Hey - I'd vote for these guys!
Suddenly I'm a little excited about the impending (only 17 months to go) elections.
Tuesday, May 15, 2007
Monday, May 14, 2007
Prosperity choices...
I have been speaking about "Prosperity For Dummies - managing success after a long layoff" since January at the Top Producer Seminar. Economist Bill Edwards at Iowa State has been entertaining similar thoughts. We came to different conclusions.
His remarks are insightful to me because they seem ( with one exception) to be the same advice most ag economists have been giving my whole career. After acknowledging the financial reality of higher grain prices and pointing out farm equity positions are in the best shape in decades his primary advice:
Pay down debt. Which leads to the question, are there any circumstances when extension advisers would suggest we take on debt? Boy, if not now, when? Let's fact it - ag economists are dogmatically against using borrowed capital.
And many farmers agree, which is a good thing. These farmers, in my opinion will be less competitive in the rush to control land by rent or purchase, for one thing. And as I have been predicting for some time that explosion is just beginning.
Interest rates are historically low, debt service income looks more solid than I have seen, and the rewards to ownership (not operating) are huge and growing. Moreover, every piece of land I have purchased in the last 20 years failed the "cash flow test" (whatever that means).
Had I not ignored such stern advice to avoid debt, my farm would be much smaller and my equity drastically less. Risk aversion in hard times is one thing. Risk aversion in good times will leave you trailing the pack.
I note the standard call to avoid cash rent leases - good luck with that!
And as for his advice on the kitchen, I think he has it backwards. No other investment impacts every day more than that room. I would spend my first dollar there. It is not a luxury - auto-steer is a luxury.
Consider investing to improve happiness, not just a balance sheet.
[via Farmgate]
I have been speaking about "Prosperity For Dummies - managing success after a long layoff" since January at the Top Producer Seminar. Economist Bill Edwards at Iowa State has been entertaining similar thoughts. We came to different conclusions.
His remarks are insightful to me because they seem ( with one exception) to be the same advice most ag economists have been giving my whole career. After acknowledging the financial reality of higher grain prices and pointing out farm equity positions are in the best shape in decades his primary advice:
Pay down debt. Which leads to the question, are there any circumstances when extension advisers would suggest we take on debt? Boy, if not now, when? Let's fact it - ag economists are dogmatically against using borrowed capital.
And many farmers agree, which is a good thing. These farmers, in my opinion will be less competitive in the rush to control land by rent or purchase, for one thing. And as I have been predicting for some time that explosion is just beginning.
Interest rates are historically low, debt service income looks more solid than I have seen, and the rewards to ownership (not operating) are huge and growing. Moreover, every piece of land I have purchased in the last 20 years failed the "cash flow test" (whatever that means).
Had I not ignored such stern advice to avoid debt, my farm would be much smaller and my equity drastically less. Risk aversion in hard times is one thing. Risk aversion in good times will leave you trailing the pack.
I note the standard call to avoid cash rent leases - good luck with that!
And as for his advice on the kitchen, I think he has it backwards. No other investment impacts every day more than that room. I would spend my first dollar there. It is not a luxury - auto-steer is a luxury.
Consider investing to improve happiness, not just a balance sheet.
[via Farmgate]
Sunday, May 13, 2007
On the other hand...
I support strongly the emergence of an agrarian sector that sells not just products (beans, lettuce, eggs, beef, etc.) but process (free range, organic, local, biodynamic, etc.). It is a true market response to consumer choices propelled by entrepreneurship, passion and very little government support (which could be the reason it's thriving).
But, here's the catch. I also am an enthusiastic proponent of industrial agriculture. These are farms like mine that grow products that meet every standard required, in environmentally responsible ways, and using every bit of technology I can get my mind around.
These two sectors in agriculture really do not compete much head-to-head. Only our insistence on one vision for farming makes that seem the case.
Still when I read articles about agrarian farming I lament the witless drivel that passes for informed comment about what I do for a living. Consider this paragraph from a paean to local agriculture:
On the coasts of America, around metropolitan areas and in scenic rural areas like New England or Lancaster County, these concerns can be addressed with the enormous amount of money available there. But transferring those values to my county or northwest Iowa, for example, yields no return for society and overrides Constitutional freedoms.
We have room and need in America for industrial and agrarian farms. And best of all, consumers can make the choice.
