A Multiyear Slump Brought On By A Glut
A report from the Wall Street Journal. “The Farm Belt is hurtling toward a milestone: Soon there will be fewer than two million farms in America for the first time since pioneers moved westward after the Louisiana Purchase. Across the heartland, a multiyear slump in prices for corn, wheat and other farm commodities brought on by a glut of grain world-wide is pushing many farmers further into debt. Some are shutting down, raising concerns that the next few years could bring the biggest wave of farm closures since the 1980s. A decade ago, a U.S. biofuel boom and China’s growing middle class lifted prices for crops like corn and soybeans. Many American growers spent the windfall buying land and half-million-dollar equipment.”
“The boom also encouraged farmers in other countries to ramp up production. Farmers world-wide put nearly 180 million new acres into cultivation over the past decade. Corn and wheat output has never been higher, and never has so much grain been bunkered away.”
“In Great Bend, 80 miles east of Ransom, Les Hopkins recently sold his John Deere dealership after sales all but stopped. He is owed about $100,000 by farmers who financed machinery purchases they haven’t paid off. He has tried tracking them down by calling from cellphone numbers they won’t recognize. ‘That money is gone,’ he said.”
“The motor on David Radenberg ’s tractor gave out last fall as he sowed wheat on his family’s 2,400 acre farm in Claflin, 90 miles east of Ransom. He didn’t have the money to fix it. ‘You want to cry when you find out how much it costs,’ he said. He decided to sell the tractor for $10,500 and rely on an older model. If grain prices remain weak, the farm could be next. After 30 years farming, this crop could be his last: ‘Do I go work at Wal-Mart as a greeter or as a parts man at the mechanics shop?’”
From Southeast AgNET. “Farmland values continued to wane in the fourth quarter, according to the Tenth District Survey of Agricultural Credit Conditions. On average, nonirrigated and irrigated farmland values dropped 6 percent, and ranchland values fell 7 percent from the same period last year. These downgrades were the largest since the Great Recession of 2007-09 but were relatively small compared to declines in the 1980s. The largest changes in District states occurred in Kansas and Nebraska. The value of nonirrigated farmland fell 13 percent in Kansas, and irrigated farmland in Nebraska was 8 percent lower. Decreases in ranchland values in Kansas, Nebraska and Missouri were the largest since 2002.”
“After falling steadily for several quarters, cash rents in the fourth quarter were down sharply from their peak values. In the Mountain States, for example, cash rents on non-irrigated cropland have fallen 40 percent from their peak in the fourth quarter of 2012 to the fourth quarter of 2016.”
“Farm income also weakened in the fourth quarter. In fact, farm income fell for the fifteenth consecutive quarter, the longest such streak in survey history. Moreover, 70 percent of bankers expected the downward trend to continue in the first quarter of 2017. Capital and household spending extended declines to 15 and 10 consecutive quarters, respectively.”
The Tama News-Herald. “The trend to lower land prices across Iowa and in Tama County continued for the third year running in the 2016 Iowa State University Farmland Value Survey. The survey showed an average value of $7,455 per acre average in 2016, down from $7,985 or a drop of 6.64 percent. State-wide, the average price in 2016 was found to be $7,183, a 5.89 percent drop. The survey notes the amount is based upon low, medium and high priced ground.”
“Over the years, Tama County land values have increased 54 in the past 66 years. Farm ground price has risen in Tama County every year since 1999 except in 2009 and the past two. It hit a peak in 2013 at $9,145 per acre.”
From Ag Week. “Farmland values and cash rents declined moderately in the fourth quarter of 2016, according to the Federal Reserve Bank of Kansas City’s Agricultural Credit Survey. Credit conditions also weakened alongside lower farm income, and bankers have adopted some risk prevention measures in response. For example, variable and fixed interest rates increased for all types of farm loans. More than 30 percent of bankers also reported an increase in collateral requirements, the largest share in survey history.”
From the Independent. “More than 77 percent of Nebraska producers are concerned that they may not be able to obtain operating capital in 2017, according to the 2016 Farm Financial Health Survey conducted by the University of Nebraska-Lincoln’s Department of Agricultural Economics. ‘Demand is on the rise for operating loans, which is leading to some difficult conversations between producers and their bankers,’ said Jessica Groskopf, assistant extension educator with Nebraska Extension.”
“She said low commodity prices have resulted in the fourth consecutive year of declining net farm income, or the return that farmers and ranchers get for their input of labor, management and capital. The decline has forced producers to use cash reserves to service debt and pay for non-farm expenses such as family living that now exceed earnings. This reduces the operation’s ability to make debt payments, which makes it more difficult for banks to approve operating loans.”
“According to Nathan Kauffman, assistant vice president and Omaha Federal Reserve Branch executive, and Matt Clark, assistant economist at Kansas City’s Federal Reserve Bank, farm lending activity at commercial banks slowed significantly in the fourth quarter as lenders and borrowers assessed economic prospects for 2017. Despite persistent increases in the level of outstanding farm debt and ongoing demand for loan renewals, they said new loan originations dropped sharply.”
