Concentrate on what gives you the greatest returns first

WASHINGTON | Fri Mar 30, 2012 4:57pm EDT

(Reuters) – U.S. farmers will plant the most corn in 75 years to cash in on higher prices, topping expectations at the expense of soybean and spring wheat sowings, according to a U.S. government report on Friday.
The dramatic expansion raised hopes that the next harvest would ease razor-thin supplies that have kept corn prices near historic highs.
The Agriculture Department, in a separate report, said supplies in storage as of March 1 were smaller than expected, making a big crop imperative.
“Going forward, it’s going to be all about the planting weather,” said Don Roose, president of U.S. Commodities.
Despite the early prospects for a bumper crop, Corn, wheat and soybean futures rose strongly on the surprisingly tight grain stocks. Corn for delivery in May went “limit up,” rising by the maximum amount allowed in a day of 40 cents. The climb of 6.6 percent to $6.44 a bushel was the biggest gain for corn since Oct 11.
Soybeans were up 3 percent, to a six-month high of $14.02 a bushel, and wheat was up nearly 8 percent, the biggest increase since Oct 11.
FARMERS GEAR UP FOR BIG YEAR
The farm sector is enjoying a boom that dates from 2006 as food demand rose worldwide and biofuels helped spur crop production. With farm income at record highs, farmers have updated their tillage equipment and built more storage bins, making business for equipment makers like Deere & Co and AGCO Corp, seed companies such as Monsanto Co, bin manufacturers such as Brock Grain Systems, owned by Berkshire Hathaway, and processors such as Archer-Daniels-Midland Co (ADM).
The increase in corn acres and decline in soy acres is particularly positive for fertilizer producer CF Industries, which is weighted more heavily in the production of nitrogen fertilizer need to grow corn, said Jeff Stafford, equity analyst for Morningstar. Soybeans don’t require nitrogen fertilizer. CF Industries was up 2.2 percent at 185.5, while rival fertilizer maker Mosaic was up just 0.3 percent at 55.43. Bunge Ltd, the world’s top oilseed processor, could take a hit from the decline in soy plantings, Stafford said. However, grain companies also could make more money by transporting increased volumes of crops around the world. “For a grain trader like Bunge, they make more money from the higher volumes of food that are shipped,” he said. Bunge was up 1.7 percent at 68.38, while ADM was up 1.4 percent at 31.7. Deere was up 0.5 percent to 80.90.
MORE CORN IN THE TOP CORN STATE
Another year of full-throttle output is on the horizon. USDA estimates growers will plant the largest area to the eight major field crops — corn, wheat, rice, cotton, soybeans, sorghum, barley and oats — since 1998 and up 2 percent from 2011.
In USDA’s annual prospective plantings survey, farmers said they would expand corn planting by 4 percent from 2011, which exceeded analyst expectations or 94.72 million acres. Iowa, the No 1 corn state, would plant a record amount of land to corn.
Soybean plantings were projected to fall 1 percent nationwide from last year to 73.9 million acres, increasing concerns about tightening global supplies of the oilseed due to poor harvests in South America. Analysts had expected soy plantings to increase to 75.393 million acres.
“Acreage is expected to shift to corn,” the USDA said. In many states, corn offers higher returns than competing crops.
In Iowa, corn planting would be up by 4 percent while soybeans drop 6 percent. Nebraska, No 3 in corn, would expand corn area by 5 percent while trimming soybeans by 4 percent and wheat by 11 percent. Illinois, No 2 in corn and soybeans to Iowa, would boost soybean area by 100,000 acres, or 1 percent, while cutting corn by the same amount.
LARGEST CORN PLANTINGS SINCE 1937
Big corn plantings should replenish a stockpile that is forecast to shrink to its lowest level since 1996 by the Sept 1 end of this marketing year. If farmers stick to their plans, it would be the most corn planted 97.2 million acres in 1937.
USDA estimated farmers will plant 12 million acres of spring wheat other than durum, with a record low number of acres seeded in South Dakota. That is down 3 percent from last year and below the average trade estimate of 13.313 million acres.
USDA’s projection for a total wheat planted area of 55.9 million acres was up 3 percent from 2011 but well below the average analyst estimate of 57.422 million acres.
Growers intended to plant 13.2 million acres of cotton, down 11 percent from last year, and 2.56 million acres of rice, down 5 percent, according to the USDA report.
With normal weather and yields, the corn harvest would be a record 14.5 billion bushels, up 10 percent from the mark set in 2009, according to Reuters calculations. Soybeans would total 3.2 billion bushels, the fourth largest on record. The wheat harvest would be 2.1 billion bushels and cotton growers would pick 18 million bales.
TIGHT SUPPLY
The U.S. corn stockpile was down 8 percent from a year ago, the government said, with consumption running faster than traders expected.
In a quarterly report, USDA said there were 6.009 billion bushels of corn in storage on March 1, 2 percent less than traders expected. Some 3.6 billion bushels were consumed during the quarter, equal to 30 percent of the 2011 crop.
Traders estimated consumption would be 4 percent smaller than USDA estimated.
Soybean stocks were estimated by USDA at 1.372 billion bushels, up 10 percent from a year ago but 1 percent smaller than traders expected.
Wheat stocks totaled 1.201 billion bushels, according to USDA, down 16 percent from a year ago and 2 percent less than traders expected.
(Editing By Russell Blinch and Alden Bentley)
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Principles of the New Economy