I support strongly the emergence of an agrarian sector that sells not just products (beans, lettuce, eggs, beef, etc.) but process (free range, organic, local, biodynamic, etc.). It is a true market response to consumer choices propelled by entrepreneurship, passion and very little government support (which could be the reason it's thriving).
But, here's the catch. I also am an enthusiastic proponent of industrial agriculture. These are farms like mine that grow products that meet every standard required, in environmentally responsible ways, and using every bit of technology I can get my mind around.
These two sectors in agriculture really do not compete much head-to-head. Only our insistence on one vision for farming makes that seem the case.
Still when I read articles about agrarian farming I lament the witless drivel that passes for informed comment about what I do for a living. Consider this paragraph from a paean to local agriculture:
The American Farmland Trust estimates 1.2 million acres of cropland, pastureland, and rangeland are lost each year to development. Farms are increasingly being swallowed up by new houses, roads, and strip malls—86 percent of U.S. fruits and vegetables and 63 percent of dairy products currently come from areas in the path of urban sprawl. This loss of farmland combined with the shift during the past century toward industrialized agriculture has greatly extended the distance produce and meats travel. The average American meal today journeys more than 1,500 miles from where it’s grown or raised to where it’s bought—at a big cost. Green-house gases emitted during food transport contribute to climate change. Our produce is not as fresh as it would be if it were grown closer, which would improve its taste and, health experts say, possibly its nutritional value. And because our food is so heavily mass-produced and transported, the origins of outbreaks of E. coli, like those from last year’s much-reported batch of tainted spinach, cannot always be pinpointed in time to prevent human illness, sometimes even death. [More]To save make my responses more coherent, I will insert them into the original text.
The American Farmland Trust estimates 1.2 million acres of cropland, pastureland, and rangeland are lost each year to development. [Wait - lost? Those acres have gone missing? Actually those acres simply have houses on them, and houses have to be somewhere. This familiar trope insinuates that the strong instinctive urge for permanent housing should be satisfied only for the affluent and that the need for food requires every acre. (See ethanol, etc.)] Farms are increasingly being swallowed up by new houses, roads, and strip malls—86 percent of U.S. fruits and vegetables and 63 percent of dairy products currently come from areas in the path of urban sprawl. [ Where exactly would you site a fruit/vegetable operation - New Mexico? Of course valuable crops like sod are grown on the outskirts of development. Transportation costs matter. Besides, if this land is developed those valuable crops will still be grown just outside urban areas. This statistic has not changed appreciably for decades, and should be recognized for what it is: an inversion of cause and effect. Farmland is valuable because it's close to people and and hence a candidate for high-value agriculture. People are the key - not land] This loss of farmland combined with the shift during the past century toward industrialized agriculture has greatly extended the distance produce and meats travel. The average American meal today journeys more than 1,500 miles from where it’s grown or raised to where it’s bought—at a big cost. [Oddly, the market will sort this out if you price in all costs.] Green-house gases emitted during food transport contribute to climate change. [Okey-doke, let's include this cost via a carbon tax] Our produce is not as fresh [Can you actually discern something 80% as fresh?] as it would be if it were grown closer, which would improve its taste and, health experts say, possibly [or possibly not] its nutritional value. And because our food is so heavily mass-produced and transported, the origins of outbreaks of E. coli, like those from last year’s much-reported batch of tainted spinach, cannot always be pinpointed in time to prevent human illness, sometimes even death. [But we did pinpoint it, thanks to industrial records/tracking. As for death, compare food contamination deaths now to truly agrarian times.]It is not necessary to have an internecine battle to address consumer wishes about food. It is also foolish to believe the agrarian model could provide a reliable food supply on the scale of industrial agriculture.
On the coasts of America, around metropolitan areas and in scenic rural areas like New England or Lancaster County, these concerns can be addressed with the enormous amount of money available there. But transferring those values to my county or northwest Iowa, for example, yields no return for society and overrides Constitutional freedoms.
We have room and need in America for industrial and agrarian farms. And best of all, consumers can make the choice.
Friday, May 11, 2007
When you sell hammers...
Everything looks like a nail. I have been following the discussions about wealth and income inequality for some time. Recently I ran across this thoughtful piece via a link on Greg Mankiw's blog.
But wait, the authors are in the education business, i.e. college professors. Doesn't a whacking income inequality between people who use their products and those who don't bode well for higher education biz?
Higher education does not often examine its own efficiency or value. What I do know is more dollars buys fewer classroom hours, and those are with fewer full professors. Grades are inflated, graduate skills have dropped, and in general a college degree does not imply the level of education it used to, in my opinion. All these outcomes have one standard solution from colleges: we need more money. Without the growing income inequality, education consumers might be pressuring colleges for a better product.
