Your Ideas about the Wild Money World

[sumdumguy]

Because it seems to me that Agrivillers are
generally knowledgable and conversive, I would
like to hear your ideas about the future and what
you are doing to prepare.

In the back of your mind, is there a worst case or
is all the talk just fear mongering?

[SASKFARMER3]

Some thing is funny out their from the Chinese buying land in huge chunks all
over to the US government printing money
like no tomorrow to the housing crisis
in our major cities. Ah hell our towns
when has a town of under 400 had a house
that sells for 320,000.00.
So were stopping all purchases of any
new equipment except the kelly harrow.
No combines in 2013 no tractors no
sprayers etc. Paying down debt as fast
as we can. Building cash reserves and
grain reserves (kind of hard to do that
one this year but maybe next) Not over
paying for land (250,000 to 300,000).
Farming what we have and working harder
on that core business.
Basically witnessed the housing crash in
Phoenix. Family lived down their and
still their. When whole subdivisions are
empty because the homes were foreclosed
on, it wasn't nice. Yes Canadians bought
up most but what if our homes crash.
Lots in Regina took the equity out of
their home 750,000.00 and borrowed
250,000. to purchase homes in USA they
then added extra to purchase cabins at
the lake which are houses. (your home is
not a asset). So basically they took a
second mortgage out on their homes for
$500,000. That's the ones who have homes
paid for then their are the ones who
instead of buying a starter home and
moving up over the years went in full
force and purchased 675,000 homes over
30 years backed by CMHC.
I think Canada has huge problems and its
going to get ugly before it gets good.
real ugly!

[Farmkid1]

I have had a bad feeling for a couple years. I think one of the scariest things in the Canadian economy is the Line of Credit Mortgages. There are more out there than you think. Younger people have no sense of money when they literally spend their whole lives living on credit. Credit cards in university and then LOC mortgaes for the rest of their lives. Banks that lets you roll with 80% of the value of your house and never pay it off, or even get below 80%. They up it if you can prove your house value went up. Crazy, but helps people buy boats, sleds and cabins....good for the economy??

However, let's not kid ourselves, plenty of big farms are operating this way as well. I think that the problem is that the numbers are just getting so big...land, equiptment, inputs.

I always thought investing off the farm is important, however I have been proven wrong more times than not because my farmland has doubled or tripled in price and my RRSPs/TFSAs/RESPs all are flat to up 2 points. My new theory in January was to keep it in my bank account this year and see what happens with the world economy. I have been paying 1.5 to 2 percent fees to an investor to get zero return. Would rather have the cash on hand to pay off some debt if things get out of control.

Just my two cents.

[fjlip]

Good idea if farmers stop major purchases, dealers and manufacturers should get a rude awakening. And they need it. The economy will not like it.
QE 3 is trying to free up savings!

[charliep]

Farmkid1

I would interested in knowing your age just to put
things into perspective. I work with a lot of 20 and
30 year olds most who are not heavy spenders/live
beyond their means and have some appreciation of
their life challenges (and risks going) going ahead.

My first house cost about $45,000 - more or less
equal to my salary at that time (early 1980's). I
financed the house with a $15,000 down payment
and a $30,000 mortgage financed at 13.5 %
(payments about $350/month).

Fast forward to today. Starter house $400,000.
Combined family income $135,000. Assume $40,000
down payment and mortage of $360,000. Payments
at 3 % interest about $1,700 per month. Increase
interest rates to 6 % and their payments are now
$2,300.

They are caught with baby boomers like myself who
have a life style we want to maintain. The whole
aspect of financing us through our golden years is
going to be very expensive. Kind of selfish but I want
to do as much as possible to help this generation
suceed.

[sumdumguy]

My thinking is aside from some metals, move
some money to Australia. I am also a baby
boomer. Capital preservation is my goal.

Its pretty weird when someone without a job can
borrow $300,000 for a house and pay 3.1 %.
The savers are paying for this atrocity.

[cottonpicken]

The problem is the baby boomers and the greatest
generation laid the frame work for this economic
apocalypse to occur.

If your a baby boomer you have been privy to living
the most comfortable life in the history of mankind.

Within 2 years gen x and y's quality of life will be
shocking.

[theplowboy]

We are trying to lock in low interest rates now for as long as we can.

I think some of the QE2 and US mismanagement will eventually drive up inflation and interest rates...maybe in 2 or 3 years.

We don't want to owe alot of money when that happens.

Also worried about grain prices if the world has a couple of good harvests and prices drop through the floor.

[Farmkid1]

Charlie I am gen x, 37 to be exact. I don't think all 20s and 30s are financially extended (you sound smart you probably work with some smart ones) BUT I have a couple banker buddies that can tell stories that would shock the hell out of you. However, if I am totally honest I could probably be doing a better job teaching my own kids about $$ as they are going to grow up with a hell of a lot more than I did.

I am with Plowboy, lock in some low interest rates, and hope defation doesn't kill us all.

Would have been intersting marketing times if the corn crop had not burnt up. Anyone lock in 2013 wheat?

[rhoff]

My belief is that we are going to enter a period of
stagflation. I think central bankers will turn a blind
eye to the first signs of inflation and when the
economy has finally finished de-levering then
inflation will be out of control due to fed policies
from the last three years. The insurance sector
sucks in periods of low interest rates so is really
out of favor among investorsI have found a
p&c,&reinsurers that are quite profitable even in a
low rate environment. So I can wait out low rates
and be well positioned for the day some central
banker has to do a Volker impression.

[sumdumguy]

Rhoff, please translate in plain English.

[parsley]

I agree,, sask3, that we are in for some rough
times. High interest rates, scarce money, inflated
prices and looting and riots and social upheavel
Those who don't owe money and know how to
live modestly and still have fun, will survive
nicely. Btw, the tall corn made me look twice.
Pars

[cottonpicken]

Sorry Pars,you'll be using 100 dollar bills as toilet
paper.

[parsley]

With 25% interest rates and landtaxes tripled, I'll
still eat well. And the wine in the cellar aged. I
predict you will curse the taxes. All farmers will.
#taxesfromhell