# Only the beginning.



## Vol (Jul 5, 2009)

Earlier we read about Deere and its layoffs.....and now for the rest of the industry.

Regards, Mike

http://www.agweb.com/article/agricultural_equipment_sales_decline_in_2014_NAA_Associated_Press/


----------



## JD3430 (Jan 1, 2012)

Just heard on the "news" that basically all phases of spending have stopped and savings is at an all time high.


----------



## rjmoses (Apr 4, 2010)

What do they expect when price fluctuates from $3 corn to $7 and back?

Price stability is a fundamental necessity for a strong economy, otherwise, how can a business plan 2-7 years out? Making a profit one year in five in a market where the planning horizon is at least two years just doesn't work!

I'm a firm believer that we need to go back to a fixed economic standard, like gold.

Ralph


----------



## Teslan (Aug 20, 2011)

Maybe if you are looking to buy new machines the prices will come down some.


----------



## R Ball (Feb 26, 2013)

Traders have to have price movement , volatility . If not they cannot make any money . In my opinion that's one of the reasons all commodity's trade below cost from time to time.


----------



## rjmoses (Apr 4, 2010)

R Ball said:


> Traders have to have price movement , volatility . If not they cannot make any money . In my opinion that's one of the reasons all commodity's trade below cost from time to time.


Originally, the purpose of commodities trading was to stabilize the markets by spreading risk and allowing the producer (farmer) to lock in profit. By selling in the future, the farmer would be able to limit the effects of price moves. E.g., It costs me $1.50 and I can sell it in December for $2.00, thereby making $.50/bu. Theoretically! This was called hedging.

But, it also limited my ability to profit even more so if there was a crop shortage. If it went to $2.50/bu, I'm still sold at $2.00 and somebody else gets the $.50 as a speculator, because now they can take my crop at $2.00 and sell it at the $2.50 price. Kinda bad news for me.

Now, for the good news: If the price fell below $2.00 or even below $1, perhaps because of extreme surplus, I have still sold it at $2 and am making my $1 profit!

Over 98% of all commodities contracts in corn, beans, etc.,are never delivered--they are liquidated. (Some contracts are "cash settled"--no delivery of actual goods.)

Traders only make money when the price moves. Somebody bets the price is going up; somebody else bets it's going down. Somebody makes money; the somebody else loses. It's a zero sum game. Most losses are by amateur traders and the locals make the money because they are there when the market moves!

In the last ten years, more and more trading has gone electronic and the commodities markets are in a sense shrinking.

Just talking......

Ralph


----------



## Chessiedog (Jul 24, 2009)

Sounds like you guys need to spend some of that old moldy money .


----------



## panhandle9400 (Jan 17, 2010)

Far as I care about deere/ co , hope the cuts are at Ottumawa . Looks like they will have to tighten up the old belt we might say ! Everybody else will have to follow suit . ImO and hope interest dont go high as it was in early 80's....................


----------



## mlappin (Jun 25, 2009)

panhandle9400 said:


> Far as I care about deere/ co , hope the cuts are at Ottumawa . Looks like they will have to tighten up the old belt we might say ! Everybody else will have to follow suit . ImO and hope interest dont go high as it was in early 80's....................


Must be referring to the Carter interest rates...


----------



## PaMike (Dec 7, 2013)

I pay in cash, live a humble life, and anything that is financed is at a fixed rate. I wouldnt mind some high interest rates for a bit to bring some people back in check....


----------



## rjmoses (Apr 4, 2010)

mlappin said:


> Must be referring to the Carter interest rates...


Jimmy Carter was the recipient of high interest rates. The interest rates, which got as high as 18% for a home mortgage, were triggered by Richard "Tricky Dicky" Nixon floating the dollar in 1972-3. The high interest rates caused massive inflation.

Gold went from $35 to $800/oz, gas went from $.30 to $1.30, and so on. I was making very good money in 1973. One year later, we couldn't make ends meet. Five years later, we were hurting bad.

I don't ever want to see that again! But, we probably will--it's a sure cure fix for the Social Security implosion that's about to happen.

Ralph


----------



## JD3430 (Jan 1, 2012)

PaMike said:


> I pay in cash, live a humble life, and anything that is financed is at a fixed rate. I wouldnt mind some high interest rates for a bit to bring some people back in check....


Yes, you would. Think of your customers. If they have to pay high interest rates, they won't be buying land, barns, horses, etc. 
then your buyers dry up.


----------



## PaMike (Dec 7, 2013)

That's ok. I will put most of my hay into cattle. High interest rates brings land prices back down to "real" levels and allows the people with cash on hand to make some money. Right now the people that make the money are the people that are willing to gamble with financing. I am not one of those types....


