Land Price Bubble

Most farmers must have also noticed the lie in the markets.

About 5 years ago when we had large increases in prices as the Wheat market was manipulated there was a disparity between what the grain commodity market said Wheat should sell at and the price being offered by the mills & grain traders.

There is no direct connection between financial markets & the real world - yet you are expected to accept the prices being quoted & future prices - despite the fact fraud has been committed in markets, for example the Libor bank base rate.
 

shakerator

Member
Location
LINCS
The problem with Derivatives is they are fundamentally flawed.

Derivatives basically insure trading by allowing claims to be made and spread - complicated mathematics was used to spread the risk and essentially de-risk trading. Derivatives could then be traded and essentially betting on risk.

Margins expanded as it was seen to be the case that risk no longer existed.

However there was a fundamental flaw - what if someone didn't pay ? what if those using the system were humans and they lied. Lehmans broke the derivatives chain because they couldn't honour their commitments which rippled on to the next and the next etc, So rather than the system being an asset it became a liability because most didn't have the assets to backup their liabilities.


I don't disagree, but it seems our legislators do
 

shakerator

Member
Location
LINCS
So..

Question: how far will Western governments go in order to prop up support existing levels of economic performance; what will they be willing to do to avoid a severe depression?

How do you define economic performance?
If the 1970's methods for GDP and inflation were done like for like today the former would be negative the latter double digits....

If this stealth theft becomes too obvious then look at Dodd frank, BOE/ FDIC, FSB policy it's all harmonised and personally I expect fireworks from 2015/16 with deflation and inflation simultaneous - BIFLATION .....inflation in the things you need, deflation in the things (your supposed) to want.



Nothing is based on real capital anymore. And society raises an eyebrow when it is (I don't want to sell you this jag/combine/ in cash etc)
 
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Goweresque

Member
Location
North Wilts
So..

Question: how far will Western governments go in order to prop up support existing levels of economic performance; what will they be willing to do to avoid a severe depression?

Everything. They all know that they cannot afford to not keep all the plates spinning, because approximately 50% of the economy is the State. If the State can no longer support that 50% of the economy (a mixture of paid employees and benefit/pension recipients) due to the other 50% of the economy having collapsed and producing no tax revenue, then there will be riots in the streets. A large proportion of the population live hand to mouth, from pay cheque to pay cheque, or benefit payment to benefit payment (and many can't even manage that, hence the rise of Wonga et al), so would be hungry in short order if the State could no longer pay. Thus they have to keep the cash flowing by hook or by crook. The first way is to pump money into the economy indirectly in order to stimulate it, and keep tax revenue flowing, if that were to fail, or not be a quick enough solution due to a catastrophic financial shock, then I think they would print money and pay it direct to State employees and benefit claimants.

Ignoring the moral hazard, it makes sense - pretty much all money is debt backed nowadays, so if the debt stock contracts due to non-payment and write-offs, then the State can indeed make up the gap with money printing without affecting inflation too much. Of course if this is made general public knowledge the clamour for money to be spent on everything would be massive and it would all go horribly wrong in short order, hence why it would have to be a last resort. But they would do it if there was no alternative other than social unrest.
 

shakerator

Member
Location
LINCS
so if the debt stock contracts due to non-payment and write-offs, then the State can indeed make up the gap with money printing without affecting inflation too much..


If you print out of thin air there will be consequences somewhere along the line.

Inflation at the supermarket is 10% a year.

Packages get smaller, prices slightly up, more cheap fillers in ingredients, I can't believe more people don't notice.
 

shakerator

Member
Location
LINCS
So..

Question: how far will Western governments go in order to prop up support existing levels of economic performance; what will they be willing to do to avoid a severe depression?

I see this mornings papers we are now adding drug dealing and prostitution to official GDP which is expected to 'boost' the economy by 2.3%..... same as the Whole of agriculture!!

Fine.....but WHY NOW!
 
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carbonfibre farmer

Member
Arable Farmer
I see this mornings papers we are now adding drug dealing and prostitution to official GDP which is expected to 'boost' the economy by 2.3%..... same as the Whole of agriculture!!

