Saturday, January 26, 2013

Junkbox, Episode XIII⊍...  

Tough week ahead, but February calendar looks good. See you at TP Seminar.
Be cool. Stay warm. (Have you noticed the temp forecast for the next few days?)

Thursday, January 24, 2013

Coffee vs. Coke...  

I think the HFCS market is slip-sliding away, but I did not see the downtrend in soda consumption becoming as pronounced as it has.

 Now look where we are: Soda is in a free fall, with domestic revenue down 40%. Coffee culture is ascendant, up 50% in ten years. In another decade, the United States could easily spend more on coffee than soda -- something utterly unthinkable at the turn of the century (industry data via IBISWorld) [More]
Like so much else, it is driven in part at least, by generational differences. And when Coke tried to staunch the bleeding with a 2-minute commercial, it did not impress much - in fact. it may have hardened anti-sugar positions.
This explains why the reaction to the commercial was immediate and derogatory, even in the advertising community. “Critics Jeer Coke’s Entrance Into Obesity Discussion” read a headline in a MediaPost blog. “The soda giant makes an awkward first stab at addressing obesity,” said AdWeek, which called the video  “shameless.” Among food and health writers, the response was mocking, perhaps best represented by Marion Nestle’s “Coca-Cola Fights Obesity? Oh, Please.”
...There is virtual consensus that drinking too much soda is bad for you, and it’s not hard to understand the evidence. I asked Rob Lustig, a pediatric endocrinologist at the University of California, San Francisco, and the author of “Fat Chance: Beating the Odds Against Sugar, Processed Food, Obesity, and Disease,” if he’d sum it up for me. His response: “A calorie is NOT a calorie. Different calories have different metabolic fates in the body.
Those from fructose overwhelm the liver, forcing the pancreas to make more insulin and driving more energy into fat cells. And soda is nothing but a fructose delivery system.”[2]

Soda is a fructose delivery system as tobacco is a nicotine delivery system. (And if it’s not “truly” addictive but only habit forming, so much the better; it’ll be that much easier to get people to cut back.) That’s why added sugar, especially in liquid form, is rapidly becoming the focus of savvy public health officials, scientists, physicians, journalists, parents and even politicians. And the ridiculous notion that government has no role in public health — the blind “nanny-statism” argument, which ignores everything from seat belts to tobacco to guns — is being overwhelmed by the tide of evidence, as demonstrated by a recent poll by The New England Journal of Medicine, in which 68 percent of nearly 1,300 respondents worldwide “favored government regulation of sugar-sweetened beverages." [More]
These are charges that may be more definitely proven, but if we have learned nothing else from GMO's, climate change, etc., it's that public perception doesn't wait for replicated studies or respect scientific consensus when it suits them.

 There is some kind of synergy I think developing with social media, search engines, economic discontent, and anti-consumerism that could rebuild our food system. From meat to drink, a growing number of people aren't just eating what's set in front of them.

Wednesday, January 23, 2013

The Moon Hoax...  

Only a few problems.

 

Of all the conspiracy theories, this one has always irritated me most. So I'm not impartial here. Good to see some facts thrown at it.

But wait for the finish.
Remember stocks?...  

Somehow amidst all the doomsaying and predictions of collapse (especially if Obama was re-elected), a funny thing happened. Equities plodded along toward a quiet boom.
One of the biggest trends underlying the strengthening of the U.S. economy has happened so gradually, and with so little discussion, that it was easy to miss. But facts are facts, and while many people didn’t notice it, the U.S. stock market has been on an absolute tear, rising back to near its pre-crisis level.
Tuesday was a typical day in this long rally, which has proceeded with only a few interruptions since March 2009. The Standard & Poor’s index rose 0.4 percent, enough to make Americans’ 401k accounts a little bit more flush, but not dramatically enough to prompt any outpouring of celebratory confetti or even a hint of the bubble-era mentality that flourished in the late 1990s (The TV ad for a brokerage in which a tow truck driver hit it rich day trading is but a distant memory).

The Standard & Poor’s 500 is almost . . . all . . . the . . . way . . . back
But add up those days of 0.4 percent gains—there have been a lot of them in the last four years–and it is a remarkable run. Tuesday’s close left the S&P only 4.6 percent below its all-time high in October 2007, meaning it could enter record territory after just a couple more good days. We are living through the strongest stock market rally since the late 1990s–though this one has far, far more solid fundamentals underlying it.
The rise is a major, major reason that Americans’ household finances are looking better. [More]
Ezra nails it, I think. The climb has been so relentlessly boring it hasn't attracted the attention it deserves. But, giddy optimist that I am, I think this is pretty damn good news. What we didn't need is more volatility and skyrocketing share values. This pedestrian recovery gets more solid every moment.

