A Brief Word on American Awakenings

From gold to grains to oil, commodities finished 2010 at or close to their highest levels in years.

Gold closed at $1,421.40 an ounce, up 31% for the year after an almost uninterrupted climb since January. Grains and soybeans capped off a rally that started this summer.

The jump in commodity prices has been driven by China's demand for raw materials and speculators betting that they could profitably ride the momentum higher.

"People are looking to get out of the dollar, and stocks have run up so much that commodities are looking like a good alternative," said Spencer Patton, founder and chief investment officer for hedge fund Steel Vine Investments LLC.

Gold traditionally has been viewed as a shelter used as a hedge against inflation. That kept it idling for much of the decade. Then central banks dealt with their global trouble in 2008 by printing new notes.

Other precious metals also moved higher. Silver contracts for March delivery rose 42.4 cents to $30.937 an ounce. January palladium settled up $17.10 at $803.30 an ounce. December platinum gained $29 to close at $1,773.30 an ounce.

Industrial metals, used to make everything from computer parts to automobile engines, also gained as global consumption and manufacturing started to recover. Copper surged more than 40%, rising from just over $3.00 a pound to close the year at $4.4470.

Farmers in the US Midwest saw net income reach $81.6 billion, up 31% from 2009 and about 26% higher than the annual average over the past decade. Smaller reserves of corn and soybeans this year couldn't satisfy ever-growing global demand. Wheat prices also climbed as droughts, fires, and heavy rains around the world slashed the amount of grain for harvest.

A key factor in corn's rise has been demand from the ethanol industry. About 1.6 billion bushels of corn went to making ethanol in 2005. By 2010, it grew to 4.8 billion bushels. In addition, China in recent months has become a significant net importer of corn for the first time.

For soybeans, the demand pressure has come largely from China, which has increased its soybean consumption by an average 257 million bushels each year over the last four years. Much of that has gone toward feeding livestock for a Chinese middle class increasingly hungry for meat.

Raw commodity ingredients account for only a fraction of the price of food at the grocery store, so it can take months if not longer for commodity price increases to hit consumers.

Increased demand from China and India has also helped stoke the rise in oil and energy prices in the second half of the year. Oil prices hit a low around $70 a barrel late in May but closed the year at $91.38 a barrel.

JJS: High prices for produce means high incomes for farmers which means high rents for farmland, as Ricardo showed centuries ago.

Would you have ever believed land rents could reach $300 per acre? It wasn't long ago that $45 to $70 per acre were typical land rentals rates in eastern Wisconsin. What are the underlying fundamentals causing this precipitous increase? Higher prices for corn, soybean, wheat, and cotton.

Using typical fixed cost per bushel and $325/acre land rent at $4.83/bushel corn price come next fall, one must harvest at least 168 bushels per acre to break even on the venture.

Landlords are advised to keep in mind the needs of their current tenants. Being fair over time is important.

JJS: The squeeze on tenant farmers calls into question the figures from the USDA above for net profit; were they for absentee owners or working farmers? At any rate, enough good news for investors. Now to the bad news for workers.

A total of 1,530,078 Americans filed for bankruptcy protection from creditors last year, up from 1,407,788 in 2009.

Annual consumer filings have increased each year since the Bankruptcy Abuse Prevention and Consumer Prevention Act was enacted in 2005.

The cost of renting a place to live rose sharply last year: The average rental price rose almost 12% in 2010 while the average price of homes for sale dropped about 10%.

Rents hit a national average of $1,319 by December, up from $1,181 in January 2010.

The hike in rents was blamed on high unemployment and foreclosures driving more people into the ranks of renters.

JJS: Relief is coming into sight as land becomes less spendy, albeit for the wrong reason -- lack of income.

Home prices are dropping in the nation's largest cities. The Standard & Poor's/Case-Shiller 20-city home price index fell 1.3% in October from September and 0.8% from 2009 October.

Six cities set new lows for the period since the 2006 peaks. All cities recorded monthly price declines. The last time that happened was in Feb. 2009.

The 20-city index has risen 4.4% from their April 2009 bottom. But it remains 29.6% below its July 2006 peak.

This year is on pace to finish as the slowest for home sales in more than a decade. And mortgage rates are rising again. In the last month, rates on fixed mortgages have surged more than a half-point to near 5%.

As fewer people purchase homes and millions of foreclosures come on to the market, most “experts” expect the declines to continue through mid-year with prices on average to lose another 5% to 10%.

JJS: Want affordable land and housing for the right reason? Then let’s institute land dues (or land taxes). When owners pay that overhead, they don’t speculate, so land always stays affordable. This idea of public recovery of natural values received extensive coverage recently.

To many on the left the topic of religion these days is explored overwhelmingly in terms of quavering alarums about the Christian Right. Dr. Mason Gaffney challenges this patronizing perspective.

Readers will note references to Henry George, a leading thinker, writer, and political activist when Populism was new, and later as it merged into Progressivism. George held that we can right the wrongs of the land-grant giveaways most simply and expeditiously and legally by levying heavier taxes based on the value of land. He taught that in the absence of such taxation the original unequal distribution of land would simply magnify itself, leading to the kinds of extreme class divisions that menace us today.

History springs endless surprises. Jeff Halper suggested as much in this newsletter two issues ago, apropos Israel and Palestine. Now Gaffney challenges us to think freshly about the intellectual and religious motors of our history and future. To read the article

JJS: To open minds and spread the reform, give the US Congress a head’s up. America Speaking Out is an effort by the House Republican Conference to engage Americans across the country and give them a voice in creating a new agenda for Congress. Take a moment to communicate directly with Congress and others speaking out. To speak out click here

Also see:

China's Global Shopping Spree
http://www.progress.org/2010/procure.htm

Absentee Ownership -- biggest worry about land
http://www.progress.org/2010/iowaland.htm

Homes are cheaper, but not necessarily affordable
http://www.progress.org/2010/median.htm

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A Brief Word on American Awakenings

The Ups & Downs in 2010 for Assets

by C. Leonard, by G. Booher, by AP, by A. Hoak, and by A. Cockburn

A Brief Word on American Awakenings The Ups & Downs in 2010 for Assets

by C. Leonard, by G. Booher, by AP, by A. Hoak, and by A. Cockburn

A Brief Word on American Awakenings

The Ups & Downs in 2010 for Assets