labor requirements, long-term benefits from meticulous effort.

As a result, Asian children, primed by an ethic of relentless effort, spend more time on tough problems, and usually end up getting to the right answer, whereas other children will quit after less time due to frustration. Because Asians are taught and believe effort will get results, mathematics at least is right up their alley. So at least, Gladwell theorizes.

But Gladwell can make that argument far better than I can.  It was my sudden realization of the favorable light the world holds of the rice monoculture and the contrast to the more common uneasiness with a corn monoculture here.

Rice captures energy and maximizes carbohydrates for wetlands farmers in Asia.  Corn is unsurpassed in capturing harvestable energy on Midwestern farms.  Yet the former is never singled out as an environmental sin, while lack of diversity is a big knock on corn farming.

Of course, the comparison is complicated by all kinds of other factors, especially the failure of industrial farms to adequately justify their operation and instead trying to hide behind agrarian symbology and popularity.  But my uneasiness with all-corn farming may be lessening by this under-my-nose example of another monoculture that seems to work long term.

I'm not saying monocultures don't have costs, but those need to be carefully calculated including all externalities rather than simply deciding it makes the countryside too boring.

Another machine I really need...



Meanwhile, I can never get my chainsaw started.

[via presurfer]

Did I mention I'm getting another MacBook Pro?...

Just to add to the gloom at Microsoft, this old familiar headache resurfaces:

A new digital plague has hit the Internet, infecting millions of personal and business computers in what seems to be the first step of a multistage attack. The world’s leading computer security experts do not yet know who programmed the infection, or what the next stage will be.
In recent weeks a worm, a malicious software program, has swept through corporate, educational and public computer networks around the world. Known as Conficker or Downadup, it is spread by a recently discovered Microsoft Windows vulnerability, by guessing network passwords and by hand-carried consumer gadgets like USB keys. [More]

The unsettling part of this flap is the suspected Eastern Europe connection.  There seems to be a pattern in the FSU countries of cyber-hassling, if not warfare.

Update to "The stimulus battle"...

In a disappointing discovery late last week, involving a purported study used by Mankiw and Republican tax-cut advocates to discredit infrastructure spending, we find the report doesn't exist.

Reports of a recent study by the Congressional Budget Office, showing that the vast majority of the money in the stimulus package won't be spent until after 2010, have Democrats on the defensive and the GOP calling for a pullback in wasteful spending.
Funny thing is, there is no such report.
"We did not issue any report, any analysis or any study," a CBO aide told the Huffington Post.
Rather, the nonpartisan CBO ran a small portion of an earlier version of the stimulus plan through a computer program that uses a standard formula to determine a score -- how quickly money will be spent. The score only dealt with the part of the stimulus headed for the Appropriations Committee and left out the parts bound for the Ways and Means or Energy and Commerce Committee.

Because it dealt with just a part of the stimulus, it estimated the spending rate for only about $300 billion of the $825 billion plan. Significant changes have been made to the part of the bill the CBO looked at. [More]

The politicization of the debate is not going to make progress any easier, but transparency enforced by the Internet may help to countrbalance this shortcoming.

I am surprised an economist of Mankiw's stature has not posted a correction.

Energy-independence Update...

It's been a while since I checked how our massive ethanol push has helped us become more independent from BGO (Bad Guy Oil*).  After all, when all other arguments for ethanol subsidies peter out, this one wraps it in the flag and brings home the subsidy bacon every time.

I last checked on progress toward replacing filthy foreign oil with wholesome ethanol in December 2007 so now we are pumping lots of ethanol we should see some serious replacement:

*Bad Guy Oil is oil from SA, Algeria, Kuwait, Lybia, Iraq, Venezuela.  The definition is mine and arbitrary.  Lybia dropped out of the Top 15 last year. Arguably, we could throw Columbia in that category.

Some notes:

1. God bless the Canadians.
2. Mexican production declines are a big problem for them and the US.
3. You can't muscle out low cost producers like SA.
4. Wait until low oil prices kick in.
   

Ethanol does not replace Mideast oil.  It replaces high-cost oil from anywhere else - even domestic.

The stimulus battle...

The esoteric world of economists is reveling in the attention the ideas put forth to revive our languishing economy have generated. I have watched with interest as the normally tepid prose of the profession becomes more heated (OK - warmed) as various proposals are offered.

One powerful argument is represented by Greg Mankiw, who offers (to me at least) persuasive reasons why tax cuts at the top and to businesses will give us the biggest bang for the buck.  He has also offered reasoned arguments on the issue of growing inequality over the past few years.

However, this position strikes me as politically tone-deaf, particularly when considering the source. As an architect of tax cut dogma and a proponent of the more valid but likely futile gas tax concept, Prof. Mankiw has perched safely with his status quo supporters on pedantic high ground. And he seems to think the current recession is unconnected with his advice to tax-cutters. His involvement in the mess we are in right now was last semester, apparently.

If he really believed there was the possibility of fiscal control to match the much-advocated tax cuts, it would be a simple mistake.  But you don't scale the lofty heights of academia with naivete of that magnitude. His blessing allowed, even sanctioned, a decade of fiscal foolishness culminating in the belief on the right that any problem could be solved by tax cuts.

