Jim Rogers, The World Is Not Short of Grain

Kalpa, Seeking Alpha
The prevailing bullishness of investing in anything related to agriculture did not play out very well for Jim Rogers’ followers in the year 2009. In Rogers’ January 15th, 2010 CNBC interview, he was very humble about his “ability to time the markets” due to the failure of his predictions. He remains bullish on agricultural commodities and fears food shortages. He also states that farmers will be unable to pay for fertilizer next year.

On July 12, my article 13 Agriculture Myths Busted: This Bubble Is Ready to Pop, listed my contrarian viewpoints counter to the agriculture bulls. These played out by the end of the year, despite the unpopularity of my position at the time. I based my predictions upon deflation driven factors. As I predicted, both farmland prices and agricultural commodities declined in 2009.

The Macro View
You cannot predict agricultural economics without taking into account the macro global economic picture. Right now, we are continuing to deleverage, with high unemployment and low growth. Anyone who can’t see that is in denial. Anyone who sees growth as better than a “new normal” is in denial. To back up my outlook, I’ll quote from Kenneth Rogoff, Carmen Reinhart, and John Hussman…
(21 Jan 2010)

The Suburbanization of Poverty: Trends in Metropolitan America, 2000 to 2008

Elizabeth Kneebone and Emily Garr, Brookings Institute
An analysis of the location of poverty in America, particularly in the nation’s 95 largest metro areas in 2000, 2007, and 2008 reveals that:

By 2008, suburbs were home to the largest and fastest-growing poor population in the country. Between 2000 and 2008, suburbs in the country’s largest metro areas saw their poor population grow by 25 percent—almost five times faster than primary cities and well ahead of the growth seen in smaller metro areas and non-metropolitan communities. As a result, by 2008 large suburbs were home to 1.5 million more poor than their primary cities and housed almost one-third of the nation’s poor overall.

Midwestern cities and suburbs experienced by far the largest poverty rate increases over the decade. Led by increasing poverty in auto manufacturing metro areas—like Grand Rapids and Youngstown—Midwestern city and suburban poverty rates climbed 3.0 and 2.2 percentage points, respectively. At the same time, Northeastern metros—led by New York and Worcester— actually saw poverty rates in their primary cities decline, while collectively their suburbs experienced a slight increase.

In 2008, 91.6 million people—more than 30 percent of the nation’s population—fell below 200 percent of the federal poverty level. More individuals lived in families with incomes between 100 and 200 percent of poverty line (52.5 million) than below the poverty line (39.1 million) in 2008. Between 2000 and 2008, large suburbs saw the fastest growing low-income populations across community types and the greatest uptick in the share of the population living under 200 percent of poverty.

Western cities and Florida suburbs were among the first to see the effects of the “Great Recession” translate into significant increases in poverty between 2007 and 2008. Sun Belt metro areas hit hardest by the collapse of the housing market saw significant gains in poverty between 2007 and 2008, with suburban increases clustered in Florida metro areas—like Miami, Tampa, and Palm Bay—and city poverty increases most prevalent in Western metro areas— like Los Angeles, Riverside, and Phoenix. Based on increases in unemployment over the past year, Sun Belt metro areas are also likely to experience the largest increases in poverty in 2009…
(25 Jan 2010)
The report referenced above can be downloaded here.

Is the “Volcker Rule” More Than a Marketing Slogan?

Simon Johnson, The Huffington Post
At the broadest level, Thursday’s announcement from the White House was encouraging — for the first time, the president endorsed potential new constraints on the scale and scope of our largest banks, and said he was ready for “a fight.” After a long, tough argument, Paul Volcker appeared to have finally persuaded President Obama that the unconditional bailouts of 2008-2009 planted the seeds for another major economic crisis.

But how deep does this conversion go? On the “deep” side is the signal implicit in the fact that Volcker stood behind the president while Tim Geithner was further from the podium than any Treasury Secretary in living memory. Where you stand at major White House announcements is never an accident.