Corn Highest Return
Soya bean Second Highest
Wheat Third Highest

By concentrating on fulfilling the highest pricing for corn, you get maximum returns, where the price of corn will lower until equilibium, for fulfilling the demand for corn, when price of corn lowers to producing the corp of corn = costs where profit = zero, it is time to move on to fulfill the next crop which is Soya bean, this will go on eternally, and the forces of demand and supply will ensure equilibrium, where is corn price = costs where profit = zero, people will not produce corn anymore, by cutting supply, the corn will rise in the future, and when corn is the highest, people will return to fulfill the demand of corn. Likewise you will put your best land to plant corn first, then soya bean, then wheat. You need to fulfill domestic demand first before concentrating on international demand.
The same logic applies to manufacturing, where you have consider your factors and the objectives you want to achieve. A lot depend on demand where the factors of location, highest profit from products, labour, the best factories are determinants of your final answer. 
If you understand my logic, you will get maximum returns from your land for fulfilling my principles of the New Economy, a lesson where everyone must learn.
– Contributed By Oogle.

The Liquidity of Credit ; A Question of the Crises of Confidence

Capitalism is all about the Demand and Supply of money;

1) The flow of Hot money is borderless and will find its ways to the economies that generate the highest returns. It will flow out from economies that is not as efficient, where the government’s sovereign debt is unable to meet its obligations.
2) Therefore reforms must be made to keep the House in order, a balanced budget and reforms to industries that do not meet global standards of governance and disclosure.
3) The management of Risks in a global marketplace.
4) The emphasis of sustainable growth instead of pure growth of the GDP.
5) Every country, every industry has its unique problems and solutions must be found to tweak it back to health.
6) Once the House is back in order, the Crises of Confidence will disappear and liquidity will return with the liquidity of credit.
7) Over emphasis on low interests and borrowings is not sustainable in the long run and savings must be encouraged instead.
8) A lender of last resort (eg IMF) can only solve short term liquidity problems, not long term.

Rethinking the growth imperative

By Kenneth Rogoff (chinadaily.com.cn)

 