While I don't think the "wealth effect" will be infecting households anytime soon, there will be a relief from economic anxiety in stages. Adding to this anti-apocalyptic sentiment is news like this.
New England’s power grid operator says wholesale electricity prices dropped by nearly 23 percent regionally last year thanks to falling natural gas prices and decreased demand.
ISO New England said Wednesday that electricity prices are now at their lowest levels since 2003.
The lower wholesale prices don’t necessarily mean quick drops in monthly power bills. Utility regulators in the six New England states set retail rates in advance, and because the rates are in place for intervals of months or years, the lags between drops in wholesale and retail prices can vary.
But since the ISO expects the trend of low recent natural gas prices to continue, the savings should be coming.
‘‘With that trend line continuing, consumers will definitely see the benefit,’’ the ISO chief operating officer, Vamsi Chadalavada, said.
The ISO says wholesale power prices dropped from $46.23 per megawatt hour in 2011 to $36.09 last year. That means buyers paid $1.5 billion less for electricity in 2012 — from $6.7 billion in 2011 to about $5.2 billion last year.
The driver in the falling wholesale rates is a 20 percent decrease in the price of natural gas, New England’s dominant fuel for electricity production. The ISO said the region is benefiting from stepped up production from the nearby Marcellus Shale field in New York and Pennsylvania.
But lower electricity demand — due in part to the economic downturn, milder weather and better energy efficiency — also has pulled down prices, according the ISO. [More]
Just like the combination of more efficient cars, different driving habits, and Bakken has, and continues to reshape our energy burden, analogous trends all over our economy are turning the curves we all thought would extend to unsustainability. These fruits are just beginning to ripen. There also considerable knock-on benefits from each one.

I am not convinced this is bad news for commodities, either. Sure, fast money fueled some pretty spectacular spikes, but there is still plenty of wealth to wander into our markets from time to time. Maybe fundamentals will be able to exert slightly more influence, which would certainly make them a little easier to comprehend.




Tuesday, January 22, 2013

Junkbox, Episode XIII♌...  

Crimony, it was cold in Green Bay!  Those guys had a great year up there, though.
Throw another cob on the fire.

Sunday, January 20, 2013

The Zimbabwe fear...  

In my preparations for visiting South Africa, I cannot but compare the sad outcome in Zimbabwe (formerly Rhodesia) that must haunt farmers in SA.

Impact on production

Before 2000 land-owning farmers had large tracts of land and utilized economies of scale to raise capital, borrow money when necessary, and purchase modern mechanized farm equipment to increase productivity on their land. As the primary beneficiaries of the land reform were members of the Government and their families, despite the fact that most had no experience in running a farm, the drop in total farm output has been tremendous and has even produced starvation and famine, according to aid agencies.[26] Mostly crops for export have suffered severely, e.g. Zimbabwe was the world's 6th largest producers of Tobacco in 2001.[27] It produces nowadays less than 1/3 of the amount produced in 2000,[28] the lowest amount in 50 years.[29] Zimbabwe was once so rich in agricultural produce that it was dubbed the "bread basket" of Southern Africa, while it is now struggling to feed its own population. About 45 percent of the population is considered malnourished.

A complex picture

Although controversial and having generated a lot of bad press, the land reform has produced some of the effects it was intended for, according to a 10-year survey of 400 households located in Masvingo province. The survey was conducted by Ian Soones of the University of Sussex, UK. Rough official figures state that about 7.6 m hectares or about 20% Zimbabwe's area redistributed since 2000. Crops for export such as tobacco, coffee and tea have suffered the most under the land reform, with e.g. a reduction in tobacco production by 43% from 2000 to 2009. The main every-day food for Zimbabweans, maize, has been reduced by 31%, while small grains production has grown by 163%.[11]
For Masvingo province Scoones finds that 28% of the total area was transferred. This was taken over by over 32,500 households on A1 sites (making up 1.2 m hectares) and about 1200 households in A2 areas (making up over 370,000 ha), alongside perhaps a further 8,500 households in informal resettlement sites, as yet unrecognised by the government. Almost half of the 400 households surveyed were describing themselves as not successful with their new land, while others have succeeded with hard work. About 5% of the households (but "possibly" more than 5% of the land) in this study has gone to "cell-phone farmers" well connected to ZANU-PF. Masvingo is however a part of the country with relatively poor farming land, and it is possible more farms went to "cell-phone farmers" in other parts of the country, according to the study [More]
While I am working to educate myself on the basics of recent history in eastern Africa, I find it is almost fractal in its complexity. One thing seems certain: South Africa is at a crucial point in its national history and certainly its agriculture. I do not know enough to reasonably estimate the future or even accurately judge how well it operates currently.

