Farm And Ranch Country (Bill Graff)

Too Much, way too much cost We used to be the Land of the Free, not anymore, not really. Two main points to comment on 1. USDOT and America's farmers 2. California Agriculture and regulation USDOT regulators Anne Ferro and her boss Ray LaHood. What is next from them, tractor drivers pulling wagons to a grain elevator will need a CDL?  Where does this all end? One of her comments " In a perfect world farm vehicles would only operate on farms, while commercial trucks would only operate on public roads."  What world is she from?????? We have a farm tractor on a road almost every day of the year.  Ray LaHood knows better, he needs to put an end to this madness. California Agriculture and regulation on the "left" coast.  California if it was a country to itself would have the 8th largest economy in the world.  I think California has lost all common sense and with the progressive liberals in total control out there all hope of getting it back is lost.  Is the rest of country following California's "lead" in these areas?  What other states and countries gain from all this madness?  Water and its control will be the ultimate endgame for the regulators. I feel for the farmers left in that state.

What is really needed to put the country on sound financial footing is $11 to $12 TRILLION in cuts over 10 years not the $1 to $4 trillion being discussed now. You can fix social security today by indexing the retirement age to the increase in life expectancy.  That is it, fixed probably for ever. 2 other questions then need to be answered. 1.  How much do we spend on health care? 2. How much do we tax the American people? Answer those two so they add up in the end and all the other questions just kind of go away. I am not for raising taxes, and $4 trillion in cuts over 10 years is not really an actual cut, just a reduction in the budget baseline.  Remember the baseline goes up every year and if you cut the increase, not actually reduce the spending from the previous year DC calls that a "cut". Just go back to 2007 actual spending levels and the problem is fixed.  That would be an actual reduction is spending and individuals would see decreases in their individual benefit checks, but problem is solved. Economy going into a double dip recession, interest rates low for at least 2 more years.  Obama crew gives very few small business people any confidence.  Washington ruling class not willing to give power and control up.    Mainstream media is in bed with them also. Way out?, yes just cut the budget and direct the money you do spend away from Washington, D.C. "empires".  World is changing and has changed how it operates, but DC still stuck in the "big government" mentality.  We never even mention what all of us would have to do if we were in this much financial trouble, which is to sell some assets to reduce debt. Only thing both political left and right agree on is to cut agricultural spending.  Somewhere between $10 and $48 billion.  (Note- after I recorded this I was told actual number is $33 billion in cuts to ag spending over 10 years). Is Washington ruling class hoping the Tea Party drives over a cliff?  I think the "ruling class" sees the tea party as a true enemy.  Tea Party just does not want to slow down the growth of government, but totally eliminate huge chunks of it.  Will these new political players put the years in to this "game" that will be needed to not just change it but conquer it???????  Many want to just get "this" fixed and then get back on with their lives.  Ruling class will just try and outlast these "new upstarts". This debate holds huge consequences for you and your businesses and jobs.  How it is settled, not just this one small debate, but the larger debate on really how much government does America want.  How much do you want?  Are you willing then to pay the taxes required for that much? Who will outlast the other is going to decide this debate in my opinion.  

I know you are wondering what do these four have in common? I believe any deal on the debt limit will include a "new" index on how the government figures inflation.  What this means is higher taxes and lower benefits.  This may be the only thing that both parties in the deal want and will get.  Could save as much a $2 trillion over 10 years. Chinese Inflation is on the rise.  In its 4000 year history anytime inflation gets out of hand in China, you have social,political, and economic unrest.  Chinese leaders will do whatever is necessary to get inflation down, including selling US debt at a time we need them to buy more of it. Government hit the debt ceiling back in May, why is August 2nd the debt ceiling date and not back in May?  The US government has "borrowed" money from funds under its control.  Including government employees Thrift Savings Plan monies.  This is the government employees retirement funds.  So, how safe is your IRA or 401K plan?  What if the government when it cannot function anymore for lack of money all the sudden says "25% or 50% or all of your retirement funds have to be invested in these low paying government securities?  It is already borrowing its own employees money. Greece since it gained its independence has been in default more than 50% of the time.  Why would anyone lend them money?  Oh Mr. Banker I pay my loans 50% of the time will you lend me money?  And, why would you want them as part of your economic union? All four of these things can and will affect the Farm Bill debate and your finances.