More than any other faction, the tax-cuts-pay-for-themselves myth was fueled with his school of thought.  And they seem determined to keep trying this answer despite the empirical evidence or at least until the Harvard Endowment meltdown forces some horrifying staff cuts, anyway.

If a tax cut multiplier is 10% or even 50% better at generating GDP than another choice, is that the crucial metric? Is it possible that multipliers are not the only criteria by which government action should be measured?

The other major alternative is infrastructure spending.  I can follow the reasoning that it yields less immediate economic boost, but if some experts are doubtful of any stimulus power to reverse our slide, this choice at least leaves some assets in place at the end of the stimulus.

Consider we have been merrily cutting taxes, especially on the top rates now for enough to stand back and see what we have to show for it.  Form my angle it looked like several years of brisk income and asset value growth (again primarily at the top) - and then when various bubbles burst: these gains mostly evaporated. Was the economy stimulated? Definitely.  Did it have lasting effect? That's a mixed result at best.

Now compare to stimulus applied to infrastructure.  Perhaps the economy does receive less immediate zing, but twenty years later you still have Hoover Dam or the Interstate System.  My point is I suspect we may be too focused on short term results.

We're going to throw money we don't really have at this problem. That's now clear. Building stuff we really need - even via the sluggish and wasteful government way - at least insures we won't left with little to show for it. Lord knows the budget pressure on the other side of this chasm will make large public works politically dead in the water, so from my perspective the stimulus package is one window to get some stuff fixed around here.

Reading the history of any large public works project from the Brooklyn Bridge [great book here] to the Big Dig is a continuous horror story of waste, graft and delay.  But we're using all of these edifices to great advantage today.  Pointing out that public projects are less efficient than private works conveniently overlooks the issue that many needed components of our infrastructure simply would not exist, if left to private investors. In the same way, the stunningly bloated costs at the time seem almost trivial when viewed decades later.  (And the inflation I expect  on the other side of the recovery could make investing in "things" rather than consumption look brilliant.)


Farmers have long relied upon our superior infrastructure to offset our higher costs when competing with growers in Brazil, for example. We have much at stake in this spending decision (like some local roads and bridges to handle 300 bushel-corn harvests).  And I'm not convinced infrastructure improvements are getting a fair accounting for the decades of benefits they bring. We grossly underestimated the lift from the Interstate System, for example.

When the Interstate Highway System was proposed, its developers did understand and quantify what the system might do in terms of travel time savings, operating cost savings for users, and safety benefits. But, as the task one white paper notes, no one who designed the Interstate Highway System could have predicted exactly what would happen to the overall economy as a result of the investment in the Interstate System. National, multi-state, regional, and local economies were all empowered to reorganize to take advantage of new capabilities in terms of speed, capacity, and safety. Regions that were not part of the nation’s economy became integrated through new opportunities to have longer distance links for goods movement and for personal travel. Urban areas were able to expand and grow, enabling more agglomerations of industries and skills within much larger urban boundaries. Not everyone who was witness to these impacts applauded all of the impacts. The Interstate System was identified as a cause of urban sprawl as well as an enabler of urban growth.  [More]

Furthermore, infrastructure is real and visible. Just like the comfort in owning farmland versus equity shares, right now the physical proof of a public investment might have a hard-to-calculate benefit in the form of an outward and visible sign.

Let me suggest it is far more crucial to our economic health to convince more Americans our system still works for them, not just some. Further, doing more of the same, i.e. cutting top tax rates, does little toward that goal, even if the models suggest it is the best of all possible choices. In contrast, everybody gets to use good roads or new schools.


I get proponents' point about multiplier effects and how tax cuts are the fastest, easiest most powerful way to jump-start the economy.  But it looks a like a economic sugar high to me. And recent tax cuts produced an awful lot of ephemeral wealth, it seems. Surely a mixture of the two should not be dismissed out of hand by the economic community.

Academia's estrangement from the real world by virtue of tenure allows it a curious detachment from such ideas that engage non-tenured minds, at least until sufficient historical data accrues to make it worth studying.  This myopia seems most pronounced the further up the ladder experts ascend.  I have begun to weigh opinions from private sector economists with more respect, since they have much more on the line when they put forth proposals.

Our economy is suffering from a crisis of confidence by a large number of people who don't even know what a multiplier is.  Or particularly care.  And oddly enough, their opinions matter too. Actions that cause them to view the future with less alarm, or make less dysfunctional econiomic decisions are not to be despised.

Unfortunately, the cream of our academic crop seems more intent on scoring historical bragging rights than working with politicians to craft policies that both move our nation in the right direction and relieve the growing anxiety in the people they enjoy experimenting on.

If our economic brain trust would pause from making notes for their upcoming papers to understand the level of primal fear gnawing at the body economic they might produce something of more value to the decision makers. They might also realize they will not have data and time to produce bullet-proof explanations.  In fairness, this may be sinking in.

Most revealing is the current debate over the effect of going to war on ending the Great Depression. I can only imagine the wonderful data sets that might have been had we waged the war by economic rather than military strategy.

This crisis will not produce an attractive or even efficient government response.  It will be smeared with political fingerprints and lamentable human fault. Experts will have a field day exposing the flaws and criticizing the deployment. But like all arm chair generals, they don't have much to lose, and sadly it may be their only contribution until they can summarize at leisure later.