Meanwhile events unfold in Zimbabwe that will have impact on the SA outcome.
Latest annual corn production is estimated at 833,000 tons, down by 60,000 tons from last year, compared to more than 2 million tons harvested in 2000.
The collapse of the rural economy is causing mass migration to already stressed towns and cities, he said.
Farm dam walls have not been maintained, fencing has been uprooted and conservation laws are being openly disregarded with drastic environmental consequences, Taffs told reporters.
Taffs said his organization has drawn up a broad recovery program to restore the value of land against which loans could be obtained by the new farmers and former owners would provide support and advice drawn from long years of experience in farming.
“People are starving in this country. It is time to act. We can’t wait any longer,” Taffs said.
The farmers’ proposals call for foreign funding for an issue of bonds to pay compensation to farmers who lost their land and the creation of a Land Bank where the bonds, redeemable later, and title deeds would be deposited and made available as capital for new farmers to restart derelict properties and “reenergize the land market.”
If that happened and farming got back on its feet on a commercial basis, the ex-owners would have a viable investment in bonds with returns comparable to any good investment worldwide, Taffs said.
“It won’t cost the government anything. It will be a minimum burden to donors. The benefits will be immediate and immense. If it’s in place before the planting season, we could be self-sufficient in food again within a year,” he said.
The organization says less than 400 of its 4,500 white farmer members in 2000 are still on the land, half of them are actively farming and just 10 are still farming on the commercial scale they were in 2000.
“Our sector has been really been taken down. The new farmers have access to the land but no access to assistance,” he said.
Taffs said the farmers did not envisage getting their land back. Some had died penniless since the often violent land seizures began in what President Robert Mugabe insisted was a program to reform imbalances in colonial-era ownership of prime land by whites, mostly the descendants of British and South African settlers.
“We don’t want to turn the clock back. We want to go forward in a pragmatic manner. What is lost has to be monetized and put back into the economy to ensure a bright future for the people through the successful completion of the land reform program,” he said.
Experts from 50 nations, many from Africa, and officials of international financial institutions helped draw up the recovery plan unveiled Thursday.
After years of meltdown since the collapse of the agriculture-based economy, Mugabe’s party says there’s no cash to pay out displaced white farmers. In the past, it acknowledged the need compensate former owners for buildings and improvements on the land. Many of the best former white farms were given to Mugabe loyalists and cronies and now lie idle.
Compensation in new bonds, calculated from criteria still to be ironed out, would be subject to routine fiscal and investment laws to avoid capital flight, according to the farmers’ group. [More]
There is a tendency for Americans, I think, and US farmers in particular (when they bother to consider SA) to draw parallels with our agricultural history. I am not sure this is helpful for one big reason.

When Europeans came to North America, the isolation of the indigenous people made them fatally susceptible to European diseases such as smallpox. The result was a rapid and thorough extermination of native Americans such that the land was for all intents and purposes uninhabited. In Africa, by comparison, proximity had already allowed some immunity to European plagues. Indeed, it was almost the reverse case, as African diseases like yellow fever and malaria decimated colonists. The fact that economic development progressed with a tiny minority of colonists among a large and growing population of natives makes the two continental experiences hard for me to equate.

Much to learn.
 




Bright lights...  

No big city. Where there once was a dark hole, behold the rigs and flares of the Bakken field.


[More astonishing photos of Kuwait on the Prairie]

Wednesday, January 16, 2013

I think there's something here...  

Just not sure what it means for agriculture.

 

One thing for sure - NASS is sooo yesterday on this idea.
The future belongs to the young...

But the present belongs to us geezers. Thanks to a system sharply slanted toward the elderly we have developed an odd actuarial situation.
But a funny thing happens to Americans’ life expectancy when they age. The U.S. mortality rate is the highest of the 17 nations until Americans hit 50 and the second-highest until they hit 70. Then our mortality ranking precipitously shifts: By the time American seniors hit 80, they have some of the longest life expectancies in the world.
What gives? Have seniors discovered the Fountain of Youth? Do U.S. geriatricians outpace all our other physicians?
Part of the answer is Darwinian: Those Americans who have been less able to access reliable medical care, maintain good diets and live in neighborhoods that are not prey to gun violence have disproportionately died off before age 80. That isn’t natural selection but social selection — the survival of the economically fittest in a nation that rations longevity by wealth.
But the larger part of the answer is that at age 65, Americans enter a health-care system that ceases to be exceptional when compared with the systems in the other 16 nations studied. They leave behind the private provision of medical coverage, forsake the genius of the market and avail themselves of universal medical insurance. For the first time, they are beneficiaries of the same kind of social policy that their counterparts in other lands enjoy. And presto, change-o: Their life expectancy catches up with and eventually surpasses those of the French, Germans, Britons and Canadians. [More]
The absolute conviction that the US medical system is the envy of the world is a conceit supportable for only a few of us. It is also inconsistent with almost every measure of health outcomes. It needs to be changed. Period.

