Category / Economics

by Hoosier Econ

Year To Date Federal Government Deficit $460 Billion

The United States Treasury just released up to date tax revenue collection relating to 2014 fiscal government budget. 2014 government budget ends in September.
CSN News provides a more detailed analysis:

Inflation-adjusted federal tax revenues hit a record $2,469,178,000,000 for the first 10 months of the fiscal year this July, but the federal government still ran a $460,450,000,000 deficit during that time, according to the Monthly Treasury Statement.
After the current fiscal year, the second highest federal tax intake in the first 10 months of a fiscal year occurred in the first 10 months of fiscal 2007, when the government collected $2,432,115,460,000 in 2014 dollars – or $37,062,540,000 less than in the first 10 months of this fiscal year.

The total dollar amount already spent by the government stands at $2,929,628,000,000.

You can read the rest of the article here.

by Hoosier Econ

30% Drop in Soybean & Corn Prices?

Agricultural stocks have taken a beating just recently and one could speculate recent co mments/numbers0 could have this particular commodity market spooked.
The USDA just released numbers for Indiana and nationally on how yields will play out this fall for corn and soybeans. The plants them self are still in pollination stage, but each week gets us closer to the harvest. Here is what the USDA said via Hoosier Ag:

 In Tuesday’s USDA report, corn production is forecast at 14.0 billion bushels. Yields are expected to average 167.4 bushels per acre, up 8.6 bushels from 2013. Soybean production is forecast at a record 3.82 billion bushels, up 16 percent from last year with yields expected to average a record high 45.4 bushels per acre. Indiana corn yields are forecast to be above the national average.

Indiana is forecast to set a new record high corn yield at 179 bpa with an estimated state production of 1.05 billion bushels, the second year in a row the Hoosier state has produced over a billion bushels of corn. Hoosier soybean yields are forecast to equal last year’s level at 51 bpa which will equal 279 million bushels of production. Winter wheat yield is estimated at 73 bushels per acre, even with last year’s record high. Winter wheat production is forecast at 26.3 million bushels.

With that data coming out, Purdue Ag Economist Chris Hurt says profit margins will be squeezed this year at the annual crop report analysis program at the State Fair.

“The revenues will be down sharply this year; crop farmers’ incomes could fall 25-30 percent.” Hurt predicts that corn and soybean prices will continue to move lower as we approach harvest, “This report will not give us new lows; but, if the September and October reports show an increase in corn yields, we could see new low prices.” Hurt said if the National average yield tops 170 bpa, corn prices could dip as low as $3.20 a bushel.

Shuan Casteel, Purdue soybean specialist and Extension agronomist Dr. Bob Nielsen were also in attendence at the State Fair panel. They stated crops were ahead five year averages and that the crops still have 30-45 days of yield potential despite the cool weather.

by Hoosier Econ

The Nine Pound Gold Shirt

Sometimes in life it’s o.k. to splurge on clothes shopping. But one man did it in a big way and Economic Policy Journal lays out the details:

Pankaj Parakh owns a pure gold shirt worth about £127,000 (roughly $213,000).He had it custom-made for his 45th birthday. The shirt, made out of 18-22 carat gold, weighs more than four kilograms (nearly nine pounds). The gold itself is 18-22 carat purity, and there have been no other metals used. It is lined with a thin cloth for added comfort

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by Hoosier Econ

Indiana Schools Back in Session: Examination of Their Debt

Indiana public schools are swinging into full gear and with that, their financial books are starting to get published in the back pages of your local newspaper. Most of their financial information from a broad spectrum is posted on the state website and can be found in the Department of Education “School Financial Reports” portal.

The debt held by public education has swelled in recent years in municipalities. For numerous years, Indiana school boards were able to pass tax increases and spending agendas without much say from the public. Since 2008 school boards must get these items on a ballot for voters to decide.

Here are some listings of a handful of school corporations around the state and how much “total principal” they owe. Time period covered is July 1, 2012 to June 30, 2013:

Brownsburg $188 Million

Avon $236 Million

Indianapolis Public Schools $642 Million

South Madison Schools $69 Million

Greenwood Community $20 Million

Plainfield Community $127 Million

Greenfield-Central Com Schools $96 Million

Carmel Clay Schools $153 Million

Zionsville Community Schools $200 Million

Fort Wayne Community Schools $133 Million

Rochester Community $13 Million

Seymour Community Schools $22 Million

Vincennes Community $31 Million

Lake Station Community Schools $15 Million

Tell City-Troy Twp School Corp $24 Million

Fremont Community Schools $5 Million

Vigo County School $58 Million

by Hoosier Econ

Texas Ranch For Sale: $725 Million or Best Offer

Per Associated Press:

One of the largest ranches in the U.S. and an icon for Texas horse and cattlemen has been listed for $725 million, marking the end of a decades-long courtroom battle among the heirs of cattle baron W.T. Waggoner, who established the estate in 1923.

The estate includes the 510,000-acre ranch spread over six North Texas counties, with two main compounds, hundreds of homes, about 20 cowboy camps, hundreds of quarter-horses, thousands of heads of cattle, 1,200 oil wells and 30,000 acres of cultivated land, according to Dallas-based broker Bernie Uechtritz, who is handling the sale along with broker Sam Middleton of Lubbock.

