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| I selected those years as I wanted a clear imprint in my mind on those years in which the dollar was either strong or weak & trying to get this crude oil thing settled in my mind. When crude oil advanced from roughly the 60 level & moved higher I had expected more of an impact on the economy. It did not occur. However, the government has changed some of the methods in which they calculate the cost of living. These changes were initially implemented to insulate the treasury from big annual increases for social security benefits and for other economic reasons. However, I do feel the price of crude oil has had considerable effect on consumers but has been disguised because of all the various credit alternatives available today. Home equity loans for one. I think the consumer is now backed into a real corner and have felt that way since last July. For example, I know a couple of physicians, making huge incomes, who are in serious financial trouble; too many SUV's....stepped up into classier homes...I just use them as one example as I don't think this sub prime housing thing is the only problem..I think it goes deeper. If you remember when the inflationary 70's ended..it was time to liquidate most hard assets & when Reagan was elected & we went to a strong dollar policy to clean house...the good times were over. I am trying to look at all the possible methods which the treasury and Fed can use to get out of this current mess.
This acreage debate, while an interesting story, will be highly influenced by crop insurance payments, which are determined by prices in February and this year those prices will favor soybeans more than last year. If corn has reached it's economic value (near maximum) beans could continue higher & think the problem is already close to being solved except when the speculative commodity crowd gets into a story which they like and really believe, they continue to run with it until they over do it. Think we are about at that level. I think the next scenario to look at is 2009 & 2010. I still have more questions in my mind than answers.
Additionally, last night I talked to a long time friend, who happens to own a bunch of different companies & recently bought a new Lear which he pilots himself & has a home in Scotland as well as several in the USA & is originally an Iowa farm boy & met him when he was working for a bank in Chicago. He specializes in buying poorly managed companies & then getting them in shape. It was a long, good conversation & because he is generally so busy we only talk every couple of months. After having just returned, he and his wife, from a 'round the world trip' including meeting some Middle East biggies...he thinks it is time to buy the dollar...for the long pull. Thinks we are going to pull out of this mess but the big banks are still going to spill a lot of their blood. He still owns some midwest farm land and thinks it is time to 'cash it in and run to the bank.' I enjoy his conversations as he takes the cold, hard view versus the futures markets which is frequently 'fantasyland.'
The thing I am searching for, is some idea of value for livestock, soybeans and wheat. When I play with the numbers, I don't see one single thing for which corn can be used at current prices which will return a decent profit. Therefore, why own corn? Wheat and beans are a different story as they have a variety of uses. But, again, I am bothered because these wheat and bean markets are getting some age on them. More than usual.
Edited by SeniorCitizen 1/23/2008 05:25
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I am going to begin here tonight.