With college competing with health care for Biggest Pain in the Wallet, customers may need reminding why they should fork out so much to put Morgan through Yale. No problem. We'll just turn to our unbiased Economics/Marketing Department.
The last thing an academic study would be likely to show is poor return for your dollar from academics, I would guess.
Other questions pop up: Is there an upper limit for how many college grads we can absorb? How does more money to higher education help those doing jobs for which college education has no real value? What does the rise of education competitors like India mean for those higher salaries in the future? (IT engineers are having a sobering reality check thanks to the ease of outsourcing work, for example.)
If income and wealth inequality is a problem - and I tend to think it poses some social and political hazards - offering college as THE answer strikes me as simplistic.
From where I stand, the problem calls for a farm subsidy, methinks.
It's all in your perspective.
Everything looks like a nail. I have been following the discussions about wealth and income inequality for some time. Recently I ran across this thoughtful piece via a link on Greg Mankiw's blog.
So instead of lamenting the increased earnings gap caused by education, policymakers and the public should focus attention on how to raise the fraction of American youth who complete high school and then go on for a college education. Solutions are not cheap or easy. But it will be a disaster if the focus remains so much on the earnings inequality itself that Congress tries to interfere directly with this inequality rather than trying to raise the education levels of those who are now being left behind. [More]The authors make a convincing case for investing in education, since difference in education levels seems to be a powerful factor in future income. The question is begged by these types of conclusions if the sliver of college grads earning the astronomical salaries were excluded, would the trend be as sharp? My hunch is an awful lot of college grads (liberal arts, teaching, business, etc.) don't enjoy the enormous salary differentials making college less of a good deal than "average statistics" would suggest.
But wait, the authors are in the education business, i.e. college professors. Doesn't a whacking income inequality between people who use their products and those who don't bode well for higher education biz?
Higher education does not often examine its own efficiency or value. What I do know is more dollars buys fewer classroom hours, and those are with fewer full professors. Grades are inflated, graduate skills have dropped, and in general a college degree does not imply the level of education it used to, in my opinion. All these outcomes have one standard solution from colleges: we need more money. Without the growing income inequality, education consumers might be pressuring colleges for a better product.
With college competing with health care for Biggest Pain in the Wallet, customers may need reminding why they should fork out so much to put Morgan through Yale. No problem. We'll just turn to our unbiased Economics/Marketing Department.
The last thing an academic study would be likely to show is poor return for your dollar from academics, I would guess.
Other questions pop up: Is there an upper limit for how many college grads we can absorb? How does more money to higher education help those doing jobs for which college education has no real value? What does the rise of education competitors like India mean for those higher salaries in the future? (IT engineers are having a sobering reality check thanks to the ease of outsourcing work, for example.)
If income and wealth inequality is a problem - and I tend to think it poses some social and political hazards - offering college as THE answer strikes me as simplistic.
From where I stand, the problem calls for a farm subsidy, methinks.
It's all in your perspective.
I thought they were the bad guys...
There is a fascination in DC with "czars". With the Iraq war not proceeding exactly as planned, Pres. Bush is looking for a "war czar". The obvious question is "Isn't that your job?", but it seems he has had an upgrade to "commander guy".
(Man, I couldn't even make up stuff this good). The list of czars is getting longer.
What if the administration appoints a business czar - would he/she be the "biz-czar"?
Anyhoo, the tendency to appear like we're solving problems by handing it to a czar strikes be as overt belief in dictatorial power for stuff you really really want to get done. No wonder our government is doing so well with the old democracy method.
There is a fascination in DC with "czars". With the Iraq war not proceeding exactly as planned, Pres. Bush is looking for a "war czar". The obvious question is "Isn't that your job?", but it seems he has had an upgrade to "commander guy".
(Man, I couldn't even make up stuff this good). The list of czars is getting longer.
# In 2001, with escalating concerns about possible attacks on our information technology infrastructure, Bush named a "cybersecurity czar."
# In 2003, the president's desire to help his corporate benefactors led to the creation of a "regulatory czar" at the Office of Management and Budget. Around the same time, Bush named his first "AIDS Czar." (He didn't choose wisely -- Bush tapped Randall Tobias, the administration's former top advocate of global abstinence-only policies, who was recently forced to resign after procuring "massages" from a controversial Washington escort service.)
