Incoming

2012-02-01T10:01:00.001-06:00

File under "Holy S***!"...

Not being a gun enthusiast, this item blew me away.

Earlier this month, a British Army sniper Corporal Craig Harrison broke the world’s record for superaccurate shooting, taking out a pair of Taliban machine gunners from a mile-and-a-half away. It was a one-in-a-million feat — one performed under “perfect” conditions, Harrison says: “no wind, mild weather, clear visibility.” [More]

But wait, there's more.

The U.S. military has been after self-guided bullets for years. Now, government researchers have finally made it happen: a bullet that can navigate itself a full mile before successfully nailing its target.
The breakthrough comes courtesy of engineers at the government’s Sandia National Laboratories. They’ve successfully tested a prototype of the bullet at distances up to 2,000 meters — more than a mile. The photo above is an actual image taken during one of those tests. A light-emitting diode was attached to the bullet, showing the amazing pathway that the munition made through the night sky. [More]

Between stuff like this and drones, is there a good argument against being paranoid?

2012-02-01T08:22:00.000-06:00

Junkbox, Episode IDUNNO...

Heading to the record-breaking TP Seminar to tape the show today.

I take 'em when I can find 'em.
Helpful global temperature chart. New study, same conclusion.
Another step toward the HAL 2000 car.
The Indian wheat yield problem
Wild mustard could get a little wilder
Is wind dying?
I need to work "sustainable" into this post, I guess.

2012-01-30T17:26:00.000-06:00

I would be surprised...

If officials find much of the MF Global missing $$. So would others.

Federal officials looking for an estimated $1.2 billion missing from customers of MF Global Holdings Ltd. feel more and more that a lot of it may never be located, according to a report citing sources familiar with the probe.
What's been learned so far suggests that a good deal of the money may have “vaporized” because of scrambling in trading in the week before MF Global filed for bankruptcy protection Oct. 31, the Wall Street Journal reported, citing “a person close to the investigation.”

Many now think specific MF Global employees used money from a customer account meant to be walled off and used it to cover collateral requirements or to unfreeze assets of banks and others as they became more worried about how exposed they were to MF Global, the Journal reported. [More]

The TP seminar is underway, and this will be one of my questions to the analysts at the taping.
See their answers this weekend.

2012-01-29T18:53:00.000-06:00

A pain in the back...

I have friends and family who suffer from back pain, and Jonah Lehrer clarifies what we know in a brilliant article about the boundaries of our understanding of cause-and-effect.

Today, back pain is an epidemic. There's an 80 per cent chancethat, at some point in your life, you'll suffer from it. There areso many moving parts in the back that doctors have always haddifficulty figuring out what, exactly, was causing a person's pain.As a result, patients were typically sent home with a prescriptionfor bed rest. This treatment was very effective. Even when nothingwas done to the lower back, about 90 per cent of people with backpain got better within six weeks. The body healed itself, theinflammation subsided, the nerve relaxed.
For years, this hands-off approach remained the standard medicaltreatment. That all changed, however, with the introduction ofmagnetic-resonance imaging in the late 70s. These diagnosticmachines use powerful magnets to generate stunningly detailedimages of the body's interior. Within a few years, the MRI machine became a crucial diagnostic tool. The view affordedby MRI led to a new causal story: back pain was the result ofabnormalities in the spinal discs, those supple buffers between thevertebrae. The MRIs certainly supplied bleak evidence: back painwas strongly correlated with seriously degenerated discs, whichwere in turn thought to cause inflammation of the local nerves.Consequently, doctors began administering epidurals to lessen thepain, and if it persisted they would surgically remove the damageddisc tissue.
But the vivid images were misleading. It turns out that discabnormalities are typically not the cause of chronic back pain. Thepresence of such abnormalities is just as likely to be correlatedwith the absence of back problems, as a 1994 study published inTheNew England Journal of Medicine showed. The researchersimaged the spinal regions of 98 people with no back pain.Two-thirds of normal patients exhibited "serious problems" such asbulging or protruding tissue. In 38 per cent of these patients, theMRI revealed multiple damaged discs. But none of these people wasin pain. The study concluded that, in most cases, "the discovery ofa bulge or protrusion on an MRI scan in a patient with low backpain may frequently be coincidental".
This is not the way things are supposed to work. We assume thatmore information will make it easier to find the cause, that seeingthe soft tissue of the back will reveal the source of the pain, orat least some useful correlations. Unfortunately, that oftendoesn't happen. Our habits of visual conclusion-jumping take over.All those extra details end up confusing us; the more we know, theless we seem to understand. The only solution for this mental flawis to ignore a wealth of facts, even when the facts seem relevant.This is what's happening with the treatment of back pain: doctorsare now encouraged not to order MRIs when making diagnoses.
The failure of torectrapib has not ended the development of newcholesterol medications -- the potential market is simply too huge.Although the compound is a sobering reminder that our causalbeliefs are defined by their oversimplifications, that even thebest-understood systems are still full of surprises, scientistscontinue to search for the magic pill that will make cardiovasculardisease disappear. Ironically, the latest hyped treatment, a drugdeveloped by Merck called anacetrapib, inhibits the exact sameprotein as did torcetrapib.
The initial results of the clinical trial, made public inNovember 2010, look promising. Unlike its chemical cousin, thiscompound doesn't appear to raise systolic blood pressure or causeheart attacks. (A larger clinical trial is under way to see whetherthe drug saves lives.) Nobody can conclusively explain why thesetwo closely related compounds trigger such different outcomes orwhy, according to a 2010 analysis, high HDL levels might actuallybe dangerous for some people. We know so much about the cholesterolpathway, but we never seem to know what matters.
Chronic back pain also remains a mystery. Doctors have longassumed that there's a valid correlation between pain and physicalartefacts -- a herniated disc, a sheared muscle, a pinched nerve --yet there's a growing body of evidence suggesting the role ofseemingly unrelated factors. A recent study published in thejournal Spine concluded that minor physical trauma hadvirtually no relationship with disabling pain. Instead, theresearchers found that a small subset of "nonspinal factors", suchas depression and smoking, were most closely associated withepisodes of pain. We keep trying to fix the back, but perhaps theback isn't what needs fixing. Perhaps we're searching for causes inthe wrong place.
The same confusion afflicts so many of our most advanced causalstories. Hormone-replacement therapy was supposed to reducethe risk of heart attack in postmenopausal women -- oestrogenprevents inflammation in blood vessels -- but a series of recentclinical trials found that it did the opposite, at least amongolder women. (Oestrogen therapy was also supposed to ward offAlzheimer's, but that doesn't seem to work, either.) We were toldthat vitamin D supplements prevented bone loss in people withmultiple sclerosis and that vitamin E supplements reducedcardiovascular disease. Neither turns out to be true.
Given the increasing difficulty of identifying and treating thecauses of illness, it's not surprising that some companies haveresponded by abandoning research. Most recently, two giant firms,AstraZeneca and GlaxoSmithKline, announced that they were scalingback research into the brain. The organ is too complicated, toofull of networks we don't comprehend. We live in a world in whicheverything is knotted together, an impregnable tangle of causes andeffects. Even when a system is dissected into its basic parts,those parts are still influenced by a whirligig of forces we can'tunderstand or haven't considered or don't think matter.
This doesn't mean that nothing can be known or that every causalstory is problematic. Some explanations work better than others,which is why, thanks largely to improvements in public health, theaverage lifespan in the developed world continues to increase.Although our reliance on statistical correlations has strictconstraints -- which limit modern research -- those correlationshave managed to identify many essential risk factors, such assmoking and poor diet.
And yet, we must never forget that our causal beliefs aredefined by their limitations. For too long, we've pretended thatthe old problem of causality can be cured by our shiny newknowledge. If only we devote more resources to research or dissectthe system at a more fundamental level or search for ever moresubtle correlations, we can discover how it all works. But a causeis not a fact, and it never will be; the things we can see willalways be bracketed by what we cannot. And this is why, even whenwe know everything about everything, we'll still be telling storiesabout why it happened. It's mystery all the way down. [More][Apologies for a very liberal excerpt, but the whole piece is worth the time, albeint mildly discouraging]

I have been puzzling for some time about the anti-scientific mood in much of America, or at least a "cafeteria" approach to science and technology. We choose when adherence to the scientific method is applicable. For farmers, it displays as staunch defense GMO's with arguments they deny for climate change. This list includes vaccinations, environmental cancer causes, flood control, meat consumption, and other hot-button issues.

I've written about our profession's approach to science before. In agriculture, we justify it by carefully annotating some science as "sound". Curously, sound science is always research that validates our position.

Sound science doesn’t just line up on one side of an argument either.Anyone who has been to a congressional hearing or in major litigation canwitness a parade of sound scientists contradict one another – for a hefty fee,of course.
When EU customers won’t buy GMO corn for obviously trumped up healthissues, I really doubt that a mountain of sound science will suddenly changetheir minds. It certainly hasn’t for US producers. Sound science has quietlypointed out that market advisors are virtually ineffective – although betterthan farmers themselves – compared to random choice, but producers stillfork out hefty fees and mumble mantras of technical mumbo-jumbo. Soundscience points out that wind energy is a non-starter because of the backupgenerators required, but it looks like such a great idea and if we can get asubsidy the science won’t really matter.
Sound science would also demand that no tractor be operated without aclosed cab (interestingly, something our “non-science” EU cousins believeand we don’t) or by operators over 65.

What might be happening is the clash between how much cultural change we can absorb and the pace of scientific progress. But watching the anger of the Tea Party and the mystical surreality of modern spirituality on the other side, it appears neither wing has much respect for plodding efforts by scientists to push back the boundaries of ignorance.

Meanwhile, we want our phones to work and our cars to drive themselves and life to become easier, faster and cheaper every day. My observation is electronic advancement is far more likely to be embraced than medical or geophysical. One is too close to home, the other has too many long time horizons. In those areas we reserve the right to manufacture our own belief systems, even though I think it is those seemingly disassociated technologies that are wrenching our intuitive understanding of the world the most.

My concern is that making the scientific method a handmaiden to our particular agenda renders it worthless. Our minds will have to work overtime to rationalize mysticism here and physics next door. Most of all, it appears the failings of our education system in STEM courses makes the option of "going with the gut" or "feelings" a choice that cannot be criticized even with it's dismal results.

Religion is caught in the divergence from seeing the world dispassionately and empirically. Hence the rise of atheism or at least a "none-of-the-above" spirituality that is becoming the refuge for those seeking meaning and forced to choose between reason and faith.

We've struggled with this rift before, of course, but we now have so much power (ironically thanks to science) to change our world and lives, that the philosophical nature of the debate is dwarfed by the scale of possible consequences.

2012-01-26T08:34:00.000-06:00

The Phipps Grain Bin Rally...

Oh yeah, I'm officially taking credit for this corn rally. The Argentines arranged their drought just to have one last cheap shot at me.

As I have mentioned before (at least in speeches) I have built two of the world's most expensive free grain bins under the Cargill Grain Bin Program. This year I thought I was home free. My target price was $6.34 on the first trading close in February. If Mar corn closes below that, my 41,000 bushels no longer have to be delivered.

Once - just one - I thought I was going to win one. (This is third and final year of the contract) If we coulda just stayed below the trigger AND THEN HAD A BIG RALLY, I could have matched a friend of mine whose bin experience was just that: his trigger was a half-cent higher than the close, and he went on to sell the contents for zillions. He mentions it often...

So as we motor to $7 please wave to me in the rearview mirror.

[Just in case you are new or confused, this is all very tongue-in-cheek. I would never have built the bins without the program, they have already paid for themselves, and railing at higher markets because you voluntarily sold earlier is nonsense.]

It just doesn't feel like a win.

If only NASS could issue a report between now and then...

2012-01-25T17:28:00.002-06:00

Junkbox, Episode XMEN...

I hate moving to a new computer, so I was blown away by the "Migration Assistant" on my Apple iMacs. The computer asked me which computer I was moving from when it found my network, told me it would take about 5.5 hours, and started the move.

About 6 hours later, I essentially had two identical computers. The new 27" screen adds mostly width, but is still a welcome addition for worsening eyes. The speed is noticeably zippier, and I've eliminated some annoying freezes.

Best of all, I get to play Santa Claus to one of nieces/nephews/friends and hand off my old Mac.

Some stuff I've found:

It's a big fracking deal. The magnitude of this energy boom is just sinking in. Especially in ND.
Uneasy lie the heads that wear the expensive hats
Where the coal trains will be heading
Silicon Valley may be choking its own recovery
Getting workers to rural boom towns. Not easy.
The man who starved his country

2012-01-24T07:38:00.003-06:00

This is the competition...

In an amazing and slightly horrifying article, the NYT details why the iPhone is made in China. And it's not just low wages - it's simply incredible organization and speed. The most jaw-dropping revelations:

Apple executives say that going overseas, at this point, is their only option. One former executive described how the company relied upon a Chinese factory to revamp iPhone manufacturing just weeks before the device was due on shelves. Apple had redesigned the iPhone’s screen at the last minute, forcing an assembly line overhaul. New screens began arriving at the plant near midnight.
A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.
“The speed and flexibility is breathtaking,” the executive said. “There’s no American plant that can match that.”
Similar stories could be told about almost any electronics company — and outsourcing has also become common in hundreds of industries, including accounting, legal services, banking, auto manufacturing and pharmaceuticals.
...
The company disputed some details of the former Apple executive’s account, and wrote that a midnight shift, such as the one described, was impossible “because we have strict regulations regarding the working hours of our employees based on their designated shifts, and every employee has computerized timecards that would bar them from working at any facility at a time outside of their approved shift.” The company said that all shifts began at either 7 a.m. or 7 p.m., and that employees receive at least 12 hours’ notice of any schedule changes.
Foxconn employees, in interviews, have challenged those assertions.
Another critical advantage for Apple was that China provided engineers at a scale the United States could not match. Apple’s executives had estimated that about 8,700 industrial engineers were needed to oversee and guide the 200,000 assembly-line workers eventually involved in manufacturing iPhones. The company’s analysts had forecast it would take as long as nine months to find that many qualified engineers in the United States.
In China, it took 15 days. [More of what should be mandatory reading to understand globalization]

Just like the old basketball saw, "You can't teach height", we still struggle in the US to grasp what millions of motivated low-wage workers can allow in terms of flexibility and market response. As manufacturing increasingly depends on shorter time horizons and being first to market, the ability to move literally hordes of people around to fit the task is a dominating advantage.

But just as we have centers for specific business activities (Silicon Valley, Motor City, Wall Street) it might be that we are moving to global focal points for manufacturing, finance, technology, etc. For us in agriculture we need ot work to make sure we are the leading location for agriculture.

I'm not sure that is our goal right now, and the sacrifices (less subsides for production, more for research, education, for example) needed to make it happen aren't being asked or made.

Update: For a refreshingly upbeat case that clearly articulates the other side of the story for the US, read this gem by Dan Dresner.

2012-01-22T08:40:00.003-06:00

Probably not to get...

US government grants, anyway. If there is a non-scientific reason why the Chinese climatological community is sounding the alarm about global warming, I haven't seen it. The usual accusations applied to our own scientists don't seem to work, however.

Anyway, the latest Chinese assessment of the impact of climate change sounds familiar, if not more urgent.

Both drought and flooding are already major issues in China. The report predicts an increasing concentration of rain during the summer and autumn months, overwhelming rivers in the south; and long dry winters, which will be especially crippling for those living in China’s parched northwestern provinces.
Rising sea levels will also make coastal areas more vulnerable to flooding from typhoons and flood tides, defenses for which are currently “inadequate,” says the report. This is of particular concern, as such coastal areas are home to the major cities and Special Economic Zones at the center of China’s rapid industrialization. Shanghai is expected to see an increase of 10 to 15 centimeters in its coastal waters over the next three decades; it has already risen by 11.5 centimeters in the previous three.
With global warming will come changes to the pattern of the seasons and thus the realignment of China’s agricultural map. A warmer, wetter northeast will sustain more rice and other crops, while the cotton-growing region of Xinjiang in the northwest could suffer a decline in agricultural output. [More]

Another article on this report helpfully mentions a little more detail about ag:

Under one scenario of how global warming will affect wateravailability, by 2050 eight of mainland China's 31 provinces andprovincial-status cities could face severe water shortages --meaning less than 500 cubic metres per resident -- and another10 could face less dire chronic shortages.
In low-lying coastal regions, rising seas will press upagainst big cities and export zones that have stood at theforefront of China's industrialisation.
China's efforts to protect vulnerable coastal areas withembankments are inadequate, says the report, noting theirvulnerability to typhoons and flood tides that global warmingcould intensify.
There are sure to be shifts in Chinese crop patterns aswell, says the report. More rice and other crops will probablygrow in the northeast, thanks to warmer weather and possiblymore rain. In the northwest cotton-growing region of Xinjiang,shrinking water availability could lead to a "marked decline inagricultural crop productivity". [More]

I think the steadily growing body of evidence will slowly (as in decades) overcome ideological opposition to the overwhelming scientific consensus here in the US and as we see above, around the globe. It will simply never be acknowledged.

That is an OK outcome, IMHO. It matters less, for example whether farmers stop railing against government or scientific leaders than if they install tile, revise planting dates and change maturities, or even crops. They can even claim alternative reasons such as merely cyclical patterns. But I am doubtful this will be the rule for those who succeed us. This is how public opinion changes now.

It is rebuilt mind by mind.

2012-01-21T17:55:00.002-06:00

A reason to visit Germany...

Way cool.

Almost makes me want to go to Hamburg.

Almost.

[via sullivan]

2012-01-13T18:56:00.001-06:00

As you can see...

From the updated speaking schedule at right, I'm on the road for a while. I'll post when I can and when I learn something interesting.

Speaking of which, what up with the root worm insecticide shortage? Could it be people are doubling down on 17-stacked trait-hybrids or (like us) are planting more "refuge" corn?

As for the reports this week, I'll let time render a verdict.

BTW, Mike Hoffman (the USFR Meteorologist) is beginning to eye the NWS long range forecast of a wet, cold, late spring. Doesn't mean squat now, but I'm not bailing on my sales yet.

2012-01-12T07:27:00.001-06:00

Maybe we don't need to raise taxes...

We could just collect what is owed right now. Bruce Bartlett has the sad story.

[Be sure to click and view full size and read the lower right caption]

Clearly, therefore, one solution to the tax gap is to increase reporting and withholding requirements. However, previous efforts by Congress to do so have been met with huge political resistance. People don’t like the intrusion into their privacy — and the diminution of their opportunities for tax evasion — and businesses don’t like the cost or the alienation of their customers.
In 1982, Congress briefly enacted a withholding requirement for interest income and the outcry was so loud that it was repealed almost immediately.
Conservatives tend to talk about noncompliance as if it were solely a function of tax rates. The higher tax rates are, the greater the incentive for tax evasion; lower tax rates and evasion will decline. Thus tax evasion is yet another excuse to cut taxes.
However, as the I.R.S. data show, noncompliance increased between 2001 and 2006, a period in which a substantial number of tax cuts were enacted. The top rate fell to 35 percent from 39.6 percent, the bottom rate fell to 10 percent from 15 percent and the rate on dividends fell to just 15 percent from a top rate of 39.6 percent. If the conservative model is correct, tax compliance should have increased, since the return to evasion fell substantially.
Of course, another factor in tax compliance is enforcement. Someone who thinks the odds of being caught are close to zero is going to be strongly tempted to cheat no matter how low tax rates are.
Unfortunately, Republicans have been treating the I.R.S. like a political punching bag for years, cutting its personnel and restricting its ability to do its job. The number of I.R.S. employees fell to 84,711 in 2010 from 116,673 in 1992 despite an increase in the population of the United States of 53 million over that period.
Federal revenues are at a historically low level and are a key cause of the federal budget deficit. Sooner or later, taxes will have to be increased. It would be better to minimize that increase by ensuring that taxpayers pay what they owe. It’s unfair to honest taxpayers and undermines tax morale when large numbers of people and businesses don’t pay their taxes. [More]

With a smaller workforce, I suspect the IRS will be targeting the richest hunting ground. And that looks like my ground. Could it be that grain 1099's will finally happen?