CAMBRIDGE – Modern macroeconomics often seems to treat rapid and stable economic growth as the be-all and end-all of policy. That message is echoed in political debates, central-bank boardrooms, and front-page headlines. But does it really make sense to take growth as the main social objective in perpetuity, as economics textbooks implicitly assume?
Certainly, many critiques of standard economic statistics have argued for broader measures of national welfare, such as life expectancy at birth, literacy, etc. Such appraisals include the United Nations Human Development Report, and, more recently, the French-sponsored Commission on the Measurement of Economic Performance and Social Progress, led by the economists Joseph Stiglitz, Amartya Sen, and Jean-Paul Fitoussi.
But there might be a problem even deeper than statistical narrowness: the failure of modern growth theory to emphasize adequately that people are fundamentally social creatures. They evaluate their welfare based on what they see around them, not just on some absolute standard.
The economist Richard Easterlin famously observed that surveys of “happiness” show surprisingly little evolution in the decades after World War II, despite significant trend income growth. Needless to say, Easterlin’s result seems less plausible for very poor countries, where rapidly rising incomes often allow societies to enjoy large life improvements, which presumably strongly correlate with any reasonable measure of overall well-being.
In advanced economies, however, benchmarking behavior is almost surely an important factor in how people assess their own well-being. If so, generalized income growth might well raise such assessments at a much slower pace than one might expect from looking at how a rise in an individual’s income relative to others affects her welfare. And, on a related note, benchmarking behavior may well imply a different calculus of the tradeoffs between growth and other economic challenges, such as environmental degradation, than conventional growth models suggest.
To be fair, a small but significant literature recognizes that individuals draw heavily on historical or social benchmarks in their economic choices and thinking. Unfortunately, these models tend to be difficult to manipulate, estimate, or interpret. As a result, they tend to be employed mainly in very specialized contexts, such as efforts to explain the so-called “equity premium puzzle” (the empirical observation that over long periods, equities yield a higher return than bonds).
There is a certain absurdity to the obsession with maximizing long-term average income growth in perpetuity, to the neglect of other risks and considerations. Consider a simple thought experiment. Imagine that per capita national income (or some broader measure of welfare) is set to rise by 1% per year over the next couple of centuries. This is roughly the trend per capita growth rate in the advanced world in recent years. With annual income growth of 1%, a generation born 70 years from now will enjoy roughly double today’s average income. Over two centuries, income will grow eight-fold.
Now suppose that we lived in a much faster-growing economy, with per capita income rising at 2% annually. In that case, per capita income would double after only 35 years, and an eight-fold increase would take only a century.
Finally, ask yourself how much you really care if it takes 100, 200, or even 1,000 years for welfare to increase eight-fold. Wouldn’t it make more sense to worry about the long-term sustainability and durability of global growth? Wouldn’t it make more sense to worry whether conflict or global warming might produce a catastrophe that derails society for centuries or more?
Even if one thinks narrowly about one’s own descendants, presumably one hopes that they will be thriving in, and making a positive contribution to, their future society. Assuming that they are significantly better off than one’s own generation, how important is their absolute level of income?
Perhaps a deeper rationale underlying the growth imperative in many countries stems from concerns about national prestige and national security. In his influential 1989 book The Rise and Fall of the Great Powers, the historian Paul Kennedy concluded that, over the long run, a country’s wealth and productive power, relative to that of its contemporaries, is the essential determinant of its global status.
Kennedy focused particularly on military power, but, in today’s world, successful economies enjoy status along many dimensions, and policymakers everywhere are legitimately concerned about national economic ranking. An economic race for global power is certainly an understandable rationale for focusing on long-term growth, but if such competition is really a central justification for this focus, then we need to re-examine standard macroeconomic models, which ignore this issue entirely.
Of course, in the real world, countries rightly consider long-term growth to be integral to their national security and global status. Highly indebted countries, a group that nowadays includes most of the advanced economies, need growth to help them to dig themselves out. But, as a long-term proposition, the case for focusing on trend growth is not as encompassing as many policymakers and economic theorists would have one believe.
In a period of great economic uncertainty, it may seem inappropriate to question the growth imperative. But, then again, perhaps a crisis is exactly the occasion to rethink the longer-term goals of global economic policy.

Kenneth Rogoff is Professor of Economics and Public Policy at Harvard University, and was formerly chief economist at the IMF.


http://www.project-syndicate.org

The problem with an imperfect Market

Concept Theory 1
“Money will flow into the most free market offering the maximum returns.”

Concept Theory 2
“How to maximise Capitalism? Where Demand=Supply will give you the maximum returns.”

Concept Theory 3
“The New Economy is a Perfect Market, where the old economy is an imperfect market. Markets will react immediately with the free flow of information to correct any flaws in demand and supply.”

Concept Theory 4
“Globalisation is the co-operation of every markets, every governments.”

Concept Theory 5
“By solving Capitalism, and the use of money, resources will be maximised for maximum gain.” 

