What your ivy league tuition is buying

[jrsiajdranch]

Well I am reading this morning from my regular sources on the dairy trade when I came across this article.

http://www.agrimoney.com/news/harvard-dairy-deal-beats-nz-farmland-clampdown--2325.html

The whole article is very interesting but I will pull out a few quotes.

The US university's $27bn endowment fund, which is pursuing a policy of increased investment in commodities and natural resources, has gained clearance to buy a 4,000-acre dairy farm, for which it is paying a reported NZ$34m.

The deal, which will add to dairy and forestry interests Harvard already has in the country, beats by two months rules which give the country extra powers to veto foreign investments in farmland, amid a controversy over an attempt by a Hong Kong-listed company to buy New Zealand's biggest private dairy farm.

Others are interestd to.

Natural Dairy Holdings, formerly known as the China Jin Hui Mining Corporation, has agreed to buy 16 dairy farms from the Crafar Farms empire, which went into receivership last year with debts of more than NZ$200m.

Well I think they all could have bought farms much closer if they really wanted to.

This article just shows big money is flowing into ag right now.  Is this a good thing?

JR

[hardnox604008]

Hi JR,

I really have no idea whether it is good or bad. I would observe that institutions bought near the top in the last land cycle and many sold well before the recent upsurge.

The one thing I am relatively sure of that it wasn't on their radar screen when they could have bought NZ dairies for nothing after the big budget shakeup in the early 90s.

The bigs definitely are going that way, like the Bush family purchase of 100,000 acres in Paraguay in 2006.

We shall see.

Best, h

[GoredHusker]

Locally, Prudential bought a large quantity of ground back in the mid-70's.  They no longer owned it by the late 80's.  The one thing I have noticed is that the bigs normally buy in at the highs.  Three quarters just sold yesterday.  Using the typical cash rents around here, the return on investment comes out to 2.5%.  The longer we keep interest rates at zero, the longer we'll continue to see money flow into investments paying this poor of return. 

[zman343]

Exactly.  These kind of stories remind me of pre 2007/08 crash.  Money is chasing returns because they are not getting paid to save.  It's a shame because excessive risk taking and overspending were a big part of the problem that led to the crash.  Now they (the Fed) are trying to re-create part of that bubble through inflation but think they can target certain areas.  Right...  Fact is they don't have a clue and contrary to current sentiment cannot hold things together forever.  Look at Japan as the model example.  Japan has done more QE and stimulus and where has it gotten them?  An equity market that has been in a downtrend since the late 80's and a very strong currency. Hmmm.

On a lighter note for the original post, I didn't know Harvard started teaching Milking 101.

[GoredHusker]

The biggest question to me is who bails them out this time?  I'm afraid we'll see people marching down the streets with pitchforks if the gov't steps for round two bailouts. 

[zman343]

Yeah it could get very interesting in that scenario.  It's funny that if you watch CNBC, everything is candy canes and gum drops and I heard somebody say yesterday that this is the strongest recovery after a recession in the history of recessions.  Then I step back to the real world and read a report saying that over 41 million people are on food stamps in the U.S. and up almost 18% from a year ago.  Same old story, the rich get richer, the poor get poorer, and the remaining middle class are moving down the ladder.

Interesting point, I was sharing this information with somebody and his response was that "it doesn't matter what grain prices do then or if food prices rise because the government is the one footing the bill anyway".  Sad but true.

[Palouser]

Since when is trying to avoid a serious deflationary spiral the same as, "they (the Fed) are trying to re-create part of that bubble through inflation"? You can't have it both ways Zman. Where are the indicators for inflation? And here I thought you and Nox were really worrying about a double dip recession and deflation just a bit ago.

This is a blame game that disregards the actual perils the country has been trying to thread itself through.

What are your solutions?

---

[zman343]

No I still think deflation is the bigger threat.  I said the Fed is trying to create inflation.  They'd like to re-create it in housing but that would likley be the last place where inflation would show up due to high unemployment.  I think the Fed can't support things for long no matter how much QE they do, just like in Japan.

The solution is to swallow our medicine and let the chips fall where they may.  The longer we keep kicking the can down the road, the bigger the can gets and the harder it is to kick.

[Palouser]

I have heard your prescription many, many times over - and have YET to see an economic justification for it. Not once. Ever.

I believe realism is too unpalatable for most people anymore, and consistency is the first casualty. For instance, many who blame the current administration for economic stagnation are also the ones who believe the proof is that the economy hasn't righted itself yet! And yet the prescription you tout, and many others, would result in even worse current conditions. How can this be?

The last attempt at this approach was Hoover. For about 3 years. I don't doubt that if the LAST administration had just let the whole mess slide into a black hole, as their 'moral hazard' arguments indicated they should, we would be looking at global depression and wars breaking out everywhere, and a return to authoritarianism on a large scale. Even they were not that idiotic. The idea that letting 'er go is some sort of faster return to economic sanity is insanity itself, because it depends on the 'invisible hand' that even Greenspan admits does not really exist. Wall St actions as a largely unregulated business before the crash proves this w/o a doubt.

Wishful thinking is not in short supply. Wishful thinking as the foundation of many people's ideological view of economics is mainstream. Maybe that's all people can afford anymore.

[dapper7]

pal, with all due respect, do review some history. hoovers sec of treasury carnagie wanted to liquidate any business enterprise that was failing, across the board, saying let things run the course and we will be coming out of this in a year as stonger hands take over.  hoover fought this and had many stimulus type programs going. deficit spending etc. fdr campaigned against hoover as a big spender ,and after winning the election ramped up spending by a factor of 10. my reading of history leads me to believe that the great depression of the thirties didnt become great until fdr took over. with massive expansion of govt.(for that time).  with all the agencies of the alphabet. a direct quote from fdr" we will spend until we have the votes to continue". lasty over lay a chart of the dow  from that period and our current time and see the simularities as we are pursuing the same policies. fdr had czars(didnt call them that) obama has 30 czars operating independently reporting only to him. we are repeating the same mistakes as then but with one huge difference, we are now the worlds largest debtor. we were not back then and had the cushion.  this is not all obamas fault as all presidents have to deal with what happened before (for decades) what makes a successful society is saving capital. and savers have been punished for a long time. this will not end well and it doesnt  matter who is at the helm, 41 million people on food stamps , foreclosures on homes rising, 20 percent unemployment(shadow stats.com, where everybody without a job is counted whether they are "discouraged or not")  thank you for your time,d7