Maybe all the economist jokes hold an element of truth after all.

Urban crawl?...

One of farmers' long-standing complaints (unless you were selling, of course) has been urban sprawl. I have been less uptight about this than many, feeling inherent problems would curb sprawl (Heh).

Well, between energy prices, total inertia in home building, and a new political atmosphere, anti-sprawl wishes may come true faster than we ever imagined.

For example, the debate over optimum population density is impacting transportation and city planning.

On to St Louis. It’s hard to talk in too much detail about places I’m not very familiar with. But the pace at which things can change is going to be dictated, in part, but the extent to which there’s actual interest in building anything in the metro area. At the moment, clearly, nobody is going to undertake large new building projects—dense or otherwise—in St. Louis or anywhere else. And a small city in the midwest is under no particular obligation to turn itself into a particularly dense metropolis. But what you want is to avoid a situation where you’re preventing density. St Louis has a couple of decent rail transit lines and it’s important to allow dense projects to be built near those stations and along the corridors that are served by rail. These things are expensive to build, and once they’re there it’s important to utilize the served areas in the most efficient way possible. That doesn’t mean forcing people to build extremely tall projects near them, but it does mean letting such projects go through without demanding vast fields of parking to be placed around everything. 

In general, I would also just note that it can get misleading to look at citywide density averages. The relevant issue for a city that (like St. Louis) has some transit is whether or not you’re achieving density at your transit nodes. Additional consideration that are important is that ideally the stations will be close enough together to create not just pockets of density but whole corridors of density, even if the corridors are surrounded by pretty traditional suburbs. The stretch of Arlington County running from Rosslyn to the Metro stations at Court House, Clarendon, Virginia Square, and Ballston are a great example of how this can look. [More]

The increased availability of light rail to create "corridors" of density might be a compromise image more farmers could buy into.  Of course, this also implies small communities not in the corridor could see further economic stress.

A Big Mac per month...

Back in the day, when American farmers suddenly discovered some of their grain and livestock checks were written in yuan, it was fashionable to multiply stuff by 9-zero-numbers and become infatuated by the profits represented in the figures.  One these rural myths ran something like this: If every Chinese were to eat just one Big Mac per month, we would have to double the size of the US cow herd to supply it. (I always wondered what this speculation implied for pickle producers, not to mention the "Special Sauce" industry.)

I actually scribbled through some rough calculations and the statement is roughly within the ballpark, but is still nonsense, as we have discovered.  Why would the source be US meat, and how do you plan to get rural Chinese anywhere close to a Mickey D's and possessing the necessary funds and desire?

It seems we're back at this game only from a different angle.

Global grain markets are facing breaking point according to new research by the University of Leeds into the agricultural stability of China.
Experts predict that if China's recent urbanisation trends continue, and the country imports just 5% more of its grain, the entire world's grain export would be swallowed whole.
The knock-on effect on the food supply - and on prices - to developing nations could be huge.
Sustainability researchers have conducted a major study into the vulnerability of Chinese cropland to drought over the past 40 years, which has highlighted the growing fragility of global grain supply. Increased urban development in previously rich farming areas is a likely cause.

"China is a country undergoing a massive transformation, which is having a profound effect on land use," says Dr Elisabeth Simelton, research fellow at the Sustainability Research Institute at the University of Leeds, and lead author of the study. "Growing grain is a fundamentally low profit exercise, and is increasingly being carried out on low quality land with high vulnerability to drought."[More]

To be fair, this premise may have more legitimacy than the hamburger fantasy, as land conversion in China is definitely occurring and the switch to high values crops from grain also commonplace.  But in the same breath, it is obvious China cannot simply expropriate the entire global grain trade.

Recently China has been skipping the part of grain stage of the value chain and importing mucho meat. This cancels the need for a lot of grain. Moreover, China will be the beneficiary of grain yield advancements just like Western producers.  Some of them they might actually not steal, but develop themselves in their own massive biotech industry.

Lining up all the variables in one direction can produce some dramatic answers to economic questions. But between a global recession and commons sense, I'm not holding my breath waiting for an instant grain shortage due to Chinese demand or their faltering production.

Haven't done one of these for a while...




[via sullivan]

Consumer mood clues (#1)...

Maybe we actually "dropped".

There is a growing belief, even among luminaries in the retailing industry, that the orgy of consumption fuelled by cheap credit, which has driven the retailing boom of the past decade or two, is at an end, and that a new age of frugality is dawning. This is not just because credit is no longer so readily available (and may never be so again). Consumers may actually be reappraising their lives, and realising that “shopping ‘til you drop” is imprudent, and perhaps even vulgar.

In a valedictory address to a convention of American retailers in New York last week, Lee Scott, the departing boss of Wal-Mart, said that surveys of Wal-Mart’s customers had found they had given up eating out, going to movies and shopping, and that “they talked about how good they felt about doing it.” Of course, we have heard this sort of thing before, only for the addictive thrill of splashing cash to save the day for retailing. But this time may be different. [More]

It's early to make predictions, but what if a drastic reduction of consumption actually rewards us psychologically with good feelings?  I could see this happening if your social circle all moved in this direction.  If nothing else we have discovered the power of our homeys to make us happy.