“Because the outlook for farm income has remained weak and farmland values continue to decline, both lenders and borrowers may have been more apprehensive about adding new debt heading into 2017, they said. The sharp reduction in the volume of new farm loans at commercial banks occurred during a prolonged decline in farm revenue, Kauffman and Clark said.”
“In 2016, prices for most agricultural commodities continued to fall, building on the declines of previous years, with soybeans being a notable exception. A 30-percent, year-over-year drop in the price of feeder cattle helped reduce the cost of purchasing the animals and likely contributed to the sharp reduction in loan volumes in the livestock sector.”
I could have added several more links but I think the point is made. This was a bubble too, but has been ignored. Oh, just like with luxury apartments, all of a sudden the WSJ decides it’s a bust! OK, now we can call it that. But how did we get here? From the Tama County link:
Notice what happened starting after 2009. What else started just then? Global QE on a scale never imagined before.
Looking at it again, it doubled in the decade before that too. Then doubles again. Many of these reports will say, “no one expects it to be as bad as the 80’s bust.” Well, did this happen in the 80’s:
‘The boom also encouraged farmers in other countries to ramp up production. Farmers world-wide put nearly 180 million new acres into cultivation over the past decade.’
This time is different. They will QE to infinity before they let the prices fall substantially.
Price have already fallen substantially.
I’m already seeing prices on very nice places in one of the markets I follow where the ask is 100K+ under assessed, and less than bubble 1.0 peak prices.
Game Oooova!
Where at jerz?
They have already QEd to Infinity, with turtles all the way down to boot.
Infinity: “I don’t think that word means what you think it means.”
Farm Aid
From Wikipedia
Farm Aid started as a benefit concert held September 22, 1985, in Champaign, Illinois, to raise money for family farmers in the United States. The concert was organized by Willie Nelson, John Mellencamp and Neil Young, spurred on by Bob Dylan’s comments at Live Aid earlier in that year that he hoped some of the money would help American farmers in danger of losing their farms through mortgage debt.[1]
https://en.wikipedia.org/wiki/Farm_Aid
No one could’ve seen this coming. No one….
Yeah and you posted this in the previous thread:
Raymond K Hessel
‘As Yellen the Felon pushes us into Weimar 2.0 with her deranged money printing, it is highly likely that starter homes for 500,000 will be the norm. Of course a can of beans will probably cost $10.’
No matter how many times proven wrong, this delusion persists. QE is deflationary. You may get a spurt up, but in a globalized world overcapacity results and hammers prices lower still. It’s not 1915. That world doesn’t exist anymore. And I’ll post day after day proof that rents, for instance, are falling and oversupply mounts, yet I’ll have posters keep saying “rents are gonna go up!”
It’s always the “they” who will keep it from falling apart. No matter that an entire generation of farmers are losing money year after year and about to fold, “they” will make a can of beans cost $10. They aren’t the magic people. They aren’t “elite”. This ignorance is why central bankism and globalism has failed and is on the way out. The media won’t tell you this but I am.
The big driver here is in whose hands does the free money end up in. It isn’t winding up in J6Pack’s wallet, so demand remains flat while capacity grows and asset prices are inflated. But bubbles always pop. Central banks can kick the can but they eventually run out of ammo and that’s when things get interesting.
It’s DebtDonkey (non)thinking. Just more trees-grow-to-sky foolishness.
There is one single precedent for it world history. Not one.
your delusional thoughts have cost you a lot of money the past 8 years.
That’s really funny, coming from an insolvent debt donkey.
Loan-owners have a lot of repairs this year with the crazy weather. Does wood rot?
“Does wood rot?”
If not properly maintained.
Did you primer and paint all the ends before you built it?
It all rots my friend. Even redwood.
“Did you primer and paint all the ends before you built it?”
Anything I do, yes.
Caring for Wood Siding
To enjoy wood siding’s beauty for a lifetime, maintain it properly and diligently.
https://www.houselogic.com/organize-maintain/home-maintenance-tips/wood-siding-care-and-maintenance/
I wish I could agree with you on central banks and globalism being on the way out, Ben, but The Profiteers (as Charles A. Lindbergh Sr. called them) are still firmly in charge, of the things that matter, anyways. Their agenda, although maybe on pause for the time being, will be advanced.
Here’s a quote from Lindbergh regarding the election of our current president:
“The voters become dissatisfied with the old ways and finally they vote in protest, instead of having a definite plan for action when they win. Anything they consider is likely to be at least as good as the old, so they take a chance.
There are always candidates with rosy promises who wedge into such moves. They present themselves as the new “Moses,” but all they know is to criticize the old — a thing that any one can simply do. These would-be saviors are beginners — they see the wrong but not the remedy, and in spite of their best intentions, the cause is lost before they start, even if they win an election.”
It’s only been a couple of weeks jp. Hard to call our path away from Globalism a lost cause with surety. Globalization is a big thing with lots of momentum. Its’ Socialism on a grand scale and that isn’t sustainable. Some of the wheels are already falling off.
“They aren’t the magic people.”