The fate of the last 1099 change does not make it seem likely.

2012-01-09T16:32:00.001-06:00

I had hoped...

To have grandchildren earlier. This wasn't the reason, but...

New moms and dads with visions of Ivy League degrees dancing in their heads should be prepared to face a bill of $422,320 in today’s dollars if Junior heads off to one the country’s priciest colleges as a member of the class of 2034.

If college costs keep rising as they have for the last three decades, the inflation-adjusted price of four years of tuition alone will more than double at private colleges and nearly triple at public universities by the time a baby born this year is ready to enroll, an analysis by The Daily shows.

Even after adjusting for inflation, college tuition has increased by an average of 3.5 percent a year at private schools and 4.5 percent a year at public schools, the analysis showed. When room and board are factored in, the total cost of college has gone up by an average of 3.08 percent a year at private schools and 2.96 percent at public schools. [More depressing projections]

I wonder how this would compare to my own education cost and calculated in acres of farmland. If I remember correctly, it was about $6000 total at RHIT (1966-1970). I think land was selling for about $600, so it cost ten acres to educate me.

Pricing land at $12,000/A, today's 4-year private education cost looks like about $160,000 or 13 acres.

These are quick and dirty numbers - just thinking out loud.

2012-01-08T07:33:00.000-06:00

What Bt boost?...

Contra conventional wisdom, new hybrids don't seem to be moving the corn trend line. In fact, there isn't one right now.

This is less unusual than it might seem.

Statistical analysis finds no statistically significant time trend in average U.S. corn yields since 2003. Thus, the increase in consumption of U.S. corn from 10.2 billion bushels to 12.6 billion bushels between the 2003/04 and 2011/12 crop years, has largely been met through an increase in planted acres of 13.3 million (from 78.6 million acres to 91.9 million acres).
It is important to note that it is not uncommon to find no statistically significant trend in U.S. average yield over a 9 year period. Of all 64 9-year periods starting with the 9 years that begin in 1940, less than half had a statistically significant upward trend in corn yields. This may seem surprising since the average annual increase in U.S. average corn yields since 1940 is 2.2% per year. [More]

It is much harder to come up with some sort of composite (rain, heat, delays, etc.) weather graph that shows a trend is weather influence. But my bet it it would not be flat like the above.

There are many of us with a downward 9-year trend since 2003. Those who have had some spectacular crops in the last few years may be misled into thinking the curve always goes up.

At the very least, the assumption of unlimited productivity advances looks a little shaky to me.

2012-01-07T17:08:00.002-06:00

I did not know that...

That famous line from Johnny Carson leapt to mind as I saw this photo showing the shadow of the rings of Saturn. It never dawned on me they would be dense enough to cast shadows. I'm trying to get my head around what it would look like on the surface.

This is a stunning portrait of Saturn taken by the Cassini spacecraft in December. Its beauty and fantastic — in the literal sense of being like a fantasy — cloudscape are so overwhelming you might not even notice the moon Tethys hanging just under the knife-edged rings. To give you an idea of how immense Saturn is, "tiny" Tethys is over a thousand kilometers across. [More]

2012-01-06T17:57:00.000-06:00

I notice they didn't test calls to Dad...

Calling to talk to Mom is good for you.

Wired flags a new study that proves many mothers across the country right: For your own sake, you should call home more often. The research comes from Evolution and Human Behavior. It finds that a phone call to mom provides significant stress relief while instant message conversations won’t quell the nerves.
The conversations happened after research subjects took a stressful test. As subjects spoke (or typed) with their mothers, the researchers measured changes in levels of cortisol (generally linked to stress) and oxytocin (a hormone linked to pleasure). When subjects talked on the phone, cortisol levels dropped and oxytocin went up. But IMing with Mom looked the same as having no contact at all. [More]

I also note the test was for girls calling home.

2012-01-06T17:45:00.000-06:00

First!...

So we decided to mow the lawn today.

I'll start on the pool tomorrow...

Keep an eye on Mike Hoffman* next week on USFR. He's out on a limb about an abrupt dive into deep winter next week, but I'm not so sure (at least for us).

If he's wrong, I'll try not to mention it...

*Seriously, this guy has made me a lot of money when deciding whether to plant or let stuff field dry, etc.

2012-01-04T17:15:00.002-06:00

Junkbox, Episode MMCXII.14159*...

Bonus points for knowing what the decimal digits refer to.

Is this the last great US Map? More importantly, why don't I care?
Organic production struggles with reality. In dairy too.
Go west, young man!" You'll feel better.
Economists and blogs. Economics won't be quite so dismal anymore.
Is MF Global ag's Lehman Bros.?
The BRICs are coming! The BRICs are coming!

2012-01-04T16:18:00.002-06:00

What's wrong with this sentence?...

I read this and blinked:

The U.S. Food and Drug Administration prohibited some unapproved uses of antibiotics in livestock on Wednesday.

Farmers will no longer be able to administer a class of antibiotics called cephalosporins to cattle, pigs, chicken and turkeys in unapproved doses or frequencies, or as a means of preventing disease, the agency said. [More]

I assumed I understood what "unapproved" meant, but maybe not.

That has long been a concern of many public health experts, including the Pew Health Group. Pew said in a press release today that while "the FDA has approved cephalosporins to treat some infections in food animals, the drugs often are administered in ways not specifically approved by the agency."
This "extralabel" use of antibiotics by livestock producers is linked to the emergence of resistant bacteria, or superbugs, that have infected tens of thousands of people, according to David Wallinga, a physician at the Institute for Agriculture and Trade Policy and a member of the Keep Antibiotics Working coalition.
Today, the FDA said the drugs remain critically important for humans, so their use should be restricted only to humans.
The decision to restrict the cephalosporins comes just two weeks after the FDA announced it was trashing a 1977 proposal to remove approvals for two antibiotics, penicillins and tetracyclines, used in livestock and poultry feed.
An association of veterinarians says the new rule on cephalosporins won't have a big impact. They can still use these other antibiotics to keep animals healthy. [More]

How can off-label use not be prohibited?

So, is this just the FDA, saying "We really mean it this time!"?

2012-01-04T07:55:00.000-06:00

In which I learn about capital gains...

Well, color me embarrassed! I got into an argument with TurboTax about some machinery I sold to Aaron as part of the transition on our farm. The stooopid program taxed the sale as ordinary income, instead of the relatively delightful 15% I had planned.

Only capital gains on depreciable property aren't like capital gains on say, shares of stock or farmland.

The income tax consequences of an outright sale can be substantial, as shown in Example 2. For the seller, a large amount of recaptured depreciation and capital gain may arise from the sale, especially if some assets have an adjusted tax basis of zero; that is, they are "depreciated out." Reporting all the income and gain in one tax year may cause some of it to be taxed at a higher marginal rate than the seller usually pays. In addition, most sellers prefer to spread out or postpone tax payments whenever possible. [More]

Which is exactly what TT calculated. All my stuff is depreciated out, thanks to Sec. 179, and all the various bonus depreciation boondoggles of the past few years. And I didn't sell any of it ~~below~~ above original cost.

I guess I can keep working for another few years...(sigh)

Feel free to hoot with derision at my ignorance.

My so-called friends did...

2012-01-03T07:19:00.000-06:00

The trouble with North Dakota...

Is, as we all have realized, it's too close to where North Dakota is. Simply put: Location, location, location.

This recent gem of verification of this hard fact.

Our top export last year was (drum roll, please) FUEL. That's right, citizens, we're importing oil and exporting gasoline/diesel. While much of that is due to consumption decline, the other biggy is the ND problem.

Nevertheless, something real is happening here. What accounts for the new-found U.S. competitiveness? I think a key factor is that abundant new supplies of crude oil from Canada and North Dakota are now coming into the central United States. Between 1987 and 2008, West Texas Intermediate, the benchmark light, sweet crude oil for sale in Cushing, Oklahoma, sold for $1.50/barrel more than Brent, its North Sea counterpart. That differential vanished in 2009-2010, and so far in 2011, WTI has sold at an average price that astonishingly is almost $17/barrel cheaper than Brent. [More]

Since there aren't good ways to get this shale oil to the ports, but there are pipelines from Midwest refineries for fuel, the obvious is happening.

Meanwhile (sigh) I may have been a little too optimistic about shale gas which is currently propelling the energy boom elsewhere.

By the same logic, you can claim to be a multibillionaire, including all your "probable, possible, and speculative resources."

Assuming that the United States continues to use about 24 tcf per annum, then, only an 11-year supply of natural gas is certain. The other 89 years' worth has not yet been shown to exist or to be recoverable.

Even that comparably modest estimate of 11 years’ supply may be optimistic. Those 273 tcf are located in reserves that are undrilled, but are adjacent to drilled tracts where gas has been produced. Due to large lateral differences in the geology of shale plays, production can vary considerably from adjacent wells.

The EIA uses a different methodology to arrive at its resource calculations, offering a range of estimates. In the most optimistic, "high shale resource case," it estimates there are 1,230 tcf in the “estimated unproved technically recoverable resource base.” It also offers several production forecasts through 2035, ranging from 827 tcf in their Reference case, to 423 tcf in their Low case—one-fourth the headline number. In the Low case, which certainly could be correct, the EIA says the United States could once again become a net natural-gas importer by 2035. [More]

I'll keep checking on the estimates, and maybe much of the predicted reserves will be shifted into the solid column, but I should have looked a little harder at where the numbers were coming from. Maybe it was the "infographic misinformation syndrome" that helped me leap to a possible overly rosy outlook.

Now that Obama's dog has won the War on Christmas, or something, it's time to get down to a war that really matters: the war on terrible, lying infographics, which have become endemic in the blogosphere, and constantly threaten to break out into epidemic or even pandemic status.
The reservoir of this disease of erroneous infographics is internet marketers who don't care whether the information in their graphics is right ... just so long as you link it. As a Christmas present to, well, everyone, I'm issuing a plea to bloggers to help stop this plague in its track.
Below the break, a tour of some of the more egregious examples, and some thoughts on why they've become so prevalent.
For those of you who can't sit through all that boring writing, however, I will first deliver my message in--ahem!--a more visual format:

McArdle's identification rules:

If you look at these lovely, lying infographics, you will notice that they tend to have a few things in common:
They are made by random sites without particularly obvious connection to the subject matter. Why is Creditloan.com making an infographic about the hourly workweek?
Those sites, when examined, either have virtually no content at all, or are for things like debt consolidation--industries with low reputation where brand recognition, if it exists at all, is probably mostly negative.
The sources for the data, if they are provided at all, tend to be in very small type at the bottom of the graphic, and instead of easy-to-type names of reports, they provide hard-to-type URLs which basically defeat all but the most determined checkers.
The infographics tend to suggest that SOMETHING TERRIBLE IS HAPPENING IN THE US RIGHT NOW!!! the better to trigger your panic button and get you to spread the bad news BEFORE IT'S TOO LATE! [Same for all above]

It should be obvious the energy business is in the same turmoil as the rest of the global economy, as new demand and precarious economic situations make all sorts of information hard to get and even harder to verify. But either some better minds than mine are investing way too much on a overblown idea of NG reserves or stubborn pessimism will be slowly proven wrong. That said, I no longer assume that richer people are probably smarter people. (And it's not because I think I've gotten smarter)

2012-01-02T07:56:00.001-06:00

So, about the Mayans and 2012...

Great stuff.

On the other hand, if this is THE END, I'm glad I borrowed all that money.

2012-01-02T07:48:00.002-06:00

15 Minutes of ~~Fame~~ Winter...

My snow shovel is rusting out this "winter". This is surprising because it's plastic. But it doesn't look like I'll need it soon.

[Click to embiggen]

[Source]

Accuweather is the longest range forecast I check routinely along with Intellicast, and NWS. The last is fun because we are only 2 miles from IN, and the forecast for Dana, IN next door can often be remarkably different.

Meanwhile we ponder how much we want to tear up our lane hauling corn on unfrozen gravel.

On a side note, I asked some friends if a really warm March, which produced warm, dry soils by say, the 20th would induce them to put seeds in the ground. This would be about 10 days earlier than most of us have traditionally felt comfortable with. All said yes, since their earliest corn had been by far the best the last 4-5 years.

At least one part of our brains are coping with climate change, it seems. Maybe that's the way it will work out - we'll make adaptations all the time we proclaim AGW to be nonsense.

2012-01-02T07:27:00.001-06:00

Still coming inside...

I had wondered if financial turmoil has slowed the flow of fund money into farmland, like it has with commodities, but maybe not. At least one large hedge fund manager is doubling down.

Diggle plans to transfer ownership of his farmland into aholding company, in which outside investors can hold shares, hesaid. Vulpes, which currently manages about $200 million, willown and operate the company. After buying farms in Uruguay andIllinois, as well as a kiwi-and-avocado orchard in New Zealand,he plans to pour money into Africa and eastern Europe as globalfood prices soar.
The value of farmland in the U.S. has probably gained 20percent to 30 percent in the last two years, while Diggle’sinvestments in Uruguay may have risen 50 percent as sheep andcattle prices almost doubled in Latin America this year, he said.
Agriculture would be the “single most interest opportunityover the next 10 to 20 years,” Diggle said.
Vulpes favors investments in metals, energy and food, and“dislikes” government bonds, he said.
“Being long stuff in the ground is going to be a betterplace to be than holding pieces of paper,” Diggle said.
The firm’s Testudo Fund, which is heavily invested inprecious metals and the mining industry, has gained 2.5 percentthis year. The Russian Opportunities Fund has declined about 10percent in the same period. [More]

Of course, this may not signify much, because hedge funds are little more than a way to extract bloated fees from extremely rich people.

Much has been made about hedge funds’ failure to keep up with the major stock market benchmarks this year. But 2011 is merely the latest disappointment in a string of misses that stretches back nine years, according to one analysis of the hedge fund industry.
Money invested in hedge funds since 2003 would have generated a return of 18% through November, according to data compiled by Hedge Fund Research. That puts it far behind the Standard & Poor’s 500-stock index, which has generated returns of 29% over that same period, once dividends are factored in, according to Simon Lack of SL Advisors. The hedge fund underperformance is even starker when placed next to a small basket of investment grade corporate bonds, as measured by the Dow Jones Corporate Bond Index. That benchmark has gained 77% since 2003.
Factor in hedge fund mangers’ customary 2% management fee and a 20% cut in profits, and the gap widens even more.
While disappointing, Mr. Lack says investors have no one but themselves to blame.
“The investors are all sophisticated wealthy institutions, not retail investors. So frankly, it’s a lot of sloppy analysis,” he said. [More]

Maybe the continuation of hedge fund money into farmland is a bad sign, no? If nothing else, those farms will likely push the boundaries of cash rents if for no other reason than to pay their exorbitant fees. Try as I might, I can't work up much sympathy for the investors, however, which maybe underscores the growing social rift between that sliver of the very wealthy and even those of us doing pretty darn well. Be honest - aren't you rooting a teensy bit for the conniving hedge fund managers? Didn't you experience some titillating schadenfreude during the Madoff revelations?

Yeah - me too.

Regardless, I think it is fair to say it is really hard to find places to put money that will 1) still be there in 6 months, and 2) earn a positive return.

2012-01-01T08:21:00.002-06:00

Save the mice!...

An interesting response to the anti-meat position - at least for Australia.

Published figures suggest that, in Australia, producing wheat and other grains results in:
at least 25 times more sentient animals being killed per kilogram of useable protein
more environmental damage, and
a great deal more animal cruelty than does farming red meat.
How is this possible?
Agriculture to produce wheat, rice and pulses requires clear-felling native vegetation. That act alone results in the deaths of thousands of Australian animals and plants per hectare. Since Europeans arrived on this continent we have lost more than half of Australia’s unique native vegetation, mostly to increase production of monocultures of introduced species for human consumption.
Most of Australia’s arable land is already in use. If more Australians want their nutritional needs to be met by plants, our arable land will need to be even more intensely farmed. This will require a net increase in the use of fertilisers, herbicides, pesticides and other threats to biodiversity and environmental health. Or, if existing laws are changed, more native vegetation could be cleared for agriculture (an area the size of Victoria plus Tasmania would be needed to produce the additional amount of plant-based food required).
...
Most cattle slaughtered in Australia feed solely on pasture. This is usually rangelands, which constitute about 70% of the continent.
Grazing occurs on primarily native ecosystems. These have and maintain far higher levels of native biodiversity than croplands. The rangelands can’t be used to produce crops, so production of meat here doesn’t limit production of plant foods. Grazing is the only way humans can get substantial nutrients from 70% of the continent.
In some cases rangelands have been substantially altered to increase the percentage of stock-friendly plants. Grazing can also cause significant damage such as soil loss and erosion. But it doesn’t result in the native ecosystem “blitzkrieg” required to grow crops.
This environmental damage is causing some well-known environmentalists to question their own preconceptions. British environmental advocate George Monbiot, for example, publically converted from vegan to omnivore after reading Simon Fairlie’s expose about meat’s sustainability. And environmental activist Lierre Keith documented the awesome damage to global environments involved in producing plant foods for human consumption.
In Australia we can also meet part of our protein needs using sustainably wild-harvested kangaroo meat. Unlike introduced meat animals, they don’t damage native biodiversity. They are soft-footed, low methane-producing and have relatively low water requirements. They also produce an exceptionally healthy low-fat meat.
In Australia 70% of the beef produced for human consumption comes from animals raised on grazing lands with very little or no grain supplements. At any time, only 2% of Australia’s national herd of cattle are eating grains in feed lots; the other 98% are raised on and feeding on grass. Two-thirds of cattle slaughtered in Australia feed solely on pasture.
To produce protein from grazing beef, cattle are killed. One death delivers (on average, across Australia’s grazing lands) a carcass of about 288 kilograms. This is approximately 68% boneless meat which, at 23% protein equals 45kg of protein per animal killed. This means 2.2 animals killed for each 100kg of useable animal protein produced.
Producing protein from wheat means ploughing pasture land and planting it with seed. Anyone who has sat on a ploughing tractor knows the predatory birds that follow you all day are not there because they have nothing better to do. Ploughing and harvesting kill small mammals, snakes, lizards and other animals in vast numbers. In addition, millions of mice are poisoned in grain storage facilities every year.
...
Each area of grain production in Australia has a mouse plague on average every four years, with 500-1000 mice per hectare. Poisoning kills at least 80% of the mice.
At least 100 mice are killed per hectare per year (500/4 × 0.8) to grow grain. Average yields are about 1.4 tonnes of wheat/hectare; 13% of the wheat is useable protein. Therefore, at least 55 sentient animals die to produce 100kg of useable plant protein: 25 times more than for the same amount of rangelands beef. [More]

I was vaguely aware of the problems in Australia due to a lack of predators to control introduced species like the famous bunny problem. But I did not know they were still battling occasional mice population explosions.

These calculations may be of little value to our grain-fed beef industry, but the new research in methane accounting and measurement could be altering even those numbers.

New CSIRO research indicates that the amount of methane emitted from cattle fed on tropical grasses in northern Australia is up to 30 per cent less than previously believed.
Current greenhouse gas accounts indicate that methane from the northern cattle industry contributes about 4.5 per cent of Australia's greenhouse gas emissions
CSIRO research leader Dr Ed Charmley says he hopes the new data might allow current estimates of the industry's contribution to Australia's greenhouse gas emissions to be updated.
"Measurements from cattle in CSIRO's custom-built respiration chambers show that Brahman cattle fed a wide range of tropical grasses emit up to 30 per cent less methane than previously determined," he said.
"While you always have to be cautious in extending lab data to the field and across an industry, we have been able to cross-check our findings with methane detecting laser systems used in the field. [Only a little more]

Again, I can't find anything to match this assertion for corn-fed meat, but as better methods for measurement are developed, perhaps those numbers, too will move us on from the caw-fart presumption of GHG contributions of meat.