New research shows that happiness isn’t just an individual phenomenon; we can catch happiness from friends and family members like an emotional virus. When just one person in a group becomes happy, researchers were able to measure a three-degree spread of that person’s cheer. In other words, our moods can brighten thanks to someone we haven’t even met.

“Especially in the United States, we’re very used to thinking of ourselves as rugged individuals. But even very small things that happen to us have big impacts on dozens and hundreds of other people,” says James Fowler, a University of California, San Diego, political scientist, who co-authored the study with Harvard University medical sociologist Nicholas Christakis. “The things that we do and the things that we feel are going to reverberate throughout our social network.”[More]

Considering how many of us will have friends and family going through difficult financial circumstances, we may scale back in sympathy, or simply because going shopping isn't the activity of choice as it used to be.

At the same time, the "there-but-for-the-grace-of-God" refrain will be running through more fortunate minds, I'm sure.  Consumption will be doubly hard to restart under such social constraints, so may be our enormous dependence on consumer spending will back off to levels similar to European countries, where government and business provide much more of the spending.

The government certainly seems willing to step up.

Best blog comment...

I've read today:

With t-bills at zero yield and big bank shares turning into penny stocks, I'm starting to worry we might might nationalize a couple of them by accident. [Source]

You can't even discount the ludicrous entirely anymore.

Another cool thing...

That came up at the Top Producer Seminar:  the Tweel



[Note:  according to the comments this is old (2 yrs.) news.  And noisy.]

Still, some novelty points.

Gadget alert...

How cool is this?

You’d have to be a jaded gizmophile indeed not to be impressed the first time you turn on this tiny, shiny black box. In the center of the short end, there’s a very bright light-emitting-diode lamp. Inside, there’s a miniaturized Texas Instruments digital-light-processing (D.L.P.) chip, similar in principle to the ones that drive some full-size HDTV sets. Together, they produce an astonishingly bright, clear, vivid video or still image. That’s right -- from a projector you’ve pulled from your jeans pocket.
There are no footnotes for that jeans-pocket statement, either (like, “not including enormous power brick”), because the Pico can run on battery power. Each charge lasts for about 90 minutes -- longer if you use the lower brightness setting or when you’re playing video without sound. You can recharge the projector either from its power cord or from a computer’s USB jack. A spare battery comes with the projector, and so does a little drawstring carrying bag.

A pocket-size, self-contained projector changes all the rules. An iPod and a Pico -- that’s the entire setup. Now, for the first time, a tent wall can become a movie screen when you’re out camping. (So much for roughing it.) [More]

The neat part about technology like this is even the makers may not fully appreciate how it will be used. Smaller, lighter, cheaper can trigger all kinds of imagination when placed  in  the hands of users.

One unfortunate outcome could be ubiquitous PowerPoint presentations for groups of 1-2 on topics so trivial as to need no more than two bullets.  Conversation may never be the same.

[More info]

[Another review]

I feel all warm and tingly...

About my prose now.  Here's what happens when really bad science writing hits the streets:

First thing that happens when you have a heart attack, an unlucky part of your heart turns white. The blood’s stopped pumping to that spot, so it becomes pink-speckled bloodlessness, coarse and cool like grapefruit gelatin.
This is the moment when, if they could think, these heart cells in this new poor part of town would go, “Well, shit.” Mortal things have a godly way of knowing when they’ll die.
Next comes the back-alley bruise of organ death. The cells turn from white to black, all shitted up like a body pit in a war, two weeks after. Suddenly, soldier, this part of your heart is dead, only it’s still in your body, attached to the good section — the 90210 ventricle — and the good part is smirking, it’s saying, “Come on, rebuild yourself, man!”
But the dead part can’t fix itself. And the healthy part can’t throw it a bloody rope. So the whole heart begins to die — 650,000 American deaths a year.
But now look here, a woman. She is a pretty lady of Pakistani heritage who highlights her soccer-mom layers, which you don’t expect from a lab-worn doctor-lady. And she’s got ideas. Wild ones. Hina Chaudhry believes she can do what the body can’t: fix the dead parts. [More - unfortunately]

Umm, OK.  Does it make me a bad person that I didn't go nuts when I read it - or that the picture skewed my judgment?

While admittedly the Internet and bozos like me have lowered the bar for good writing, maybe the sheer volume will make up for the quality.  Regardless,  the purists are not doing all that well right now.

In case you missed it...

Rev. Lowery stole the show. (Jan tipped me off - I was speaking)



I believe we have turned a corner, and just in time.

They aren't making any more...

But they are finding more farmland.  In a striking example of a nation with a clear national policy and plenty of hard-pressed citizens to put it into practice, China is slowly working to secure food by acting like the BTO for the world.