But they can still do a lot, until they can’t. World central banks continue to buy stocks with money they printed out of thin air. Banks continue to let foreclosed properties rot while marking it as an asset on their books, and extend and pretend loans instead of recognizing losses. Look at Greece, in a constant state of crisis for years.
I always go back to the 30% vacancy rate in Tokyo apartments while young people with paying jobs sleep on park benches. Japan’s crash was 30 years ago. And protestors in the street are crying not for landlord bankruptcies but for higher taxes to build more public housing and offer more subsidies.
It will take a massive, massive sea change in public perception and awareness, something like the Nuremberg Trials or the collapse of the USSR, to finally and completely repudiate central banking globalism. I’m optimistic this is starting to happen, but it’s up to everyone to present a clear case in favor of a lot of unpopular things like losses and bankruptcies and foreclosures and repossessions to finally end the 30-year war on deflation and recession. This blog is a great start.
‘A rise in vacancies won’t mean drops in rent’
http://www.japantimes.co.jp/community/2016/07/02/how-tos/rise-vacancies-wont-mean-drops-rent/#.WJ94kNq9KK0
“According to the June 11 issue of Nikkan Gendai, the vacancy rate for rental properties in the 23 wards of Tokyo is currently 33.7 percent, while in surrounding prefectures, it’s even higher: 35.5 percent in Kanagawa and 34.1 percent in Chiba.”
“…nationwide rents peaked in 2007 at about ¥9,000 per tsubo (3.3 square meters). Right now the average rent is ¥8,633 per tsubo, a drop of 3.7 percent, and about the same as it was at the end of the bubble period in the early 1990s.”
“wages for those who traditionally rent have dropped 8 percent since 1999.”
“A demonstration in Tokyo’s Shinjuku, Ward on June 12, organized by the group Call for Housing Democracy, demanded that if the government doesn’t raise the minimum wage, it must work to either push down rents, provide housing subsidies to low income people or build more public housing.”
-
Four solutions to the problem, all of them wrong.
Bloomibergi radio programming has hosted a raft of globalist speakers and experts. Today’s expert said “oh, the middle class feels that globalism has left them behind. We need to educate/convince the middle class that globalism really does help them. They need to know that markets around the world are buying American products.”
Should be interesting to see if the globalists have any success with this.
It helps the middle class not just the middle class in this country. Middle class pay is much lower in China and Brazil and globalism has helped that middle class in fact it largely created it, but it the U.S., Western Europe and Canada it is killing it.
Ben,
Right now our budget deficit is $20 trillion dollars. Trump’s “fiscal stimulus” promises to explode it even further. That money will never be repaid ESPECIALLY in a deflationary environment - the worst nightmare for mega-debtors like the US government. Instead, the Fed will print that money away as did their Weimar Republic central bank predecessors, and with exactly the same outcome: economic collapse followed by the rise of a really nasty dude promising simple solutions for complex problems.
Wait and see if this is a delusion or not. For all of our sakes, I sincerely hope that it is, but if you look at the Keynesian fraudsters running the Fed and central banks for the exclusive benefit of their oligarch cohorts, it’s not hard to see how this is going to play out.
+1
The total US government obligations were 100 trillion when I started this blog in 2004. It’s probably much larger now. It can never be repaid in any environment: it’s mathematically impossible.
All this inflation/Hitler stuff is the same baloney I’ve heard my entire adult life. They say economics and the study of the heavens are the only two sciences that don’t have lab experiments. But we’ve just been through a $30 trillion QE experiment. What happened to inflation? It fell once the big China blowup caved inward. And not just one QE, multiples, some still ongoing. What’s inflation in Japan: negative, after 25 years of this stupidity.
If printing money created inflation, gold would be over $10,000 an ounce. If you have one bit of belief in the scientific method you have to conclude QE is deflationary.
If printing money created inflation, gold would be over $10,000 an ounce. If you have one bit of belief in the scientific method you have to conclude QE is deflationary.
But printing money created inflation. In RE and the stock market, you don’t see inflation?
The only reason you didn’t see a similar inflation in gold is because the USD was strong and not devalued.
In a true hyper-inflationary scenario, it’s not just “printing money” that drives it, it’s expectations, kind of like a bank run on the currency. When everyone is trying to spend local currency as fast as they can, because they are afraid tomorrow it will be worthless, that’s when you’d see gold $10,000 an ounce.
‘Bank For International Settlements Warns Of Looming Debt Bubble’
So it’s global. The choice is “default or inflate away”.
Whoever said that the study of the heavens doesn’t involve lab experiments is out of date. We have moon rocks and meteorites aplenty to study, not to mention all our little space travelers beaming stuff back from Pluto and beyond.
Ironically, it’s the experiments on earth that are languishing. Laboratory experiments are very expensive, and nobody wants to spend the cash on the STUFF in a lab. Instead, they are relying on computer modeling. And failing spectacularly, I might add.
In a true hyper-inflationary scenario, it’s not just “printing money” that drives it, it’s expectations, kind of like a bank run on the currency. When everyone is trying to spend local currency as fast as they can, because they are afraid tomorrow it will be worthless, that’s when you’d see gold $10,000 an ounce.
What she said.