As Jan and other colleagues begin to enroll in Medicare, I can tell you for a fact, that not one - even the most rabid free-market, anti-government evangelists - is less than thrilled. I think we had doped out the above trend long ago. "We got ours" is the motto of my generation.

Tuesday, January 15, 2013

Danged if I know...  

The trend for Americans to drive less continues. I have several theories, and so do others.


 [Note these are miles per capita]
Long-term forecasting can be an inexact, even embarassing, affair, so I’ll avoid saying too much with too much confidence.  What I’ll do instead is present the three hypotheses laid out by the Roundtable.  For our distinguished panel, recent declines in driving are indicative of one of three trends:
  1. The Interrupted Growth Hypothesis: VMT cuts are temporary and increases will resume once the economy picks up (although we know more VMT is not a required, or inevitable, part economic growth);
  2. The Saturation Hypothesis: car ownership and personal travel budgets have hit their limit, so no more growth is likely;
  3. The Peak Car Hypothesis: VMT has hit its peak, and history will now see a VMT decline of undetermined length.
That’s right, folks.  According to the experts, in the future VMT will either go up, go down, or stay the same. [More and chart source]
Any other theories out there?  Anyone? Bueller?

My concern is when you couple that chart with this one:

[Source]
This doesn't bode well for ethanol - which already is battling the "wall".

Saturday, January 12, 2013

Junkbox, Episode XIII∂...  

Guess who likes to browse through the character viewer on his computer?
Author's note...  

A recent comment questioned whether I even read comments. Actually, Blogger - my blog engine - emails each comment to me before it is posted, even the spam. I normally do not reply, since I make my comments in the post itself or a follow-up post. I view comments as a place for readers themselves to interact, if they wish, rather than a debate forum between readers and me.

Thanks for both reading and commenting.
Why I don't expect...  

Rational economic solutions here or elsewhere in the globe any time soon. Simply put, we all think we are smarter than economists.

At a recent big pow-wow of economists (I'll bet that was a wild affair!), papers were presented which stunned the assembled experts, and also sobered them as to their effect on public thinking about matters economic. 

Consider this chart:

 
ECONOMISTS love to argue. Indeed, since the crisis, it has often seemed they cannot agree on anything, and especially not on important matters like how best to boost a sickly economy or when to trim government borrowing. “Schlock economics” was the judgment bestowed by Robert Lucas, a Nobel prizewinner, on the stimulus proposals of Christina Romer, then Barack Obama’s chief economic adviser. Another Nobel laureate, Paul Krugman, labelled a rival view of business cycles “Phlogiston economics”, a reference to a debunked 17th-century theory of chemistry. More soft-spoken economists worry the bickering may carry a reputational cost: the public may simply conclude that solid, fact-based conclusions are beyond economists’ reach.
Such concerns were discussed (politely) at the latest annual meetings of the American Economic Association. Dismal scientists throng together each year (this time in not-so-dismal San Diego) to gossip, test the job market and hear presentations on hundreds of new academic papers. Among them were a handful focused on economists’ image problems. They suggest that economists, in fact, agree on quite a lot but that the public is resolutely unimpressed when they do. [More and chart source]
I think there are several things going on here. First, is a resurgence in anti-intellectualism as our education system slowly worsens, especially in non-STEM areas. Economics is not considered a "fact-based" discipline like math or engineering. In fact, there may be growing contempt for economic thinkers as elites far distant from the real world, which we laymen understand intimately, of course.
Economists might conclude from this that they just need to shout their views more loudly. But communication is only part of the problem. Ms Sapienza and Mr Zingales note that when Americans are told what economists believe before answering a question, their view scarcely budges. Told that economists favoured a carbon tax, the share of the public supporting the tax rose only marginally, from 23% to 26%. The public actually grew more confident in its ability to pick stocks successfully after learning that economists think it is close to impossible. Americans seem to believe that economists operate in a fact-free environment, a bit like Buddhists, commented Robert Hall of Stanford University. [Same]
Interestingly, one response from economists seems eerily familiar: we need to tell our story.
But what do non-economists know about that? They don't go to econ conferences or read econ papers. Most of all, they just see what we write in the press. Now, there's a school of thought that econ's big shame is macroeconomics - that people see us disagreeing about whether to ease monetary policy or tighten, whether to spend on stimulus or tighten our belts with austerity, and think "Man, these economist guys just don't know anything." I do think there's a bit of that going on. But I think that there's another issue that has done far more to hurt economists' standing with the public. An issue on which economists, for once, have extreme consensus rather than disagreement. And on which that consensus is nearly the opposite of what almost every non-economist believes to be the nature of the world.