Increasingly, however, there are very real indications that the conversion is either superficial (on the economic side of the White House) or entirely a marketing ploy (on the political side). Here are the five top reasons to worry…
(24 Jan 2010)

“Bonds, Climate Bonds!”

John Mathews and Sean Kidney, Government.com
While the talks in Copenhagen have been holding everyone’s attention, one aspect of mitigation of climate change appears to be oddly absent from the discussion.

It’s one thing to say that taking steps now will cost less than taking steps later, of the order of 1 or 2 percent of global GDP. But how are those steps to be financed? What are the respective roles of public and private finance?

In Copenhagen developing nations argued that ‘developed’ countries will have to transfer billions, if not trillions of dollars, to countries where mitigation and adaptation efforts are most needed. Various developed nation government and UN officials happily said that public funds will not be enough to do what’s required — but say little more than that.

Yet the role of private finance in effecting the transition to a low-carbon economy — what will be the biggest economic transformation in history and estimated in one recent report to be more than three times the size of the whole industrial revolution — is the crux of the issue.

Putting the emphasis on private financing allows a different perspective. In place of always talking about the ‘costs’ of climate change mitigation, we can talk instead about investment opportunities.

For example, a large part of mitigation effort involves building and renovating energy infrastructure, whether at a grid level or at a household level. The International Energy Agency has said that global investment to shift to clean energy over the 20 years from 2010 to 2030, over and above business as usual investment, is likely to be of the order of US$10 trillion…
(18 Jan 2010)

Prosperity Without Growth: Economics for a Finite Planet by Tim Jackson

Jeremy Leggett, the Guardian
Prosperity is understood as a successful, flourishing or thriving condition: simply, a state in which things are going well for us. Every day the system in which we live tries to persuade us – via TV news, politicians’ speeches, corporate pronouncements, inducements to consume and so on – that our prosperity is intimately linked to whether or not gross national product is growing and whether stock markets are riding high. These are the two main measuring sticks for the version of capitalism on which most countries base their economies today.

Other ways of measuring prosperity, such as employment and savings, follow these two. If GNP – the total national output of goods and services – is in recession, then unemployment will rise, and that means growing numbers of unprosperous people without salaries. If stock markets are falling, that means falling pension values, and rising numbers of unprosperous people in retirement. So what’s not to like about growth?

Tim Jackson states the challenge starkly: “Questioning growth is deemed to be the act of lunatics, idealists and revolutionaries. But question it we must.” And that is the core mission of this perfectly timed book. Had he published it before the financial crisis, he would probably have been dismissed as another green idealist, at best. But in the wake of the crisis, more people are questioning the primacy of growth at all costs. President Sarkozy, the Nobel-prizewinning economist Joseph Stiglitz and elements of the Financial Times’s commentariat are among those now arguing that prosperity is possible without GNP growth, and indeed that prosperity will soon become impossible because of GNP growth. A new movement seems to be emerging, and this superbly written book should be the first stop for anyone wanting a manifesto.

Jackson, who is economics commissioner on the UK government’s Sustainable Development Commission, skilfully makes the relevant economic arguments understandable to the lay reader. He is not slow to simplify where that is warranted: “The idea of a non-growing economy may be an anathema to an economist. But the idea of a continually growing economy is an anathema to an ecologist.”…
(23 Jan 2010)
More information about Prosperity Without Growth

Economic growth ‘cannot continue’

Continuing global economic growth “is not possible” if nations are to tackle climate change, a report by an environmental think-tank has warned.

The New Economics Foundation (Nef) said “unprecedented and probably impossible” carbon reductions would be needed to hold temperature rises below 2C (3.6F).

Scientists say exceeding this limit could lead to dangerous global warming.

“We urgently need to change our economy to live within its environmental budget,” said Nef’s policy director.

Andrew Simms added: “There is no global, environmental central bank to bail us out if we become ecologically bankrupt.”

None of the existing models or policies could “square the circle” of economic growth with climate safety, Nef added…
(25 Jan 2010)
The report can be accessed here