When people start refusing to exchange tangible goods and services for debauched FedBux, that’s when the end-game begins.
‘The choice is ‘default or inflate away’
How many people are living in houses they stopped making payments on once or twice?
Central bank flunkies have succeeded in one thing….. Collapsing demand for all items. All in an effort to “create inflation” which they’ve failed at miserably.
Let the deflationary spiral rage on.
“If you have one bit of belief in the scientific method you have to conclude QE is deflationary.”
Have the geniuses at the Fed noticed this yet? Or do those blinders they wear prevent them from detecting the ginormous gluts on the supply side of the market that remain in the wake of their ZIRP demand stimulus?
It depends where the money ultimately ends. To the degree it ends up creating supply it is deflationary. To the degree it ends up encouraging consumption it is inflationary. Up to now, it has mainly increased supply from China and thus it has overall held down inflation. However, in the future it may trigger inflation. The money that flowed into China and was saved soaking up the excess cash is now flowing out and encouraging consumption: Home buying, tourism etc. be careful what you wish for, the fact that the Chinese cannot find great places to invest their savings means they are spending more which is inflationary. China’s closing of factories is inflationary.
As usual Dan you can’t even see what’s already happened.
http://www.shanghaidaily.com/business/manufacturing/Worldwide-crude-steel-production-climbs/shdaily.shtml
You understand the paradox of thrift. At the individual and family level it is always good. However, at the national level and international level it can actually slow economic growth. The money has flowed to a country with around 50% savings rate, the way the CIA measures it. The money just sitting over there has slowed the entire world’s economy and offset the impact of the multiple QEs. Now, that China is moving more to consumption and money is flowing out to countries with lower savings rate and higher velocity of money, it might just become very inflationary.
Meanwhile the record supply of all items continues to grow while demand continues to collapse.
Show me proof of falling demand in commodities.
Do your own work my friend.
This chart made me break out the calculator for some back of the napkin calculations.
From 2009 to 2016 there’s a compound annual growth rate (CAGR) of 7.06%. Formula I used is ($7,455/$4,625)^(1/7)-1 x100 to convert to a percentage.
In contrast, from 1950 to 1959 there was a CAGR of 2.35%.
During the period from 1970 to 1979 there was a CAGR of 16.59%.
To Ben’s point, I think the real measure would be how much did the CAGR exceed a risk free rate over a given period.
I didn’t bother looking up the U.S. Treasury rates for those periods, but if I recall my financial history correctly the 1950’s were a period of relatively low inflation (so the 2.35% CAGR makes sense in the context of that period), the 1970’s were a period of very high inflation (so the 16.59% CAGR, while high, does not seem out of place for that period).
The kicker is the 7.06% CAGR during the period of QE and artificially low interest rates.
Perhaps one of the resident geniuses can come up with a more refined model to show how much the return exceeded a more widespread measure of inflation or use actual values for the risk free treasury rates for the matching periods.
I guess since 2009 a wave of institutional investment dollars flowed into real assets (in this case, farmland) because “there is no alternative (TINA)”.
Here is some more math for you. Corn costs $4/bu to produce. You get $3/bu at the elevator. This assumes cheap gas and rent around $200/acre. What’s a reasonable price for the land?
http://www.extension.iastate.edu/agdm/crops/pdf/a1-20.pdf
‘costs $4/bu to produce. You get $3/bu’
Like in Australia, where something like 40% of landlords lose money (negative gearing). Yet air box prices are some of the highest in the world. The result: more cranes are operating in their 3 biggest cities than all of north America. That’s more cranes than SF, LA NYC, Toronto, Vancouver, Boston, Houston, Dallas Miami Beach, all the others, combined. This when some Melbourne and Brisbane sectors are 20% empty.
“That’s more cranes than SF, LA NYC, Toronto, Vancouver, Boston, Houston, Dallas Miami Beach, all the others, combined.
And there’s falling prices in every one of those cities.
Think about how much money it took to turn 180 million acres into farmland! And it’s not just grains. Nuts, meats, eggs, dairy. Fish farming went up 60% just in Asia.
‘The Emerging Disruptor: Farmland Investors’
‘Institutional investors are putting down millions of dollars for farmland. There’s always been investment interest in agriculture—but never before has it been so widespread.’
‘For Paul Pittman, CEO of Farmland Partners, the journey to farmland investment began on a family farm in Illinois. The firm has experienced explosive growth from 7,300 acres nationwide in April 2014 to nearly 120,000 acres today in Arkansas, Colorado, Florida, Georgia, Illinois, Kansas, Louisiana, Michigan, Mississippi, Nebraska, North Carolina, South Carolina, Texas and Virginia. Pittman says Farmland Partners (NYSE: FPI) is focused on developing investments in the Corn Belt because the global food supply is so dependent on grains, oilseeds and livestock.’
“I think public companies that invest in that space should be welcomed,” Pittman says.’
This is an example of Yellen bucks looking for a place to die.
I light of the oil conversation here the last couple of days, I would imagine the newly dedicated farmland took a lot of oil to produce in the first place.
