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Kay McDonald

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  • 13 Agriculture Myths Busted: This Bubble Is Ready to Pop [View article]
    Artful Dodger
    Thanks for your eloquent writing on owning farmland. Since I grew up a farmer's daughter in the Midwest, and family still farms, I wouldn't know where to begin in telling "my" story. I just visited recently. There is always something depressing to relate. The latest is that they may bulldoze the abandoned farm on the property, which once belonged to my great-uncle. Since I'm a nature lover, and there are many trees, and some native prairie on the place, plus nice old barns, and buildings all hand-built by relatives who were good at carpentry, this would be sad. It is a small wildlife oasis in a sea of corn. But, the bottom line is, they are small compared to corporate farms, and the extra acres could help boost their profit margin. Over the years I've watched as they straightened a creek, removed trees and native prairie and small wetland, all for the same goal. The reason I tell this is that the story has been repeated many times across the Midwest.
    Your point about finding labor is also great. I wish I'd included it somehow in my points above. My expectation is that corporate farms will be operated by immigrant labor over time in the not too distant future. This isn't real prevalent yet, where I'm from, but it has begun.
    Also add, to all of this, there is a sentiment that goes with farming that one cannot underestimate. There is a deep connection with the land. This is probably what grabbed you when you bought more land years ago. It is what drives other members of my family and friends families who I grew up with, causing heartaches along the way. When I was in gradeschool, a best friend's Dad hung himself in their barn during a difficult farm year and he was dealing with a handicap that made farming difficult. Things like that you never forget and become part of you.
    In my opinion, much of the reason for the positive sentiment has been lost because of the new profit driven values of corporate farming. Just look at the average age of a farmer in Nebraska or Iowa or anywhere. The corporate farm model has destroyed the sentimental appeal to the younger generations.
    The economics of the story go on and on, too. Like you say weather, labor, long work hours, high costs of modern equipment, inputs, etc. make it an unpredictable challenge every single year.
    Anyone sitting in an air conditioned 22nd story of some modern office building in mid-July in some large US city's downtown, who decides to put his or her retirement into a hedge fund investing in farmland hasn't a clue what's behind the scenes, do they?
    Jul 12, 2009. 12:23 PM | 15 Likes Like |Link to Comment
  • Update on the Deflating Commercial Real Estate Bubble [View article]
    I have seen reports that suggest the delinquency rate is much higher than 10%, but I am using the Fed's report here.

    "While some are probably over-leveraged, many are probably not."
    At a rate of 42% down overall, and looking at the time-frames of when the loans originated and when they come due, I suspect the vast majority are underwater.

    "If the banks want they can extend the terms during a recovery."
    This is true and is being done right now, but, you are assuming "a recovery" here. With GDP as low as it is, jobs numbers as poor as they are, and the deflationary threats evident today, it could be a long time down the road until we have that recovery.

    "The residential lending crisis will prove far worse on the banks than CRE" There's a big difference between the two, however. The length of the loans and the government's response and intervention in each area. I'm looking more at CRE as the straw that breaks the camel's back.

    I mostly agree with your last paragraph, too, but it is the 50% regional and smaller bank's lending to small businesses that I am concerned about.
    Jul 16, 2010. 04:22 PM | 7 Likes Like |Link to Comment
  • Remember $20 Oil? Looks Like It's Coming Back [View article]
    Anyone's view here on whether this $20/b oil prediction comes true or not probably depends upon your overall view of the economy. I happen to agree with Verleger that we are in a serious global deflationary downturn which may last a few years. My prediction would be that the $20/b price could be possible once this sucker's rally ends and more of the unresolved solvency problems resurface and need to be confronted.