2011-12-31T08:14:00.003-06:00

If not Iowa...

I'd say ethanol was over as a major political factor.

In the past, ethanol was a hot topic in the Iowa caucuses, but in 2011, most of the GOP field came out against ethanol subsidies and greater numbers of Iowans seem to agree with them as larger, more pressing issues such as the economy and the budget take over.
“It’s an issue I think Iowans are mindful of, but with the economy and everything else like that, there are other issues that they’re more focused on,” said Craig Robinson, formerly political director for the state Republican Party and editor of The Iowa Republican.
The industry insists that its political sway is as important as ever.
“I would argue it’s bigger. That is, I mean, y’all don’t write as many stories about it, but in terms of impact on Iowans’ votes it’s probably bigger than it’s ever been because of the size of the industry,” said Monte Shaw, executive director of the Iowa Renewable Fuels Association.
“When you look at what’s driven Iowa’s economy over the last few years, it’s agriculture,” Shaw added. “And the No. 1 driver behind agriculture is renewable fuels, in Iowa.” [More]

And, umm... ag isn't the 'driver".

[Click to enlarge]

[Components do not total to 100% due to a limitation of ten sectors]
[Source - try building your own graph/table - it's easy]

We just refuse to accept the reality of our place in the economy, don't we?

2011-12-31T07:57:00.001-06:00

Belated, but worth it...

Meant to post this earlier, of course, but amazing has a shelf-life.

Wonder what the Star Trek Theme would sound like?

2011-12-29T08:10:00.001-06:00

It looks good on paper...

The capitalism of Adam Smith gained popularity in part because it was easy to follow, and had the helpful appearance of calm reason. It also described in many ways the actions of people in the real world of his time as free markets were just beginning to become intricate. I have long subscribed to his basic premises, but the advancing complication of our global economy has shown a few serious gaps between theory and reality.

Kenneth Rogoff identifies some of the problems with modern capitalism.

Perhaps the real point is that, in the broad sweep of history, all current forms of capitalism are ultimately transitional. Modern-day capitalism has had an extraordinary run since the start of the Industrial Revolution two centuries ago, lifting billions of ordinary people out of abject poverty. Marxism and heavy-handed socialism have disastrous records by comparison. But, as industrialization and technological progress spread to Asia (and now to Africa), someday the struggle for subsistence will no longer be a primary imperative, and contemporary capitalism’s numerous flaws may loom larger.
First, even the leading capitalist economies have failed to price public goods such as clean air and water effectively. The failure of efforts to conclude a new global climate-change agreement is symptomatic of the paralysis.
Second, along with great wealth, capitalism has produced extraordinary levels of inequality. The growing gap is partly a simple byproduct of innovation and entrepreneurship. People do not complain about Steve Jobs’s success; his contributions are obvious. But this is not always the case: great wealth enables groups and individuals to buy political power and influence, which in turn helps to generate even more wealth. Only a few countries – Sweden, for example – have been able to curtail this vicious circle without causing growth to collapse.
A third problem is the provision and distribution of medical care, a market that fails to satisfy several of the basic requirements necessary for the price mechanism to produce economic efficiency, beginning with the difficulty that consumers have in assessing the quality of their treatment.
The problem will only get worse: health-care costs as a proportion of income are sure to rise as societies get richer and older, possibly exceeding 30% of GDP within a few decades. In health care, perhaps more than in any other market, many countries are struggling with the moral dilemma of how to maintain incentives to produce and consume efficiently without producing unacceptably large disparities in access to care.
It is ironic that modern capitalist societies engage in public campaigns to urge individuals to be more attentive to their health, while fostering an economic ecosystem that seduces many consumers into an extremely unhealthy diet. According to the United States Centers for Disease Control, 34% of Americans are obese. Clearly, conventionally measured economic growth – which implies higher consumption – cannot be an end in itself.
Fourth, today’s capitalist systems vastly undervalue the welfare of unborn generations. For most of the era since the Industrial Revolution, this has not mattered, as the continuing boon of technological advance has trumped short-sighted policies. By and large, each generation has found itself significantly better off than the last. But, with the world’s population surging above seven billion, and harbingers of resource constraints becoming ever more apparent, there is no guarantee that this trajectory can be maintained.
Financial crises are of course a fifth problem, perhaps the one that has provoked the most soul-searching of late. In the world of finance, continual technological innovation has not conspicuously reduced risks, and might well have magnified them. [More worth reading]

Of all the issues he lists and others that I wonder about, I think at the top is the current "capitalist" obsession with budget deficits. This anxiety is rooted in several mistaken ideas.

One is the interpretation of financial propriety, wherein borrowing is linked to a lower moral status. I have argued before that borrowers and lenders are engaging in a peer-to-peer transaction, but until (and I think we are there for the most part) lenders have no one to pay them to use their money this mistaken moral judgement will continue to mislead public policy.

Deficits on a personal or national level are a bad idea when things are going well. During the early part of this century we could have continued our deficit reduction, but chose to cut taxes unnecessarily and splurge on Medicare D, not to mention devise obscure instruments to fund wagering in housing. The anger many now feel at those actions is triggering a response they should have advocated THEN, not during a steep recession.

Our mistaken blind belief in simplified capitalism is now leading into even deeper financial difficulty, as economic growth is the only proven answer to address our spluttering economies. It also diverts us from other important issues that impair our economy.

It is also leading to austerity – taxes are increasing and government spending is falling at the local and state level around the country. A difficult fiscal conversation still lies ahead at the federal level, but cuts and contractions of various types seem likely.
Some people argue that Americans need to tighten their belts. That’s an interesting discussion, particularly at a time with unemployment is still above 8% (with recent declines largely the result of many jobless workers’ decision to stop looking and drop out of the labor force altogether). Precipitate austerity is hardly likely to help the economy find its way back to higher employment levels.
But what about government support for the big banks? Is this contracting in the light of our current fiscal pressures? Unfortunately, it is not; much government support remains, implicitly through allowing banks to be “too big to fail,” and explicitly through various kinds of backing provided by the Federal Reserve.
The rationale – or perhaps we should call it ideology – behind supporting big banks is that they are needed for the economy to recover. But this position looks increasingly doubtful when the banks are sitting on piles of cash while creditworthy consumers and businesses are reluctant to borrow. [More]

Right now the US costs for public borrowing is negative across the yield curve. It costs us not to borrow. Wasteful government spending is of course inefficient, but even deficit-abhorring farmers are asking for better bridges, locks, and other infrastructure. With the massive construction sector still in the doldrums, investment in infrastructure, energy, and education will generate returns that at least will be positive.

Recognizing the difference between our global economy and that of Adam Smith would be a good first step in tackling our problems. Capitalism is not a stand-alone invention, but a system shaped by an increasing number of minds as more people around the world are able to make economic decisions. Our public (government) decisions should likewise borrow from a more current and applicable set of alternatives. Just because Smith's system was easier to understand does not make it accurate or right.

2011-12-27T07:41:00.000-06:00

Now I know why...

Tyler Cowen writes more than he speaks. Although this message is very powerful, it is the first time I have seen Cowen actually present in public. He is more formidable on paper, IMHO, but still effective, and the sixteen minutes here is really good stuff.

Transcript here

2011-12-27T06:54:00.001-06:00

For those who remember...

Calvin and Hobbes.

[via sullivan]

2011-12-25T11:54:00.000-06:00

Hope...

I drew the short straw and represented the clan at morning worship. Even with the meager crowd, I was struck by how many cancer references filled the "Joys and Concerns". While I have looked and hoped for progress against this Hydra of disease, I offer this clear-eyed look at the growing reasonableness of such dreams.

After four decades of largely unfulfilled hopes—Dec. 23 marks 40 years since President Nixon declared war on cancer—scientists have hit on a potential cure that few thought possible a few years ago: vaccines. If they succeed, cancer vaccines would revolutionize treatment. They could spell the end of chemotherapy and radiation, which can have horrific side effects, which tumor cells often become resistant to, and which often make so little difference it would be laughable were it not so tragic: last week, for instance, headlines touted two new drugs for metastatic breast cancer even though studies failed to show that they extend survival by a single day. Vaccines could make such “advances” a thing of the past. And they could make cancer as preventable, with a few jabs, as measles. [More for reading]

The writer, Sharon Begley, used to be the science writer for the WSJ, and is no lightweight. The whole article reinforces my hopes for generations to follow, and I thought it was an appropriate thing to share the Christmas Day.

2011-12-25T06:23:00.001-06:00

Rejoice!...

Here's wishing you a great Christmas. We're full of excited <7 yr-olds poised to open presents. Jan and I are up because that's what old people with old habits do. Meanwhile I still have to get ready for my bank meeting Tuesday.

Am I the only one who is continuing to be shocked by the hockey stick that is the business of farming? The numbers are relatively enormous compared with just a few years ago - and that's QuickBooks talking, not just me. Now add in I'm not farming the whole farm either - just about half.

In talking to farmers and those who work with us, I haven't heard one suggest our businesses could either stay this good or get better. And yet...

Oddly, I believe they can and very probably will. Moreover, I am convinced we are beginning to manage this prosperity slightly better each season.

Anyhoo, that outcome is what I wish for all of you guys.

2011-12-21T10:11:00.000-06:00

Iowa over? (ctd)...

At the risk of repetition, I will echo some additional remarks about the totally entertaining circus that the Iowa primary has become.

We are forever indebted to the Hawkeye State for the EskimoPie (from Christian Nelson, in Onawa) and the largest buttersculpture in the world (at the state fair). But let’s not kidourselves. There’s nothing representative about Iowa. Whitesmake up 91.3 percent of the state’s 3 million citizens, comparedwith 64 percent of the country at large. Hispanics are 5 percentof Iowans, blacks 2.9 percent. Demographics aren’t the onlyanomaly. Unemployment in Iowa is less than 6 percent, theseventh-lowest rate in the nation.
A record 115,000 Republicans turned out to vote in the 2008caucuses -- that’s right, less than 4 percent of Iowans makes arecord. And since 1976, Iowans have picked the Republicannominee only three times.
...
Paul has many fine qualities as a candidate, which hisfurious supporters are quick to point out whenever the newsmedia treats his campaign as a sideshow. In a year when voterscrave authenticity, Paul exudes it. He eschewed earmarks beforeit was cool and, according to the Associated Press, as apracticing physician he rejected Medicaid payments, insteadtaking whatever a patient could afford, including a batch offresh shrimp once in return for delivering a baby.
Yet Paul is seriously out of step with much of theRepublican Party and most of the U.S. He has long championed thegold standard and lenient drug laws while opposing U.S.interventions abroad, the Federal Reserve and the income tax. Aunique politician? Yes. The Republican nominee? Never.
Paul’s rise isn’t the only factor hastening Iowa’sirrelevance. Iowa’s stock in trade is retail politics, whichenables voters to take the personal measure of a candidate in away the hurried contests that follow don’t allow. Iowa’s dinersused to be so crowded with candidates you could hardly muster aquiet cup of coffee without a glad-handing politician stoppingby to curry favor.
...
For Romney, who has failed to rise much even as Gingrichfalls, it’s tolerable to be beaten by Paul in Iowa providedRomney regroups to win the New Hampshire primary on Jan. 10.Gingrich, too, will live to fight another day should Paul takeIowa. In other words, if Paul wins, everyone wins, because noone really loses. Except for Iowa, which has it coming. [The whole thing]

And you just don't know what will happen next...

2011-12-21T08:08:00.001-06:00

A Big Fracking Deal...

I'm officially naming the explosion (heh) in natural gas production as the The Big Thing for 2011. Although I was impressed at the time I first heard of it, it continues to create huge side-effects that wil rock our world.

NG exploration has helped the steel and construction industries.

For example, estimates of Pennsylvania job creation due to increased shale gas production since 2009 range from 44,000 to 72,000. In Bradford County, Pa., the 2009 unemployment rate of 10 percent has been halved because of Marcellus Shale gas development. New York’s economically depressed Southern Tier is also benefiting from gas field development in nearby Pennsylvania. Case in point: RB Robinson Contracting, Inc., a family construction business in Candor, N.Y., had eight full-time employees in 2009. Today, it provides full- and part-time work for 120 people.

Ohio’s steel industry has also felt the economic impact of the revival of shale production. More than 400 workers in Youngstown are constructing a new $650 million steel mill for Vallourec & Mannesmann Holdings, Inc. It will annually produce a half million tons of seamless steel well tubing used in drilling and “fracking” natural gas wells. U.S. Steel is spending $95 million to expand and upgrade its tubular steel mill in Lorain, Ohio, and Timkin is spending $50 million on a similar project at its Canton mill." [More]

NG is replacing coal and oil (especially in the East)for electricity.

Natural gas will replace coal as the leading fuel for generating electricity in the U.S. by 2025, when it will also become the world's No. 2 overall fuel source thanks to its abundance and a drive for cleaner-burning energy, according to the latest long-term outlook from Exxon Mobil Corp. [More]

Here in the US, NG will become the #1 electricity fuel even sooner: 2019. And while it is not a panacea for carbon emissions, it does have big advantages in transportation, distribution, and its own environmental plusses.

NG may be pulling the plug on wind farms even with their subsidies. I'm not counting this as a plus, just acknowledging I was wrong about the effect of more NG. I thought peaker plants would help to stabilize the grid with lots of fickle wind turbines and their fluctuating output, but it seems it's easier to just build the NG generators.

General Electric saw a drop in demand for its wind power turbines to around half of its 2009 sales levels as power companies turned to natural gas for cheaper alternative energy forms, the company said on a conference call.GE is the top supplier of wind turbines for some of the nation’s largest wind power farms — huge swathes of land dotted by giant windmills that use the wind to generate anywhere from 1 to 3 megawatts of power per windmill. Each turbine and wind farm typically carries enormous upfront capital costs that can take several years before the power company can recoup its costs. [More]

NG could spawn more basic chemical production, as it is an excellent feedstock for all kinds of basic chemical needs.

Officials in Appalachian states are hoping the natural-gas boom will attract more than just controversy to their economically struggling region. Pennsylvania, Ohio and West Virginia are offering tax breaks and incentives to "ethane crackers," or the multi-billion dollar plants that start the chain of making ethylene, a basic feedstock for chemical plants, reports Gabriel Nelson of Energy and Environment News.

No ethane cracker has been built in the U.S. since 2001 because natural-gas prices were too high, and most production was sent overseas. Since new deposits, such as those in the Marcellus Shale, have been tapped, crackers are now cheaper in the U.S. than anywhere except the Middle East. The U.S. ethane supply has grown by 25 percent over 10 years, and because it's harder to transport than methane, cracking plants must be located close to drilling sites. Nelson reports if ethane supplies stay at current levels, petrochemical companies will spend over $16 billion on pipelines and crackers. [More]

I still am not sure how this will play our for transportation fuel, but this close the the East Coast, where oil is still used for home heating and electricity, replacing both with NG could dampen demand for oil enough to keep gasoline prices lower than might be expected. This is not good news for ethanol, and would seem to cap upside potential to the mandate.

I'm OK with that possibility, especially since we can't seem to match our predictions for corn production, and it is rapidly becoming clear cellulosic ethanol is a joke.

Like I predicted. [Apologies for shameless, gratuitous self-congratulation, but getting something right happens soooo rarely...]

2011-12-19T08:35:00.000-06:00

Could not resist...

Just one quick post.

On the subject of The Great Land Bubble:

Is China about to implode? Paul Krugman is worth a read on the subject, though in the end he doesn't know any better than anyone else. For what it's worth, the one encouraging thing I've consistently read about China is that their property bubble is largely driven by cash purchases, not debt. And non-debt bubbles, like the dotcom bubble, are inherently less destructive when they burst than debt-driven bubbles. [More]

I agree whole-heartedly. The other difference with a farmland bubble is the low velocity. Most of us never want to actually sell the land, so after a while even a way off-base price is little more than an unpleasant memory. I suppose I have paid too much for land, but my heirs won't care, just like I don't care what my forebears paid for the land handed down to me.

Then again how often have we said, "This time is different?" But even if we are way wrong, the default rate on land mortgages in 1987 (the bottom) was about 7%, or viewed from the other direction, 93% gritted our teeth and scrounged up the payments somehow.

2011-12-19T08:11:00.002-06:00

Better and better...

After Herculean effort, my ISP guy (a young farmer/engineer neighbor) has fired up a REAL Internet connection. I use picpitstop.com to measure speed and I've been hitting 13+ Meg (down) and nearly 1M up.

However, something screwy is going on with my Mac and Airport router. I have to restart several times, swap cords, reconfigure, sacrifice a chicken, and I still don't know what happens. I have to get that squared away and write the Christmas letter today.

I'll try to post some stuff before I drop off for no good reason.

(I'll bet I need a new 27" iMac, don't you?)

2011-12-18T13:00:00.000-06:00

#%^&**$@!...

My e-mail account was hacked a few hours ago (password stolen) and a stream of messages sent from my account. To all affected, sorry. I think I have stopped the flood.

To be fair, Macs are very virus-proof, but passwords are my own responsibility.

2011-12-18T08:20:00.001-06:00

Junkbox, Episode XIXMAS...

AT&T is frustrating my ISP guy by missing appointments for a new high-bandwidth "pipe" like...well, a cable guy. Meanwhile, I can't get iCloud to clear up (heh).

The farm boom isn't doing much for the rest of our counties
Farmers didn't just suffer through the Great Depression - one economist thinks they caused it. (I respectfully disagree with his analysis)
The looming Shrubbery Crisis
Finance isn't about allocating capital anymore.
Another biotech promise seems in doubt
Nice guys do actually finish last

Still not too late for shopping, folks.

2011-12-11T11:56:00.001-06:00

Peak ethanol...

Perhaps.

Drivers of the approximately 16,500 highway-worthy electric vehicles in the U.S. can choose from 4,448 public charging stations should they want to plug in someplace other than home or work, according to U.S. Energy Department data.
That's one per 3.7 electric cars, such as Nissan's Leaf or Tesla's Roadster. That compares with 2,468 places to fill up the 7.6 million vehicles that can run on E85, a fuel that is 85% ethanol. E85-capable vehicles, also known as flex-fuel vehicles, can run on either E85 or traditional gasoline.
The Obama administration is pushing for still more charging stations, with $230 million worth of support from the Energy Department and private investment:
Ecotality received funds under the federal program to install 14,000 chargers in 18 metropolitan areas in six states and the District of Columbia.
"Electricity is the flavor of the month, just as others have had their time in the sun, electricity is now there," said Brett Smith, co-director of manufacturing, engineering and technology at the Center for Automotive Research in Ann Arbor, Michigan. "Is this a long-term technology or is it just that flavor of the month?"
Smith cited E85 and hydrogen fuel-cell cars as examples of technologies that have been favored by the government before the Obama administration chose to promote electric vehicles through policy and spending. [More]

And of course, ethanol is not wildly popular with the Republican Tea party base outside farm states.

But this year is an exception because the party, under increasing influence from the Tea Party, has pivoted on the subsidy. This summer, many Republicans in Washington voted to end the $6 billion-per-year ethanol subsidy. Though it ultimately survived, subsidies have become a rallying call for fiscal conservatives looking to cut waste and Tea Partiers who don’t want government ‘picking winners and losers.” No other candidate is as uncompromisingly for the subsidy than Newt. Mitt Romney, who has been vague on the issue, most recently says that while he initially supported the subsidy, should not “go on forever” — hardly a comforting position for Iowa farmers. Rick Perry, Michele Bachmann, Rick Santorum, and Ron Paul have all come out against the subsidy. [More]

Finally, the antipathy on the right for the EPA doesn't really reassure ethanol producers either.

You live by the subsidy, you die by the subsidy, I guess. In this case it looks like the whole political spectrum is a threat.

2011-12-11T10:55:00.001-06:00

A man and the moon...