----------



## Vol (Jul 5, 2009)

I remember Jimmy Carter and 20% interest rates and we do not want to revisit that era.....land does need to be brought back into line with reality, but not at the expense of our already teetering economy.

Regards, Mike


----------



## PaMike (Dec 7, 2013)

I didn't live through those times, so I will take your word for it. I just think that with 3,4 ,and 5% interest on things too many people rush out and buy something because the interest will hardly cost anything....


----------



## JD3430 (Jan 1, 2012)

Vol said:


> I remember Jimmy Carter and 20% interest rates and we do not want to revisit that era.....land does need to be brought back into line with reality, but not at the expense of our already teetering economy.
> 
> Regards, Mike


Wow I remember those times. We were burning wood to heat our house because we had sky high fuel prices. Me and my dad figured we could pay to buy & install a central wood burning heater for less than. 2 yr supply of oil. My dads business nearly went under. We were cutting firewood for us and selling the excess for extra money. We barely could give gifts at Christmas.
You think the economy is bad now, if we get high interest rates on top of this, we'll be in a world of hurt. 
No thanks, I will definitely pass on higher interest rates. 
Yo


----------



## JD3430 (Jan 1, 2012)

PaMike said:


> I didn't live through those times, so I will take your word for it. I just think that with 3,4 ,and 5% interest on things too many people rush out and buy something because the interest will hardly cost anything....


And that's not necessarily a bad thing. People buy things and manufacturing picks up. Jobs are created, wages rise, unemployment goes down. That's the free enterprise system. 
Debt incurred during times of low interest rates is a matter of personal responsibility. Just because interest rates are 3% doesn't mean there's a gun at your head to buy a Harley or a speed boat.
Believe me, you don't want high interest rates unless you're retired.


----------



## PaMike (Dec 7, 2013)

True True, I just think of the housing bubble in 08. I think that if interest rates were higher people would actually think before they bought. Maybe not. Maybe they would just keep buying. I see so many families just spending and spending. They just live to make next months payments. Around here they build 450K spec houses, and they sell before the house is completely done. You drive by a month later and there is a brand new 40K F150 in the drive. I have a hard time believing there are THAT MANY high paid jobs that can supply a lifestyle like that....of course I am rather fiscally conservative.



JD3430 said:


> And that's not necessarily a bad thing. People buy things and manufacturing picks up. Jobs are created, wages rise, unemployment goes down. That's the free enterprise system.
> Debt incurred during times of low interest rates is a matter of personal responsibility. Just because interest rates are 3% doesn't mean there's a gun at your head to buy a Harley or a speed boat.
> Believe me, you don't want high interest rates unless you're retired.


----------



## deadmoose (Oct 30, 2011)

PaMike said:


> True True, I just think of the housing bubble in 08. I think that if interest rates were higher people would actually think before they bought. Maybe not. Maybe they would just keep buying. I see so many families just spending and spending. They just live to make next months payments. Around here they build 450K spec houses, and they sell before the house is completely done. You drive by a month later and there is a brand new 40K F150 in the drive. I have a hard time believing there are THAT MANY high paid jobs that can supply a lifestyle like that....of course I am rather fiscally conservative.


I used to wonder what all those people did to afford them houses. Then I eealized when the market crashed that many if not most could not afford them. Banks gladly loaned them the money though.


----------



## JD3430 (Jan 1, 2012)

PaMike said:


> True True, I just think of the housing bubble in 08. I think that if interest rates were higher people would actually think before they bought. Maybe not. Maybe they would just keep buying. I see so many families just spending and spending. They just live to make next months payments. Around here they build 450K spec houses, and they sell before the house is completely done. You drive by a month later and there is a brand new 40K F150 in the drive. I have a hard time believing there are THAT MANY high paid jobs that can supply a lifestyle like that....of course I am rather fiscally conservative.


What you are seeing is correct, but....
The housing bubble wasn't caused by low interest rates.
The housing bubble was caused by the government irresponsibly forcing the banking system to make loans to people who couldn't pay the loans back. 
Started back in the Clinton era and was enforced by Janet Reno. After a decade of making stupid loans, the bubble burst.


----------



## PaMike (Dec 7, 2013)

Probably so, but we all know those people wouldnt have chased those loans if interest rates were 10%


----------



## RockmartGA (Jun 29, 2011)

JD3430 said:


> The housing bubble was caused by the government irresponsibly forcing the banking system to make loans to people who couldn't pay the loans back.


And the banks were happy to do it. They make sub-prime loans to people who couldn't afford it, bundle those loans and sell to Fannie Mae / Freddie Mac. Take the proceeds and go make more loans.

