‘The Great Financial Writeoff’

[malleefarmer]

Was discussed on rural radio today at lunch time.

Hmmm gold and agland both safe havens not sure about the second.

Another commnet on same session was ag is first to go into recession/depression but always always first out.

Just a opinion who knows but like errols posts better to have some knowledge on possible scenarios

[TOM4CWB]

There's a stampede for the lowest currency happening, China started talking of a 6.9 peg and market immediately went over 7. New Zealand has now cut 50bps and its currency dropped 1%, India cut 35bps, the Aud has dropped. Gold was over 1500 briefly tonight and USD is hanging right in there on top end of resistance. Either gold or USD is making a false move, i have my suspicions but will wait for confirmation. This is gonna get interesting

China has built an economy and Nation on their Chinese currency... bought US debt with US currency... obtained by sales of products bought...

As long as there is production and trade... currency will be used for the exchange of these goods and services... the US $ is King so far...

How does land here... in western Canada... over double in 5 years... when reported inflation is less than 2 percent...

Yet wheat and Canola dropped in price.

Farm equipment doubles... but what is it actually worth???

China devalues its currency...

What is something worth...? What the buyer will pay the seller for the product....in a currency payment that is trustworthy to be useful to the seller. Commodity Marketing no less... hence the need for futures and options...

Trust... in the integrity of the currency...

[bucket]

China has built an economy and Nation on their Chinese currency... bought US debt with US currency... obtained by sales of products bought...

As long as there is production and trade... currency will be used for the exchange of these goods and services... the US $ is King so far...

How does land here... in western Canada... over double in 5 years... when reported inflation is less than 2 percent...

Yet wheat and Canola dropped in price.

Farm equipment doubles... but what is it actually worth???

China devalues its currency...

What is something worth...? What the buyer will pay the seller for the product....in a currency payment that is trustworthy to be useful to the seller. Commodity Marketing no less... hence the need for futures and options...

Trust... in the integrity of the currency...

Tom

I highlighted that one part ...you could also say " ..what the buyer is forced to pay from the seller for the product.." Because how does a combine become worth 750000 dollars...protected territories etc...

And then it goes back to the value of grain and land in relation to everything coming onto the farm...there is a disconnect....

[macdon02]

Looks like the IMF wants to make "Deep interest rate cuts". Checkout the part on paper currency not having a par value to electronic. Here's the link to the pdf.

https://www.imf.org/en/Publications/WP/Issues/2019/04/29/Enabling-Deep-Negative-Rates-A-Guide-46598

Are we ready for -10% or -15%? Save all your life and it looks like govt will take it to prevent recession. There might be no leaving the farm in the future if cash savings are going to be seized. This leaves a lot of questions moving forward because they are running on the same hypotheticals that was supposed to produce the opposite reaction of today. There's a lot of things we been told over the last 90 years that are going to turn into lies. Promises are going to be broken. Eliminating the concept of savings and positive interest rates will simply destroy govt programs as they rely not only on taxes but interest compounding like it did before 08. This is gonna be a bloody mess.

[AlbertaFarmer5]

Promises are going to be broken. Eliminating the concept of savings and positive interest rates will simply destroy govt programs as they rely not only on taxes but interest compounding like it did before 08. This is gonna be a bloody mess.

This will most certainly blow up all of the pension funds, which were going to blow up anyways, just expedite the process. It has been so long since saving was the prudent thing to do, that soon no one will remember that it once was a rational thing to do.

[errolanderson]

And it begins . . . . governments will demand write-offs and clear bad loans from banks. Global commodities remain under intense selling pressure . . . .

https://www.bloomberg.com/news/articles/2019-09-05/turkey-working-on-plan-to-clear-some-bad-energy-loans-from-banks

[macdon02]

And it begins . . . . governments will demand write-offs and clear bad loans from banks. Global commodities remain under intense selling pressure . . . .

https://www.bloomberg.com/news/articles/2019-09-05/turkey-working-on-plan-to-clear-some-bad-energy-loans-from-banks

It'll be interesting once it gets to Europe, the difference in 08 between how the FED and ECB handled the crisis, the Fed took all of Fanny and Freddies toxic assets immediately, whereas the ECB left them in the banks. So the French banks, a huge lender into the energy sector, and Deutsch and Commerz are loaded to the gills with NPL's. I suspect when it hits those, if not slightly before, contagion sets in around the world as traders hunt for the next Big Short. Interesting to note, Richardson just completed the first blockchain transaction for grain with Bangladesh. I believe this is being done to limit the risk with letters of credit in the transaction.. stay tuned.

[errolanderson]

2020 may welcome in much greater volatility and risk to the investor, particularly for global equities. There is the potential for supply shocks, the uncertainly of the ongoing U.S. trade war, unproductive debt and certainly the mess in Europe are all ignition points for volatility. Now stir-in, the U.S. election . . . .

But today, equity markets continue to parade as if nothing is wrong. A clique, but a perfect storm (IMO).

[jensend]

Haven't we already seen inflation in housing, agricultural land and the equity markets? That's what low interest rates have already done. Negative interest rates might give a little bounce. Negative interest rates indicate an economy on life support. Most life support cases don't recover. Then you'll have deflation.