Wouldn't a second "Great Recession" be fun?
Aug 07, 2011
First off, a useful link http://www.factcheck.org/
In my view, CoT reports are much too far behind the action this week to be helpful. I imagine most assumed the grand stock market sell off pushed grain prices down. To be sure, the Ukrain offer to sell some wheat at below US prices had an effect on wheat, that was not what caused corn to drop. I still don't see there being enough corn to go around, come January. The questions are: how much can wheat, oats, barley and beans be substituted for corn in livestock feed; how much livestock will the world leave unfed; and do those of us who eat corn care that there isn't any? The other set of questions are the usual suspects: how much corn will the world have, how much wheat and how much soy and rice? Can December corn be kept below $10? (seems unlikely) How high is too high? $15 is too high.
I suppose I am available for hire if you need or want a custom designed, complex hedging or speculative-hedging position devised and monitored . I will need worst case production estimate, best case guess and some notion of how much risk you care to tolerate. Don't tell me none -- you're farming, a business that requires a lot more stomach for gamble than does running a damn bank. And it requires a wider range of skills. So how come farmers aren't getting paid as well as bankers? (If Any of you made $50million last year, the largest bank payout I'm aware of, I apologize for calling you underpaid.) Drop me a note: email@example.com.
Are we going to have a double dip depression, like the 30s? Maybe. The US is sorely lacking in manufacturing, other than the building of houses. That means super low interest rates and quantitative easing create far fewer jobs than any time since the Civil War. Europe is not looking so hot, either. Who will buy all the cheap Chinese goods if not Europeans or Americans? Brazil is arm-twisting to export goods to China rather than raw materials to China to buy back as value-added goods. India and Russia don't seem like huge consumers of Chinese goods. So wouldn't that put China and Europe in the soup with the US? I dunno -- I'm just a mathematical economist who's spent a lot of time finding out how really little economists know (that was easy) and how much they think they know (it is amazing). John Maynard Keynes, the Brit economist of the Great Depression, is one of very few who actually understood that much of what the future might hold cannot be given probabilities. That means that nearly all economics that have been done since Keynes are fatally, I do mean fatally, flawed.
Ya wanna know what the future holds in store? Hire a future teller. I can't even tell you what next year's weather will be. (wouldn't that be nice?) About the only thing I can predict is that this upcoming week's financial markets will be pretty bouncy, and that the week after that is very likely to be less bouncy than its two predecessor weeks.