China's Ministry of Commerce triumphantly announced this month that its bilateral trade with the continent is set to hit $100bn (£67.8bn) by the end of 2008, two years ahead of schedule. Africa's plentiful oilfields and rich mineral deposits are top of China's imports, and in return the world's most populous nation is exporting tens of thousands of its countrymen.
By some estimates, 750,000 Chinese people have spent time on the continent or have moved to Africa permanently to do business and take advantage of the natural resources. And Hebei, the province from where the middle-aged Mr Liu hails, is no exception. He reckons 10,000 farmers from Hebei alone have gone to 18 African countries in the past few years.
They work in "Baoding villages", named after the dusty township where Mr Liu lives; he likes to point out that Baoding means "Protection and peace". The villages, ranging in size from 400 to 2,000 Chinese, have been set up across the continent, from Nigeria to Kenya, from Sudan to Zambia.
Mr Liu started the Baoding villages when he was head of Hebei province's foreign trade bureau in 1998 and was seeking ways to boost the local economy, which had been dampened by the Asian financial crisis. He discovered Africa.
"We found Africa was not affected by the crisis, and we went there, and found that local people were short of food, even though there was lots of land not in use for farming and plenty of animals," he says. "So I decided to switch from exporting goods to exporting agricultural expertise."

It is a winning formula for China, which has more than 20 per cent of the world's population but only 7 per cent of its arable land. "China has too many people and too little land," Mr Liu ponts out. "In Africa, they have plenty of land and too few farmers. Places such as Ivory Coast are short of 400,000 tonnes of food a year, and the local people cannot farm enough to feed the population. Local farming skills are not developed." [More]

While this certainly looks like a mashup of colonialism and outright invasion, as long as Africans welcome the immigrants, who is to say they are imperialists?  It certainly offers a stark comparison with our military-based nation building.  And China is hardly alone in this strategic effort.

From a long term perspective, our ignorance of Africa prevents much understanding of the possibilities for farming there, given the right people in charge.

For instance we have little appreciation for how enormous the continent is.

I remember joking about Brazil would never realize its agricultural potential only to have to eat those words a few years later. We may be ignoring the same or even larger competitive emergence when the energy of Chinese farmers is coupled with underutilized resources.

The Italian garment industry certainly found this out when they began importing cheap Chinese labor. To their consternation, the workers rapidly became managers and then owners.

But most brands aren't so straightforward. To please customers looking for the "Made in Italy" label, several luxury companies now have their goods made in Italy by illegal Chinese laborers. The Tuscan town of Prato, just outside Florence and long the center for leather-goods production for brands like Gucci and Prada, today has the second-largest population of Chinese in Europe, after Paris. More than half of the 4,200 factories in Prato are owned by Chinese entrepreneurs, some of whom pay their Chinese workers as little as two euros an hour. [More]

Undoubtedly this global recession will change attitudes about immigration. Already our inflows of Hispanis workers have slowed dramatically, and perhaps even reversed.  We may yet look back on the good old days of immigration problems becuase they were clear evidence of a growing economy.

The power of China is people, something generally not recognized in the west, where we see population as a problem. One reason I tend toward occasional optimism about the global economy is we now have several  hundred million more minds engaged in finding answers, instead of the few in the developed world.

Never pay taxes again...

I'm getting almost giddy reading about the possible tax-related additions to the stimulus package.  First - the payroll tax holiday/reduction.

Now this suggestion for the Republicans to champion as a trademark policy: Investment Tax Credit (Remember that boys?  Happy days, happy days)

To stimulate investment, Republicans might consider resurrecting a Democratic tax idea from the Kennedy Administration--just as Jack Kemp did in 1977. This idea, named the Investment Tax Credit, reduced the cost of machinery and equipment by giving businesses a credit of 7% (later 10%) of the purchase price against their tax liability. In 1981, Kennedy adviser Walter Heller argued that the ITC really marked the beginning of supply-side economics.
Another political virtue of the ITC is that Obama economic adviser Larry Summers and Clinton Administration economist Brad DeLong are the principal advocates of the importance of machinery and equipment to long-run growth. (See their articles in the Quarterly Journal of Economics and Brookings Papers on Economic Activity.)
In a 1992 study for the American Council for Capital Formation, DeLong estimated that a 10% ITC would boost economic equipment investment substantially and raise the rate of real economic growth by as much as 0.3 percentage points per year. That's a lot when you consider that between 2001 and 2007 the economy averaged 2.4% real growth.
In the past, the ITC has often been used as an economic stabilizer--being implemented as a temporary growth measure and repealed when the economy appeared to be overheating.
But Stanford economist Kenneth Judd tells me that he thinks a permanent ITC would work much better than a temporary one. (See his article in the Journal of Political Economy.) However, a recent Federal Reserve Bank of Cleveland study suggests that the timing effect could be very powerful, with a 1.5% ITC raising growth by 0.8% in the first quarter.

Of course, there is debate among economists on the impact of an ITC. Obama economic adviser Austan Goolsbee has argued against it on the grounds that it raises the prices of capital goods and wages of workers in capital goods industries. But at least under current conditions, when there is so much unemployment and unused industrial capacity, this would not seem to be much of a concern. [More]

So I'd be hitting the pause button on major purchases until I see if this has legs, because ITC is the gold mine of tax breaks for farmers.

Maybe it's a duke or prince...

I guess cash is not the king any longer.  And it held the throne for less time than an Italian prime minister.

Now a slew of economists and business school professors lecturing at the annual TEPAP management course here in Austin this week are mincing no words: Refinance now. Trillions of dollars in federal bailout funds will eventually ignite double-digit inflation, said Ed Seifried, a professor emeritus of economics at Lafayette College. "You may never see long-term fixed interest rates this low again." Yes, they might inch a bit lower, but the downside potential is small. His advice: Do it this week.