Simply amusing and amazing photos.

[Even more]

2011-12-07T07:57:00.001-06:00

Good grief - Yoda was right!...

We may have found "THE FORCE".

This could be the announcement we've all been waiting for.
As soon as the Large Hadron Collider (LHC) revved up its supercooled electromagnets in 2008 -- which promptly "quenched" (read: broke down in a very expensive way) and then restarted the following year -- it's been the one piece of news the world has been eagerly awaiting: confirmation of the discovery of one of the Universe's most secretive particles -- the Higgs boson.
After gazillions of particle collisions and countless rumors of Higgs discoveries, we have... yet another rumor of a Higgs discovery. But this time, the rumor seems to be meatier than ever.
...
According to comments left on a number of particle physics blogs, the word is that the LHC is closing in on the Higgs.
The Higgs boson is theorized to be the "force carrier" of the Higgs field -- a field thought to permeate the entire Universe, endowing matter with mass. Only by using powerful particle accelerators like the LHC do we stand a chance of seeing these mysterious particles. [More]

I can't wait for Sheldon to explain it all on an upcoming The Big Bang Theory.

[Insert your joke here]

And also with you.

2011-12-07T07:10:00.001-06:00

Freeze! [or] Panic!...

Even in this time of starkly divergent and entrenched positions in public debate do you simultaneously run across two well-reasoned arguments that both appeal and completely contradict.

First, this truly depressing information about the new urgency in reducing carbon emissions, since a 2℃ rise (the popular target maximum) will be much worse than we had previously calculated.

The thing is, if 2 degrees C is extremely dangerous, 4 degrees C is absolutely catastrophic. In fact, according to the latest science, says Anderson, "a 4 degrees C future is incompatible with an organized global community, is likely to be beyond 'adaptation', is devastating to the majority of ecosystems, and has a high probability of not being stable."
Yeeeah. You'll want to read that sentence again. Then you'll probably want to pour yourself a stiff drink.
Obviously, "incompatible with an organized global community" is what jumps out, but the last bit, "high probability of not being stable," is equally if not more important. One of the most uncertain areas of climate science today has to do with feedbacks -- processes caused by climate change that in turn accelerate (or decelerate) climate change. For instance, heat can melt the Arctic permafrost, which releases methane, which accelerates climate change, which melts more permafrost, etc.
Based on current scientific understanding, positive climate feedbacks -- the ones that accelerate the process -- considerably outweigh negative feedbacks. At some level of temperature rise, some of those positive feedbacks are likely to become self-reinforcing and effectively unstoppable, no matter how much emissions are cut. These are the "tipping points" you hear so much about.
But at what level? Will hitting 2 degrees C trigger runaway positive feedbacks? It's difficult to know; this is one of the most uncertain areas of climate science. James Hansen thinks 2 degrees C will do it. Others disagree.
But the situation becomes considerably clearer around 4 degrees C. At that level, there's good reason to believe that some positive feedbacks will become self-reinforcing. In other words, 4 degrees C would very likely be a way station on the road to much higher temperatures. [More]

There is an excellent presentation of the paper supporting this stance here. Not a lot of laughs. But it does mesh well with other research about the consequences of even small temperature increases on what we view as "normal" climate.

But the real stunner was this economic perspective from a econoblogger rising in the ranks, Karl Smith.

I hold these positions
Climate Change is almost certainly real
Humans are almost certainly causing it with carbon emissions, deforestation and domestication of animals
There will be large environmental costs associated with climate change include a very rapid increase in extinctions
There are likely to be major population dislocations because of climate change
There are likely to be major agricultural shifts because of climate change.
Nonetheless, we should pursue the development of fossil fuels as rapidly as possible including looking for ways to streamline regulation in North American regarding fossil fuel production. [More]

Smith goes on the the argument that since we can't reach emissions goals without deep economic sacrifice, we have to bet the globe on advancing technology fast enough to enable a solution to be found in the future.

This strikes me as a pretty gutsy position, but his case has merits. However, as the research like the first case continues, if it shows even worse outcomes than we are imagining now from temperature rises, the tradeoff suggested by Smith becomes an ever worsening gamble. He could still be right that since we don't show any interest in taking the threat seriously yet, at least in the US, betting on a future miracle may be our default non-decision.

But the odd and consequences of being wrong approach catastrophic.

On a slightly related note, I think Huntsman may be feeling some love from anybody-but-Mitt Republican voters and bigwigs, as he suddenly decided to backtrack on his courageous climate-change stand.

Jon Huntsman used to believe climate change is real. Now he’s not so sure.
In a move that’s sure to endear him to the conservatives who are starting to warm up to the former Utah governor, Huntsman said Tuesday under questioning from TPM that he now believes there’s “more debate yet to play out” before we can be sure climate change is really happening.
That’s certainly not the way Huntsman sounded waaay back in August, when he famously tweeted:
“To be clear, I believe in evolution and trust scientists on global warming. Call me crazy.”
That was part of an organized effort by Huntsman to be the sane one when it came to climate science. In an interview with Time, he said it this way:
“I’m not a meteorologist. All I know is 90 percent of the scientists say climate change is occurring. If 90 percent of the oncological community said something was causing cancer we’d listen to them.” [More]

Seems like a lot of folks are betting on a) a Gingrich implosion, and 2) a Romney closure failure. And I suppose climate change is an easy issue to play fast and loose with on the right. Ron Paul may be cornering the market in consistency and principle.

2011-12-06T14:00:00.000-06:00

You can run...

But you can't hide. I'm talking about hot money looking for safe place to live - theme that shows up constantly in my posts, I now realize.

I would guess I'm not surprised because I am ~130% invested in farm land, which not only has been safe for the last few decades, but lucrative. But if you are not a land nut, choices for safe investment are not ample.

You’ll find the above on page 143 of the Credit Suisse 2012 Global Outlook, which we’ve stuck in the usual place.
It shows how the world’s outstanding stock of safe haven assets denominated in either dollars or euros has evolved, adjusted to account for the Fed’s purchases of US Treasuries and other assets in recent years as part of quantitative easing.
You can see just how impressive the decline has been since 2007, and we’d also note that if Credit Suisse had been feeling uncharitable, they would have been justified in excluding French sovereigns.
The chart helps explain much of what’s happening in global financial markets now, especially in Europe (not on its own, mind you — we said “helps” explain):
– Begin with the ongoing collateral crunch, and how the decline of safe assets is directly tied to the dramatic fall in the availability of high-quality collateral in European lending markets. So much of it is now encumbered via direct bilateral funding agreements or by sitting at the central bank drawing liquidity. [More]

While I kinda thought this was happening, the scale of the shrinkage was alarming.It also makes me wonder, what will have to happen to make stuff that was downgraded upgraded in the future? I suspect only significant time and good performance.

2011-12-06T10:00:00.000-06:00

Baby, we are drilling...

Once oil companies began including the full costs of sourcing in developing nations, the economics of producing at home, or at least countries with functioning democracies, looked a little better.

Now, in a sense, the choice has been made for them. Big onshore fields in the world's most prolific hydrocarbon provinces are increasingly the preserve of national oil companies, state-owned behemoths like Saudi Aramco and Russia's OAO Rosneft and OAO Gazprom. For foreign majors like Royal Dutch Shell PLC and BP PLC, their former heartlands in the Gulf sands are now largely off-limits.
Shut out of the Middle East, they have responded with a huge push into new areas, both geographic and technological. Over the past few decades, they have built vast plants to produce liquefied natural gas, or LNG. They have drilled for oil in ever-deeper waters, ever farther offshore. They have worked out how to squeeze oil from the tar sands of Alberta. And they have deployed technologies like hydraulic fracturing, or fracking, and horizontal drilling to produce gas from shale rock.
Wood Mackenzie, an oil consultancy in Edinburgh, says that more than half of the international oil companies' long-term capital investments are now going into these four "resource themes"—a huge shift, considering how marginal the companies once considered them.
There are also drawbacks to the new focus on nontraditional kinds of hydrocarbons. Environmentalists strongly oppose shale-gas extraction due to fears that fracking may contaminate water supplies, the oil-sands industry because it is energy-intensive and dirty, and deep-water drilling because of the risk of oil spills like last year's Gulf of Mexico disaster.
There are financial considerations, too. While conventional assets are relatively easy to develop and historically have offered good returns, projects in some more technically difficult sectors—like deep-water and LNG—typically take longer to bring on-stream, and are higher cost, meaning returns are lower.
But there is an upside for the majors. "The silver lining is the shape of the profile of these projects, which is different than conventional ones," says Simon Flowers, head of corporate analysis at Wood Mackenzie. LNG ventures, for example, can deliver contract levels of gas at a steady rate over 20 years. "So the returns may be lower, but overall you have a more dependable cash-flow stream," he says.
By pursuing these nontraditional fuels, the oil companies are committing themselves ever more deeply to the wealthy nations of the Organization for Economic Cooperation and Development. Wood Mackenzie says $1.7 trillion of future value for all the world's oil companies—52% of the total—is in North America, Europe and Australia. The consultancy has identified a "significant westward shift" in oil-industry investment, away from traditional areas like North Africa and the Middle East "towards the Brazilian offshore, deepwater oil in the Gulf of Mexico and West Africa and unconventional oil and gas in North America." And then there's Australia, far out east, "which is in the early stages of a spectacular growth phase." [More]

While I was impressed with the possibilities for domestic natural gas production, once again I was several beats behind the march away from the Mideast.

It would be ironic if after pouring enormous resources of every kind into that area, it becomes a auxiliary supplier for the US.

Meanwhile, the mismanagement of Russia's resource-based economy seems to have been noticed by its citizens.

First, political optics are particularly important in Russian politics. Mr. Putin has always promised stability, and this was based to a significant degree on his perceived invincibility and the power of deterrence that his rule, via the “power vertical” system, conveyed. There was a sense of inevitability to his policies, reinforced by the strength of both his personality and of the political machinery supporting him. Mr. Putin, therefore, looked to elections as in part a legitimizing ritual in a political order that – as it moved ever further away substantively from Mr. Medvedev’s declarations of fealty to democracy – has come to occupy an increasingly thin border between limited democracy and full authoritarian rule. Yet, with the regime’s invincibility now severely dented, critics and opponents will undoubtedly be emboldened in opposing government policies, challenging the pervasive corruption, and demanding a fairer distribution of incomes and resources at a time when Russia’s one-dimensional, resource-driven economy, is confronting growing challenges.
Second, Mr. Medvedev’s future itself has become cloudy. He had to deliver the votes during the parliamentary election if he was to be given the prime ministership. He had already lost whatever credibility he had with the electorate with the closed-door decision to switch the two top governing positions. Now, despite all of the administrative advantages that the ruling party had – where it could mobilize workers; control the television medium; use its judicial connections to fine Russia’s leading independent vote monitor, Golos, for alleging electoral violations; employ other connections to mysteriously shut down communications broadcast from independent radio stations such as Ekho Moskvy, and blogging platforms such as LiveJournal; as well as the widespread, scathing allegations of thousands of violations of electoral rules by external and internal observers – United Russia still had a relatively poor showing. Mr. Putin has a history of not tolerating politicians who do not deliver as he expects.
Third, the election is also an indicator of a brewing legitimacy crisis in Russia. As the late Harvard scholar Samuel Huntington wrote, “performance legitimacy” plays a critical role in authoritarian regimes. When Mr. Putin was able to deliver growth and increasing public goods to the population, the legitimacy of his rule seemed solid because he reinforced it with an image of personal vigour and determination. Given Russia, however, is confronting massive structural problems due to its reliance on energy, with the vast Reserve Fund used to prop up the economy during the recession now largely depleted, and a demographic time bomb of extremely low birth rates, a shrinking population and a disintegrating health care system, not to mention an outflow of funds to Western safe havens, performance legitimacy is an increasingly less viable option within Mr. Putin’s social contract that trades freedom for security. [More]

While not the only vehicle, I think this is another piece of evidence that the Internet will increasingly play a bigger though as yet undefined role in public policy development and politics. And I mean everywhere.

[Note: Re-reading this, I realized it maybe should have been two posts, but one thing reminded me of the other. And you learn to write it down immediately. This is how 60+ year-old minds work.]

[Oh yeah - yours will too.]

2011-12-04T18:21:00.001-06:00

Morality and debt...

There has been a robust debate in the econoblogs regarding the Eurozone crisis and how the economic strength of Germany does or does not grant them the moral "high ground". I have noticed this is often how debtor/creditor arguments devolve - the virtues of the lender versus the vices of the borrower. Tyler Cowen does an excellent job of listing the facets of this debate, and sums up this way:

I believe that the Germans have approached this crisis with some bad economic theories, a lack of understanding of how government spending cuts can be self-defeating in the short run, and a good deal of more or less deliberate self-deception about its partners in the union, not to mention Germany’s own ability and willingness to act “fully European.” I’m also not sure that Germany has a path out of this which leaves their own financial system intact. You can rack up the moral and practical minus points there in considerable number. That said, I see a lot of intellectuals dismissing the perspective outlined above, rather than figuring out why it makes so much sense to so many people, not just in Germany. I think the financial elites in the periphery countries themselves actually see it quite clearly.
The result is significant misunderstandings about what can happen and will happen in the eurozone. Germany cannot and will not drop its moral perspective, even if there is some theory — and yes theory is the right word here, because no one knows these broad guarantees will work — of how a broader and far more costly commitment can set things right.

In reading American discussions of the eurozone, I am frequently reminded of earlier discussions of the Soviet Union. Most outsiders simply didn’t realize how little social capital was left in the system, though some of the Soviet insiders did. Might the same be true of the eurozone? I’m not calling these countries corrupt, rather there may be remarkably little cross-national cultural capital, and remarkably little deep public support for a costly EU bargain, so little that many German (and other) insiders know that no grand bargain can be sustained or even seriously attempted.

I believe we need to be exposed to this moral perspective, and this intellectual Turing test, as a bracing slap in the face, as a wake-up call, and I see our unwillingness to do anything with this perspective, other than summarily dismiss it as a kind of tragic juvenile moralizing, as a sign of our own decline, right here in the USofA.

But it's the same transaction, people! How can lending be an act of moral superiority and the borrowers' actions be cast as morally suspect? If nothing else, hasn't the lender then engineered the "fall" of the borrower?

To be sure, the economic and cultural character of Germany resonates with the "work ethic" moral training remains a powerful part of Western societies: hard work, thrift, gratification delay, self-determination, etc. But I think we may be outgrowing those values or at least failing to modify them to present economic realities.

One of the most powerful of these new realities is the abundance of wealth. In the face of that surplus the choices for investors are not always an array of solid, high return productive assets, but a sorry collection of higher-risk, low yield instruments. I do not disallow the German culture its moral high ground connected to thrift and good choices, but I do wonder why they should not bear responsibility for their investment choices - both private and public. Why were they pouring money into Greek, Spanish, Irish debt to such a degree they could not suffer bad consequences? Aren't they guilty of bad investment strategy at least? Should not they bear the consequences of buying junk?

This is the dilemma of capital surplus countries and individuals. You will seldom find another place to park your money as "virtuous" as your own business, since they would likely be in capital excess, too.

Meanwhile, Ezra Klein reports from the financial front lines.

Over the course of dozens of interviews conducted in Berlin over the last few days, I've spoken to members of Angela Merkel's government, members of the opposition Social Democrats, industrialists, and bankers. No one has evinced even the slightest willingness to see the euro zone crack apart. But nor have they quite said they're willing to save it. Rather, they remain serenely confident that they will save it. But they don't have a surefire strategy. They have a bet. A big one.
That's really the key to understanding the German psychology on the euro. In America, we keep asking why they don't join with the European Central Bank to end the run on the European periphery. The answer is simple: they don't want to end the run on the European periphery. To them, the run on Italy and Greece and Portugal and Spain is a feature, not a bug. It's leverage, and they want to use it.
Look how much it has already gotten them. Greece, Portugal, Italy and Ireland are working their way through stringent deficit-reduction plans. The widely disliked governments of Greece and Italy, which proved unequal to the task of fiscal reform, have been toppled. There is a good chance that the euro zone might become what Germany has always wanted it to be: a fiscal union, in which the members meet their deficit targets and reform their labor markets. And none of this would have happened without the markets making their run at the European periphery.
So to understand the German position, look at it from their perspective: Why in the world would Germany let up the pressure now? When they're so close to amending the very treaty underlying the euro zone? When France has joined with them on a set of reforms? When the market is doing what the Germans never could?
I worry this makes the Germans sound like puppetmasters. They're not. Many of their intended reforms are very sensible. The flaws they point to in the euro zone are, indeed, deep, structural flaws in the euro zone. They do envision a future that includes sacrifice on their part: eurobonds that raise Germany's cost of borrowing and a bailout fund -- excuse me, a fiscal stabilization fund -- that they contribute heavily to.
So my concern isn't that the Germans are selfish and calculating. It's that, without quite realizing it, they have become reckless. They are trying to time the market, betting that they can, in essence, manage the run -- that they can do just enough to keep the pressure on without letting matters get totally out of hand. They are like a doctor who, faced with an unhealthy patient presenting signs of a heart attack, demands to see the patient lose weight before they will administer the life-saving treatment.
In almost all of their arguments, the Germans are right. The euro does need to be fixed. But first it needs to be saved. The Germans are betting that this is their opportunity to do both. If they're right, it will have been a remarkable play. If they're wrong, it will have been a disastrous one. [More]

It will be some time featuring very low rates before this curious economic puzzle gets solved. The idea of excess money struggling to get a return despite being the trophy of economically prudence and self-discipline will take some time getting used to. My guess is we are nearing that time as the last of the ~5 year investment instruments roll over into sub 1% territory. I'm seeing it at my bank, and now in Europe.

[Update: Rats! As soon as I labored through this post, Kevin Drum explains it much better. And with punctuation, spelling and charts. It's a must-read for those newly interested in the euro.]

Savers need borrowers just as much as the reverse. Meanwhile, the ag markets have a huge stake in this political turmoil as we obviously miss the extra money in the pits.

2011-12-03T18:36:00.001-06:00

Add Danforth...

The roll call of Republicans aghast at their own party grows. His defense of Sen. Lugar, whom I consider to be one of the best the GOP has ever had, is priceless.

Republican John Danforth, who served as a senator from Missouri for nearly 20 years and later as George W. Bush’s ambassador the United Nations, is not happy with the slate of Republican presidential candidates. “I’ve been watching some of these Republican debates and they’re just terrible. Terrible,” he told KTRS in St. Louis yesterday. “It’s embarrassing for me as a Republican to watch this stuff,” he added, calling out audiences for applauding the candidates’ morbid boastings. [More]

If the GOP sinks to nominating Gingrich, it could mark the low water point, IMHO.

2011-12-03T18:28:00.001-06:00

One more reason...

Why I would have died a flaming death in corporate America: marketing campaigns. I try to imagine having a meeting with these people.

Below are some highlights. Warning: We are about to enter the strange arena of marketing, where fictional worlds are conjured up out of whole cloth for the sole purpose of moving goods.
From what I can tell, the intention expressed here is to brush up the image of Hillshire Farm and roll out two new premium brands: "Smith & Smith Fine Meats" and "Flat Iron Ranch." The campaign is "foundational," the one slide declares, "and demonstrates how the new, purposeful Sara Lee will manifest: Modern. Authentic. Simple."

Seriously, if you can't sense a wind change in the meat industry from this, what will it take? It looks to me you're going to have to be able to fake "sustainability" and "humane production" at the very least.

2011-12-03T18:21:00.001-06:00

My new crusade...

Why I use credit cards:

[via mr]

2011-12-03T13:29:00.001-06:00

Wish I had said it...

"Give a man a gun and he can rob a bank. Give a man a bank and he can rob the world."

[Source?]

2011-12-02T21:00:00.000-06:00

Another subculture...

I pretended didn't exist.

In fairness, it's not much different than dog shows, IMHO.

Just not as upscale, I guess.

