Asset values

Agriculture.com Staff 10/02/2008 @ 1:00pm

I heard a good bedtime story last night.

Might be the best one I've ever heard. Nope, it wasn't a story I read to our kids. They are a bit past this stage at ages 17 and 15 now. I heard the story on TV.

For years now, it's been a habit of mine, after long busy days full of distractions and interruptions, to wind down before bed by watching a bit of TV. Not Letterman or Leno, or shows going for big laughs, but rather programs that feature folks talking. And by talking, I don't mean shouting at each other in never ending arguments about us/them, liberal/conservative, right/left, democrat/republican, etc.

I'm talking shows where people actually talk to each other.

Last night it was Charlie Rose's PBS nightly talk show. His guest was famous investor Warren Buffett, the Oracle from Omaha. Rose had Buffett on to discuss the current financial crisis with Washington and Wall Street.

I think we've all been struggling to fully get our heads around this big mess and what it means for our lives. To me, what's been missing in the whole thing has been long-term thinking. Were the Wall Street whizzes thinking long term when they developed and pushed all those derivative securities?

Nope.

Was Washington thinking long term earlier this week when the $700 billion rescue plan was being forced down our throats? Again, no. It was "trust us and pass this now or the sky will fall. We've got to do this to shore up the stock market."

Excuse me but $700,000,000,000 is a lot of dough. Our dough. At least slow down and properly explain the problem and the cure to us first.

Tell us a good bedtime story.

Like Warren did last night. Uncle Warren was easy to follow. One of the points he made on how we got into this mess involved "asset values." Too many folks got to thinking home values could never possibly fall.

Oops.

Throughout this drawn out financial meltdown, I've felt the ag sector has had a better handle on things than the public at large. Been there done that. The 1980s weren't so long ago for us to forget.

Buffett also talked about the need for banks to continue to market the value of the poisonous derivative securities they currently hold. They're worth what they're worth. Right now, not very much.

If you're allowed to fudge on what an asset is really worth, or to pretend it never went down in value, you're left with what? No real market and a big ongoing mess.

So accurate asset valuation is important according to Uncle Warren. Me to. It's been what I've been living for 19 years now, compiling the actual auction sale price data I do on all types of used farm equipment. I sure hope this information has been helpful to folks over the years with their buy, sell, trade, appraise decisions on used equipment.

Let me leave you with a small dose - some facts and figures on John Deere 4440 tractor values.

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