‘took a lot of oil to produce’
It all feeds on itself. 180 million acres, China pouring 100 years of concrete in three. London creating a new skyline of empty towers, New York too. The resulting boom in mining from Brazil to Australia used a lot of oil, but created a glut in iron ore. Then it all collapses and the frackers had a glut on their hands.
Which gets to why all this new money doesn’t create inflation. Inflation never goes away, but in a world where money can flee to every corner of the world to create capacity and then overcapacity, QE can only eventually produce deflation. The emptiness of the scarcity claims will always be revealed when no real scarcity existed in the first place.
“QE can only eventually produce deflation.”
Distortions always do. QE, price fixing and market rigging simply drives excess inventory and collapses demand.
In the 1950 your mother didn’t ,or didn’t need to work.
Health care cost 1/3 of what it does today in hours worked.
Great society n big gov
How can you get to a massive bust without a preceding bubble? I bet it has never happened before in the history of modern central banking.
Please post counterexamples if you know of any.
The only thing I can think of is a new technology that makes a prior technology obsolete. For example, there must have been a bust in the blacksmith profession as the automobile took hold, even if the blacksmith industry was right-sized for the pre-automobile economy.
High fashion and technology are two examples of products with a very short life cycle.
Fair enough. But often new technology is buoyed by a flood of easy printing press money… Witness the tech stock boom and bust for a recent example.
“often new technology is buoyed by a flood of easy printing press money.”
I think that’s a stretch and the dot com bubble was an anomaly.
In my opinion, innovation is the real driver of new technology.
If there’s a flood of easy printing press money it will flow everywhere, but won’t necessarily drive the creation, invention, or application of new technology. Of course, a lot of not so great ideas will be funded, but that’s another topic altogether.
Gadgets and AppleJunk isn’t innovation.
Compared to the 1980s bust, it looks like prices are off by less, a mere 18 percent so far. It’s a long way down from here to the eventual drop of 63 percent that was reached by the mid-1980s.
Bigger bubble this time. The reference point shouldn’t be the peak bubble price.
‘Farmland Rental Rates Dropping Overall’
‘Renegotiating expired farmland rental rate agreements — a process now underway across the Upper Midwest — can be one of the toughest jobs in agriculture. Farmers and landlords often have differing perceptions of what’s fair and reasonable. The task might be especially challenging this winter because of two conflicting trends: Many farmers, pointing to continued poor crop prices, want to pay less for the land they rent. Many landlords, pointing to excellent overall 2016 yields, don’t want to accept less.’
‘Strong crop prices during the 2008 to ‘13 boom boosted farm profitability, encouraging landlords to ask for higher rental rates and allowing farmers to pay more. Corn, in particular, provided strong returns, pushing up rental rates the most in areas where the crop is common.’
‘Cass County, in eastern North Dakota, reflects the trend in areas where corn and soybeans are major crops. It’s the nation’s leading producer of soybeans and a major corn producer. The average per-acre rental rate for nonirrigated cropland in the county nearly doubled from 2008 to ‘15, rising from $67.50 to $125.80. It 2016, however, it dropped to $117.’
And this presents the perfect storm which could result in food shortages and/or much higher food prices down the road: institutional landowners who refuse to lower rental rates, while the renter farmers refuse to grow crops.
Now there’s a beaut of a Donkism
Those of us in the market for food need the speculative land bubble to go away.
The Greek Kabuki theater rolls on, with the IMF and ECB pretending they might not bail out the Greek deadbeats yet again, and Greece blustering and making pledges of reform they have no ability or intention of keeping. But a bailout is assured, since a default would set in motion a cascading series of defaults and soaring borrowing costs throughout the EU.
http://www.zerohedge.com/news/2017-02-11/tsipras-warns-imf-schauble-stop-playing-fire-over-greek-debt
Margot Robbie, in her bubbble bath, explains MBSs and subprime loans in THE BIG SHORT. I will be issuing a similar series of tutorials from my bathtub for Ben to post for the HBB’s enlightenment and viewing pleasure.
https://www.youtube.com/watch?v=cHIWFk13r8U
are you gonna search the globe for some more bad news today?
Most likely.
dictate to Hobson while you bathe in a top hat.
keep Susan on the side
Make sure there are a LOT of bubbles, Ray. Nice and thick. kthanx.
Margot Robbie and I are on to something here.
Hey Donk.
You wound me, Oxide.
Carmichael, CA Rental Rates Nosedive 10% YoY
http://www.zillow.com/carmichael-ca/home-values/
I cannot imagine that farmland out here could even command the prices of the 1950s. Much of this area has a huge water problem, not as bad as out in California, but it’s still very dry out here. Farming is something you do out here from spring to about the end of September and is a no go the rest of the year. A lot of farms will go out if you ask me, water is a big problem out here on top of the bad weather. For the record, much of the grain crop goes to feed livestock, not humans (much of the corn grown is too hard and nasty for a person to eat but cows and pigs love it). There is very little ‘prime’ real estate as far as farming goes out here since the Plains are not the prettiest place to live.
Where are you referring to, xstate?
huge water problem, not as bad as out in California ??
Drought it over much to HA’s chagrin…
Raindrops in a desert my good friend. Raindrops in the desert.