2011-12-02T19:00:00.000-06:00

Newt...

Why implausible is the new possible.

2011-12-02T16:39:00.001-06:00

Junkbox, Episode YULEIX...

Some quickies for starters.

I'm not the only one hating on the new Coke cans.
No left turns. (Thanks, Jack)
Economic Buzzword of the Day: Giffen good
No doubt you heard we are now a fuel exporter
Wait - maybe farmers do ♡ regulations
Gary Schnitkey should write horror movies.

2011-12-02T16:18:00.001-06:00

A squirrel ate my Internet...

This could become Numero Uno in my Timeless Excuses List™. I was getting intermittent signals from my WAN radio and it finally gave up altogether this week after over 4" of rain* last week.

The coax cable was leaking water from outside into the power port. A squirrel (my guess) chewed the insulation off up by the receiver.

I just can't take the fuss of posting from the iPad so I went dark, and surfing was so slow I fooled around getting the floor finished in the new woodshop. We're back to a full 5 Megs without periodic hangs to boot, so life is good. I"ll try to get some stuff up this weekend.

*November is now my wettest month at 8.1". Go figure.

2011-11-28T17:33:00.001-06:00

Another apostate...

Dan Drezner, to whom I have linked occasionally, is a noted conservative foreign policy writer whose opinion I always consider, even when I disagree. Like so many others, including yours truly, he has lost the faith with what is masquerading as the Republican Party.

2) I haven't overtly talked about my own personal political beliefs since the blog moved to FP, but this seems to be an appropriate time to bring it up ~~and then never speak of it again~~. When I've published essays like this before, I find liberals write "even conservative Dan Drezner..." while conservatives often deploy terms like "academic elitist" or "RINO."
In my case, at this point in time, I believe that last appellation to be entirely fair and accurate. I'm not a Democrat, and I don't think I've become more liberal over time. That said, three things have affected my political loyalties over the past few years. First, I've become more uncertain about various dimensions of GOP ideology over time. It's simply impossible for me to look at the aftermath of the 2003 invasion of Iraq and the 2008 financial crisis and not ponder the myriad ways in which my party has made some categorical errors in judgment. So I'm a bigger fan of the politics of doubt during an era when doubt has been banished in political discourse.
Second, the GOP has undeniably shifted further to the right over the past few years, and while I'm sympathetic to some of these shifts, most of it looks like a mutated version of "cargo cult science" directed at either Ludwig Von Mises or the U.S. Constitution (which, of course, is sacred and inviolate, unless conservatives want to amend it). Sorry, I'm not embracing outdated concepts like the gold standard or repealing the 16th Amendment. Not happening.
Third, David Frum wrote something in New York Magazine that touches on the issues I just discussed, but also articulates something that has been nagging at me for a few years now:
The conservative shift to ever more extreme, ever more fantasy-based ideology has ominous real-world consequences for American society. The American system of government can’t work if the two sides wage all-out war upon each other: House, Senate, president, each has the power to thwart the others. In prior generations, the system evolved norms and habits to prevent this kind of stonewalling. For example: Theoretically, the party that holds the Senate could refuse to confirm any Cabinet nominees of a president of the other party. Yet until recently, this just “wasn’t done.” In fact, quite a lot of things that theoretically could be done just “weren’t done.” Now old inhibitions have given way. Things that weren’t done suddenly are done.
Also, things that weren't said are now being said. Or, to be more precise, things that use to be said but ignored are now being taken seroiusly by the GOP's leading lights. Newt Gingrich endorses the notion that Obama has a "Kenyan, anti-colonial" worldview. Mitt Romney claims Obama has been apologizing around the world and no longer believes in American exceptionalism. Herman Cain is [Remember your mercy rule!!--ed.].... Herman Cain. There's good, solid partisanship -- a vital necessity in this country -- and then there's unadulterated horses**t. Too much of the GOP's rhetoric on Obama reads like the latter to me.
So for those reasons, I really am a Republican in Name Only at this point. And I say this for the GOP's benefit. The next time someone writes, "even the Republican Dan Drezner has said...." GOP partisans should feel perfectly entitled to link to this post and call me a RINO. Because it's true. [More]

There is more to foreign policy for the US than doing whatever Netanyahu wants amd ignoring the rest of the globe. But you wouldn't know it from the GOP candidates, save Huntsman and Paul.

Not my party anymore.

2011-11-28T07:45:00.000-06:00

Winter touches the sea floor...

(Mostly an experiment to correct an embedding problem, but cool nonetheless)

2011-11-26T07:48:00.001-06:00

Wall Street detour...

Say what you will about the OWS movement, the idea of "The 1%" has taken root. While many before had questioned how the finance sector added so much value it was entitled to oversize profits, some of our best economic minds are having trouble seeing this to be true as well. In the process of thinking this through some are discovering something farmers have instinctively, if not consciously, believed. (Note my emphasis below)

But the bigger idea, I guess, is that the “normal people” helped by Wall Street are the 1%, and that Wall Street has its “fingers on the scales in their favor”, and that if the scales are tipped towards the 1%, then that means the 99% are the losers. They’re the prey for Wall Street’s predators.
I don’t buy this analysis. I don’t believe that Wall Street is meaningfully improving the lives of the 1%, except insofar as Wall Streeters are the 1%. (Remember that financial professionals make up only 14% of the top 1%, and 18% of the top 0.1%. They’re a large chunk, but by no means the majority.)
In fact, I suspect that the top 1%, if anything, are responsible for a disproportionate share of Wall Street’s income. Wall Street isn’t picking the pockets of the 99% and giving the proceeds to the 1%: it’s picking the pockets of the 1% and giving the proceeds to itself. And Wall Street is taking a whole bunch of money from the 99%, too. But for the 86% of the top 1% who don’t work in finance, I really don’t believe for a minute that Wall Street is helping them out by giving them the hard-earned money of the 99%.
I also don’t believe in some halcyon era when Wall Street was “an economic helpmate” to the 99%. It has always been very good at extracting rents, and very bad at creating wealth for its clients.
Narrowly speaking it’s easy to see where Emerson’s speech is coming from: the housing bubble was certainly instrumental in allowing millions of Americans to live beyond their means. And yes, Wall Street was a necessary part of the machinery of the housing bubble. But of course the Americans who bought beyond their means did not “get to continue living like kings”; instead, they got foreclosure and eviction notices. And Wall Street wasn’t there to help them when that happened.
But I don’t believe that Wall Street has its fingers on any scale. There are wealthy families who have managed to preserve and grow their wealth over many centuries — Italy and Germany both have quite a few of them, the ultimate Black Swan that was World War II notwithstanding. Those families tend to have a lot of real property: income-producing land, if you’re growing things like grapes or trees, is an amazing long-term asset, since the main rents you’re extracting come directly from the Sun. By contrast, the rich families who hire Goldman Sachs to look after their money and end up invested in Global Alpha or pre-IPO Facebook shares tend to be much newer money. They made it quickly, and they’ll probably lose it quite quickly too — it could quite easily all be gone within two or three generations. [More]

Long before I even suspected what was going on in big banks, I resented their seemingly unnecessary fee extraction rackets. This from a 1996 Top Producer article:

Much has been said about the single-minded focus offarmers for land. Interestingly enough, we are not the only profession withsuch prejudices. I have noticed accountants and financial advisers, forinstance, tend to favor money, especially cash or easily convertible assets.The reason is analogous - they “farm” these assets like we do land. If youmake your living by moving others’ money from one form to another, seeingit tied up for centuries in land, which ends their involvement (andcommissions) is not attractive.[More]

The global financial sector is not earning its pay, IMHO. "Efficient allocation of assets", my posterior! We have cash piling up in companies and banks while deflation remains an ominous threat in the developed world, for the fifth year running. Does that sound efficient to you?

What finance has done is perfected rent-seeking tactics for all those who prefer cash as an asset over all other things. In a totally unexpected development, the world is awash in such assets, as the growing global economy and technology /productivity have generated more available capital and simultaneously tempered demand for private investment. We have enormous wealth looking for somewhere to be.

I feel perversely lucky I have always been absolutely terrible at managing money, and piled my wealth into other forms instead. Moreover, debt is one really good method to countering to the One Percent, when you think about it. Nobody embezzles a loan.

When the game is rigged against you, don't play. And while everyone should feel free to to mock and deride the loopy protestors in the Occupy movement, it should give you pause that there is some serious kernel of truth fueling this anger.

2011-11-25T07:14:00.001-06:00

Why staying home...

Is a smart idea. Unless (as is often the case) your family /friends make Black Friday shopping a social event that contributes to your holiday festivities, you could save money staying home and cleaning the gutters. (I don't want to talk about it)

What the professor has determined with a complex computer algorithm for consumer electronics, others have found through less scientifically rigorous means for other products, including clothing and toys: despite all the ads that suggest otherwise, the lowest prices tend to come at other times of the year.
In the case of toys, stores actually offer the steepest discounts in the weeks immediately following Thanksgiving because they want to unload the inventory not swept up on Black Friday, said Dan de Grandpre, who has tracked deals for 15 years at Dealnews.com.
“Toys have a very short shelf life,” he said.
“On Dec. 26, they’re not really useful to retailers anymore, so they have to get rid of it and start slashing prices early in December.”
And it is a precise window of opportunity. In the week or so before Christmas, toy prices shoot back up, Mr. de Grandpre’s tracking shows, as last-minute shoppers come stampeding for Barbies and Lego sets and stores are less desperate “because they’ve been able to reduce their inventory.” [More]

I also wonder if the recent steep slide in corn prices won't bring rampant machinery sales to an abrupt halt, much as it did this summer when we didn't know what we had in our fields. I think we are much more sensitive to such exterior phenomena than before, maybe because we are buying a lot of stuff we could postpone or even do without, rather than badly needed equipment.

2011-11-23T06:58:00.001-06:00

Better mice...

Note how fast it returns to the start after mapping.

Update: the embedding isn't working. Click here.

Sorry

Ya gotta believe this kind of software will be what we turn on at the entrance to a field soon.

2011-11-22T07:42:00.001-06:00

Password sense...

Of all the places to find a better password system, xkcd was not my first thought:

[Click to embiggen]

Roll your own here.

2011-11-20T16:52:00.001-06:00

A mandate by any other name...

The fervor on the right for the SOTUS to declare the health care insurance mandate unconstitutional is far from a stand-alone issue. I have written before about the comparison to the ethanol mandate, but it is even more abstruse legally than I had imagined.

For instance, if the ACA mandate doesn't pass muster, it could impact the 1938 Farm Bill, which undergirds every farm bill since.

The role the Wickard decision will play in the health care reform lawsuits that are now before, or headed toward, the U.S. Supreme Court is unclear, because some lower court judges have refused to use the 1942 case as precedent, while others have.
ISU’s Harl notes in his article that “one of the more influential opinions from the appellate courts” did take notice of Wickard and upheld the health care law “as within the power of Congress to legislate under the commerce power.”
Of particular interest, Harl said, is the fact that the three-judge panel of the District of Columbia Court of Appeals that made the decision was headed by Judge Laurence Silberman, a conservative judge who was appointed by President Ronald Reagan in 1985.
The Silberman decision, Harl wrote, stated that “Wickard … comes very close to authorizing a mandate similar to (the health care legislation), at least indirectly.”
Also, Harl noted, “Judge Silberman, in the opinion, concluded with the statement ‘we are obliged — and this might well be our most important consideration — to presume that acts of Congress are constitutional.’ ”
Harl’s article concludes with a question: “What are the chances that the current (Supreme) court will follow the path taken by the District of Columbia Court of Appeals and uphold the legislation?”
The high court, he wrote, “has a choice — overturn Wickard v. Filburn or, at least distinguish it, which could be difficult to do, or uphold the 2010 health care legislation.” [More]

Moreover, striking it down will really complicate other applications of the Commerce Clause, which has allowed Congress to meddle in all kinds of sectors to reward constituents/supporters.

To be sure, a number of the Supreme Court's Commerce Clause cases have used the word "activity" to describe behavior that was either regarded as within or without Congress's authority. But those cases did not purport to limit Congress to reach only existing activities. They were merely identifying the relevant conduct in a descriptive way, because the facts of those cases did not raise the question--presented here--of whether "inactivity" can also be regulated. In short, we do not believe these cases endorse the view that an existing activity is some kind of touchstone or a necessary precursor to Commerce Clause regulation. . . .
Indeed, were "activities" of some sort to be required before the Commerce Clause could be invoked, it would be rather difficult to define such "activity." For instance, our drug and child pornography laws, criminalizing mere possession, have been upheld no matter how passive the possession, and even if the owner never actively distributes the contraband, on the theory that possession makes active trade more likely in the future. And in our situation, as Judge Sutton has cogently demonstrated, many persons regulated by the mandate would presumably be legitimately regulated, even if activity was a precursor, once they sought medical care or health insurance. [More]

And it's just that simple.

Seriously, the legal fallout from this case will be immense regardless of the decision.

Update: Another opinion that cites Wickard as an important guiding precedent.

2011-11-17T06:47:00.001-06:00

Another feckless prediction...

Fertilizer prices may have peaked.

No, seriously.

Aaron and I are revising our P & K apps in light of the outcome of our cash rent negotiations. My pattern has been to simply slow the buildup on fields that need it.

But whether the Fertilizer Oligopoly can repeat their slowdown to limit supplies is to be seen.

According to the International Fertilizer Industry Association (IFA), there are currently 250 fertilizer production capacity expansion projects under way globally and planned investments of approximately $88 billion through until 2015, including huge projects in China, the Middle East and Latin America.
...
Among the minerals, nitrogen production capacity is growing particularly quickly.
Capacity is seen 19% higher at 229.6 mmt by 2015, driven by expansion in China, India and Latin America, where authorities are seeking to increase self sufficiency and in Africa, where there are the most accessible deposits, according to the IFA.
Meanwhile, regarding urea, the Middle East and North Africa are set to become more important because of the energy cost advantages.
"New capacity is being built to take advantage of cheap gas in Qatar Saudi Arabia and Iran, among other spots," said Calum Findlay of UK fertilizer merchant Gleadell Agriculture.
Another area in which heavy investments are being made is potash and, as a result, large potash surpluses are expected from 2015 onward, according to the IFA. Canada will have the biggest surplus, providing a readily available source of potassium for U.S. farmers. By 2015, North America will produce 39% of the world's potash.
In the area of phosphates, rock mining capacity is expected to grow 26% between 2010 and 2015 with the largest growth areas in Africa, which has the most readily accessible reserves.
In the short term, phosphoric acid supply remains tight but that should ease in the next three to four years as 34 new plants are planned for completion between 2010 and 2015.
With food and feedstuff prices still near all-time highs, demand for fertilizers remains buoyant. But affordability will keep a lid on demand. That's because, at current levels, fertilizer prices are around 30% higher than what is considered a natural equilibrium point against agricultural commodity prices, according to CRU analysis. [More]

Another curious development is the glut of crude in the Midwest and the unusual reaction.

The decision to reverse the flow of a key oil pipeline should alleviate a supply bottleneck that has trapped crude in the Central U.S. for the better part of this year.

It will also raise the price of oil in the U.S., and could restore some of the lost legitimacy of the main U.S. crude benchmark.
Benchmark crude on the New York Mercantile Exchange jumped above $102 a barrel after Wednesday's announcement that Enbridge Inc. (ENB) and Enterprise Products Partners LP (EPD) would reverse the direction of the Seaway pipeline to transport crude from the oil hub of Cushing, Okla., to refiners on the Gulf Coast.
The reversal should help drain the brimming tanks of oil in the Midwest, where elevated inventories and a shortage of outgoing pipelines have depressed the price of crude on the Nymex, also called West Texas Intermediate, compared with Europe's Brent benchmark for much of this year.
...
Pending regulatory approval, the 500-mile pipeline could ship an initial 150,000 barrels of oil a day from Cushing to the Houston-area refining market by the second quarter of next year, Enbridge and Enterprise said.
After pump station additions and modifications, the capacity could rise to 400,000 barrels a day by early 2013, the two companies said.
That flow should help reduce oil inventories in the Midwest, which have been elevated for much of the year. Over the past 12 months, commercial crude held in storage in the Midwest has risen 4% to 91.2 million barrels last week, according to Department of Energy data.
"It enables the increasing amount of oil production to get to the refining centers on the Gulf coast in an economical way," said Andy Lipow, president of the Houston oil-industry consultancy Lipow Oil Associates.
Seaway isn't the only pipeline in the works that will transport crude out of the Midwest. TransCanada Corp.'s (TRP) expansion of its Keystone pipeline, which carries Canadian crude into Cushing, will offer an outlet to the Gulf Coast as well. [More]

I am embarrassed to say I thought they were one-way pipelines.

2011-11-17T06:35:00.001-06:00

First!...

Like those obnoxious comment trolls who try to be the first to comment, I'm calling first. A reader remarked he had heard nothing about "shallow loss" payments being amber box payments for WTO purposes, as I remarked on Sunday.

Yesterday the USDA backed up my analysis.

Meanwhile, USDA Chief Economist Joe Glauber said Tuesday that most of the programs under consideration would be likely to be categorized as trade-distorting under WTO rules.
The "shallow loss" revenue program would probably be categorized as a product-specific trade distorting subsidy in the amber box, disaster aid would be non-product specific in the amber box, direct payments linked to the cost of production would be amber box and the new dairy program could be categorized as green or amber or put in the mid-distorting blue box depending on how it is finally constructed, Glauber said. [More]

This pig just found an acorn.

2011-11-15T07:07:00.001-06:00

The new face...

Of the Plains. Hint: it doesn't look like me.

For generations, the story of the small rural town of the Great Plains, including the dusty tabletop landscape of western Kansas, has been one of exodus — of businesses closing, classrooms shrinking and, year after year, communities withering as fewer people arrive than leave and as fewer are born than are buried. That flight continues, but another demographic trend has breathed new life into the region.
Hispanics are arriving in numbers large enough to offset or even exceed the decline in the white population in many places. In the process, these new residents are reopening shuttered storefronts with Mexican groceries, filling the schools with children whose first language is Spanish and, for now at least, extending the lives of communities that seemed to be staggering toward the grave.
That demographic shift, seen in the findings of the 2010 census, has not been uniformly welcomed in places where steadiness and tradition are seen as central charms of rural life. Some longtime residents of Ulysses, where the population of 6,161 is now about half Hispanic, grumble over the cultural differences and say they feel like strangers in their hometown. But the alternative, community leaders warn, is unacceptable. [More]

As we have become expectant of instantaneous, radical changes in our world, we often miss the merely rapid social changes happening around us. My grandchildren will live in a different rural America, it seems. Nor do I think this demographic trend will stop at the Mississippi, although the economic structure variations will certainly revise its pattern. But it is hard to ignore the consequences of a shift like this:

[Click to enlarge][Same source]

2011-11-14T06:51:00.001-06:00

The really big problem...

I have become more convinced than ever our global economy is confronting a growing obstacle in the form of human-obsolescence on the producer side. Sure we need consumers to buy goods and services, but our demand for workers to supply them languishes without signs of a turnaround. (Which also explains the lack of consumers, duh.)

It is hard to look at technology and not see the the reason. The recession has had the odd consequence of promoting technical upgrades to lower production costs, lowering even further the need for people.

The question for me is not when where will the consumers come from, but what will they do to earn a living?