    I agree with "The Greates...: above comment that nations don't decrease production because they need the income. This is a key issue to understanding this situation.
    Jul 20, 2009. 10:50 AM | 6 Likes Like |Link to Comment
  • Are We Near a Peak in Farmland Prices? [View article]
    dvl and egg,
    You obviously both believe inflation is where we're headed. I don't have a crystal ball, and am still worried about getting past working out of this deflation we're in. Our government will take on more debt to further bail out our banks before this is over. The reality is, either way, we have become a much less affluent nation. If farm programs and ethanol subsidies get scaled back, plus higher inevitable property taxes go up on ag land, and perhaps fossil fuel costs go up, you may see the ever squeezed farmer eek out less of a profit. And then, land will go down in value. The fact is there is a lot of overproduction of corn and soy in this country due to farm policy and the time may come that that policy changes. Then what happens to farmland prices? Times are too uncertain right now to make anything a "given". If, on the other hand, we are headed for inflation, right now could indeed, be a good time to buy ag land because interest rates are relatively low.
    Nov 26, 2009. 01:12 PM | 4 Likes Like |Link to Comment
  • Remember $20 Oil? Looks Like It's Coming Back [View article]
    Gulf Oil CEO Joe Petrowski also predicted $20 oil for '09 in December of '08. And he had also correctly predicted on Oct. 14, 2007, that oil, then trading at $83.69 a barrel, would rise to $100 within six months. He thought that when speculators deserted it, it would overshoot on the way down. His prediction was a little early, if these guys end up being correct. Neil Barofsky announced the bailouts will exceed $23 trillion in costs to the US Federal government today. Brace yourself. Figure out how that will play into your crude price. This nation is bankrupt.
    Jul 20, 2009. 11:37 PM | 4 Likes Like |Link to Comment
  • Plug-in Vehicles: Toyota Tells the Unvarnished Truth [View article]
    John Peterson,
    A few months ago, I had the opportunity to hear Bill Reinert speak, who designed Toyota's Prius and heads their alternative transportation dept. He is undoubtedly the mastermind behind this whole post and subject which you are presenting here. I wrote a detailed description of his talk: financialnewsexpress.b... and received a personal response from him commending me on its accuracy. I have an enormous amount of respect for this man, who tells it like it is, seemingly to the detriment of Toyota, at times. He is as much of a realist in the corporate world and world of energy descent people that I am aware of (and I'm aware of quite a few having read on these issues for many years.) Being a realist also makes him quite a pessimist about our futures, the future of alternative transportation, political will on the subject, and environmental degradation on the way down. To me, he emanates common sense and is virtuous enough to go public with his statements.

    From his talk, as related to lithium batteries, he predicted that current government subsidization is in the process of producing an oversupply over these next few years and that is not even enough to bring the cost of production down.

    One surprise that I had from his talk was his positive view on fuel cell technology with the hope that it will get government support, which is what they are gearing towards by 2015.
    Jul 11, 2010. 01:00 PM | 3 Likes Like |Link to Comment
  • Superweed Immunity to Monsanto Pesticide Means Opportunity for Competitors [View article]
    Please be specific about which of my sentences were inaccurate and site references pointing me to the truth. When I read your comment, it was almost as if it was written for a different article entirely, not mine. I had no agenda when I wrote mine, but you appear to have one. SA changed my title from "Superweeds remove efficiencies from the Industrialized Agriculture System". Do you disagree?
    Jun 7, 2010. 09:15 AM | 3 Likes Like |Link to Comment
  • Grains: 2010's Most Compelling Commodity Speculation [View article]
    "Threatened by the long-term decline of crop yields, agricultural commodities are probably in the early stages of a secular bull market."

    What is that based upon? Yields have been going up.

    I recently wrote a part I

    and part II financialnewsexpress.b...

    stating the opposite of what you are saying. I know the contrarian viewpoint is always difficult to accept, but so far its been right. You never mention global macro economics, which may play out to be the number one factor affecting grain commodity prices going forward.