Lots of reservoirs are spilling over and more rain to come.
Lots of cool front yards as people dig out the high maintenance lawns. More free time and no need to own a lawn mower.
It’s not so much about fundamental value, as it is about Yellen bucks seeking a toe tag home.
‘For the second year in a row, North Dakota ag and prices came down moderately in all five regions in the state, according to an annual index produced by an organization of agricultural land appraisers.’
‘Statewide cropland values declined roughly to 2012 levels, when commodity prices were peaking, according to an annual report by the North Dakota chapter of the American Society of Farm Managers and Rural Appraisers.’
‘The average non-irrigated cropland index trend declined 8 percent in the state, after 9 percent and 1 percent declines the previous two years, according to the report. Land values in the report stood at an average of $2,459 in the state, down from the peak average levels of $2,953 in 2013, and compare to $2,530 in 2012 and $1,820 in 2011.’
‘Regional year-to-year sale declines ranged from a low of 4 percent in the southeast part of the state (excluding the Red River Valley) at $2,841 an acre to the largest annual reduction at 11 percent in the northeast, ending at $2,019 an acre.’
‘Red River Valley crop land sales posted a $4,139 per acre average, with an 8 percent decline from the previous year and a cumulative 21 percent decline from the peak, in 2013. Peak values in the region were in Pembina County, with a range from $2,278 an acre to $7,214 on 35 sales, while eastern Cass County saw values range from $2,500 an acre to $5,800 on 63 sales. Counties with the highest mean average sale values were Cass, $4,725; Pembina, $4,474; and Traill, $4,385.’
‘Statewide, pasture land sales averaged $916 per acre, down 13 percent from $1,056 an acre the previous year, reflecting changed beef cattle prices.’
“The Farm Belt is hurtling toward a milestone: Soon there will be fewer than two million farms in America for the first time since pioneers moved westward after the Louisiana Purchase.”
This is what happens when you convince gullible city folk to pay up to help the family farmer, and then direct all the subsidies to huge agribusinesses instead.
Among the other negatives — a diet of industrial cheese and high fructose corn syrup rather than (unsubsidized) fruits and vegetables.
‘This ‘bubble blind’ Fed is going to trigger another brutal recession’
Michael Pento
3 Oct 2016
‘Federal Reserve head Janet Yellen is keeping alive the tradition of her predecessors, Alan Greenspan and Ben Bernanke, by showing she is equally as blind-sighted to the bubbles central banks are blowing in the bond and equity markets.’
‘During her September press conference, Yellen stubbornly clung to the misconception that it is only possible to tell if a bubble exists after it bursts. And because of this delusion, in Yellen’s eyes, 96 months of a virtual Zero Interest Rate Policy (ZIRP) is merely, and I quote, “a modest degree of accommodation.”
‘Her blinders are so opaque that she claims to see, “no signs of leverage building up.” And her feckless ability to spot market imbalances even resulted in this doozy of a Yellen quote: “In general, I would not say that asset valuations are out of line with historical norms.”
‘This corporate debt bubble isn’t limited to the United States. Corporate debt in emerging markets has grown to $25 trillion, according to the UN Conference on Trade Development. This is 104 percent of emerging-market GDP, up from 57 percent at the end of 2008.’
‘Household debt is also surging in the U.S. — up to a record $14.3 trillion, according to the New York Federal Reserve. And this impulse to take on debt at record low interest rates has spread across the globe. China, Saudi Arabia, Thailand, and Korea led the way with the largest build-up in household debt per adult since 2010, according to Institute for International Finance (IFF).’
‘Global debt issuance is up 5.02 trillion dollars so far in the first three-quarters of 2016, according to Dealogic. This would put it on course to rival the all-time high of $6.6 trillion hit in 2006.’
‘For the first time in the history of economics, corporations and governments are getting paid to lend money. This is the direct result of the 96 months of nearly free money from the Fed and the combined $15 trillion increase in central bank balance sheets since 2007. And this rate of central bank money printing is still growing at a rate of $200 billion each month.’
‘Bankers Warn Fed of Farm, Student Loan Bubbles Echoing Subprime’
Joshua Zumbrun and Craig Torres
May 7, 2013
‘A group of bankers that advises the Federal Reserve’s Board of Governors has warned that farmland prices are inflating “a bubble” and growth in student-loan debt has “parallels to the housing crisis.”
‘The concerns of the Federal Advisory Council, made up of 12 bankers who meet quarterly to advise the Fed, are outlined in meeting minutes obtained by Bloomberg through a Freedom of Information Act request.’
‘Their alarm adds to a debate on the Federal Open Market Committee about whether the benefits from their monthly purchases of $85 billion in bonds outweigh the risk of financial instability. While Chairman Ben S. Bernanke has argued the program is worth pursuing, Fed Governor Jeremy Stein and Kansas City Fed President Esther George are among those who have voiced concerns that an extended period of low interest rates is heightening the risk of asset bubbles.’
“Agricultural land prices are veering further from what makes sense,” according to minutes of the council’s Feb. 8 gathering. “Members believe the run-up in agriculture land prices is a bubble resulting from persistently low interest rates.”
heightening the risk of asset bubbles.’