FEAR of displacement from one's job by a superefficient machine is as old as modern economic growth (which is to say, about two centuries old). It is somewhat surprising that there has not been more made of the possibility of technological unemployment during the recent recession and lacklustre recovery. Technological unemployment was widely cited as a problem in the 1920s and 1930s, a time during which productivity was soaring, inequality and unemployment were high, and instability was the norm.
The argument that rapid technological change may be generating labour market problems is given a lift in an interesting new ebook by Erik Brynjolfsson and Andrew McAfee, entitled Race against the machine. The opening chapter attempts to cast the book as a means to understand present high unemployment, which is a little unfortunate; most of current labour market weakness can be explained by weak growth, and weak growth is well explained by weak demand. It is, however, a useful contribution to the discussion of what has gone wrong in the American economy in recent decades.
The stylised facts of that poor performance are increasingly well known. Real median income has stagnated, especially over the last decade. Inequality has risen dramatically, driven by huge increases in top incomes. Employment growth has disappointed. At least some of the blame for all of this, the authors argue, can be laid at the foot of new technology. It's an interesting twist on the themes developed by Tyler Cowen in his ebook The great stagnation. Mr Cowen argues that a major slowdown in innovation is constraining potential growth, while new progress in information technology isn't providing benefits to most workers. Mssrs Brynjolfsson and McAfee tweak the argument, writing that innovation has been gathering pace and having an increasing impact on labour markets. In a nutshell, new technologies are displacing workers faster than the economy can find new uses for them. [More worth reading]

The standard answer is education, but there are signs that solution isn't working like it used to as well. Demand for college graduates is slow, salaries are dropping, and meanwhile education costs spiral upwards.

Adding more graduates to this scenario seems like pouring fuel on the fire to me. What is often ignored is technology is replacing all kinds of workers - not just those on assembly lines. In fact, the very lowest level jobs may be the most secure: hotel maids, garbage collectors, nurses aides, janitorial workers, etc.

Stanley Aronowitz and William DiFazio wrote a pretty gloomy book in 1994 with the striking title, The Jobless Future. Here is a Harvard Educational Review discussion of the book (link). What is most discomforting in reading the book today is the degree to which the factors they identify seem to be today's headlines. What does jobless mean here? In a word, it means that the US and other OECD countries will never recover the number and quality of jobs they need in order to regain the middle class affluence they had in the 1950s and 1960s. The future will involve work -- but not enough jobs to ensure a low unemployment rate. Here is their assessment in 1994:
For there is no doubt that we have yet to feel the long-term effects on American living standards that will result from the elimination of well-paid professional, technical, and production jobs. At the same time, nearly everyone admits that many of these jobs are gone forever. (xi)
The central structural factors they identified in 1994 are still key parts of our economic environment today: technology innovation replacing labor, rising productivity producing persistently flat labor demand, shifts in the structure of the economy towards finance and service sectors, and internationalization of production. [More gloomy pondering]

I cannot see why our profession will be exempt. In fact, only land ownership seems to be a guarantee against displacement: when your buy a farm, you buy the right to name the farmer.

We are currently in the process of attracting many young and youngish farmer aspirants back to rural America. More than a few I suspect are doing so because of lack of alternatives such as mentioned above. Like professions such as law, medicine, administration, management, etc. demand for workers in our industry - regardless of how highly trained - will be limited.

We know what happens when labor demand falters. It can be seen in history books in examples as diverse as Middle Age economies (guilds) to the USSR (an economy based on who you knew). Jobs will be THE commodity of the future, I'm afraid. And the social and economic gaps between those who do and do not have one will widen and worsen.

2011-11-13T06:52:00.001-06:00

Why I'm not talking much about...

The SECRET FARM BILL NEGOTIATIONS. This near-farcical drama has been portrayed as circumventing the legislative process (a fair charge, IMHO), probably futile, generating an even more complicated program, and anti-small farms.

I have followed the leaks and speculation, but there are some good reasons why I think it will be a waste of time.

1. The proposals I have seen smell like Yellow Box payments WTO-wise.

These green box subsidies have to be government-funded, not by charging consumers higher prices, and must not involve price support. They tend to be programs that are not directed at particular products and include direct income supports for farmers that are decoupled from current production levels and/or prices. [More]

The "shallow loss" idea definitely is linked to current production, it seems to me. And for farmers who carped about feet-dragging on the FTA"s to turn around and deliberately invite WTO sanctions would be breathtakingly counterproductive.

2. The CBO will not score it as generously as the writers imagine. While we never have been able to predict what a farm bill will cost - and always underestimate badly - one reason many farmers are interested is because an insurance-type outcome could make the safety net a true hammock. This doesn't happen unless we siphon more off the treasury, not less. I don't think the CBO will share the Gang of 4 budget smoke-and-mirrors optimism.

3. The AFBF is not amused. I think the sprawling farm organization senses a whacking loss of clout should corn, soy and cotton advocates push the shallow-loss idea through.

The American Farm Bureau Federation also has sent a letter to members of the House and Senate agriculture committees questioning the development of any farm bill proposal that covers "shallow losses." Several proposals effectively involve gap coverage that would protect farmers' income up to 90% levels. Effectively, a farmer buys crop insurance at 75% protection levels, and the shallow plan would cover anywhere from 10-15%, depending on the proposal.
Farm Bureau said "a shallow loss program is a drastic departure from any previous farm policy design" and that "our biggest concern is that by reducing the risk of shallow losses, farmers may be encouraged to take on more risk than they would in response to market signals alone."
Farm Bureau said creating a shallow loss program would increase moral hazard because "insured individuals may engage in riskier behavior with only a $250 deductible, they may drive faster or in more extreme weather conditions than if they purchased a high deductible policy." See link below.
Farm Bureau's choice of a comparison led one commodity lobbyist to ask, "What are they drinking or smoking over there?" The letter puts Farm Bureau at odds with cotton, corn and soybean groups that have all proposed new crop programs. [More]

4. Finally, I am not optimistic the Super-Committee will get a package done. The big stick was supposed to be draconian cuts to defense, but those are either less alarming to many in Congress than previously imagined or seen as avoidable with legislative sleight of hand or by just ignoring them. In addition, letting the Bush Tax Cuts expire would be the single easiest way to address the budget deficit. There is no big win for getting a deal, looks to me.

So my bottom line: this is most likely just farm media filler and political blithering for use in upcoming campaigns in farm states.

2011-11-12T06:18:00.001-06:00

True mystery meat...

I'm not a big fan of the McRib. It's too messy, especially for the road and the texture defies mouth analysis. But I'm far from being it's biggest critic.

Some point to the lengthy list of unappetizing ingredients. But hey - what prepared food or restaurant fare doesn't read like that?

The more unsettling accounts are how the umm, meat is processed.

Roger Mandigo is an emeritus University of Nebraska animal science professor credited with the technology that made the McRib possible. And here's its story, straight from the meat scientist's mouth.

Roger Mandigo earned induction into the Meat Industry Hall of Fame for his invention of "restructured meats."

Back in the 1970s, Mandigo tells The Salt, he was approached by the National Pork Producers Council (the folks who later brought you "the other white meat") to create a product with pork trimmings that could be sold to the fast food giant.
"The pork producers wanted to see more pork on the menu, and they were targeting McDonald's," Mandigo said.
Mandigo went to work in the lab and came up with a new take on an old-fashioned technology: sausage-making. Instead of just stuffing pork meat inside a casing, Mandigo used salt to extract proteins from the muscle. Those proteins become an emulsifier "to hold all the little pieces of meat together," he says.
"All we did was reuse the technology that had been around for hundreds of years and emphasize that we could shape products to shapes people wanted," he says.
And here is where our story takes an interesting twist: Seems the McRib was not born in the shape of its current pork patty. The original concoction Mandigo made was formed as a faux pork chop.
McChop? Maybe not.
"[McDonald's] chose the shape," Mandigo said. "They wanted it to look like the boneless part of a backrib."
That's why Mandigo is adamant that he was not the father of the McRib, despite getting the credit for it all these years. [More]

Still others use the McRib to bash modern hog production methods.

Bad news for fans of the infamous McRib: The Humane Society filed a legal complaint against Virginia-based Smithfield Foods, which supplies the pork for McDonald's sandwich. In an undercover operation from 2010, the animal rights group says it uncovered a number of disturbing farming practices, including the use of tightly confining gestation crates that cause sows to suffer "from open pressure sores and other ulcers and wounds," with nary a veterinarian in sight. Will these gross allegations sully the reputation of the barbecue-sauce-slathered sandwich?[More]

But the most curious element is the intermittent appearance of the McRib on the MacDonald's menu. There is even a theory for that.

Now, take a look at this sloppy chart I’ve taken the liberty of making. The blue line is the price of hogs in America over the last decade, and the black lines represent approximate times when McDonald’s has reintroduced the McRib, nationwide or taken it on an almost-nationwide “Farewell Tour” (McD’s has been promising to get rid of the product for years now).

Key: 1. November 2005 Farewell Tour; 2. November 2006 Farewell Tour II; 3. Late October 2007 Farewell Tour III; 4. October 2008 Reintroduction; 5. November 2010 Reintroduction.
The chart does not include pork prices leading into the current reintroduction of the McRib, but it does show it on a steep downward trend from August to September. Prices for October, 2011 hogs have not been posted yet, but I suspect they will go lower than September—pork prices tend to peak in August, and decline through November. McDonalds, at least in recent years, has only introduced the sandwich right during this fall price decline (indeed, there is even a phenomenon called the Pork Cycle, which economists have used to explain the regular dips in the price of livestock, especially pigs. In fact, in a 1991 paper on the topic by Jean-Paul Chavas and Matthew Holt, the economists fret that “if a predictable price cycle exists, then producers responding in a countercyclical fashion could earn larger than ‘normal’ profits over time... because predictable price movements would... influence production decisions.” At the same time, they note that this behavior would eventually stabilize the price, wiping out the pork cycle in the process).
Looking further back into pork price history, we can see some interesting trends that corroborate with some McRib history. When McDonald’s first introduced the product, they kept it nationwide until 1985, citing poor sales numbers as the reason for removing it from the menu. Between 1982 and 1985 pork prices were significantly lower than prices in 1981 and 1986, when pork would reach highs of $17 per pound; during the product’s first run, pork prices were fluctuating between roughly $9 and $13 per pound—until they spiked around when McDonald’s got rid of it. Take a look at 30 years of pork prices here and see for yourself. Also note that sharp dip in 1994—McDonald’s reintroduced the sandwich that year, too. Though notably, they didn’t do so in 1998.
(I’m sure all the sharp little David Humes among us are now chomping at the bit—and you’re right to do so! This proves nothing. It is just correlation—and the sandwich doesn’t always appear when pork prices are low. In fact, the recent data could prove that McDonald’s actually drives pork prices artificially high in the summers before introducing the sandwich—look at 2009’s flat summer prices. Could that be, in part, because there was no McRib? On the other hand, food prices were flat across the board in 2009 so probably not. So, no, this correlation proves nothing, but it is noteworthy.)
Because we don’t know the buying patterns—some sources say McDonald's likely locked in their pork purchases in advance, while others say that McRib announcements can move lean hog futures up in price, which would suggest that buying continues for some time—and we can’t seem to agree on what the McRib is made of—some sources say pork shoulder, others say a slurry of offal—it’s hard to really make any real conclusions here.
The one thing we can say, knowing what we know about the scale of the business, is that McDonald’s would be wise to only introduce the sandwich (MSRP: $2.99) when the pork climate is favorable. With McDonald’s buying millions of pounds of the stuff, a 20 cent dip in the per pound price could make all the difference in the world. McDonald’s has to keep the price of the McRib somewhat constant because it is a product, not a sandwich, and McDonald’s is a supply chain, not a chain of restaurants. Unlike a normal restaurant (or even a small chain), which has flexibility with pricing and can respond to upticks in the price of commodities by passing these costs down to the consumer, McDonald’s has to offer the same exact product for roughly the same price all over the nation: their products must be both standardized and cheap. [More]

This strange sandwich provokes strange reactions in consumers. But it's most lasting effect may be the piling on consequence of yets another restaurant/grocery offering that should not be examined in detail.

For my mind, this is simply an example of a culture that values quantity over nutrition in food. And one with an abnormally high sweetness demand. McRibs are probably little worse than other fast-food offerings, and as for eating offal, that too is simply a cultural and economic affectation. Protein is protein, and if you don't like the idea of "variety meats", the McRib is simply one way to avoid knowing you're eating them.

2011-11-10T06:46:00.001-06:00

Reportless on the farm...

Even as confidence in NASS reports falters, budget cuts could be adding to the woes of the agency. So much so that smaller commodities may have to count themselves, so to speak.

In light of funding reductions in fiscal year (FY) 2011 and the likelihood of additional reductions in FY 2012, NASS conducted deliberate reviews of all programs against mission- and user-based criteria, aimed at finding cost savings and forward-thinking business efficiencies so that key timely, accurate and useful data remains available in service to agriculture. As a result, the agency is discontinuing or reducing a wide range of agricultural survey programs. The decision to eliminate or reduce these reports was not made lightly, but it was nevertheless necessary, given the funding situation. Because of the timing of the agency’s survey work during the coming year, these decisions are necessary now. These programs are:
Annual Reports on Farm Numbers, Land in Farms and Livestock Operations - Eliminate
Catfish and Trout Reports – Eliminate all
Annual Floriculture Report - Eliminate
January Sheep and Goat Report - Eliminate
Chemical Use Reports – Reduce frequency of commodity coverage
July Cattle Report - Eliminate
Distiller Co-Products for Feed Survey - Cancel
Annual Bee and Honey Report - Eliminate
Annual Hops Production Report - Eliminate
Monthly Potato Stocks Report – Reduce from monthly to quarterly
Annual Mink Report – Eliminate
Fruit and Vegetable in-season forecast and estimates– Reduce from monthly and quarterly to annual report
Nursery Report – Eliminate
Rice Stocks June and September reports - Eliminate but continue January, March and August reports
Recognizing the importance of NASS’s data products and services to U.S. agriculture, NASS will make available similar data either less frequently or within the every 5-year Census of Agriculture. The next census will be conducted beginning January 2013 to reflect activities in the 2012 calendar year. [More]

The irony here is these may be the more accurate of all the reports the agency does. But it also presages what could happen to even major commodities.

The most interesting aspect of this announcement is if it will come true.

Many of the reports being cut today, including those on mink, catfish, trout, flowers and honey, were eliminated during an earlier round of budget tightening in 1982. A year later, most of the reports were restored by Congress because of appeals from farm groups.
William E. Kibler, the administrator of the statistics service at the time, said the experience showed how hard it was to eliminate a government program, no matter how small the constituency.
“The commodity organizations out there are pretty strong,” he said. “These congressmen up on the Hill say, ‘$50,000 is not much, let’s give it to them.’ ”[More]

Coupling this with the apparent ineffectiveness of the AFBF influence during the "secret" farm bill debate, and one begins to wonder if the vaunted ag lobby isn't losing steam. At the least, it would appear commodity organizations like the NCGA have taken over the helm.

2011-11-08T17:31:00.000-06:00

Button down the hatches...

Alaska is about to be hit by a super-storm.

A ferocious, dangerous storm in the north Pacific is on a collision course with the west coast of Alaska. Referred to as the “Bering Sea Superstorm” by the National Weather Service Office in Fairbanks (NWS), damaging winds, severe beach erosion and major coastal flooding are expected. In some locations, heavy snow and blizzard conditions are also forecast.
“This will be one of the most severe Bering Sea storms on record,” the NWS wrote today.
The storm is predicted to deepen at an incredible rate, with its central pressure crashing from 973 mb this morning to 945-950 mb tonight.
“This storm has the potential to produce widespread damage,” the NWS in Fairbanks said.
Sustained winds of 80 mph (with gusts to 90 mph in some locations) may impact an area the size of Colorado with offshore waves to more than 40 feet according to the NWS Facebook page. A storm surge of 8 to 10 feet is predicted along the coast. The combination of wind, waves, and high sea levels will create many hazards as described by the NWS in a Special Weather Statement:
THE HIGH SEA LEVELS COMBINED WITH HIGH WAVES WILL PRODUCE SEVERE BEACH EROSION AND MAJOR COASTAL FLOODING ALONG THE NORTHERN AND EASTERN SHORES OF NORTON SOUND AND ALONG THE BERING STRAIT COAST. HIGH WATER LEVELS WILL PRODUCE COASTAL FLOODING ALONG THE SOUTHERN SHORE OF NORTON SOUND. STRONG WINDS AND WAVE ACTION MAY PUSH ICE IN NORTON BAY ON SHORE. [More]

Double Yikes!

I suspect this is another example of storm intensification due to global warming. I cannot prove this, I admit. But I'm not alone in thinking storms could become more powerful for this reason

Kerry Emanuel, the lead author of the new study, wrote a paper in 2005 reporting an apparent link between a warming climate and an increase in hurricane intensity. That paper attracted worldwide attention because it was published in Nature just three weeks before Hurricane Katrina slammed into New Orleans.
Emanuel, a professor of atmospheric science in MIT's Department of Earth, Atmospheric and Planetary Sciences, says the new research provides an independent validation of the earlier results, using a completely different approach. The paper was co-authored by postdoctoral fellow Ragoth Sundararajan and graduate student John Williams and recently appeared in the Bulletin of the American Meteorological Society.
While the earlier study was based entirely on historical records of past hurricanes, showing nearly a doubling in the intensity of Atlantic storms over the last 30 years, the new work is purely theoretical. It made use of a new technique to add finer-scale detail to computer simulations called Global Circulation Models, which are the basis for most projections of future climate change.
"It strongly confirms, independently, the results in the Nature paper," Emanuel said. "This is a completely independent analysis and comes up with very consistent results."
Worldwide, both methods show an increase in the intensity and duration of tropical cyclones, the generic name for what are known as hurricanes in the North Atlantic. But the new work shows no clear change in the overall numbers of such storms when run on future climates predicted using global climate models. [More]

The combination of more energy from hotter air and more water vapor leads me to prepare for a wider range of weather possibilities. Luckily, I'm not quite as close to an ocean or Arctic air as those guys hunkering down in AK.

2011-11-08T11:00:00.000-06:00

You'll never guess...

Who said this:

“The state has no business getting involved in a matter between two individuals”

Nope - not Ron Paul.

2011-11-08T08:00:00.001-06:00

College doesn't pay...

For some - it just costs. College is no longer the guarantee of a good or even adequate job. Especially considering the enormous increase in the cost.

Yes, the college grad will spend years paying off her loans. But eventually her earnings net of loan payments will pull ahead of the high school graduate's. So, case closed. It may hurt to write the checks, or borrow, but college pays.
Well, maybe not.
According to the College Board, it takes 14 long years before the four-year college grad's income, net of loan payments, starts to beat what the high school grad earns. During all those 14 years, college doesn't pay. High school pays. [More]

Recently there has been a vigorous debate about the how much choosing the wrong degree is contributing to this problem. Ryan Avent has the best answer to this criticism, I think.

Personally, I think this kind of blog post—Mr Cowen's—goes a long way toward explaining the current job market malaise for the young. It is remarkable to me how readily old, successful professionals dismiss the labour-market difficulties of young adults as the product of their poorly-chosen majors and general lack of ambition, and on what flimsy evidence they're prepared to base these views. There are now 3.3m unemployed workers between the ages of 25 and 34. That's more than twice the level in 2007. There are over 2m unemployed college graduates of all ages; nearly three times the level of 2007. There are many millions more that are underemployed—unwillingly working less than full-time or unwillingly working in a job outside their field which pays less than jobs in their field. As far as I know, the distribution of college majors didn't swing dramatically from quantitative fields to art history over the past half decade.
Meanwhile, the Wall Street Journal provides us with a handy interactive graphic examining unemployment rates by major according to the 2010 Census. Coming in toward the top of the list and ahead of "art history and criticism" are the sorts of degrees you'd expect, like those falling into "miscellaneous fine arts", but also "computer administration management and security", "engineering and industrial management", "international business", "electrical and mechanic repairs and technologies", "materials engineering and materials science", "genetics", "neuroscience", "biochemical sciences", and "computer engineering". I bet those graduates are all trying to break into puppetry!
I am sure that many young graduates feel entitled to better work than they've managed to find, and some of them probably chose poorly when it came time to matriculate. But I see little evidence that high unemployment is due to the shiftlessness of youths and far more evidence that high youth unemployment is due to systematic weakness in labour markets associated with a shortfall in aggregate demand. [More worth reading]

While I agree there seems to be no evidence students are flocking to dubious majors more so than before, it seems obvious the demands of a thin job market accentuates discriminates against them more. Now add in the the decline in public employment (teachers, administrators, government workers, etc.) which was often the employer of last resort for such degrees and you have the "Dustin" phenomenon.