Likewise, TEPAP director Danny Klinefelter is urging growers to convert their equity into long-term debt and eliminate their annual operating lines in the process. If that means they have to park the excess in ultra-safe interest-bearing checking accounts, so be it. You might earn slightly less on savings that you spend on interest, but consider the margin "an insurance policy," Klinefelter said. [More]

I have long felt that cash-worship was based more firmly in psychology as opposed to long-term business planning. Farm business advisers are similarly biased to cash because it's easy to measure and offers that buffet-table allure - you can always convert it to any other asset.

Except when you can't.  The prime example of this situation is farmland, or more particularly nearby or adjacent farmland.  The illiquidity of the land market is severe, since few parcels come on the market except when prompted by generational change.

I fully recognize my aversion to cash, but suddenly more economists in farm country are looking father ahead than 2009 and speculating on the possibility of significant inflation.  I won't belabor my comments that this is now very probable and may even be part of policy plans.  Consequently, this argument strikes me as sensible to a point.

Rates will likely stay lower for longer than many observers suspect, simply because of the power of the economic down-spiral we are now working through. Asset value losses of 40-50% will not be easily forgotten, and consumers may have truly absorbed an attitude shift concerning consumption versus savings.  As a result, I think it will take 2-3 years after we reach the bottom for them to begin looking for slightly better returns than absolute safety (T-bills) can offer.

This is good news for the government which is borrowing those deposits, and good news for farmers.  There may be less urgency than Danny expresses above. This is a small quibble, of course, as interest rates for long-term money probably can't drop too much further.  

[Why do I have a bad feeling I just put that prediction on paper?]

I need to buy a power tool...

A really big, noisy one.  This has not been a good week masculinity-wise on my farm.  While you may think it was the emasculating crop report on Monday (from which we have surprisingly bounced up), it actually began the night before.

Jan and I had been watching Tess of the D'Urbervilles by Thomas Hardy.  Since I had crawled my way through Return of the Native in high school, I should have suspected something.  But no such luck.

We had invested 90 minutes the week before and the actor playing Tess was (ahem) able to hold my attention, I must admit.

 [More about this stinkin', man-hating TV show]

And I was confident I could exist my way through the last half with moderate attention and consciousness.

Little did I know that old Tom had the most wretchedly depressing ending waiting for me. The more self-sacrificing and noble the devastatingly gorgeous heroine behaved, the worse the men in her life treated her. I can't spoil the ending because it could not get any rottener.

Women are right - we are scum.  I have despised my gender for days, too despondent to enjoy even deeply fried foods.

Amazingly, the Brits can't seem to get enough of Victorian living, and its class-worshiping society.  Consider the hot new show on BBC: Victorian Farm.

Described as an "historical observational documentary", Victorian Farm follows a team of people who effectively step back in time to the turn of the last century. Filmed during the course of a year, they use only materials and resources that were available in Victorian times - to tend to livestock, repair buildings, prepare food and make furniture and food.

Acton Scott Historic Working Farm itself is recognised as one of the premier farming heritage attractions in the UK. Caught in a time warp, and deep within the Shropshire Hills, it retains all the atmosphere of daily life on a late Victorian upland farm. [More]

Good luck with that one, chums. 

But just when the shroud of self-loathing was lifting (along with corn prices I might add), another blow to my manliness destroys the feeble momentum of my rehabilitation: it seems I am to attend a baby shower.

My own son - the fruit of my loins - has permitted, even encouraged this spectacle to take place. Don't get me wrong.  I am ecstatic he and Kristi are springing off, so to speak, and can't wait to welcome a new whatever (they haven't peeked at the sex, unlike practically all expectant couples), but I had just assumed all the goofy pregame festivities would occur at a safe distance from me.  

But it has come to pass in our depraved times that instead of women going to showers and...well, doing whatever you do at one, the practice now includes couples. Even couples of advanced years.  My sixty-year spotless record of shower avoidance (not the hygienic kind, of course) is down the drain, along with whatever drops of testosterone Hardy left me.

Don't look back, comrades, it would only deepen my humiliation.  March on without me, and remember better days.


[Please, God - don't let there be games]

The death of the death tax...

Like some other observers, I think we are in a whole new ball game for the estate tax. While a middle course (freezing at this year's rates/exemptions) seemed to be gaining widespread acceptance and Obama seemed OK with it, the recession will change many dogma about wealth and income growth.

Perhaps the most important reason for the death of the “Death Tax” movement is what might be called the Paris Hilton affect. In 2001, with inequality mostly a buzzword among a few left-wing professors, it was easier to get public support for killing a tax on the wealthy. Many Americans felt they could become wealthy someday, too, so they opposed any punitive tax on their imagined futures. That was especially true in 2006, when Congress took up repeal again and Americans felt newly wealthy because of rising home values.
But in the intervening eight years, the nonwealthy actually became less wealthy and Americans realized they would be lucky to retire at all, let alone get rich enough to become the target of an estate tax. They also resented the rich Wall Streeters and corporate chiefs who lost so much of other people’s money and publicly paraded their wealth.
Capping it off was a populist branding campaign that was just as clever as the “death tax” brand. The term was “The Paris Hilton Relief Act,” suggesting that abolishing the estate tax would merely give more money to wasteful, dog-and-diamond-toting heirs such as Ms. Hilton. Mr. Obama used the term in 2006 when he said the “Paris Hilton tax break” would give “billions of dollars to billionaire heirs and heiresses.”