“Heightening the risk”??? Ha, that’s quite an understatement right there. I would argue instead that it is GUARANTEED to mis-price ALL assets.
Bend, OR Housing Prices FreeFall; Plummets 29% YoY
http://www.movoto.com/bend-or/market-trends/
BrOke doom & gloomer
What’s not to like?
Remember my good friend….. Nothing accelerates the economy and creates jobs like falling prices to dramatically lower and more affordable levels. Nothing.
Thousand Oaks, CA Housing Prices Crater 9% YoY
http://www.movoto.com/thousand-oaks-ca/market-trends/
Hey, 29%… now we’re talking.
Very interesting reading particularly page 21, you see the impact of the 2012 drought in this country on our corn crop which caused surging prices world wide. The world is using more corn, China is up ten percent from 2012, but the new demand is being met locally:
https://apps.fas.usda.gov/psdonline/circulars/grain.pdf
However, the continued efforts to reduce poverty in China may raise the demand for many commodities. Want to bet that many of these people end up in “ghost cities”:
http://www.shanghaidaily.com/nation/China-aims-to-relocate-34-mln-people-in-2017-to-tackle-poverty/shdaily.shtml
Poverty is usually defined as not able to get adequate meals. I’m not so sure moving 37 million off the farm into high rise Fang Nu tenements is going to improve their nutrition.
“Poverty is usually defined as not able to get adequate meals.”
Maybe in China, but food insecurity barely exists in the rich countries. Poverty now is only pulling two bars of 4g on your i7.
The statement “In the long run, we are all dead” is often used to justify destructive actions today because they make us feel good right now, and to pay no mind to the consequences expected tomorrow.
However, tomorrow eventually gets here, with its consequences.
Note that the mournful WSJ piece doesn’t mention the 2013 warning at the Federal Reserve I posted above. No, that would have people asking questions, like “internally there were warnings, yet you did nothing?” We aren’t told that bad outcomes can result from gigantic “experiments” like QE or ZIRP. And now they tell us, years into it that a “farm bust is upon us.”
I’ve been doing periodic blog posts on it since these farmland prices were skyrocketing. How many graphs of parabolic price increases have I posted over the years? It’s simple: what goes up must come down. Too bad the food industry had to get clobbered.
Stocks or stock market is up ! But most of my friends are still down from their 2006 high. Why?
The market is heavily influenced by a few stocks that have received Yellen benefits and they are up - way up - and they distort reality.
Our past two Treasury Board chairmen said printing money was counterfeiting. We should all agree.
With their doctorates they should be fixing the problem, not plastering over it (them).
They haven’t fixed a darn thing. Probably only made it worse.
yep, recession is coming.
“The boom also encouraged farmers in other countries to ramp up production. Farmers world-wide put nearly 180 million new acres into cultivation over the past decade. Corn and wheat output has never been higher, and never has so much grain been bunkered away.”
This is just a wild guess, but I’m guessing that other interest-sensitive sectors, such as oil, PMS, container ships and commercial real estate are also facing epic gluts, thanks to the hyperstimulative effects of QE1, QE2 and QE3.
Has the Fed owned up to their complicity in the coming bust?
Has the Fed owned up to their complicity in the coming bust?
I’m fairly certain that the refrain will be “No one could have seen it coming!”
“Farmland values continued to wane in the fourth quarter, according to the Tenth District Survey of Agricultural Credit Conditions. On average, nonirrigated and irrigated farmland values dropped 6 percent, and ranchland values fell 7 percent from the same period last year. These downgrades were the largest since the Great Recession of 2007-09 but were relatively small compared to declines in the 1980s.”
Just imagine how yuuuge the losses look when you factor in massive leverage. Got underwater farmland?
More than 66,000 empty mansions in Vancouver. Using my uncanny, Nostradamus-like ability to foretell future events, I can foresee a forthcoming “Empty Mansion Tax” to stick it to absentee housing “investors” of the Chinese persuasion.
https://www.bloomberg.com/news/articles/2017-02-10/vancouver-s-empty-mansions-highlight-middle-class-housing-woes
Photos attached in this article. What a S*#t storm. “An astounding $1billion CAD of global money poured into the city’s properties over the course of a five-week period, Bloomberg reported.
And more than $57.1million worth of homes in the small neighborhood of Point Grey - which measures just 2.5 square miles - were purchased by students reporting no income.
At the same time, there are now 66,719 vacant or temporarily occupied homes in the Vancouver area - more than double the numbers recorded in 2001, according to Simon Fraser University’s Andy Yan.”
Read more: http://www.dailymail.co.uk/news/article-4214814/Foreign-buyers-driving-home-prices-Vancouver.html#ixzz4YQboECoA
Who knows if all the owners actually pay it, especially the owners of those badly damaged abandoned houses in the pictures, but recall they do have the 1% per year non-occupancy tax enacted late last year IIRC.
Just pulling out a thin-air number, say the average price is $800,000 per house for those 66K vacant houses. That’s $8K per year per house, or about $530 million dollars for the city in non-occupancy taxes alone.