No debt deal probably means a "new" farm bill drawn up and passed at least by the house during the last week of August/first week of September.  Rumor has it Biden group talks had bigger ag cuts than Ryan's budget. Many farm programs have no "budget baseline" beyond 2012.  With no "new" money that means big cuts for ag ahead.  Budget deal is key, but will there be a budget deal.  Morgan Stanley said in 2009 "no historical precedent for an economy that exceeds 250% debt to GDP.  U.S. debt is now 400% debt to GDP.  Marc Faber - once a country's payment on debt exceeds 30% of tax revenue the currency is done for, U.S. will be there in October. Simple solution is if you want the government to stop the spending, just do not loan the government anymore money to spend.  Obama and the House (TEA Party) have huge differences in what they see as the role of the United States government. Agriculture overall is in good shape right now.  Can not be said of many pieces of the economy. Will the US experience High Inflation, Deflation, or both? My 5 Step Recovery plan. 1. Cut social spending 2. Can't fight them all. 3. Secure the borders. 4. Redo tax and regulatory environments. 5. Pass an actual Balanced Budget Amendment to the Constitution. Lower expectations of the population. Need the "Millionaire Next Door" to get back into the "game".  We need both a Dave Ramsey and Dan Miller right now. Will Obama send out Social Security checks, even though S.S. is a "dedicated" fund? House has passed a budget, Harry Reid's Democratic Senate has not passed a budget for 3 years. They do not want to show their cards on the table.  All politics, all the time. I also want the politicians to spell out how each agency will meet their budget goals.  Do not let Washington big wigs do the deciding.  Services out in the country will suffer while the DC empires will continue. Money is just not there, not enough, especially when I hear someone say, just cut the waste fraud and abuse and you can balance the budget.  No way, no how will that even cover 1% of what needs to be done. One way or the other the budget deficit will come down.  Market can not stand this for much longer.  How much health care spending do we do and how much do we pay in taxes?  Answer that question and most everything else goes away in the budget debate. Tax increases do reduce economic activity, remember we need the guy next door to do something with his money, not send it to the government or try and keep it from the government.  How much government do we want?  How much farm bill can we afford? Bush/Hastert spent 19 to 20% of GDP, Pelosis/Obama spent 25% GDP a 25% increase in spending of GDP.  We need to cut 25% of the budget just to get back to the Bush spending years.  Can we do that? Tea Party wants to do it "right here-right now" and Obama I think just wants European Socialism, so do we find a middle way? Just remember the money is just not there.  So what are you doing to prepare not just your farming or ranching operation, but your personal finances?

"Millionaire Next Door" actually small business people are the "real movers of the U.S. economy.  They do not feel good about economy, government, and big financial institutions, so the economy will not move up again until they have confidence. Too much bailout and not enough home grown jobs.  The Millionaire Next Door is just hunkering down, not spending money on expansion, more jobs, growth of their small businesses.  Federal Reserve is not giving them confidence either.  They as a whole are very unhappy with Obama administration. Actually they lost hope in 2006 with both Bush administration and the Pelosi/Reid congress.  2008 crash started in 2006.  Main street is not Wall street. It is just not high taxes and high spending, it has more to do with increased regulation.  Too many rules, regulations, runaway government bureaucrats, etc.  EPA, OSHA, IRS are the ones most mentioned by small businessmen as the problem ones. Some of them are still in the mood to not vote for any incumbents.  Debt ceiling, massive spending, runaway government,4 wars (Iraq,Afghanistan,Yemen,Libya), housing still in trouble.  They talk about "real" jobs, not government giveaways, welfare, etc.  Real jobs not a government community organized shakedown. Until the small businessmen start to feel better about what is going on, I doubt the US economy will ever recover.  Unfortunately many of our leaders do not grasp this.

WE (farmers) just don't get it. Maybe that is a good thing. Lots of farmers and most agriculture groups have not grasped what the budget deficit means for the next farm bill. Major Cuts Paul Ryan's house budget may be the highest spending number we see.  Turns out lots of people want to cut even more.  Senate was thought to be the place where agricultural  spending would be "saved". Do you know what and who is in the Biden Group and what is it charged with doing? Taxes versus lower spending, taste great or less filling? Could agriculture have bigger cuts than everybody else, yes. Debt ceiling, debt ceiling, debt ceiling Are farm groups going to realize in time that big cuts are coming and do they have enough flexibility to get "something" for the cuts? Less regulation, more freedom, less government interference, lower taxes. Farmer choice farm bill may have less choices to choose from than it would have two months ago. My fears are many and is the current farm leadership up to the task of looking out for the best interest of the farming and ranching community within the current political reality? What is your plan B for your operation?  

We need speculators to "make" a market, do we really need a lot of today's politicians? I see it as too many times business today need to look at what politicians are doing and not what the market is "telling" them to do. Politicians are very good at getting elected, they would not be in that business if they could not get elected, but many are very lacking in their understanding how markets actually work.  The market is the market, in its pure form it does not care about public opinion. Redistricting and how both political parties put districts together to maximize their parties chances in the next election.  This process has given us some really amazing politicians.  Not exactly the best and brightest get elected. At least one conservative talk show host does not have a good understanding how markets actually work. Government bureaucracies and politicians contribute to the creation of many market bubbles.  Housing market is a prime example.  They forced lenders to give loans to people who had no business owning homes.  Now, Freddie and Fannie are in trouble and home prices continue to go down. Too many Harvard and Yale graduates in government and politics and not enough people who graduated from "State". Demand for silver and gold from places like China and India show just how big those economies have become and where those people are choosing to put their money. The direction of the economy in my opinion is shaped by the perceived business climate by the "Millionaire Next Door" than by what Wall Street does. Federal Reserve has used the quantitative easing to "bail out" wall street, but has it helped the general economy much?  Many in government and these big quasi government institutions think they are smarter than the market.  The market is always smarter than anyone person.  Millions of opinions go into the market, and the whole is smarter than the one. European debt crisis and large states in the United States debt crisis is going to impact our markets.  How, when, why, I do not know, but it is too big not to impact markets.  Total collapse or run away inflation, who knows.  I also am waiting for some government, U.S., China, who knows who to try and break food prices down. Can or will these big debtor states sacrifice enough to pull the world out of this crisis, or do they bring everything down around them? Be very careful in your marketing plans this summer.

Podcasting from the tractor planting corn. The CEO of Smithfield Food is worried about his mother being able to afford bacon; blaming ethanol. His article is in the May 1st Wall Street Journal. This podcast is a rebuttal to his unfounded comments. I also compare the price increases of many household items from the '70's to the price of corn. Thanks to Jim Hightower and the Hightower Report for the research stats.