    Fact is, we are at a 7-8 year high in global grain stocks. Production in S. America is looking strong at this point. El Nino forecasts suggest very favorable conditions for US production again next year. I'm just not seeing what your bullishness is based upon.
    Feb 2, 2010. 09:29 AM | 3 Likes Like |Link to Comment
  • Jim Rogers, The World Is Not Short of Grain [View article]
    Thanks for your GD comparison.
    This year cherries were destroyed to support producers. Right now the potato farmers want potatoes destroyed. Corn ethanol is basically a government subsidy program to destroy corn to support corn prices. Dairy stock has been destroyed this year, but not through a gov. program. Farmers do need policy to keep them in business, I just wish it were better policy, and not just vote-winning policy.
    Jan 21, 2010. 12:37 PM | 3 Likes Like |Link to Comment
  • Superweed Immunity to Monsanto Pesticide Means Opportunity for Competitors [View article]
    I appreciate your comment. Like we all know, this is a huge story. Your "19 weeds" resistant is probably way low, though. Some say within five years half of all weeds in the U.S. will be resistant to Roundup.

    According to this Reuters article,

    "More than 130 types of weeds have developed levels of herbicide resistance in more than 40 U.S. states, more resistant weeds than found in any other country, according to weed scientists."
    Jun 10, 2010. 01:10 PM | 2 Likes Like |Link to Comment
  • Agricultural Commodities in Light of Peak Oil [View article]
    I do not take the time frame of the Olduvai graph at face value. But, I do take pride in the fact that, to my knowledge, I am the first SA contributor to post it. This post may have introduced some readers to the subject of PO, as there is a wide reading audience here. It is very doubtful that I will remember your comment in 2025, but I will always remember when I saw this graph for the first time. It makes one think, no matter what you believe the time frames are, or how you expect the extension to play out. It portrays a powerful message, one which scares some, and causes others to dismiss it as a joke.
    Feb 10, 2010. 04:23 PM | 2 Likes Like |Link to Comment
  • Perilous Practices of Public Pension Funds [View article]
    I read this WSJ article and have been watching this story unfold with amazement myself. So far all we see covered in MSM is the shortfalls in public and other large pensions with an assumption that the gaps need to be filled. By whom? By the other people who's pensions have contracted, of course. Talk about the media's use of the meme "populism"! This is only in its beginning stages. Wait until the next leg down in the market.
    Jan 29, 2010. 10:04 AM | 2 Likes Like |Link to Comment
  • Jim Rogers, The World Is Not Short of Grain [View article]
    I wish that in your response you'd have addressed the main issue of this post, global grain stocks being the lowest they've been in decades. I'm open minded, just can't find sources which your team no doubt has much greater access to than I do. Do you discredit the USDA reports?
    Jan 22, 2010. 01:48 AM | 2 Likes Like |Link to Comment
  • Jim Rogers, The World Is Not Short of Grain [View article]
    Thanks for your comment.
    I have reviewed your sources.

    You are trying to claim grain stocks are low based upon a global analytics article by Eric deCarbonnel dated Feb. 10, 2009. That is nearly a year ago. A whole growing season has taken place between that weather and the weather that has produced the current stocks.

    You tell me USDA data is unreliable and then you provide 2 links to USDA earlier-in-the-year wheat reports. (In my report I used the most recent USDA wheat report.)

    From what you've provided here I'm unconvinced, but would welcome more data and links from you, if you have them to make your case.

    I consult many news sources each week when compiling my Friday Ag news reports, and I cannot say that I have seen articles anywhere from any sources suggesting the dire shortages you think are everywhere. I'm not saying they can't happen a year from now, or two years from now.
    Jan 22, 2010. 01:14 AM | 2 Likes Like |Link to Comment
  • Erosion in the M2:M1 Relationship and the Burgeoning Eurodollar Bubble [View article]
    Thanks for your article. Do you discredit the two entity's which now chart M3 or why do you not mention them?
    I wrote this recently:
    I'd be curious to hear your comments.
    Nov 10, 2009. 02:55 PM | 2 Likes Like |Link to Comment