# In 2004, faced with growing discontent over the nation's struggling manufacturing industries, Bush appointed a "manufacturing czar." (He chose the chief executive of a Nebraska company that had laid off manufacturing employees and built factories in China.)
# 2005 was a banner year for czars. In February, Bush responded to revelations about failed national security intelligence by creating an "intelligence czar." Shortly thereafter, we had a "bird-flu czar." A few months after that, following the tragically botched handling of the response to Hurricane Katrina, there was a "Katrina czar."
[More]
What if the administration appoints a business czar - would he/she be the "biz-czar"?
Anyhoo, the tendency to appear like we're solving problems by handing it to a czar strikes be as overt belief in dictatorial power for stuff you really really want to get done. No wonder our government is doing so well with the old democracy method.
It's not getting better...
My whines about Windows Vista in my new Dell computer are being echoed by people with more knowledge and experience. Jim Coates in the Chicago Tribune is one of my favorite tech columnists and he is finding out the backward compatibility of Vista is a pain.
All this hassle is to prevent me violating DRM [Digital Rights Management] (copying music/videos). But despite Microsoft's assurances that it works fine, the real world travails don't go away.
Meanwhile, as per the pattern, it seems MS didn't have the security problems completely nailed down when the product shipped, so we users are enjoying lengthy downloads of humongous updates.
While businesses may be locked in by inertia, I think a few users (myself included) have reached our tipping point. Vista is a pain in the assembler, and MS has finally lost this frequent buyer.
My whines about Windows Vista in my new Dell computer are being echoed by people with more knowledge and experience. Jim Coates in the Chicago Tribune is one of my favorite tech columnists and he is finding out the backward compatibility of Vista is a pain.
When Microsoft execs made the rounds before Vista arrived, they were full of assurances that moving the software you currently own over to Vista would be a cakewalk.
In theory, you would just give the program icon a right-click and open the Compatibility tab in the pop-up that appears. When you do this and it works, Vista dims, blinks and changes, and then advises you that it is taking away the trademark translucent windows, cascading windows and other new features you just spent hundreds of dollars buying.
Microsoft's geniuses probably think these messages sound helpful. Here's how they sound to me: "You can buy new software, Coates, or you can rot." [More]
All this hassle is to prevent me violating DRM [Digital Rights Management] (copying music/videos). But despite Microsoft's assurances that it works fine, the real world travails don't go away.
Meanwhile, as per the pattern, it seems MS didn't have the security problems completely nailed down when the product shipped, so we users are enjoying lengthy downloads of humongous updates.
Anyone who was still living under the illusion that the arrival of Windows Vista would mean a lessening of security holes for Microsoft to patch would have had rude awakening this month. Microsoft announced no less than 19 newly discovered flaws in its software, of which 15 are classed as critical. [More]
While businesses may be locked in by inertia, I think a few users (myself included) have reached our tipping point. Vista is a pain in the assembler, and MS has finally lost this frequent buyer.
Thursday, May 10, 2007
Animated Bayeux Tapestry
Google "Bayeux Tapestry" for the whole story, because part of your past is intertwined with this story.
Tuesday, May 08, 2007
Herod and the 200-mile commute...
The recent announcements about the alleged discovery of Herod's tomb triggered an "oh yeah" moment for me.
Archaeological work like this fascinates me, as it weaves new threads through my pictures of life in Biblical times.
It also prompted me to report on my experience with the Great Courses during my 210-mile weekly commute to South Bend to tape US Farm Report.
My evaluation so far: Outstanding. These lectures have been a solid and reliable high point in my week, and an effective counterbalance to all the other stresses in my life.
Imagine your very favorite college professor teaching a course you are actually interested in. Now give that professor performance-enhancing drugs. Taa-daa - this is the product I have enjoyed.
I have done so far:
All have exceeded my expectations and I have become pedantic bore on more topics than ever! The lectures are compelling and the delivery more polished that I have ever heard.
C'mon - ask me about Emperor Justinian or textus receptus.
The recent announcements about the alleged discovery of Herod's tomb triggered an "oh yeah" moment for me.
Prof Netzer said he "assumed with certainty" that the discovery was the site of Herod's burial although he will have to wait for peer review before the issue is settled.
Stephen Pfann, an expert in the Herodian period at the University of the Holy Land, called the find a "major discovery" but said that further research was needed. He said all signs indicated that the tomb belonged to Herod, but a relic carved with his name was needed.