I wonder if the city would rather the houses be vacant and collect their tax.
Colorado Housing Demand Plummets 22% YoY
http://files.zillowstatic.com/research/public/State/State_Turnover_AllHomes.csv
All that quantitative easing, with so little recovery to show for it…
MarketWatch dot com
The Great Recession is still with us, top forecaster says
By Rex Nutting
Published: Feb 11, 2017 10:00 a.m. ET
Cost in lost output so far could be more than $13 trillion, estimates John Silvia of Wells Fargo
By one estimate, the U.S. economy is about 10% smaller than projected before the Great Recession
It’s been 10 years now since the credit bubble began to unravel, and we’re still struggling to recover from the Great Recession that resulted from that collapse. John Silvia, chief economist at Wells Fargo Economics and the winner of MarketWatch’s Forecaster of the Month contest for January, says that in important ways we’ll never really recover.
The Great Recession permanently altered the economy of the United States, Silvia and his colleagues argue in a new research paper: We are much poorer than we would be if the recession hadn’t happened. How much poorer? By one estimate, U.S. real gross domestic product has been nearly 10% lower, on average, for each of the past nine years, Silvia says, which means that (by my calculations) we’ve lost about $13.6 trillion in output.
…
The Federal Reserve will never change from its core essence as the oligarchy’s chief instrument of plunder against the 99%.
http://www.zerohedge.com/news/2017-02-11/barclays-significant-change-coming-fed-over-next-18-months
Serial house sitter and pet sitter could be a decent post-retirement gig for a wanderlust sort.
http://www.cnbc.com/2017/02/09/serial-house-sitters-shed-the-shackles-of-a-mortgage.html
I posted that days ago but it is a great link.
2007 redux. Real estate scams flourish in a market juiced by FedBux.
http://www.cnbc.com/2017/02/10/the-greed-report-tempted-by-the-real-estate-market-investor-beware.html
‘Amityville Horror’ House Sells For $605,000; Seller Paid $950,00 In 2010
http://www.newsday.com/classifieds/real-estate/amityville-horror-house-sells-for-605-000-1.13104819
Housing prices have a long way to fall.
Not that really is a horror!
Somehow I don’t think its zombie property taxes will go down by a third…
“He is serving 25 years to life at the Green Haven Correctional Facility in upstate Dutchess County.”
Like 40 some years to life now.
Seven little known facts about the storied ‘Amityville Horror’ murders
BRETT BODNER
NEW YORK DAILY NEWS
Saturday, October 15, 2016,
DeFeo is still alive to this day and remains at the Sullivan Correctional Facility in Beekman, New York.
After receiving six 25 years-to-life-sentences, it’s no surprise parole hasn’t been an option for the murderer. All of his appeals and requests have been denied by the parole board.
http://www.nydailynews.com/news/crime/facts-amityville-horror-murders-article-1.2830746
This can’t be good:
Venezuelans killing flamingos and anteaters to stave off hunger amid mounting food crisis
Apparently illegal immigrants, who used to be “undocumented immigrants” on leftist websites like CNN are now “unauthorized immigrants”
The old definition made it sound like immigration misplaced their papers.The new one sounds like someone forgot to sign their papers.
Of course the left is having hysterics over the deportations of people who entered the country illegally and who committed a second crime (like identity theft).
And then there was a non citizen in Texas who registered to vote and was sentenced to jail. Her plea: she didn’t know that she had to be a citizen to vote. Never mind that registration forms are very explicit about that. Apparently, after she was kicked of voter rolls and told why, she tried to reregister, more than once.
Bahhhhhhh
Enhanced permanent visitors
“Bill Kristol says that white working class Americans should be replaced by immigrants because they have become “lazy,” “decadent” and “spoiled.”
http://www.infowars.com/bill-kristol-lazy-white-working-class-americans-should-be-replaced-by-immigrants/
I saw the Youtube clip, and Kristol seemed to suggest that the white working class should improve their skill-set and move-up the economic ladder making room for new entrants.
I see Kristol has serious jello-paunch. He would likely fail the “line-up, palms-up” inspection.
SNL rocks!
Touchy, touchy. LOL
Fake news:
“We are not in a housing bubble. There are tons of problems in housing. None of them have to do with too much credit”
http://www.denverpost.com/2017/02/12/denver-new-home-construction/
“Fake news:”
That’s outright fugg’n lies, IMHO. I just e-mailed Aldo at the Denver Post asking why they disabled the comments for that piece.
“Most striking, women have become significantly more likely to work into their 60s and even 70s, often full time, according to the analyses. And many of these women report that they do it because they enjoy it.
For some women, the decision to keep working was unexpected and not necessarily welcome, because of late-in-life divorce, pension or real estate losses, or changes in Social Security. A recent paper by the economists Annamaria Lusardi and Olivia S. Mitchell examined women who were working into old age because they had more debt than in previous generations and lacked financial savvy.”
https://www.nytimes.com/2017/02/11/upshot/more-women-in-their-60s-and-70s-are-having-way-too-much-fun-to-retire.html
Sourcing the most uninformed is key in keeping the scheme going.