Trying to laugh at this problem is probably healthy, but there is growing concern among economists - not to mention parents - that the economy is trending away from a solution to this problem.

And the idea of forcing everyone to become engineers or doctors isn't working either. For one thing, there is a huge attrition rate is those fields.

Politicians and educators have been wringing their hands for years over test scores showing American students falling behind their counterparts in Slovenia and Singapore. How will the United States stack up against global rivals in innovation? The president and industry groups have called on colleges to graduate 10,000 more engineers a year and 100,000 new teachers with majors in STEM — science, technology, engineering and math. All the Sputnik-like urgency has put classrooms from kindergarten through 12th grade — the pipeline, as they call it — under a microscope. And there are encouraging signs, with surveys showing the number of college freshmen interested in majoring in a STEM field on the rise.
But, it turns out, middle and high school students are having most of the fun, building their erector sets and dropping eggs into water to test the first law of motion. The excitement quickly fades as students brush up against the reality of what David E. Goldberg, an emeritus engineering professor, calls “the math-science death march.” Freshmen in college wade through a blizzard of calculus, physics and chemistry in lecture halls with hundreds of other students. And then many wash out.
Studies have found that roughly 40 percent of students planning engineering and science majors end up switching to other subjects or failing to get any degree. That increases to as much as 60 percent when pre-medical students, who typically have the strongest SAT scores and high school science preparation, are included, according to new data from the University of California at Los Angeles. That is twice the combined attrition rate of all other majors.
For educators, the big question is how to keep the momentum being built in the lower grades from dissipating once the students get to college. [More]

I also wonder that an oversupply of engineers, etc. might not soon remove these last "safe" degrees, reducing job searches to more a matter of luck and connections than merit.

What I do know is this. I don't recall clearly my sons' graduation ceremonies, but I have a clear recollection of the days they accepted job offers.

At any rate, employing all who want to work is our largest economic problem, IMHO. If others disagree, it may be because their kids are too young or non-existent.

2011-11-07T19:09:00.001-06:00

Back in the saddle again...

If I can remember how to do this, I'm going to ease back into posting.

For Gary who asked for an updated state-country GDP map:

[Here for the interactive source]

2011-10-27T06:01:00.003-06:00

Look, I know...

Youse guys are all done, but we about 75% (500 acres of corn left). Between that and some complicating personal matters and the multiple deadlines for FJ, TP, and USFR I find myself short on enthusiasm/energy to post. Plus the GSS needs to be done (interior) in time for Thanksgiving - which is a home game.

I do miss the contact, and this week should see us way down the road.

Hope yours was a safe and surprisingly good harvest.

Thanks for reading.

2011-10-09T16:30:00.000-06:00

Kiss a half-hour goodbye...

My latest comic find: Savage Chickens

[BTW, I was right. Full-season hybrids are worse.]

2011-10-08T16:16:00.001-06:00

The best words...

Written about Steve Jobs:

As always there are those who reveal their asininity (as they did throughout his career) with ascriptions like “salesman”, “showman” or the giveaway blunder “triumph of style over substance”. The use of that last phrase, “style over substance” has always been, as Oscar Wilde observed, a marvellous and instant indicator of a fool. For those who perceive a separation between the two have either not lived, thought, read or experienced the world with any degree of insight, imagination or connective intelligence. It may have been Leclerc Buffon who first said “le style c’est l’homme – the style is the man” but it is an observation that anyone with sense had understood centuries before, Only dullards crippled into cretinism by a fear of being thought pretentious could be so dumb as to believe that there is a distinction between design and use, between form and function, between style and substance. If the unprecedented and phenomenal success of Steve Jobs at Apple proves anything it is that those commentators and tech-bloggers and “experts” who sneered at him for producing sleek, shiny, well-designed products or who denigrated the man because he was not an inventor or originator of technology himself missed the point in such a fantastically stupid way that any employer would surely question the purpose of having such people on their payroll, writing for their magazines or indeed making any decisions on which lives, destinies or fortunes depended. [More]

Even though I have grown to love Apple products, I have never really felt totally on-board like other fans. I did have a respect for Jobs simply because he was a class act in a world full of few.

Fry's point above about style and substance I found intriguing. Engineers are skeptical of style, even while we suffer for our convictions that substance will win out in the end.

It's kinda like all of us farmers who think fundamentals will eventually decide the market.

Yeah - that's working well...

2011-10-05T05:57:00.002-06:00

The case for volatility...

It's not fun to watch the market these days, but there is a growing awareness in the economics community that wild price swings may actually be necessary with very complex financial systems in order to make them fully transparent on risk.

The argument is akin to ideas about forest management—when governments suppress the natural fires that periodically clear away forest underbrush, they create a build-up of flammable material sufficient to power a massive conflagration. I certainly think an equivalent truth applies to financial markets. The longer it has been since a painful collapse, the greater the willingness to pile on leverage and complexity, such that the next crisis becomes unmanagably awful. I think it's important to be careful in applying this idea, however. A few caveats are in order.
...

Macroeconomic stabilisation is consistent with healthy volatility; real shocks can be perfectly good at trimming back over-aggressive financial actors. It's a mistake to think that a deep, demand-side recession is the only thing that will do where financial-market discipline is concerned.
And that brings us to the third point: suppression of macroeconomic volatility isn't as big a problem for financial markets as is moral hazard. I'm not sure that the relatively smooth macroeconomic performance of the last 30 years was as big a contributor to financial-market vulnerability as was the practice of stepping in to bail-out key creditors at various points over that period, while simultaneously facilitating a big increase in leverage. Governments that develop a habit of bailing out institutions when crisis strikes, and which don't go on to reform regulatory rules to ensure that next time the system is robust to individual failures, well, they're begging to suffer a build-up of financial-market excess. [More]

For agriculture the volatility we are seeing now has been greeted by some of us as an endurable exercise, since it allows our demand base at least the opportunity to lock in some less expensive feed/feedstocks and lowers the massive overhead pressure of outside funds being long.

What this also calls into question is the value of technical analysis. I like to think of lines on price charts as "elephant tracks" - the evidence of the fearful, vain elephant in our emotional "old" brain. Alarming price moves soon wear out comparisons with price history upon which technical analysis is supposedly based.

Investors may be feeling the same way, and are "not going to the ball park", as Yogi Berra would say, in droves.

Last week’s record volatility inU.S. stocks ended after four days. The anxiety it instilledamong mutual-fund investors may linger for years.

Investors pulled a net $23.5 billion from U.S. equity fundsin the week ended Aug. 10, the most since October 2008, whenmarkets were reeling from the collapse a month earlier of LehmanBrothers Holdings Inc., the Investment Company Institute saidyesterday. The period tracked by the Washington-based tradegroup included three of the unprecedented four consecutive daysin which the Standard & Poor’s 500 Index rose or fell by atleast 4 percent.
The roller-coaster ride was unnerving for fund investorswho have already endured the bursting of the Internet bubble in2000, a 57 percent collapse in the S&P 500 Index (SPX) from October2007 to March 2009 and the one-day plunge in May 2010 thatbriefly erased $862 billion in value from U.S. shares. Thedebacles, combined with falling home prices, unemployment above9 percent and a lack of trust in government to bring downspending, may sour individual investors on domestic stock fundsfor an additional three to five years, according to Andrew Goldberg, a market strategist at JPMorgan Funds in New York. [More]

In our own industry, think about the cash rent negotiations in progress that just took a different turn. I am in the middle of new leases, and rethinking some of my bids. There is suddenly more justification for lower offers, and those offers will look pretty good compared to prices today. My thinking is this atmosphere offers a good chance to secure a reasonable rent along with a promise/mechanism to share any future windfalls for those owners who find that important.

It may not work as planned, but this window of sharply lower prices may be the grain farmer's equivalent of today's feed buyer opportunity to control lower priced inputs.

2011-10-02T07:07:00.002-06:00

Weekend Update...

We've only done about 80 acres, but the early (105 day) corn was better than expected (185-200). The later planted, fuller season drops off, judging by some end rows and half-ears.

Guys around me are getting very good beans, however, 60-65. Our early beans were less, but still better than we imagined. For the first time in four years we at least had some plants on the heavy black parts instead of holes, so those areas handled the dryness better.

Lighter soils and c-o-c are 30-50 bpa less reportedly.

Meanwhile, the cold temps last night have me scrambling to get the heaters in the greenhouse and GSS going.

2011-09-29T06:56:00.000-06:00

This what summer...

Should be like for kids.

As opposed to split-second over-scheduling.

2011-09-28T06:36:00.000-06:00

It's not just crop reports...

That suck. Even the BEA is having a hard time generating good macroeconomic stats.

There’s one big reason why the current economic weakness in the US has come as such a shock. It’s not the only reason, but it’s an important one, and it hasn’t gotten nearly the attention it deserves: the state of macroeconomic data-gathering in the US is pretty weak.
In particular, the data coming out of the Bureau of Economic Analysis at the beginning of 2009 was way off. Here’s Cardiff Garcia, introducing an interview with Fed economist Jeremy Nalewaik:
The initial GDP estimate for the fourth quarter of 2008 showed that the economy contracted by 3.8 per cent. It was released on January 30, 2009 — about three weeks before Obama’s first stimulus bill passed. That number was continually adjust down in later revisions, and in July of this year the BEA revised it all the way down to a contraction of 8.9 per cent.
The BEA is happy to try to explain what happened here — but whatever the explanation, the original 3.8% figure was a massive and extremely expensive fail. It was bad enough to be able to get a $700 billion stimulus plan through Congress, but if Congress and the Obama Administration had known the gruesome truth — that the economy was contracting at a rate of well over $1 trillion per year — then more could and would have been done, both at the time and over subsequent months and years. Larry Summers warned at the time that the risks of doing too little were much greater than the risks of doing too much; only now do we know just how right he was on that front. (And even he didn’t push for a stimulus of more than $700 billion.)
So what’s being done to beef up the state of America’s macroeconomic statistics so that this kind of monster error doesn’t happen again? The BEA is doing the best it can, but it’s constrained both in terms of its budget and in terms of the quality of economists it can attract. [More]

Of course, the widely touted failure of the stimulus is anything but. It stopped the freefall and until it ran out, sustained our emergence from recession even while states were massively cutting back. But had we but known the real magnitude of the plunge in the 2008 Q4, a larger and more effective stimulus would likely have helped even conservative economists to accept a larger stimulus.

Conservative economist Douglas Holtz-Eakin has a chart he's fond of that demonstrates just how ineffective the 2009 stimulus was. Basically, it shows that the stimulus cost $260 billion and produced only an extra $268 billion in GDP. Personally, I'd take even that, but his point is that the stimulus produced no Keynesian multiplier effect at all. It was just a 1:1 replacement of revenue from one source to another.
But as you may recall, the US Bureau of Economic Analysis recently revised its GDP estimates from late 2008 and 2009, and it turns out the economy was doing much worse than we thought. And if you don't recall this, Michael Linden wants to remind you about it today. He also wants to remind Douglas Holtz-Eakin about it. Because it turns out that when you redo Holtz-Eakin's favorite chart using the corrected data, it suggests that the stimulus bill produced about $544 billion in extra GDP. In other words, a multiplier effect of about 2x. [More]

Bringing an economy from rapid deceleration to sluggish growth is an accomplishment, but anything less than a roaring boom strikes most of us as unsatisfactory. Unless we focus more on short term responses coupled with long term commitments, we will continue to muddle along in the the gray days of stagnation for far too long.

But it should be clear we really dodged a deadly bullet in 2009. Things could be much, much worse right now.

2011-09-27T07:46:00.002-06:00

Junkbox, Episode II.7...

The least I can do is share some stuff I've found curious.

Saving the Post Office
Everybody who is NOT running line up to the left.
Can we "Ireland" our way to prosperity?
Negotiating cash rent? How to make the decision.
The end of jobs
The best description of peak oil I've read. Bonus question: What does this mean for ethanol in the future?

2011-09-27T07:23:00.000-06:00

If you had any doubts...

About the attitude of at least some financial traders, this should dispel them.

[Yeah - the posting is really slow, but I sliced my thumb open on some electrical tubing and my whole hand is useless. It will pick up after harvest and construction completion. Honest.]

2011-09-21T06:17:00.002-06:00

Fuel for thought...

I have never really followed the argument that higher fuel costs were a big deal for my budget. To be sure, they rippled through input costs (especially fertilizer), but otherwise never moved my needle for cropping decisions.

Hence my puzzlement at statements like this:

Agricultural production is sensitive to changes in energy prices, and higher energy prices could cause acreage shifts.

With higher energy related expenses from 2012 to 2018 (fuel up an average of 2.6% to 5.3% and fertilizer up 4% to 10%), total acreage for corn, sorghum, barley, oats, wheat, rice and upland cotton would decrease by an average of 0.2% (under the lower energy price change scenario) to 0.4% (higher price change scenario). [More]

Really? In my world, those figures show almost complete INsensitivity to energy prices. In fact, 0.2% strikes me as outside the error band for projections five years out.

Now add in the increased efficiency of Tier 4 engines that will start populating our farms.

But give tractor manufacturers credit. They met the EPA's January 2011 deadline for Tier 4A compliance. (Final Tier 4 compliance is due by January 2014.) Not only that, they created engines that are more powerful and more efficient than what came before. Trials at the Nebraska Tractor Test Lab confirm that.
A few months ago, CNH proudly announced that some of its Tier 4A tractors had set records for fuel efficiency during preliminary trials at the Nebraska Tractor Test Lab. [More]

I will note in passing that this boost - while expensive upfront - also demonstrates the possibility that environmental protection can prompt regulation that nudges us in a better direction.

I am ~~not~~ now actually using less fuel per acre the longer I farm. It's down below 4 gpa, where it has been for years.

The more interesting energy question for me is why propane isn't dirt cheap like natural gas. The reason is the production process.

Propane is produced as a by-product of two other processes, natural gas processing and petroleum refining. The processing of natural gas involves removal of butane, propane and large amounts of ethane from the raw gas, in order to prevent condensation of these volatiles in natural gas pipelines. Additionally, oil refineries produce some propane as a by-product of cracking petroleum into gasoline or heating oil. The supply of propane cannot easily be adjusted to meet increased demand, because of the by-product nature of propane production. About 90% of U.S. propane is domestically produced.^{[citation needed]} The United States imports about 10% of the propane consumed each year, with about 70% of that coming from Canada via pipeline and rail. The remaining 30% of imported propane comes to the United States from other sources via ocean transport.
After it is produced, North American propane is stored in huge salt caverns located in Fort Saskatchewan, Alberta; Mont Belvieu, Texas and Conway, Kansas. These salt caverns were hollowed out in the 1940s,^[9] and they can store 80 million or more barrels of propane. When the propane is needed, most of it is shipped by pipelines to other areas of the Midwest, the North and the South, for use by customers. Propane is also shipped by barge and railway to selected U.S. areas.^{[citation needed]}

[More]

So instead of propane being made from NG on purpose, it is more what you have left over after extracting the NG. This makes the economics of production a little more complicated that I thought.

Increased liquids prices can lower gas producers’ breakevencosts by $2 per million Btu, which may boost U.S. output by morethan 8 percent through 2014, according to Sriram Vasudevan, aNew York-based director at Macquarie Energy Markets.
Propane at the Mont Belvieu hub in Texas gained 3 cents, or2.3 percent, to $1.36 a gallon on Jan. 10, the highest pricesince Feb. 3, according to DTN, a unit of Telvent GIT SA, aMadrid-based information provider. Ethane at Mont Belvieu wasunchanged at 60.75 cents a gallon. Ethane fell to 43.5 cents onJune 23. Butane climbed 31 percent since early July to $1.70 agallon. [More]

(The "liquids" refer to propane, butane and ethane.)

I also think the no-till claims of drastic fuel usage decreases to be less useful than at first glance. "Rolling" fuel is a $10-15 expense, which today isn't a real biggy or subject to major savings by shifting production methods.

Another reason I think no-till will probably continue its stagnant or diminishing share of acres.

All things considered, this may be all I think about fuel for this year. There are way bigger fish to fry, economically.

2011-09-20T11:43:00.003-06:00

This Bud's for you...

Not me. I can't stand the stuff. But my feelings pale in comparison to this critic:

I don’t drink Budweiser and never have. I’ve tasted it three times (a total of about 3 ounces), first while at the University of Maryland, once again in Myrtle Beach, SC, in 1984, and then again in Seattle, in 2005, at the urging of their distributor’s rep, who - correctly - observed that tasting a thing 21 years ago wasn’t giving it a fair shake. It tasted exactly the same: like a wet piece of the cardboard that comes in new dress shirts – and that’s not an original observation. I first read it on the website of the world’s foremost beer critic, Britain’s Michael Jackson. He had almost nothing positive to say about Bud. I don’t either.
Budweiser has always been far more about marketing than beer. The founder of Anheuser Busch, Adolphus Busch, refused to drink his own brew, calling it “that slop” (he was German, of course, so it came out “dot schlop”) and stuck to wine. AB first made its massive incursion into every American beer market not because Americans were clamoring for the fantastic beer but because the uber-financed new St. Louis brewery actually paid the rent for tavern owners who agreed to sell Bud and kick out all their competitors. (The source for all this – principally, along with a ton of my own research – is an article from Chicago journalist and author Edward McCleland, writing in Salon.com, which you can read here.) When AB was just moving into its ascendance, there were over 100 small breweries making virtually the same beer as Bud, the mild, aggressively-inoffensive, watery Pilsner, a style that originated in Czechoslavakia as a ladies’ beer; a wimpy alternative for the delicate palates of proper Czech ladies who couldn’t stand the big German Alts and Lagers or the muscular Belgian ales. [More fun reading for Bud-haters]

While I do not stand with the "Over-regulation Hysterics" (more on this in my next TP column), I will grudgingly grant that beer distribution laws have to stand as one the absolute examples of bad, awful, economically perverse regulation. And it's hurting our beer choices just when things are looking up for suds-fans.

The measure is intended to limit the ability of brewers to own wholesale distributorships and restaurants. As explained by Open Market, its primary backer is MillerCoors, which claims to be trying to ward off an attempt by their main competitor, AB/InBev (Anheuser-Busch), to buy up beer distributors and squeeze out other companies’ products. But the state’s microbreweries may be the real victims of the provision.
“Wisconsin’s craft brewers are getting caught in some cross fire between MillerCoors and Anheuser Busch,” the Blue Cheddar Blog explains. If this thing goes forward, it will be much more difficult to start a new small beer brewing business with room to grow in one of the states that loves beer the most.”
“This motion was sold to the legislators by Miller/Coors and the Wisconsin Beer Distributors Association on the premise that it would protect Wisconsin from a hostile AB/InBev take over of many current Wisconsin wholesalers,” the blog continues. “This is simply a farce. Since InBev took over AB, they have had 16 opportunities to buy wholesalers and have passed 16 times. Here is the real truth….Miller/Coors and the WBDA are threatened by the growth that is happening in the craft beer industry. Craft is the only segment of beer that is growing, and it is growing by double digits.”
Wisconsin’s craft brewers, who were not consulted while the measure was being framed, account for only about 5% of sales, but their share is increasing. “Everything in this bill is designed to make it harder for small craft brewers to grow,” complained Deb Carey, a co-owner of New Glarus Brewing. “It is a slimy piece of legislation.”
“We are losing assets and we are losing control over our products,” Carey added. “This debate boils down to the fact that the wholesalers do not want a drop of beer going to market in Wisconsin without them making their 30 percent profit from it. That’s it.” [More]

You read that right - the largest chunk of profit in the lager-chain is distribution! Really makes sense, doesn't it?

2011-09-14T15:40:00.001-06:00

Can't even imagine...