"We're moving in the right direction," he said. "It will be clinched once we have an inscription that bears his name." [More]
Archaeological work like this fascinates me, as it weaves new threads through my pictures of life in Biblical times.
It also prompted me to report on my experience with the Great Courses during my 210-mile weekly commute to South Bend to tape US Farm Report.
My evaluation so far: Outstanding. These lectures have been a solid and reliable high point in my week, and an effective counterbalance to all the other stresses in my life.
Imagine your very favorite college professor teaching a course you are actually interested in. Now give that professor performance-enhancing drugs. Taa-daa - this is the product I have enjoyed.
I have done so far:
All have exceeded my expectations and I have become pedantic bore on more topics than ever! The lectures are compelling and the delivery more polished that I have ever heard.
C'mon - ask me about Emperor Justinian or textus receptus.
Monday, May 07, 2007
Just could not let this one pass by...
Big science news: Artificial Snot Improves Performance of Electronic Noses.
Big science news: Artificial Snot Improves Performance of Electronic Noses.
The researchers have coated the sensors used by odour-sensing "electronic noses” with a mix of polymers that mimics the action of the mucus in the natural nose. This greatly improves the performance of the electronic devices allowing them to pick out a more diverse range of smells.OK, you may only be young once, but you can spend your life being immature.
The most affordable gasoline...
American agriculture's persistent claim of the "most affordable food in the world" has caught the attention of other commodity purveyors. Like gasoline:
Interestingly, "affordability" is not due to actual food cost - which has exceeded inflation for like, forever. It's due to income increases.
What else is "affordable"? Well, about anything that has increased in price less than disposable income. My guess is this particular spin campaign could be hijacked by all kinds of vendors.
We need a new slogan. Or at least, a more accurate one.
American agriculture's persistent claim of the "most affordable food in the world" has caught the attention of other commodity purveyors. Like gasoline:
There are probably three reasons that gasoline prices appear so high to us today. First, many don't fully appreciate the long run effect that inflation has on prices. Second, many don't appreciate how much our incomes have increased relative to prices. Finally, we still remember 1998 very well, the year in which we encountered the lowest gasoline prices since 1949. Gasoline in 1998 sold for $1.03 per gallon, the equivalent of $1.21 in today's currency. Adjusting for growth in per capita income yields a price of $1.35 per gallon in today's terms. Today's price is more than double that and people resent the increase over the last several years, in part, because they think that 1998 prices were normal. But they were not.Wow - I guess we owe a big "thank you" to the petroleum industry. Or we need to get real about claims like this.
Now let's put the recent price increase in terms of real outlays. The average household is spending $136 more on gasoline every month than it was in 1998 and $114 per month more than it were spending in 2002. But, believe it or not, real (inflation-adjusted) disposable income per household has increased even faster than have pump prices; by $800 a month since 1998 and $279 a month since 2002. [More]
Interestingly, "affordability" is not due to actual food cost - which has exceeded inflation for like, forever. It's due to income increases.
What else is "affordable"? Well, about anything that has increased in price less than disposable income. My guess is this particular spin campaign could be hijacked by all kinds of vendors.
We need a new slogan. Or at least, a more accurate one.
Sunday, May 06, 2007
Other than the the horses, I'm OK with it...
There are bloggers out there who are truly talented writers and photographers, and whose work is defining a new journalism. Thanks to a pointer from loyal readers Bob and Ann, I checked out thepioneerwoman.com. Like many blogs, this is a personal journal, more than a little gooey, and for the love of Mike - it's got POETRY!!!
Still the photos are excellent and of course, it's about cowboys, so by definition, it's like, totally awesome. It's hard to imagine a woman writing such rapturous prose about an engineer.
Cowboys - I hate 'em.
There are bloggers out there who are truly talented writers and photographers, and whose work is defining a new journalism. Thanks to a pointer from loyal readers Bob and Ann, I checked out thepioneerwoman.com. Like many blogs, this is a personal journal, more than a little gooey, and for the love of Mike - it's got POETRY!!!
Still the photos are excellent and of course, it's about cowboys, so by definition, it's like, totally awesome. It's hard to imagine a woman writing such rapturous prose about an engineer.
Cowboys - I hate 'em.
How real is this thing?...
I've been reading about "Mexican Coke" for a few days now, and I'm going to start looking out for it. My guess is the logical sources would be retailers who serve the Latino community.