Trade, of course. [There follows an explanation of how badly the public misunderstands the importance of free trade and other good stuff]
For my part, I think we have for the most part moved beyond economic systems that can be grasped intuitively. Nobody really understands to this day how to manage CDS risks, for example. [I'll post later about an economic problem facing corn farmers that made my brain hurt, and defies easy explanation].

In the face of such complex interconnected and high-speed economic apparatus, many non-economists try to work by analog or metaphor: "Well, the government is just like a business. Or a household." These comparisons are demonstrably misleading, but prevail anyway, like "guns saving lives."
 
Such mental shortcuts are leading us far astray, I fear, especially the misunderstandings in macroeconomics due to such reductio ad absurdum to something we think we do grasp.

There is also the problem of solutions from an untrusted professions that must be enacted by an even less trusted government.
The public doesn't really trust economists and it really doesn't trust the government to execute policy in optimal fashion. Maybe it's possible to redistribute the revenues from a carbon tax in a way that protects the poor and leaves most Americans at least as well off as they were before, but who actually thinks Washington can manage it? Or who, for that matter, trusts that the government will provide a safety net and public investment sufficient to ensure that open trade is as welfare enhancing as economists reckon it ought to be?
The messiness of public policy-making is an extraordinarily difficult thing to include in a simple model of trade, or labour markets, or the externalities from pollution. But if economists want to be taken more seriously by the public (assuming that government isn't about to start behaving like an optimising social planner with complete information, which seems a safe bet) then they need to do more to figure out which policies are most robust to governmental imperfections and when it is appropriate to talk about second- and third-best alternatives to a politically impossible ideal. [More]
As Otto Von Bismarck pointed out, "Politics is the art of the possible." Increasingly, I fear what is possible politically is so far from effective economically, it may be worse than nothing at all.

The overall result is double-edged. Anti-expert bias seems to me to be growing. It at least makes public policy decisions a teeny bit more predictable (forget logic, check the polls). It also suggests there could be whopping returns to actions based on sound economic thinking when the rest of the competition is doing the opposite.

Such going against popular sentiment is not easy for our brains, however.  We really want to be part of the herd. Only strenuous effort to constantly improve our understanding and place bets carefully will allow this advantage to realism to reach fruition.

Final note: Notice the top line on the first graph about stock prices. Now, answer this question: What is the most popular segment of US Farm Report? 

Wednesday, January 09, 2013

Who's the umpire, here?...  

The news this morning:
Today marks a milestone in recent U.S. tornado history that we like: the longest stretch of days without a tornado death.
January 9, 2012 marks a milestone in recent U.S. tornado history that we like: the longest stretch of days without a tornado death. It will go down in recorded history as the longest streak with no tornado deaths: 197 days.  [More]
But it only seems like last month when...
The tornadoes on Christmas Day marked an end-of-year rally in the number of twisters to strike the U.S., and ended the third-longest streak of days between deadly tornadoes, at 165. After a record tornado season in 2011, when 1,692 tornadoes left 553 dead and thousands more injured, 2012 has set records for the fewest tornadoes, with just 886 observed through Nov. 30. The month of July 2012, for example, set a record for the fewest tornadoes on record for that month since modern records began in 1954. [More
Huh?

Tuesday, January 08, 2013

How hot was it?...  

 By now you've heard about the US temperature record in 2012.  My favorite graph:






[Source]

Meanwhile, Down Under it's been so hot, they are adding new colors to the maps.
Australia's "dome of heat" has become so intense that the temperatures are rising off the charts – literally.
"The air mass over the inland is still heating up - it hasn't peaked"
The Bureau of Meteorology's interactive weather forecasting chart has added new colours – deep purple and pink – to extend its previous temperature range that had been capped at 50 degrees.


It's hard to believe after all the stories Dad told about '34 and '36, I've been through two hotter years. Of course, a brutal heat wave in July is one thing - 80's in March and December is quite another.
What if the unthinkable happens?...  

As you plan for 2013 what are some of the things not on popular radar? Here's my list:

Housing recovers - sales, prices, construction, jobs - the whole industry bounces back sharply. It may not be as unlikely as we have been thinking.

[Click to enlarge]
Months of supply declined to 4.8 months in November. This is the lowest level based on months-of-supply since September 2005.
Whenever I talk with real estate agents, I ask why they think inventory is so low. A common answer is that people don't want to sell at the bottom. In a market with falling prices, sellers rush to list their homes, and inventory increases. But if sellers think prices have bottomed, then they believe they can be patient, and inventory declines. Another reason is that many homeowners are "underwater" on their mortgage and can't sell.

Note: the Mortgage Debt Relief Act of 2007 was extended for another year. This means homeowners can sell their homes "short" (for less than they owe if the lender approves) and they don't have to pay taxes on the debt forgiveness. This will keep the short sale market active in 2013.