As long as housing prices were trending upward, they could make it work. People were getting 100% loans, paying interest only for a few years, and then selling and making money off the transaction. Everybody thought they were a real estate genious.

It was akin to a giant Ponzi Scheme. As with all Ponzi Schemes, at some point, they collapse upon themselves. The trigger was the run up in fuel prices, which collapsed the economy.

--------------------------------

My first house in the 1980s, we had to come up with a 20% down payment. Saved up for several years before we bought our first MODEST house. After a few years, we outgrew it and bought a larger house using the equity we built up in the first house. THAT was the way we did things for years and years until the government forced the change.


----------



## PaMike (Dec 7, 2013)

I agree. Make people have significant down payments. My brother bought a house with almost no money down, then the market collapsed. He had almost no skin in the game and owed a whole bunch more than it was worth, so they just walked away and stuck the bank with it... It he had put 20% down he would have had more incentive to stick it out and make things work.


----------



## somedevildawg (Jun 20, 2011)

I am the same way pamike.....but believe me, we don't want to see that again....nor do we need to see free money. 
Same way here rockmart, we put 15-20% down on a $30k house, EXCEPT....sold it 5 years later for $25k and was happy to get that....seems the neighborhood, well.....lets just say "there goes the neighborhood"

Funny the way it is and strange that we are just now learning the lesson.....in both cases, the proverbial straw that broke the camels back was......fossil fuel

If we had not dug a hole and put our heads in the sand, who know where we would be with energy? Guaranteed..... much farther than we are now! It's pathetic the mid-seventies to mid-eighties, what a waste of a decade......


----------



## somedevildawg (Jun 20, 2011)

PaMike said:


> Probably so, but we all know those people wouldnt have chased those loans if interest rates were 10%


They would have if they didn't have to qualify or have skin in the game.......that's really the diff.


----------



## JD3430 (Jan 1, 2012)

RockmartGA said:


> And the banks were happy to do it. They make sub-prime loans to people who couldn't afford it, bundle those loans and sell to Fannie Mae / Freddie Mac. Take the proceeds and go make more loans.
> 
> As long as housing prices were trending upward, they could make it work. People were getting 100% loans, paying interest only for a few years, and then selling and making money off the transaction. Everybody thought they were a real estate genious.
> 
> ...


Agree 100%, but I think where paMike and I disagree a little is that in the end, I believe in personal responsibility. Low interest rates don't cause people to default on loans and cause a crisis. Lack of personal responsibility causes people to default on loans and cause a crisis. One must read and understand the terms of what they sign, whether its a loan, LLC declaration, will, etc. People who default on loans need to stop blaming the person who loaned them the money and start blaming themselves for not understanding what they signed.

No matter what interest rate a bank dangles in front of a customer, they must be responsible enough to understand whether they can or can not pay that loan back. THEY have to cruch the numbers, look at the APR, term, etc and determine they can do it. If they can't understand the fine print, find a friend or hire a financial expert that can.
If it weren't for low interest rates, my businesses would not have prospered.


----------



## somedevildawg (Jun 20, 2011)

JD3430 said:


> Agree 100%, but I think where paMike and I disagree a little is that in the end, I believe in personal responsibility. Low interest rates don't cause people to default on loans and cause a crisis. Lack of personal responsibility causes people to default on loans and cause a crisis. One must read and understand the terms of what they sign, whether its a loan, LLC declaration, will, etc. People who default on loans need to stop blaming the person who loaned them the money and start blaming themselves for not understanding what they signed.
> No matter what interest rate a bank dangles in front of a customer, they must be responsible enough to understand whether they can or can not pay that loan back. THEY have to cruch the numbers, look at the APR, term, etc and determine they can do it. If they can't understand the fine print, find a friend or hire a financial expert that can.
> If it weren't for low interest rates, my businesses would not have prospered.


I don't thnk y'all disagree on that.....I'm quite positive he believes in personal responsibility as well. However, the banks were dangling that low interest out there and continually writing loans that they had to have known were doomed to be defunct. You can't rely soly on the customer to have responsibility, the BANK has to crunch those same numbers and the responsibility is a shared one....if I'm loaning money to a friend (I try not to as I'm no bank) I am going to be responsible enough to figure whether they can repay, if they need the money real bad, it won't make any diff the interest rate, length of loan, etc. that would be a "high risk loan" .....which in the last few years morphed into "business as usual loan"


----------



## JD3430 (Jan 1, 2012)

I read extensively about the housing crisis and from everything I read, Clinton told Janet Reno to force banks to offer loans to folks who didn't qualify for loans previously, or the banks would be punished by Reno. So the loan terms were softened. 
I guess I have to realize tht people are dumb enough to sign promissory notes not knowing they can't fulfill the terms.


----------