Since smells, and hence tastes, are closely linked to memory, I'm wondering if (a) I can detect any difference from good ol 'Merican (HFCS) Coke and if so, (b) does it bring back any memories.
The dispute about the taste of cane sugar pop vs. HFCS has been overtaken by charges of health and obesity problems, but it is also the easiest to decide for yourself.
Don't need no scientists for that.
I've been reading about "Mexican Coke" for a few days now, and I'm going to start looking out for it. My guess is the logical sources would be retailers who serve the Latino community.
Since smells, and hence tastes, are closely linked to memory, I'm wondering if (a) I can detect any difference from good ol 'Merican (HFCS) Coke and if so, (b) does it bring back any memories.
Coca-Cola downplays the appeal of the cane sugar version, insisting that "there's not a perceivable taste difference between Mexican Coke and Coke bottled in the U.S.," Martin said.
But fans of the import claim there's a world of a difference.
"It's got a much different, cleaner taste," Craven said. "You don't have that syrupy coat in your mouth after you drink it." [More]
The dispute about the taste of cane sugar pop vs. HFCS has been overtaken by charges of health and obesity problems, but it is also the easiest to decide for yourself.
Don't need no scientists for that.
Saturday, May 05, 2007
The future is optional...
While many producers are watching the CBOT buyout with mild interest and eyes glazed by so many zeroes, it may simply be just a sideshow in a larger push to find a play for enormous amounts of money. Right now, derivatives are the investment of choice, it seems.
The attraction, as outlined in the article above is manifold:
But then, they could be the last of their breed, too. Open outcry will likely be kept on just for background footage for ag video - like gambrel barns and windmills.
Hey - we use it at USFR.
While many producers are watching the CBOT buyout with mild interest and eyes glazed by so many zeroes, it may simply be just a sideshow in a larger push to find a play for enormous amounts of money. Right now, derivatives are the investment of choice, it seems.
Derivatives are so called because they derive their value from an underlying asset, such as a stock, bond, interest rate or commodity. Their use has exploded over the past couple of decades. Philadelphia is one of six American exchanges that trade options (which give holders the right, but not the obligation, to buy or sell a security). Futures, the other big exchange-traded derivative, are promises to buy or sell on a given date. [More]With computer algorithms driving stock trading, what's a broker to do with her free time? Trade somewhere else, I suppose, and here on the farm, we're the game people are betting on.
The attraction, as outlined in the article above is manifold:
Joshua Carter of Goldman Sachs sees “derivatisation” as one of the three main trends in the exchange business, along with consolidation and “electronification”. One attraction, he points out, is that derivatives are typically more liquid than their underlying assets. Also, their highly mechanical nature makes them well suited to algorithmic trading, which is growing. And transaction costs are lower than stocks for a given unit of exposure.All this could mean some very, very wealthy commodity brokers soon.
But then, they could be the last of their breed, too. Open outcry will likely be kept on just for background footage for ag video - like gambrel barns and windmills.
Hey - we use it at USFR.
What on Earth?...
Like all those folks who have been mesmerized by the Planet Earth series (especially those with new HDTV's), I was intrigued by this Japanese site reminding me all the things I did not know about my home planet.
[via Presurfer]
Like all those folks who have been mesmerized by the Planet Earth series (especially those with new HDTV's), I was intrigued by this Japanese site reminding me all the things I did not know about my home planet.
[via Presurfer]
Friday, May 04, 2007
Pics of the Big Guy...
Stunning photos of Jupiter from the New Horizons spacecraft.
Since when did we start naming spacecraft like mutual funds?
Stunning photos of Jupiter from the New Horizons spacecraft.
Since when did we start naming spacecraft like mutual funds?
Is it me or are we going deeper into the woods?...
The housing market was a dependable source of painless savings for so long, and I think at the microscopic level, many citizens built futures on the premise home prices would continue to escalate reliably. This plan is being reconsidered now.
But while the general economy has moved ahead without the housing sector, the jury is still out on whether we have hit the bottom of the housing cycle. One noted expert thinks not.
On that happy note, let's consider some implications. Hardest hit in the current doldrums were housing "flippers" - amateurs working on limited capital turning properties rapidly. Since this is a risky activity in boom markets, it snowballs when prices dip even slightly. This is why investment property could be clobbered.
Then there are Boomers who decided their house would be their retirement plan a few years ago. Actually many of us would have been OK if we had cashed out in say, in 2005. But unless you're holding a condo in Manhattan, your retirement nest egg may not be what you had hoped. To be sure, if you have been in your house fro a considerable time, and the especially if the mortgage is paid, you still have a pile of equity - but maybe not the kajillions you hoped.