If prices increase enough then some of the potential sellers will come off the fence, and some of these underwater homeowners will be able to sell. It might be enough for inventory to bottom in 2013.

Right now my guess is active inventory will bottom in 2013, probably in January. At the least, the rate of year-over-year inventory decline will slow sharply.  It will be very interesting to see how much inventory comes on the market during the spring selling season! [More]
The deficit narrows sharply, accelerating current tends.


[Same drill]
My guess is the deficit will decline to around 5.5% of GDP this year. If there is no change in policy, I expect the deficit to continue to decline over the next few years.
However, later this decade, the deficit will probably start to increase again, mostly due to rising health care expenditures. This is the long term issue, and health care spending needs to be addressed to put the debt on a sustainable path long term.

The key points are: the cyclical deficit will slowly decline, and there is a long term issue, mostly related to health care costs that we need to start to address in the next few years.

We'd be in better shape without the structural deficit and if we had avoided the great recession (I did my best to alert policymakers in 2005).   But that is water over the dam.  The bottom line is this is all very solvable. [More]
The economy is actually stronger than we think, meaning a seemingly brutal package of budget cuts won't totally stall growth. Not saying it would be a good idea, but less catastrophic than current opinion. So if Republicans ever do take the plunge and actually specify something to cut, getting their way won't be the end of the world, IMHO.
The debt limit needing to be hiked at the end of February—now, that’s a crisis. Republicans believe that the public is currently on their side. On Friday, John Boehner showed House Republicans a poll from the Winston Group, testing their messaging and positioning on the debt limit. The pollster had asked voters whether “any increase in the nation’s debt limit must be accompanied by spending cuts and reforms of a greater amount,” basically describing the “Boehner rule” that had governed 2011’s debt talks. Seventy-two percent of voters agreed with the “rule.” Now that it was decoupled from popular policies, like higher taxes on the rich and more funding for entitlements, it was winnable.

If you dug into the poll, the results were much more ominous for Republicans. The Winston Group asked its subjects about a few programs that could theoretically be slashed. There were seven possibilities: Reducing government programs “for people like you,” cutting defense spending, means-testing Social Security, raising the Medicare retirement age, raising taxes, ending charitable tax deductions, and ending the mortgage deduction. Only one of these—means-testing Social Security—won more support (61 percent) than opposition (35 percent). The tax ideas were loathed by an overall 2-1 margin; the entitlement ideas were opposed by a narrower margin.
When you talk to House Republicans, the people with the most leverage in the coming faux crisis, they’re not sure what to do with this. They worry about the “message.” In the “fiscal cliff” talks, they felt like they were made to look unreasonable. Whenever they propose a specific entitlement cut, they’re pilloried. This was one reason why the Republican leaders’ Dec. 3 response to “cliff” negotiations, a three-page open letter, suggested “more than $900 billion in mandatory spending [cuts]” without specifying what might be cut. [More]

We could avoid default and enact an array of significant cuts and tax reform. OK - now you're just LOL, but should this occur many are totally unprepared. Agriculture would be a super-mucho-prime target for such cuts, especially now budget hawks smell blood from a wounded quarry.
With the new Congress opening Thursday, they'll have to start the farm bill process over again, most likely with even less money for agriculture programs this year and the recognition that farm interests have lost some of the political clout they once held.
"I think there's a lot of hurt feelings, that all of this time and energy was put into it and you've got nothing to show for it," said Roger Johnson, president of the National Farmers Union.
Senate Agriculture Committee Chairwoman Debbie Stabenow, D-Mich., said it even more bluntly on the Senate floor just after she learned that the bare-bones extension would be part of the fiscal cliff deal.
"There is no way to explain this," she said angrily as the deal came together New Year's Eve. "None. There is absolutely no way to explain this other than agriculture is just not a priority." [More]
An even worse corn crop. I don't think this, but NOBODY is talking about even the remote chance of a yield below last year.

China puts it into overdrive. Already the giant players seems to have sidestepped its slowdown, and if their middle class keeps growing demand, those hysterically optimistic economic forecasts of just a few years ago will be dusted off and recycled. Early signs are popping up.
Steel stocks have enjoyed quite a Santa Claus rally, thanks to a country that doesn't even celebrate Christmas. China is the world's biggest steel consumer, and recently improving industrial production, home sales, and electricity-generation there have swiftly lifted local stocks 16% in the past month -- and propelled global steel stocks to an 18% gain. [More]

The pattern is obvious here: I think we may be hampered by undue pessimism about economic possibilities.  Much of this comes from apocalyptic debt rhetoric (28.7 gazillion dollars for every man, woman and dog in America!!!). Some may come from intuitive uneasiness with economic immobility - too few ladders that hard work and diligence will allow you to scale to better lifestyles.

