Thursday, November 28, 2013

Thanksgiving stuff(ing)...

 I suppose this is a kind of Junkbox, but specifically targeted to today.

First, if you're struggling for things to list when your turn at the table to be thankful comes around remember these 5 economic trends. Dibs in this one:

5) Debt burdens keep on falling. The ratio of Americans' income going to meet debt obligations has plummeted in recent years, as consumers have both reduced debt burdens (by paying them down and in some cases defaulting) and benefited from lower interest rates. The debt service ratio was only 9.89 percent in the second quarter, hovering near an all-time low of 9.84 percent from late 2012 (the data go back to 1980). That ratio was 13.5 percent in the third quarter of 2007, before the crisis. Congratulations, America! You're making progress in getting your household debts to a more manageable level.
Even though I have been following economic numbers, this reminder was a pick-me-up. Maybe it's because they can't pack enough doom-mongering in farm publications right now.

To be fair, I am convinced one thing about this ag downturn that will be unique for my lifetime at least is remarkably low odds for a massive government bailout, like the infamous extra AMTA payment.

This conviction is certainly coloring my plans for the next few years, which have proven to be a little trickier to map out with dual goals of enough retirement income and a manageable debt for Aaron. Looking at the spreadsheets, I really needed just one more year of $5+ corn to arrange the numbers in a smooth, trouble-free path. 

But since when has my ability to plan been that accurate? Like many of my generation, working past 66 probably won't kill me. 

I do think that high costs will force down rents faster than experts think. In short, DuPont and Monsanto will eat landowners lunch as well as operators. Rents are, in the end, residual, and with lenders poised to say "no" much earlier, 2014 rents could show a significant drop.


I filled up for $3.09 recently (see above).  I could get used to this. But I wasn't aware of one of the factors in the price drop.
Many Gulf Coast refiners are taking advantage of the boom in shale-oil drilling in the Midwest and producing ever more diesel for export to Europe and Asia. That's a lucrative business. And that refining process also produces more gasoline for domestic consumption. So, as The Wall Street Journal reports, refiners can still make a profit from exporting diesel abroad even if they're creating a glut of gasoline here at home. [More]
I also think it might be part of refiner and oil producer plans to do what they can to keep prices low if the EPA goes through with the mandate revision. Nothing would cement the idea of ethanol making gas prices higher than gas selling with a "2" in front of it right after the mandate was eased, IMHO.

Nonetheless, thanks Europe!


I could do this if I wanted to...


Meanwhile, back in Africa, the lack of industrialization to provide jobs is threatened by an emerging pattern of premature deindustrialization
The economic, social, and political consequences of premature deindustrialization have yet to be analyzed in full. On the economic front, it is clear that early deindustrialization impedes growth and delays convergence with the advanced economies. Manufacturing industries are what I have called “escalator industries”: labor productivity in manufacturing has a tendency to converge to the frontier, even in economies where policies, institutions, and geography conspire to retard progress in other sectors of the economy.That is why rapid growth historically has always been associated with industrialization (except for a handful of small countries with large natural-resource endowments). Less room for industrialization will almost certainly mean fewer growth miracles in the future. [More]
There simply will not be as many "factory jobs" anywhere in the world, let alone Africa. This reinforces my belief that forcing industrial agriculture into sub-Saharan Africa would be devastating to local economies even as they make money for investors, since  our type of ag is very labor-light (and getting more so).


Go watch the game. Or The Wrath of Khan.

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