Concept Theory 6
“With the Internet, information flows freely and the markets reacts immediately.”

Concept Theory 7
“Investments is engaging the markets all the time, hedging against your risks, for returns.”

Concept Theory 8
“In either a Bull or Bear market, money is still made, all of the time.”

Concept Theory 9
“Small money can be used to hedge against a future event requiring a Large Sum with the use of complex derivatives, underwriting the risks/returns ratio and the pooling of resources.”
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“As such, the flow of hot money is very disruptive to the fragal economy and causes all kinds of problems like hyper-inflation and imbalances, and rises of prices in commodities and assets. But liquidity of money in capitalism is essential for growth in the economy, how do we strike a balance? By keeping interest rates low for a prolong period will not encourage savings but spending, but how long of your future earnings can you afford to borrow against?
Liberal controlled re-expansion of credit (Refinancing and recapitalisation) is a better answer for liquidity in the markets than pure liquidity in the hands of a few with the credit ratings. Everything from houses, cars, businesses, commodities, assets can qualify for refinancing and reassessment of value/risks for the portion that has already been paid up(100%) with the borrower’s credit ratings in consideration. Unsecured loans can be extended to up to 6 times his monthly salary instead of the present 3 times. It will indirectly spur consumption and more investments into the future by the expansion of credit for economic growth, ensuring the soundness of financial institutions with confidence in the future. It will also redistribute wealth evenly for the haves and haves not. Since the risks of a global asset bubble has been corrected and taken away, it is back to the basics of fundamental growth.”

http://www.imf.org/external/pubs/ft/weo/2011/update/02/index.htm

Facts or Myths : Elitism has no place in Globalisation

In George Orwell’s Animal Farm, you see the Pigs trying to replace Humans by creating an elite society but at the end of it, they transformed to look like the Masters they replaced. If decisions are left to an elite few who’s interests will they take care of? THEIR OWN. In order to put corruption in the rightful place, the Communists China has made remarkable progress to have their voices heard with a balance to resolve the difference between the haves and the haves not, income disparity and social mobility. Elitism has no place in Globalisation as “No Man is an Island”, the collective voices of every race and religion is represented in the UN, and in order for Mankind to progress, we must know the goals we want to achieve and preserve our earth for the future generations, starting by acting now not tomorrow, to keep the good and discard the bad, to build a future we are proud of to pass on to our future generations.

Economics requires “a revolution in technique”

Would economists be better off starting from somewhere else? Some think so. They draw inspiration from neglected prophets, like Minsky, who recognised that the “real” economy was inseparable from the financial. Such prophets were neglected not for what they said, but for the way they said it. Today’s economists tend to be open-minded about content, but doctrinaire about form. They are more wedded to their techniques than to their theories. They will believe something when they can model it.
Mr Colander, therefore, thinks economics requires a revolution in technique. Instead of solving models “by hand”, using economists’ powers of deduction, he proposes simulating economies on the computer. In this line of research, the economist specifies simple rules of thumb by which agents interact with each other, and then lets the computer go to work, grinding out repeated simulations to reveal what kind of unforeseen patterns might emerge. If he is right, then macroeconomists, like zombie banks, must write off many of their past intellectual investments before they can make progress again.
Mr Krugman, by contrast, thinks reform is more likely to come from within. Keynes, he observes, was a “consummate insider”, who understood the theory he was demolishing precisely because he was once convinced by it. In the meantime, he says, macroeconomists should turn to patient empirical spadework, documenting crises past and present, in the hope that a fresh theory might later make sense of it all.

Why infinite competition in a domestic market will ultimately crash the market

Competition between global players will spur competition
Create innovations and lower the cost of goods
But infinite competition will cause destructive competition
Lowering the price until your profit = zero
Then you have a collapse where no goods can be produced anymore
Especially in a domestic market
Horizontal competition is good as it will create
A broad spectrum of goods as diverse as the oceans
But Vertical competition will cause the same type of good
To drop drastically in price until profit = zero
So it is unsustainable and unproductive
So everyone must co-operative to prevent destructive competition
Where the knowledge of markets will cause
Everyone to shy away from goods and services
That has very low margins or profits
Ultimately get higher profits and wages
Welcome to the New Economy.