What being this coordinated would feel like...

[via sullivan]

2011-09-12T16:42:00.000-06:00

Another hopeful discovery...

Watered down. My belief that fracking had uncovered a legitimate "bridge fuel" to replace coal is still solid, but diminished. As always there are some detail problems.

But if natural gas is, in fact, cleaner than coal, why would it accelerate climate change in the near-term? The key fact here is that burning coal emits two different types of pollutants. First, there’s carbon dioxide, which traps heat. But dirty coal plants also emit aerosol pollution — sulfates and other particles that stay in the air for a shorter amount of time and cool the planet by reflecting incoming sunlight back into space. These particles are bad for human health and cause problems like acid rain, but they do have a short-term cooling effect. (Since aerosols linger in the atmosphere for a shorter period than carbon dioxide, the warming effect eventually prevails.)
Since natural gas is cleaner and emits fewer sulfates, you’d actually get more warming in the short term. Now, since natural gas emits less carbon dioxide, you would get relatively less warming over a longer timeframe, although even then the net climate impact is fairly small. Ultimately, that’s not an argument against natural gas — after all, a slight improvement is still an improvement. Plus, reducing that sulfate pollution would lead to large public-health benefits. But the climate upside, at least, may not be as sweeping as advertised. [More]

Still, it is cheaper and easier to transport, much easier to build plants to burn, and capable of coming online remotely almost instantaneously. These advantages seem sufficient to use NG to replace coal to the maximum extent possible.

But we better still work on adapting to warmer temps and weird rainfall patterns.

2011-09-12T13:32:00.000-06:00

Rural schools...

Won't fit in any of the answers for America's education system. Consider this otherwise good idea for our economy and school system from Kim Manzi:

1. Deregulate schools. A publicly-funded private school is a contradiction in terms; with predominantly public funding comes the inevitable and appropriate demand for public accountability. But we need public schools to have greater flexibility in how they do their work—both in order to discover improved methods and also to tailor approaches to different kinds of students—while simultaneously exposing them to the kind of unsentimental feedback loop for school performance that markets can provide. Education is an industry representing about 4 percent of GDP that is badly in need of deregulation.
School deregulation is much broader than “school choice,” and should have two key components. First, the federal government should establish a comprehensive national exam by grade level to be administered by all schools that are materially publicly funded. We should require each school to publish all results, along with detailed data about school budgets, performance, and so on, each year. Second, continued federal funding should be contingent on states’ passing model-schools legislation that creates simple, uniform rules for establishing new charter schools, and establishes the absolute requirement that funding follows students.
The primary role of the federal government would be to ensure consistent, high-quality information, provide normal market regulation to allow education providers to achieve efficient scale, and sponsor rigorous basic research on educational practices. The role of education providers would be to compete entrepreneurially within this framework.
This is not a panacea. In a nation in which about 40 percent of all births occur out of wedlock, many children will be left behind. But better schools will create material improvement. And this method is not theoretical: Versions have already been implemented successfully in Sweden and the Netherlands, and a similar program is being implemented in Britain now. [More]

As always, vouchers and choice mean little when the only school for miles is the one you already have. But the teeny number of students and lack of political clout hint at even further degradation for small schools.

Nor is the idea of spending massive amounts to keep them up to the pace of city schools a good one either. Like much of our rural culture (churches, recreation, retail, etc.) demographics is the obstacle you can't finesse. As long as we continue to lose people, I see no alternative to losing local services, and Australian-like outback lifestyles.

Next up might be rural mail delivery.

I'm not opposed to small towns having a post office. I am not opposed to small, low-population counties continuing to exist as they were drawn at statehood. I am opposed to government spending money to maintain something that is inefficient and obsolete only because it is politically too painful to change it. The reality of rural America is that we've had a great deal for a long time and it's become an entitlement in our minds.
Rural Free Delivery started in 1902 across most of the United States. It cut the number of post offices by two thirds but added a lot of jobs for rural letter carriers, and a valuable service for farm families. The system worked so well that it endeared the "mail carrier" to those who saw the car or truck stop at their mail box each day. What most people don't see is the massive infrastructure behind the letter carrier and the incredible cost of transferring mail across the country so that each of us gets ours in our box, six days a week. [More]

I think Ken is right. From roads to RFD to schools, many of the elements of our wonderful way of life were heavily subsidized by urban taxpayers. That's going to stop, IMHO, regardless of who is president or Speaker.

2011-09-12T06:03:00.000-06:00

On the outside chance...

That House Republicans will actually consider the Obama jobs bill, there are some good things for farmers I didn't realize.

Mr Obama proposed not only extending a 2% payroll-tax cut scheduled to expire in December, but increasing it to 3.1%—half the employee’s normal contribution to Social Security. He also called for an equivalent 3.1% cut in the employer’s payroll tax for the first $5m of payroll, and elimination of the entire 6.2% tax on the wages of new hires or on pay raises for current employees. At $240 billion, those provisions account for more than half the plan’s price tag. [More]

I am assuming that self-employed would get the same breaks which would be worth a few thou to most of us who are maxed out on the SE tax. Even more valuable in the days of high farm income is the expensing continuation (although that merely postpones taxes, as many of us are being reminded).

But because it looks like it may actually help the economy, it could interfere with the GOP goal: defeat Obama. This is a tricky calculation, and if they are correct - keep the economy faltering to win the White House - I wonder that Washington will ever be able to act reasonably on economic matters in the future.

As one senior House Republican aide told Politico, “Obama is on the ropes; why do we appear ready to hand him a win?" That's a cynical question, obviously. But it's also the right question for understanding what is likely to happen next.
An ideal political process would work something like this: Congressional Republicans would take a look at the American Jobs Act and the forthcoming offsets. If they had specific concerns about some of the jobs proposals, they would propose alternatives. If they worried the offsets weren't sufficient, they would ask for more options. As the two parties agree on both the need to create jobs and reduce the deficit, this should be fertile ground for a compromise.
And maybe it will be. But that can only happen if the question is, "what's the best jobs package?" Unfortunately, as that senior House aide suggests, the question is likelier to be, "what's the best strategy for winning the White House in 2012?" And the answer to that question is to further the impression that Obama is a tax-and-borrow liberal who can't get things done in Washington and doesn't have a sound plan for the economy. Working with the president on a bipartisan jobs-and-deficit-reduction plan makes him look like, well, a good president. And good presidents often get reelected. [More]

It's not like the right has ideas that economists think will help either - tax and spending cuts are not the answer to every economic ill. But it looks like we may find that out in the next few years.

2011-09-12T06:00:00.000-06:00

Wait - he was a cheerleader???...

Rick Perry has done little to attract my admiration. But I may be giving him too much credit.

State and federal taxpayers financed his college education at Texas A&M, even giving him the extracurricular opportunity to be a cheerleader. Upon graduation, he spent four years on the federal payroll as an Air Force transport pilot who never did any combat duty.

Then, in 1984, Perry hit the mother lode of government pay by moving into elected office -- squatting there for 27 years and counting. In addition to getting regular paychecks from taxpayers for nearly three decades as a state representative, agriculture commissioner, lieutenant governor and governor, he also receives platinum-level health care coverage and a generous pension from the state, plus $10,000 a month for renting a luxury suburban home, a covey of political and personal aides and even a publicly paid subscription to Food & Wine magazine. [More]

This Bozo could well walk away with the nomination, as it stands today. And I will watch with interest as the only governor to request an ethanol waiver gets corn farmers to vote for him by not being Obama.

2011-09-11T17:16:00.001-06:00

Junkbox, Episode CMON...

So I started surfing while supper was cooking...

An excellent summary of this summer's weather
More on the Arctic ice phenomenon
What my school was supposed to be like
Is there any convergence between developing and developed economies?
Another GOP defector
How to make baseball games shorter. (I agree)
The day of the Cheap Wine Guy has come!

2011-09-11T16:47:00.000-06:00

Priorities...

As I spend almost all available time in my new workshop getting the power and water systems running and moving tools, etc., I have found I feel less guilty about posting. As if I had the time anyway.

I think Jan and I may be moving to another phase of our lives, and I'm finally letting go of a lot of the pressures to speak and write above and beyond my FJ obligations. I having more time to farm and already have my growing list of projects (furniture, mostly) for family members.

I'll probably post more this winter, as I am not speaking nearly as much. But I frankly don't know what my goals for Incoming are.

I'm keeping it open, and may surprise you and me both.

As always, thanks for reading. See you whenever...

2011-09-05T15:54:00.000-06:00

Three engineers...

With five degrees, and it took all we had to get this up this weekend.

It should be clear why a 64' x 30' workshop was needed to support this structure.

2011-09-04T16:37:00.001-06:00

Name the world's largest...

Oil producer.

Nope.

2011-09-04T16:23:00.001-06:00

Conflict of interest...

Dan Ariely at his best.

2011-09-04T07:23:00.003-06:00

Helpful harvest troubleshooting aid...

2011-09-04T06:51:00.002-06:00

In case you had given up...

I'm still blogging, but shut down following the last week of ProPricing and all our family coming home for Labor Day. We're using this event to get the greenhouse on the GSS.

Some random observations over the last few days.

I see more and more examples of business decisions driven by climate change. From the carbon footprint analysis for pork producers to the curious Chinese Icelandic "resort" that could be related to post-ice trans-arctic trade. It is influences like these, from competitors to customers that will shift many opinions.
Not to mention current weather trends.
I still think acreage for corn will be heavily affected by corn-on-corn performance (or lack) in much of the eastern Cornbelt. What if those years of just-as-good yields were the exceptions due to remarkably good weather? And the possible single-Bt failure is equally ominous.
Which leads me to think seed corn pricing could be a debacle, between trait value questions, another "Liberty-like" blunder, and seed supply problems.
Our corn is surprisingly wet - like 26%. I had assumed it had given up weeks ago, but apparently not. I am still not optimistic about yields, but our plan to start early (Tuesday) is on hold until we can get more than ear samples. BTW, the slight tendency is for NASS to overestimate the yield.
I can't get my mind around the concept of an early frost. Especially after this weekend.

Thanks for your patience.

2011-08-28T07:06:00.003-06:00

Slower and slower...

I can't quite put my finger on it, but it seems to take me longer to do less than say when I was 35 or so. Who knew?

Anyhoo, I'll finish the Cargill Propricing meetings* this week (until December), and we'll start corn right after Labor day. Meanwhile, I need to get the GSS heated, plumbed, and wired. The actual greenhouse is going up next weekend as a project for the whole family.

So posting may be shallow until post-harvest, so to speak.

Thanks for reading.

*At the risk of sounding like a Tool, check out the new ProMax contract. If I had to design a contract, it would look like this. Given my belief in continued strong demand and production issues, the Jul-Nov high-tick guarantee on 50% of the bushels looks like a solid.

2011-08-28T06:57:00.000-06:00

Not again...

The similarities between this growing season and last are disturbing. Historically, we simply haven't had dramatic rainfall shortages such as have begun about the first week July each year. In fact, only during the spring months do we get anything like normal rainfall lately. The temps speak for themselves.

There is no way of knowing, but the prudent scenario seems to be to prepare for similar weather patterns for 2012. The moisture shortage already baked in (pun intended) means the odds of dryness starting out next year are already higher.

FWIW, here's our strategy:

50/50 rotation. We will have to plant about 100 A. of corn-on-corn to get to closer to even numbers of acres, but CoC has taken it in the shorts big time last year and especially this year.
There ain't nothing in the "stacks" to help with hot nights, so we are valuing expensive corn largely on the basis of ease of planting. If conventional corn repeats its performance from last year versus stacked hybrids, we'll take the money and load up Smart Boxes.
Rip all the bean ground. Out theory is we need to make the soil capable of absorbing as much of the spring moisture as possible, while still drying out enough plant in good condition. Roots need to be able to go down as deeply as possible as early as possible. And "ponds" are killers.
More tile. While we are giving serious thoughts to installing control gates in some of our new systems, the need to have ground work/plant right as early as possible means drainage on our heavy soils.
Vertical tillage. We bought about 1.5 days of planting this year by running a Verta-Till over some fields. If the yields hold up, such hours could be gold. We'll also use it in the fall on corn stubble.
"Window" planting. We don't seem to get "seasons" to plant, but ~ 72-hour windows. We have to be able to get as much planted as fast as possible and still get it started well.
More short-season hybrids. Our theory is get pollination and fill over before the race for moisture is over. Also we are moving characteristics like Goss's wilt tolerance and standability up as selection criteria because of the rapid spread of the former and the higher probability of stalk cannibalization.
Early, wetter (corn moisture) harvests. This year's crop won't handle a normal windy fall October front, let alone a significant storm. Given prices and drying costs coupled with early demand I'll spot Cargill ~50¢ off the $7.60 bid to get it out of the field.
More bins. Harvest windows must not be negated by elevator lines.
Possibly adding a second N app, perhaps UAN as sidedress depending on weather after planting.
Corn head guidance feelers. I think down corn will be present more often rather than the exception.

As they say, your mileage may vary, but those who say there is nothing we can do to deal with changing weather patterns are wrong, IMHO. And those who are betting on a return to more normal summer weather patterns are entitled to the payoff if they are right. The steps above represent costly, but possible high payoff actions that could make a big difference. If we are wrong we will lose less than those who bet the other scenario, since many of the investments have some value regardless.

2011-08-28T05:57:00.001-06:00

How did they get the raccoon poop...

Cleaned off them? It seems the latest decorating rage from across the Pond is old grain sacks.

Fabric sacks, like the kind traditionally used by European farmers up until the middle of the last century for carting grains to and from the mill, can be spotted all over the home this fall.
On pillows. On tables. On lampshades.
Many retailers like Target, Pottery Barn and Restoration Hardware as well as the design community have their own applications for these textiles, some of which are authentic and others only inspired by the past. Even so, bringing this sort of woven simplicity to decorative pieces is on the rise.
"I definitely see this as a big trend for fall," says Sabrina Soto, Target Style Expert for Home and HGTV celebrity designer. "Vintage-inspired pieces -- reminiscent of what you might find at a
Kymberley Fraser designed this penguin-themed grain sack pillow for her 3 Fine Grains line of home goods.
French flea market -- can create a traveled, eclectic look in any room."
The two looks emerging include striped linen and printed burlap.
Historically, linen grain sacks were produced on the farm.
Family farmers would set aside land for growing hemp or flax. They would harvest it, soak it to loosen the fibers, clean and spin the fibers into thread and then weave the fabric (because in those times durable fabric was not readily available). From the rolls of fabric different textiles were created, including utilitarian grain sacks.
"The grain sacks were used for the harvesting of whatever they were growing," says Wendy Lewis, a Vermont-based textile specialist and importer who sells high-quality antique and vintage grain sacks acquired from the descendents of the farmers who made them (www.textiletrunk.com). [More]

No matter how we farm, our older cousins always seem to do it a little cooler and cuter.

Incoming - your source for breaking decorating news!

2011-08-23T07:03:00.003-06:00

Junkbox, Eposode MIXCD...

Another week of Cargill meetings, but at least I'm home at night.

What's happening in Hungary and why does it creep me out?
The plutonomy vs. the middle class (highly recommended)
Where the old "knowing where to hit it" story comes from. And it's true! Also one of my heroes.
Could rootworms end up doing to ethanol what subsidy critics couldn't?
Wait, Republicans do want to raise taxes (on some people). Meanwhile, it appears Warren Buffet is right.
The secret power of pronouns
Debt-forgiveness ideas seem to be rising to the top.

2011-08-21T07:22:00.001-06:00

Quote of the day...

"You no longer need a couch to be a couch potato."

[Source worth reading]

2011-08-21T06:53:00.002-06:00

Driving less: Chapter 2...

The previous post on mileage driven drew not just attention here, but prompted more inquiries into traffic stats. Another interesting wrinkle is the fatality decline.

What’s interesting, though, is that fatalities per mile often drop during a recession — and it’s dropped extra dramatically in this particular downturn. “This is the most profound departure from the general trend we’ve ever had,” said Darren Grant, an economist who studies traffic safety at Sam Houston State University (and who provided me with the chart above).
Grant notes that traffic-safety experts aren’t certain why people seem to drive more safely during a recession. One factor might be that people go out drinking less. But Grant offers up another theory: “It’s possible that it has something to do with how people value their time.” When the economy’s booming, the logic goes, people drive faster because they have places to be. That same principle might explain why people walk measurably faster in cities with high productivity, like, oh, Manhattan (although this is a complicated topic, see here for a fascinating discussion). [More]

I for one don't miss windshield time, and look forward to avoiding it strenuously in the future.

2011-08-20T16:00:00.000-06:00

Meanwhile, I was a big fan...

Of Vladimir Horowitz. We didn't have pianists like this when my hormones were raging.

Pianist Yuja Wang struck a chord at the Hollywood Bowl this month and not just with her performance of Rachmaninoff's Third Piano Concerto. The 24-year-old Chinese soloist had necks craning, tongues wagging and flashbulbs popping when she walked on wearing an orange, thigh-grazing, body-hugging dress atop sparkly gold strappy stiletto sandals.

In particular, Wang's outfit was a hot topic at the concert and continued after Times music critic Mark Swed's review appeared in print and online. While Swed praised her delicacy, speed and grace at the piano, his fashion comments — including the observation: "Her dress Tuesday was so short and tight that had there been any less of it, the Bowl might have been forced to restrict admission to any music lover under 18 not accompanied by an adult" — have touched off a spirited debate among music critics and bloggers about what constitutes appropriate concert attire and conversely, whether a critique of a performer's clothes has any place in a music review. [More uptightness in every sense of the word]

More interesting still to those of us on the far fringe of classical music is the legions of brilliant pianists emerging with technical skills that were the province of a select few only a few years ago.

Ms. Wang’s virtuosity is stunning. But is that so unusual these days? Not really. That a young pianist has come along who can seemingly play anything, and easily, is not the big deal it would have been a short time ago.
The overall level of technical proficiency in instrumental playing, especially on the piano, has increased steadily over time. Many piano teachers, critics and commentators have noted the phenomenon, which is not unlike what happens in sports. The four-minute mile seemed an impossibility until Roger Bannister made the breakthrough in 1954. Since then, runners have knocked nearly 17 seconds off Bannister’s time.
Something similar has long been occurring with pianists. And in the last decade or so the growth of technical proficiency has seemed exponential. Yes, Ms. Wang, who will make her New York recital debut at Carnegie Hall in October, can play anything. But in China alone, in recent years, there have been Lang Lang and Yundi Li.
Russia has given us Kirill Gerstein, born in 1979, the latest recipient of the distinguished Gilmore Artist Award, whose extraordinary recording of the Liszt Sonata, Schumann’s mercurial “Humoreske” and a fanciful piece by Oliver Knussen on Myrios Classics was one of the best recordings of 2010. In June Mr. Gerstein made his New York Philharmonic debut at a Summertime Classics concert with a boldly interpreted and brilliant account of Tchaikovsky’s First Piano Concerto. But don’t let his probing musicianship distract you. He is another of those younger technicians who have figured out everything about piano playing. [More]

This could be what I think of as the Tiger Woods Syndrome, where parents start much earlier with talented offspring and with the help of new methods of training produce prodigies in abundance.

But for a sector of the music industry not looking at a booming future, I think is was inevitable to see sex appeal woven into the product. It was already a big part of standard soprano uniforms. And if you look a the orchestras backing the admittedly treacly music of Andre Rieu. et. al., it is pretty obvious you need to be obviously pretty to apply.

Also, the live event is rising in importance to recorded music likely due to file-sharing and the decreased profits. So looking smoking hot works is not limited to the ~~album cover~~ CD case. I suppose the same things could be said for men (see also: El Divo) but I'll have to take Jan's word for that.

With increasing cosmetic surgery and other enhancement techniques, looking good is slipping onto the requirement list for more professions.

At some point, I wonder, will farmers have to be gorgeous to succeed? Screwier things have happened.

I'm getting out just in time.