But most of it, I think is the age-old fear of being seen as foolishly ignorant of the dangers facing us.
Luckily being foolish is now part of my senior-citizen job description.
 

 

Monday, January 07, 2013

Timesuck Warning!!!...  

 What the hey - it's not like you're doing anything important. 

*Be sure to head to the actual tumblr - Lousy Book Covers - for the devastating remarks.

My faves so far:







*Seriously, I haven't seen one-liners like this since MST3K!
Junkbox, Episode XIII¬™...  

Not enough for deep thinking.

Sunday, January 06, 2013

Predicting our past...  

There is a curious trick our mind plays on us when we think about who we are now and who we might become.
“Middle-aged people — like me — often look back on our teenage selves with some mixture of amusement and chagrin,” said one of the authors, Daniel T. Gilbert, a psychologist at Harvard. “What we never seem to realize is that our future selves will look back and think the very same thing about us. At every age we think we’re having the last laugh, and at every age we’re wrong.”
Other psychologists said they were intrigued by the findings, published Thursday in the journal Science, and were impressed with the amount of supporting evidence. Participants were asked about their personality traits and preferences — their favorite foods, vacations, hobbies and bands — in years past and present, and then asked to make predictions for the future. Not surprisingly, the younger people in the study reported more change in the previous decade than did the older respondents.
But when asked to predict what their personalities and tastes would be like in 10 years, people of all ages consistently played down the potential changes ahead.
Thus, the typical 20-year-old woman’s predictions for her next decade were not nearly as radical as the typical 30-year-old woman’s recollection of how much she had changed in her 20s. This sort of discrepancy persisted among respondents all the way into their 60s.
And the discrepancy did not seem to be because of faulty memories, because the personality changes recalled by people jibed quite well with independent research charting how personality traits shift with age. People seemed to be much better at recalling their former selves than at imagining how much they would change in the future.
Why? Dr. Gilbert and his collaborators, Jordi Quoidbach of Harvard and Timothy D. Wilson of the University of Virginia, had a few theories, starting with the well-documented tendency of people to overestimate their own wonderfulness.
“Believing that we just reached the peak of our personal evolution makes us feel good,” Dr. Quoidbach said. “The ‘I wish that I knew then what I know now’ experience might give us a sense of satisfaction and meaning, whereas realizing how transient our preferences and values are might lead us to doubt every decision and generate anxiety.” [More]
Am I the only person who finds the idea this is as good as I'm going to be depressing? Actually, I spend a lot of time thinking how much worse I am than I used to be, which is my excuse for poor predictions about who I will be in the future.

Saturday, January 05, 2013

Science for the goose...   

Is science for the gander. In his anti-GM recantation, a noted environmentalist uses a logical process that could work for many farmers.
This was also explicitly an anti-science movement. We employed a lot of imagery about scientists in their labs cackling demonically as they tinkered with the very building blocks of life. Hence the Frankenstein food tag – this absolutely was about deep-seated fears of scientific powers being used secretly for unnatural ends. What we didn’t realise at the time was that the real Frankenstein’s monster was not GM technology, but our reaction against it.

For me this anti-science environmentalism became increasingly inconsistent with my pro-science environmentalism with regard to climate change. I published my first book on global warming in 2004, and I was determined to make it scientifically credible rather than just a collection of anecdotes.

So I had to back up the story of my trip to Alaska with satellite data on sea ice, and I had to justify my pictures of disappearing glaciers in the Andes with long-term records of mass balance of mountain glaciers. That meant I had to learn how to read scientific papers, understand basic statistics and become literate in very different fields from oceanography to paleoclimate, none of which my degree in politics and modern history helped me with a great deal.

I found myself arguing constantly with people who I considered to be incorrigibly anti-science, because they wouldn’t listen to the climatologists and denied the scientific reality of climate change. So I lectured them about the value of peer-review, about the importance of scientific consensus and how the only facts that mattered were the ones published in the most distinguished scholarly journals.

My second climate book, Six Degrees, was so sciency that it even won the Royal Society science books prize, and climate scientists I had become friendly with would joke that I knew more about the subject than them. And yet, incredibly, at this time in 2008 I was still penning screeds in the Guardian attacking the science of GM – even though I had done no academic research on the topic, and had a pretty limited personal understanding. I don’t think I’d ever read a peer-reviewed paper on biotechnology or plant science even at this late stage.

Obviously this contradiction was untenable. What really threw me were some of the comments underneath my final anti-GM Guardian article. In particular one critic said to me: so you’re opposed to GM on the basis that it is marketed by big corporations. Are you also opposed to the wheel because because it is marketed by the big auto companies?

