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sw363535
Honored Advisor

Bubbles.............hiccup, hickop, hikep,

Since the field of "stimulated" thought seems to be infesting the marketing thread.  I got a question........ If the farm land/grain appraisal bubble decides to pop as it historically always does, what will triger it and how big a deal will it be?

Will the first indication come from sale prices of land or will large bankruptcies start the snowball--------regardless of the lack of snow??

Heard a question posed by an FDIC source that germinated the question in a fertile immagination.

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15 Replies
425Cat
Advisor

Re: Bubbles.............hiccup, hickop, hikep,

Well Ben from the Fed is going to keep printing money so they said today, so we have some time to blow the bubble bigger. The future looks bleak for this country as a whole.  The eventual collapse will take farm values with it.

 

Forbes and Howard Dean were just on CNBC. What a difference in opinions on how to solve this countries debt and growth issues.

 

Forbes is briilliant, Dean is clueless in my opinion.

 

I'd say we got probably 18 months tops . $ 4 corn won't support the new paint and high land values. Lenders will get nervous quick.

 

This country actually needs a stable dollar.

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Silverwheaton
Senior Contributor

Re: Bubbles.............hiccup, hickop, hikep,

Until the US(and other top world governments) stops deficit spending, the inflation and currency devaluation will continue!  If congress would suddenly have a born again experience and start to live within their budget, then the bubble would bust.  If that doesn't happpen then the bond market will eventually implode and force them to stop spending.

 

For those who don't think that spending is the problem, read this carefully and follow the numbers.

 

  http://finance.yahoo.com/news/why-16-trillion-only-hints-040600503.html?fb_action_ids=45113970492327...

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timetippingpt
Honored Advisor

Re: Bubbles.............hiccup, hickop, hikep,

And most importantly the bankers getting nervous won't matter much. They are required by law not to loan you money if the your operation does not cashflow all expenses  AND principal payments. The new banking laws put them in a very tough place when corn drops back to a normal support level just under $4.

 

Working capital of the operting companies will need to be MUCH higher than the last time this happened, probably 55-65%, not the

25-35% we have all operated with for decades.

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too close for comfort
Senior Contributor

Re: Bubbles.............hiccup, hickop, hikep,

Will the landing be softer or harder with everyone is thinking this time is different?

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425Cat
Advisor

Re: Bubbles.............hiccup, hickop, hikep,

Well ask yourself how many can cash flow at 4.00 dollar corn. Banks will begin to walk away from ag even if your balance sheet looks good and you can show postive cash flow. They have done it before. They will move to where future growth is perceived and away from a sector that is contracting. 

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roarintiger1
Honored Advisor

Re: Bubbles.............hiccup, hickop, hikep,

Got news for you.......The banks will not walk away soon enough.......just like back in the eighty's.

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read_write
Contributor

Re: Bubbles.............hiccup, hickop, hikep,

When it does burst it will be a be a generational buying oppourtunity.
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425Cat
Advisor

Re: Bubbles.............hiccup, hickop, hikep,

You're right some will allow overleveraging . The problem I see though is when margins do tighten eventually capital could become scarce 

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jrsiajdranch
Veteran Advisor

Re: Bubbles.............hiccup, hickop, hikep,

Be watching for who takes over little Timmies postion.  If it is a person cut from the Paul Volcker cloth stick a fork in it.  We will Know by the First of Feb. I have made a pretty big bet that this won't occur till then.

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