Fine.....but WHY NOW!

To measure something you need a scale to measure by.

If that's changed constantly, you have no way of comparing like with like either forwards or backwards.

RPI and CPI come to mind.

Lies, damn lies and statistics.
 

goughy57

New Member
Mr Roger Huish, late of Caefforiog, and once the biggest dairy farmer in the UK, is my esteemed neighbour - a born stockman, he has now retired to a smallholding after a period in the West Country.

He is now engaged in writing a book about his farming career: my understanding is that he never really recovered from the loss of the farm. I suppose that he'll have his memoirs privately published one day, and I'll be first in the queue the next day - after all, his name is just 'Hywel Richards' spelt differently.
hi. do you know rogers location now? trying to make contact with him after 45 years
 

graham99

Member
Price only matters on 2 days - the day you buy and the day you sell

I'm not planning on selling so can I afford to buy is all I'm interested in, the rest is just meaningless bits of paper
so you have no debt .
the meaningless bit of paper, with the interest rate on it ,could sink us all ,if they stop printing money
 

graham99

Member
Monetary authorities the world over have made it very clear that the response to the 2007 Financial Crash would be to print money, and keep printing it until asset prices stabilised, which is exactly what they have done. They are petrified about allowing deflation to set in, which would be a downward spiral of reduced asset prices, defaults on loans, bank debt write-offs, bank insolvencies etc etc. Thus if there so much as a hint of economic recession they will print more money and inject it into the economy. Farmland is one of the first assets that is hit by the wall of printed money, being both a business asset (and thus subject to very favourable tax laws) and is easily traded, and owned, by non-farming people. Anyone who has just made a killing in the City can buy a big estate, put it in the hands of an agent, and sit back, safe in the knowledge their money is not in a bank any more. If the authorities get out of hand with the money printing at some point and create hyper-inflation, then owning a real asset will be far better than owning cash, which could be worthless inside a very few years.Farmland has the added advantage that it produces food, which doesn't go out of fashion.

Its a no-brainer really. The only scenario that makes land ownership a bad deal is deflation, and that scenario turns the Western world into a Mad Max wasteland. So it will not be allowed to happen, even if it takes printing enough money to make land £20, 30, 40k/acre.
but you can not sell farm produce for less the the cost of production .
if your customers have no money then the land is worthless
 

graham99

Member
No it also is a very safe long term haven for money and a massive inheritance tax planning device. When you see the sums being spent on top properties in London by foreigners looking for a safe haven (and we are talking £25 - 100 million per house) for their money - why wouldn't you invest some of your money from the sale of such a property in a farm? A few million is chicken feed to these people.

Land prices aren't just about farming, land has an investment, financial planning and an amenity value as well. The later reasons (to some people) can be more important than the profit from farming.
as long as the money printing keeps going .
things are not good in the towns every one forgets about the growing number of homeless.
and if there is a crash and a lot of people lose there jobs and can not pay the rent ?
 

graham99

Member
I think the important point is that it's a very different matter for someone who's already established to buy an extra parcel of land compared to a new entrant who's having to finance his/her purchase as a stand alone venture.

I would agree with others that almost no land can ever pay for itself outright at current prices.
hit the nail on the head .
there three problems in modern business,one is the uneven taxing of the people ,
two is the family money making an uneven playing field.
three ,todays young hot shots seem to bailed out ,instead of bankrupted,making another uneven playing feild
 

SFI - What % were you taking out of production?

  • 0 %

    Votes: 79 42.2%
  • Up to 25%

    Votes: 65 34.8%
  • 25-50%

    Votes: 30 16.0%
  • 50-75%

    Votes: 3 1.6%
  • 75-100%

    Votes: 3 1.6%
  • 100% I’ve had enough of farming!

    Votes: 7 3.7%

Red Tractor drops launch of green farming scheme amid anger from farmers

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As reported in Independent


quote: “Red Tractor has confirmed it is dropping plans to launch its green farming assurance standard in April“

read the TFF thread here: https://thefarmingforum.co.uk/index.php?threads/gfc-was-to-go-ahead-now-not-going-ahead.405234/
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