I did a little calculating on what a 30 Year Mortgage would be on this property if you put a $30 Million dollar downpayment on it and secured a loan for 4.25%. Your monthly payments would be just a shade over $3.4 Million a month.

by Hoosier Econ

Los Angeles Zoning Code Complexity

I’m currently relaxing in Oxnard, CA so I’ve had mornings skimming over the LA Times newspaper. They actually have a good business section and the editorials are as expected. I caught an article from their 7/31 edition in business section titled “L.A. To Revamp Zoning Code”. Before I begin, this blog takes the position that America is over regulated on every level of government. Many of these regulations are becoming petty and overlapping with other rules from various government entities. This makes business expansion and even home building very expensive and time consuming.
L.A. has a zoning code now over 800 pages of rules and amendments to rules. In 1946, the book only had 86 pages. The city council is now on a mission to revamp the book so it is less confusing and expensive for development. In the article, the city recently passed an ordinance that required businesses to put bicycle racks 50 feet from the door of the business but it collided with the American with Disabilities Act law of “an easy path to a door without bicycles blocking the path”. As the L.A. Times stated, it left the businesses coming to the city council for yet another amendment added to change the rule. Here are some other examples from the article of what just this one city faces in zoning:

– 60% of the zoning laws were just for certain districts but must be enforced everywhere.
– Want to build a single family home? That zoning has 300 different variations of rules.
– Starbucks found out if you wanted to have a store open up before 7 a.m. it needed a special permit. The cost was around $30,000 and waiting six months just for a decision.
– If you’re a small business or not a financially well off person looking to build a home you are less likely to get through the maze of rules. The system is designed so you have to hire consultant company or lawyers to get what you want approved.

Zoning laws usually are approved considerably easy to get passed. L.A. city council has now stated it will “take years” to change the code. Before regular citizens get a say, the council will consult with the groups that more than likely benefitted from the complex system.

by Hoosier Econ

2014 Corn Harvest Depends on Next Sixty Days

While many midwest Americans have embraced the record breaking cool summer(Indiana coolest July since 1895) along with heavy rains, a lot of corn farmers are nervously awaiting the next sixty days in the pollination process of their corn harvest.

Early this month I blogged about Soybean/Corn numbers but more specifically this point

Heavy rains in the cornbelt in June(beginning of pollination) have mostly meant lower yields come harvest.

I even e-mailed an investor July 12th on the East Coast this point on the corn yields with all the rain and cool weather the area has received:

One corn follower said the very wet condition in the cornbelt occuring right when pollination takes off in June has always tilted towards lower yields in the last fifty years.

Now a few weeks later, Indiana Economic Digest published a story of farmers showing the wear of cool/wet weather affecting their corn crops. You can read the story here for full details but will quote some of it for quick reference.

Purdue University corn specialist Bob Nielsen said the cooler temperatures that delayed planting and have continued into the July growing season
“We just had way too much moisture here,” Sutton said. The result is variable heights in corn and depleted nitrogen. “The nitrogen deficiency causes the brown bottoms. … And, with less heat, the corn thinks it’s July 4th.” Sutton said a St. Louis, Missouri-based agronomist his family retained told them, “We have the worst crops in the nation.”

Lower yields than expected will ultimately drive up the price of corn. The pollination process of corn is a wait and see game. Last year ten days made the difference on record number corn/soybean harvest that developed in August. This year may prove a little later.

by Hoosier Econ

Indianapolis Colts Training Camp

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Anderson Herald Bulletin reported some economic numbers related to the Indianapolis Colts training camp. An event like this is hard to gauge on economic impact but they did have some financials:

Since the Colts training camp returned to Anderson in 2010, city officials and business leaders have said the estimated economic impact each year from the event is between $5 million and $6.5 million.

The camp does cost the city money:

Winkler said the city has also paid the NFL more than $559,740 between 2010 and 2014 to provide security at the camp. He said each year the city enters a contract with the NFL and Anderson University with each agreeing to pay a portion of the costs associated with the event.

At least $200,000 of the funds used to pay the NFL was in forgiven loan payments of $50,000 each, by the city, on behalf of Anderson University, Winkler said. The school had borrowed money from the city to pay for expenses related to the camp, he said.

The Colts also do not pay the city any money to hold the camp in Anderson.

by Hoosier Econ

U.S. Military Veteran Tells of How Bad Communism Is

The other day I was engaged in some conversation with a man about the social affects of what Communism brought to countries. We started discussing the old Soviet Union. In short, Soviet Union historically engaged in disinformation. One example was the government told Russian’s that America would stage “traffic jams” or “large gatherings” if saw the events on tv. He decided to share this story with me of what he experienced in dealing with people from the old Soviet Union. I am paraphrasing the story.

I was stationed in North Carolina in 1975. The U.S. decided to bring over some Russian troops to train with us for a short time. One weekend we had some down time so my Colonel decided we should take the Russian guys out to party. We took them to a dance hall and partied for a little bit. The Russians came up to us and stated we had staged the scene and it was all propaganda. My Colonel took the guys outside to his car, reached into his glove box and slammed a map of North Carolina on his car hood. He demanded that the Russians point to any city on the map and he will take them there and show that many other bars exist with people gathering. The Russians chose a city hundreds of miles away. So we started that way and stopping at several bars along the way. The Russians were completely blown away in what they saw and they also got pretty drunk.

by Hoosier Econ

Graph of the Day: Next Market Crash

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John Maxfield  from theThe Motley Fool penned an article in the USA Today that shows an enticing graph of potentially the next big crash in the markets.

Austrians economic disciples have been screaming the last decade about the Federal Reserve’s printing or now digitizing of money to the banks through borrowing. On top of that, the federal government has needed massive amounts of money to fund welfare/social programs that are by law “mandatory”.

Maxfield and Austrians part ways with his explanation in the article. There really is no more denying inflation is happening. Pricing is exploding across many sectors.

Personally, I have followed the Feds printing and done well. But the money supply is drying up and a downturn is very real down the road