Who's undermining the boom?
Richard Ohge 02/17/2012 @ 9:16am
I noted one of those commenting in the Article was Kansas City Federal Reserve's Jason Henderson. A recent article in this publication had pointed to the fact that on an average, last year American Farmers retired about 40% of their debt. Also, they didn't in many cases borrow operating capital, not at 9%-nor even at 5%.
Since I do Marketing in an annual niche publication that serves Rural America, I had already noticed Banks and Lenders from these same ares were pulling advertising with an ubiquitous, "The economy is too slow..." If you can't loan money for operations or equipment purchases, what is a banker to do?
At the same time, land sales and rental prices started climbing through the roof. Expect a visit from the assessor's office pretty soon. County Boards have been schrieing about the budget crunch this year, as well.
All of this seems to be orbiting the as yet unfinished Farm Bill. Pundits want it done before election. A couple of points seems to stand out. One, their seems to be a consensus to slash USDA Services and the Rural Development Funding Initiative. It might be good to note, that the Banks and Lenders mentioned above really don't like this initiative.
Why? It's an anathema to their originators and boards. You can't get paid "Discount Points". Rates are fixed only. The criteria is "Set in Stone", as are the limits on the fees charged. In fact the rules are so precise, the banks can't do the horse trading and finagling they love to do with Fannie, Freddie and Sub-prime. (And yes, Sub-Prime is alive and well in Rural America.)
Next, we have a brouhaha over subsidies. There are "Righteous Arguments" on both sides of the question, but let's look at something else, instead. Chine, Russia, Australia, Argentina, Brazil, and the EU ALL want the US Government to end subsidies-to "level the playing field". While Chinese Vice President Xi was in Iowa penning a $4 Billion order for soy beans, he was also denouncing subsidies as an unfair practice. Consider...if all these separate entities hate subsidies SO MUCH, perhaps THAT'S reason enough to leave them alone.
If the USDA is contributing so much to the revitalizing of Rural America, (My town of Belmond just got $22.9 Million to expand our Medical Facilities and other folks used the Rural Development Funding for houses.) then why is it even on the table.
I'd be more than happy to see the FDA, EPA, ATF, DEA, and IRS, bloated herds of toadies in each case, served up on the chopping block in it's stead.
These folks are the forces gnawing away at the "Fat Years" the American Farmers are experiencing. Reigning them in might extend not only those years, but their effects on the rest of the American Economy.
The "Lean Years" will come...let's not hurry them.
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