But the truly scary scenario is at the bottom of the home buyer pyramid. Subprime mortgages were another real-estate gimmick that seemed feasible as the tide was coming in. As these loans head south, the defaults have crimped earnings at several financial companies. They will survive, and don't need my tears.
But borrowers with less than perfect credit are now out of the market and also - more importantly, I think - out of the home-equity loan market. Notice how those ads are scarcer recently. Home equity loans fueled a significant portion of consumer spending growth, thus driving the economy as businesses held back on capital spending.
What do all these developments suggest? First, if Shiller is right, we may not be close to seeing the effect of lower home prices on the economy as a whole. More and more borrowers will be at least frozen in place instead of ratcheting up the equity ladder. You may be stuck with actually paying off your mortgage.
Labor will become slightly more fixed in place, as relocation costs for companies skyrocket and workers choose to stick it out in the old job. Retirees will recalculate their last day differently as well.
The upper end seems to be bulletproof so far - largely untouched by the loss of equity and shrinking pool of buyers. But interestingly one big loser could be Uncle Sam.
Of course, the current fad in DC is not fiscal restraint, so it may not get much play unless deficits approach the the gold standard of $450B or so. Still, it might become a slightly hotter talking point.
But what about farmland? Don't color me worried. And here is why - can you say "mandate"?
Land prices are firmly in the grips the need for carbohydrates to make fuel.
Now this example is Hoosiers, of course, so we have no idea what real free-spenders might be paying. We won't even miss 1031 buyers, IMHO. In fact, farmers could start our re-ownership of agriculture in this window of opportunity.
The housing market was a dependable source of painless savings for so long, and I think at the microscopic level, many citizens built futures on the premise home prices would continue to escalate reliably. This plan is being reconsidered now.
But while the general economy has moved ahead without the housing sector, the jury is still out on whether we have hit the bottom of the housing cycle. One noted expert thinks not.
Robert Shiller is worried about your home's value, and that's not good. A finance and economics professor at Yale, Shiller proved he could see a crash coming with his book "Irrational Exuberance," which forecast the end of the 1990s stock bubble and hit bookstores in March 2000 - almost to the day the Nasdaq started to collapse.His prediction? Brace yourself:
Today, Shiller believes homes are roughly as overvalued as stocks were then and, once again, he's worth listening to.
In fact, I'm inclined to think there's a good chance that the return on real estate will be negative, substantially negative, over the next 10 years because all booms reverse in the end. [More depressing reading]
On that happy note, let's consider some implications. Hardest hit in the current doldrums were housing "flippers" - amateurs working on limited capital turning properties rapidly. Since this is a risky activity in boom markets, it snowballs when prices dip even slightly. This is why investment property could be clobbered.
Then there are Boomers who decided their house would be their retirement plan a few years ago. Actually many of us would have been OK if we had cashed out in say, in 2005. But unless you're holding a condo in Manhattan, your retirement nest egg may not be what you had hoped. To be sure, if you have been in your house fro a considerable time, and the especially if the mortgage is paid, you still have a pile of equity - but maybe not the kajillions you hoped.
But the truly scary scenario is at the bottom of the home buyer pyramid. Subprime mortgages were another real-estate gimmick that seemed feasible as the tide was coming in. As these loans head south, the defaults have crimped earnings at several financial companies. They will survive, and don't need my tears.
But borrowers with less than perfect credit are now out of the market and also - more importantly, I think - out of the home-equity loan market. Notice how those ads are scarcer recently. Home equity loans fueled a significant portion of consumer spending growth, thus driving the economy as businesses held back on capital spending.
What do all these developments suggest? First, if Shiller is right, we may not be close to seeing the effect of lower home prices on the economy as a whole. More and more borrowers will be at least frozen in place instead of ratcheting up the equity ladder. You may be stuck with actually paying off your mortgage.
Labor will become slightly more fixed in place, as relocation costs for companies skyrocket and workers choose to stick it out in the old job. Retirees will recalculate their last day differently as well.
The upper end seems to be bulletproof so far - largely untouched by the loss of equity and shrinking pool of buyers. But interestingly one big loser could be Uncle Sam.