So while lobbyist strategy and internal bickering may have played a role, the real reason for the preservation of taxes on the wealthy is the public’s attitude toward the wealthy themselves. [More]

I waffle daily in my outlook for our economic future, but am confident there is another side of this chasm.  That said, it cannot look like our recent past, if only because we are shaping it with our rescue efforts.

As those few of us who have largely escaped the ravages of deflation and income loss are slowly sucked into the maelstrom, the number folks who have a dog in this fight dwindles. Meanwhile the rising tides of resentment toward Wall Street is easily transferable to anyone with more wealth.  Far fewer harbor even unlikely dreams of taxable estates, and the need for revenue will be enormous in 2010.

If we can settle for an estate tax with 2009 parameters, we'd be crazy not to do so. Once again allowing our farms to be the poster children for a repeal movement would only lump us in the company of those who are now most reviled in our society, and further damage our brand.

Why phone receptionists are hard to hire...

In Toronto.  It seems businesses there have an affinity for puns.  Despite myself, I loved these:

Wait for it...

[Way, way too many more - seriously, you'll kill 20 minutes at least.  I warned you.]

[via neatorama]

All kinds of destruction...

At Murray State University last night speaking to soybean growers, I followed Jeff Beals, who works with Jerry Gulke at SMS.  After listening to Jerry state he was going to cancel his seed corn order and plant all beans this year after Monday's reports, it was great to have Jeff fill in some the details in their thinking. (Of course, I sure ol' Jer will have revised his position by the TP Seminar next week, but that goes with the job - especially this year)

Anyhoo, Jeff used the term production destruction.  I could not find a credible defintion, but I think the meaning is obvious.  And I think he (they) are on to something, since rumors I've heard seem to confirm how the credit crisis is a pain here, but a game-stopper in places like Brazil, and especially Eastern Europe.  Even the EU, whose governments and investors were diving into places like Ukraine and Georgia are thinking twice.

The European Commission would like to draw Ukraine and Georgia closer to the EU through European Neighborhood Policy agreements on trade, economic aid, energy cooperation, institution building and the rule of law, while leaving aside the long-term question of possible membership of the bloc.
But EU officials are dismayed that Ukraine has done so little in economic reform, tackling corruption and improving transparency and the rule of law to qualify for more assistance.
"Instead of fighting corruption, they spend their time fighting each other," the energy official said.

It was politically inconvenient that both states voiced enthusiasm for joining the EU just as the bloc was suffering enlargement fatigue after taking in 10 new members in 2004. [More]

More to the point for us, a machinery insider told me this morning the rumor is sales of big sprayers from John Deere to Russia/Eastern Europe have fallen through due to lack of credit. US dealers who had been told in December not to expect any inventory any time soon, suddenly found a few (about 800 units) had become available.  

And my dealer told me delivery times on new combines been rolled forward remarkably.  For instance when he called me last July to warn if I wanted to trade up to a bigger machine (I was negotiating for a significant chunk of rented ground that  -  thank God - fell through) I had to have the order in immediately to guarantee fall '09 delivery. [BTW - a great video of where combines come from here]

Not only are machines being delivered in February instead of October, dealers can now have one on the lot.  Last year to prevent big dealers from hogging the output, a signed order with a farmer name on it was required, I was told.

To make a short story long, lots of overseas competition for farm machinery just disappeared due to the credit freeze. If Citibank doesn't trust Wells Fargo (or is that backwards?), I doubt if it wants to deal with First National of Moscow,  especially given the rouble rout.

But my point - and I'm pretty sure I have one - is the credit crisis and commodity bust is destroying commodity production capacity as well - or at least delaying its expansion. Without money, competitors in developing nations are hamstrung in their push to gain competitive tools to match ours.  I think our myopia on our own problems has left this factor unconsidered.

While we complain about the bailout schemes, at least we still have government institutions trying to prime the credit pump, and a currency still (miraculously) in demand.  Most of our fastest growing competitors have nothing faintly similar for help, and capital inflows from rich countries have essentially reversed.

Steel prices are plummeting, ditto rubber, copper, you-name it, but that only helps for machines yet to be built, so add farm machinery to the list of industries trying to figure out how to avoid whacking losses as demand falls. Many of them also have a construction side which is really not much help right now either.

Along with input prices and customer credit issues, ag production could actually be declining for many crops.  And I'm not so sure it will bounce back up very quickly without money flowing a lot more freely.

So bash Wall Street and our finance sector if you choose. But I'm beginning to root for those quasi-rascals. At least they're our rascals.

Now we're talking...

Of all the stimulus ideas offered to date, this one I like the best:

Republicans said more tax cuts were needed in the stimulus. Senate Minority Leader Mitch McConnell of Kentucky said one idea discussed during a Republican caucus lunch yesterday was a two- year suspension of the payroll tax as part of the stimulus.[More]

To be fair, I'm just one greedy taxpayer, of course (although accelerated, bonus, super-duper depreciation allowed me to postpone too much of them for next year - I'll hate myself in 2010).  But serious economists think this is the best tax cut of all.