So I did some reading. And I discovered that one by one my cherished beliefs about GM turned out to be little more than green urban myths. [More] [My emphasis]
Just as he realized the same scientific rigor he use to defend anthropogenic global warming demonstrated the safety and efficacy of GMO's, clearly the reverse is true. Either peer-review, valid sampling, error-correction, and continual refinement of conclusions from new data are a good way to understand the world or they are not useful in any argument.

Curiously, the consensus on climate change is much better documented than GMO's. And which do farmers embrace?

Friday, January 04, 2013

Junkbox, Episode XIII∮...  

Happy New Year! Let's get those accounting books closed out!
Thanks for the comments, especially about Africa.  I don't feel my response would add much until I get back.

Tuesday, January 01, 2013

But wait, there's more!...  

Farmers like me just got a second batch of Christmas presents. They may not be very good for us, but like all the candy, cookies, etc of the last few days, it is hard not to smile.

Assuming the House passes the fiscal cliff compromise today, grain producers can only fall into the Big Winner category, if winning means paying as little to the government and getting as much as possible.

Vanna - show them what they've won:
  • The Estate Tax fix is about as good as could have been hoped. The exemption was left at $5M per person, although the rate rises to 40%. Very few won't be able to ease around that burden. The big sleeper bonus is retention of the basis step-up.
  • Taxes go up on households over $450,000. Thanks to skyrocketing input costs (heh), that may not affect very many of us either. AMT is fixed, which more of us might be exposed to.
  • Payroll tax goes back to where it should be. That was pretty well baked in the cake. Capital gains gores up for those over $450K, along with the new ACA tax on investment income of 3.8%. Not great news but, not terrible either.
  • Another year of depreciation goodies (tax extenders). (Memo to self: get that last big tile job done!)
But here is the most unbelievable - and undeserved - bonanza: another round of deficiency payments!

In summary, I was wrong and right in my predictions. We technically did go over the cliff, but Congress apparently is moving the cliff. 


Your inner conservative caveman...  

It used to be standard copy to poke fun at food faddists, especially for those of us in agriculture. But the curious trend is such food belief systems are not just growing by adding adherents, but multiplying to offer diets/lifestyles to match up with your other worldviews, including politics.

While we automatically look to the left when vegans are discussed, a new approach on the right is every bit as unique: the Paleo-libertarian conjunction.
Paleo’s main proponents aren’t particularly partisan. Mark Sisson, who keeps the Paleo blog MarksDailyApple.com, says on his page that “people’s health and personal enjoyment of life matter more to me than politics and the hot air from the latest pundits.” But Libertarians have embraced the caveman set as kindred spirits, and it would appear that the caveman lifestyle and anti-state, laissez-faire tendencies often come hand in hand. Paleo-Libertarian logic maintains that the U.S. government is to blame for obesity, heart disease, diabetes, and dozens of other ills by virtue of telling us to eat the state-subsidized fruits of Big Agriculture’s labor. It says the USDA’s nutrition guidelines were created with the food lobby, not the human body, in mind.
These are by no means implausible or even particularly radical claims. Some socialists and environmentalists have come to the same conclusions, at least nutritionally speaking. Still, this admittedly healthy distrust of government — not to mention the adoption of a diet that is the complete antithesis of the USDA’s recommendations — is innately libertarian. Gary Taubes, a science writer best known for his anti-sugar crusades, is widely cited in Paleo circles. When Reason magazine asked him why so many libertarians are drawn towards Paleo, Taubes responded that perhaps they simply “like the idea that government agencies and federal agencies can be just dead wrong.”
Some true believers take the “natural” argument even further by asserting that the centralized state, and all of its freedom-thwarting attributes, are a consequence of a grain-based agricultural society. The low-fi libertarian website LewRockwell.com features pages upon pages of articles about the Paleo lifestyle written in a rugged, conspiratorial tone. “It came to me like a revelation on my morning commute: Bread is a tool of the state,” writes one commentator. “The ‘staff of life,’ the very symbol of food itself, has become to me a symbol of the domestication of humankind. It has also suggested one more way I can work to strengthen the individual and weaken the state.” [More]
It is the growth in food-politics crossovers that convinces me it will have more impact on our food system and the politics of agriculture than farmers currently imagine. Since it is a splintering of demand for food products and production methods, the market signals will be weak and confusing. Our large-scale approach to food will struggle, I would think, to address consumer desires - at least the wealthiest and most lucrative markets.

At first, I thought it would be largely confined to meats and ripple back to me through corn demand, but the growing grain/starch-avoidance diets, to cite one example, also present market questions. Moreover these divisions will occur within political camps, not just across them.

Of course, these market forces are still quite small, and frankly, I think production issues like climate change will overshadow their influence on markets in the near future. Still, I have some background suspiscions that market opportunities are going unexploited.