As I traveled by rental car from the Lake of the Ozarks to Morris, IL, I took the back roads south of Hannibal. The harvest of soybeans and corn is making substantial progress like the leaves falling from the trees. Many more trucks and cars are for sale along the side of the road, definitely a sign of the down general economy. I spied a husband and wife eating dinner with their small children. What a pleasant sight. The little enjoyments of lifestyle farming.
The big question everyone is asking this fall is whether the stock market and the economy are in a "cyclical" or "secular" bear market. A cyclical bear market means we are just in a normal stock market downturn that is part of the ordinary business cycle. Secular means a deep and prolonged recession with deflation, where the markets fall from their peaks 40% or more and don’t rebound for years.
Examples would include the 1930’s and the 1970’s, the current Japanese economy, and our NASDAQ. To get a secular bear you need a speculative bubble to burst like the dotcom stocks, a shock to the economy like 9-1-1, and policy errors by government. The wild card will be the tax and interest rate cuts and whether they are effective stimulus, given our uncertain consumption economy with the high consumer debt levels and increasing unemployment. The jury is still out in this case.
Point of View
Lenders are telling me that land values are starting to soften where quality is poor or location is away from development potential areas.
Big game of the week – University of Oklahoma vs. Nebraska. Tough call. OU won some big games at home and on the road. Is the Big Red tough enough to wear it down? Whoever wins might meet the loser again, then suffer a loss in the Big 12 playoffs. OU is good on defense but then Big Red has the Home Field! Too close to call! Sorry.
Virginia Tech weaknesses – field-goal kicking and when there is an excellent quarterback and no pass rush. Short running games do force them to pass, and don’t let them get the quick scores off special teams. Now you know why I am an economist. Good on analysis, but I cannot make a decision. Ha!
In the Air
What a long week! But I will do anything it takes to get back to my Monday night class. Even if it means no sleep except at 36,00’. Flying on Sunday night is the pits. But I am beginning to see the signs of change in security. Hey, I don’t mind stripping when the other guy is holding an automatic rifle! I sure do feel for those people who have surgical pins in their knees or hips, though.
I really DO enjoy following the hay trucks on the road. It reminds me of what my sons are doing at home.
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Editors' note: Dave Kohl, Soybean Digest Trends Editor, is an ag economist at Virginia Tech. He recently completed a sabbatical working with the Royal Bank of Canada. He is now back at Virginia Tech with his academic appointment, which is teaching, extension, and applied research.
To see Dave Kohl's previous road warrior adventures type Dave Kohl in the Search blank at the top of the page.
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