But the centerpiece of any tax cut should be employment taxes: in particular, a permanent halving of the current 12.4 percent Social Security payroll tax on the first $106,800 of wages, split evenly between workers and employers. The direct revenue effect of that would be a bit under $400 billion per year, roughly in line with the present quantitative needs of the economy. It also meets our three tests of effective stimulus.

First, the funds would flow directly to households through higher take-home pay and indirectly through a reduction in the cost of employment. Economic studies conclude that the benefits of a reduction in the employer portion of the payroll tax are ultimately received by employees. But the immediate effect would be an improvement in the cash flow of credit-starved businesses (as well as being a marginal incentive to keep employment up).

Second, the funds would be extremely timely, with the benefits hitting the economy with the first paycheck after the plan was implemented.

Third, by lowering the taxation of labor, the plan would help produce a higher-employment recovery than would otherwise be the case.

Since the tax cut should be permanent to have maximum effect, the biggest challenge would be how to make up for the lost revenue once the macroeconomic need for fiscal stimulus had passed. In the short run, effective fiscal stimulus requires that government revenue drop, thereby enriching the private sector, and with the Treasury making the Social Security trust fund whole by way of intergovernmental bookkeeping. Longer term, however, spending cuts or a new source of revenue would be needed. [More]

More importantly, I think Obama and his economic advisers are persuadable.  Not withstanding the democratic opposition to tax cuts, this one is clearly targeted to lower-earners and can be implemented instantly.



Now all I need is a one-year capital gains holiday to sellout to Aaron and I'm golden.

Here come the readers...

It would seem we are slowly turning into a nation with mostly readers, thanks to younger Americans.  The National Endowment for the Arts reported these findings (among others) in a recent survey.

• For the first time in the history of the survey - conducted five times since 1982 - the overall rate at which adults read literature (novels and short stories, plays, or poems) rose by seven percent.
• The absolute number of literary readers has grown significantly. There were 16.6 million more adult readers of literature in 2008. The growth in new readers reflects higher adult reading rates combined with overall population growth.
• Young adults show the most rapid increases in literary reading. Since 2002, 18-24 year olds have seen the biggest increase (nine percent) in literary reading, and the most rapid rate of increase (21 percent). This jump reversed a 20 percent rate of decline in the 2002 survey, the steepest rate of decline since the NEA survey began.  
• The U.S. population now breaks into two almost equally sized groups – readers and non-readers.
• A slight majority of American adults now read literature (113 million) or books (119 million) in any format. 

[More]

This sort of confounds the image of video-game-playing slackers.  But is also raises the question of what aren't these new readers doing?  It would appear they are more selective in watching TV.

According to a new study from Deloitte (h/t TVTattle), "millennials" (Americans aged 14 to 25) watch 10.25 hours of TV per week—although they spend more time with "media" (including computers, videogames and music) than other age groups. Beyond that group, TV use goes up with age: 15.1 hours for Gen X (those aged 26 to 42), 19.2 hours for baby boomers (43-61) and 21.5 hours for "matures" (62-75). 
...

The question is whether these gaps are related to age or generation: i.e., whether "millennials" will watch more TV as they get older, or whether their cohort has developed other habits they'll keep through life. (Will TV-watching someday be a cartoon shorthand for age, like holding a cane or using an earhorn?) The corollary question is whether, by the time they get older, the distinction between "TV" and other forms of media will be so blurry that the preceding question will be moot. [More]

Now add in the technical problem of measuring who is watching what in the age of DVRs and online broadcasting, and what young people are up to is pretty much a guess, especially at the individual level.

For the last 20 years, the television industry has been all about young-adult demographic groups, or "demos" in the slang of Madison Avenue, because marketers have believed that young people are most likely to develop lifelong loyalties to certain brands. Thus, whichever network attracts the most adults under 50 has been considered the winner, commanding premium rates for commercial time.

As a result, network executives have driven themselves to distraction chasing young people, struggling to find programs with appeal for viewers in their 20s and 30s. During the 1990s, for instance, executives spent enormous sums trying to find youth-oriented shows in the vein of NBC's smash sitcom "Friends." Meanwhile, people of other ages slowly drifted away to their own niche shows on cable TV or other media.

Yet there are growing signs that network TV is moving away from its relentless focus on demos -- and that could have a huge influence on future programming. There's a growing sense in the industry that the 18-to-49 category's importance to marketers may be wildly overblown. Moreover, in an age of DVRs, multichannel systems and increasingly tiny ratings, the demo obsession may itself be pushing down ratings, exacerbating the industry's problems and excluding from consideration too many programs that could have broad appeal.  [More]

The actual problem could be growing individuality or at least, micro-populations that defy lumping together. It seems to me the news ways of maintaining personal connections is giving rise to viable social groups with eclectic or even eccentric preferences. Indeed those preferences may be how they establish identity. as a result, they defy aggregation and pose major headaches for advertisers.

It will be interesting to follow how TV habits change during the recession.  Typically bad economic times have raised demand for cheap entertainment, but this time there are so many more choices for escapist leisure activities.

Like, umm, reading blogs.