But there's a more alarming explanation for the surge in tax revenues. It could be that the orgy of speculation in recent years—in housing, stocks, investment instruments—has generated an unexpected gusher of the types of tax revenues derived from flipping assets and trading securities. And that suggests that with the housing boom over and the stock market moving sideways, tax-revenue growth could be slowing down, and soon. [More]
Of course, the current fad in DC is not fiscal restraint, so it may not get much play unless deficits approach the the gold standard of $450B or so. Still, it might become a slightly hotter talking point.
But what about farmland? Don't color me worried. And here is why - can you say "mandate"?
The measure would establish an overall goal of reducing future gasoline use by as much as 45 percent below what it otherwise is expected to be in 2030. That would happen through a combination of more biofuels, such as ethanol, and production of more gas-electric hybrid vehicles and other fuel-saving measures.
The centerpiece of the bill is replacing gasoline with ethanol. Ethanol currently is made from corn. Future sources include cellulosic feedstock such as switchgrass, a hardy prairie grass in great abundance, and wood chips and corn stems. [More]
Land prices are firmly in the grips the need for carbohydrates to make fuel.
This was an auction of 160 acres. The ground was flat, systematically tiled and nearly all tillable. Selling price: an eye-popping $6,731 an acre. A local farm family who were expanding their operation purchased the farm. {more detail from Mike Walsten's new farmland blog - subscription to PF required, but worth it]
Now this example is Hoosiers, of course, so we have no idea what real free-spenders might be paying. We won't even miss 1031 buyers, IMHO. In fact, farmers could start our re-ownership of agriculture in this window of opportunity.
Thursday, May 03, 2007
Maybe it's the up-tempo music from our i-Pods...
We're walking faster.
Well, duh! You try making time in heels!
Not that I would know firsthand, of course.
We're walking faster.
Comparing the results with those compiled by US psychologist Professor Robert Levine in the 1990s, the study showed that people were, on average, now walking 10 per cent faster. Men are generally 25 per cent quicker on their feet than women.
Well, duh! You try making time in heels!
Not that I would know firsthand, of course.
Electronically disconnected...
Despite forecasts of "dispersed" lifestyles - working from home, teleconferencing, virtual meetings - people still seem to want to be with each other when doing business. Especially Big Business.
One of the promises for rural America was technology would make it a place where more than farming could be done for a living. Maybe we're asking too much or worse yet, wishing for the wrong thing.
Meanwhile, my observation is rural areas are being roughly divided into growth and non-growth categories. Either they possess a magnet metropolitan area - usually with higher education, major medical services, and government offices - or they are gasping for the oxygen being sucked up by such urban areas.
I'm not sure we'll reverse this trend and re-distribute our rural population more evenly. It could be better for the type of farming we do now to have large areas essentially lightly populated, and more or less left to agriculture.
But even farmers need face time with colleagues. We may not admit it, but we do. The trick then becomes devising occasions or events that regularly provide such opportunities and then admitting to ourselves we can't really do justice to our profession over the phone,
Or via a blog.
Despite forecasts of "dispersed" lifestyles - working from home, teleconferencing, virtual meetings - people still seem to want to be with each other when doing business. Especially Big Business.
But more than that, people are evolved to deal with each other in person. Anyone who's ever had an email badly received knows that stripping the non-verbal cues off words can dramatically change how they're taken. (Americans working for British firms become particularly aware of this, because the British style is much more curt, which comes across as hostile or censorious to Americans used to appending emoticons, or their verbal equivalent, to everything.)
When you're transacting millions or billions of dollars of business, lost nuance can have catastrophic costs. Important cues such as body language don't come across on conference calls, or even teleconferences; they can only be apprehended face to face. That makes it important to have the folks doing the deals all be in the same place, or close enough to the same place (like Stamford and Greenwich hedge funds) that you can frequently meet your counterparts. [More]
One of the promises for rural America was technology would make it a place where more than farming could be done for a living. Maybe we're asking too much or worse yet, wishing for the wrong thing.
Meanwhile, my observation is rural areas are being roughly divided into growth and non-growth categories. Either they possess a magnet metropolitan area - usually with higher education, major medical services, and government offices - or they are gasping for the oxygen being sucked up by such urban areas.
I'm not sure we'll reverse this trend and re-distribute our rural population more evenly. It could be better for the type of farming we do now to have large areas essentially lightly populated, and more or less left to agriculture.
But even farmers need face time with colleagues. We may not admit it, but we do. The trick then becomes devising occasions or events that regularly provide such opportunities and then admitting to ourselves we can't really do justice to our profession over the phone,
Or via a blog.
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