Turkeys Hard At Work

I had a couple of posts about turkeys back in the spring, and apologize for not providing some updates since.

Regular readers recall that we’re raising Bourbon Red turkeys again this year; they are a wonderful heritage breed, and we’ve had good luck with them in the past. In getting a garden established on our new property, we decided to incorporate “poultry tractors” into the design from the very beginning. We had a neighbor use his tractor to bust the sod in several four-foot rows across a sunny section of our front yard. Mrs. Yeoman Farmer planted several of these beds this year, and we reserved the remaining rows for our turkeys.

We have 22 mature turkeys now, divided between two portable pens. As described in a post earlier this year, each pen is four feet wide, eight feet long, and two feet high; the eight-foot sections are covered in plywood, and the four-foot sides are enclosed with chicken wire. Every day or two, we’ve been moving each pen eight feet farther down its own garden bed. In the photograph below, the pens are moving toward the camera. Note the height of the weeds in the portion they haven’t gotten to yet, and the complete devastation in the portion behind each pen.

This system has three excellent benefits: the turkeys destroy the weeds, the turkeys get excellent supplemental greens in their diet, and the turkeys provide an excellent layer of fertilizer that can be worked into the garden bed for next year’s planting. Next year, we will rotate the pens to the garden beds that were planted this year, and plant our vegetables on the beds the turkeys have been working this year.

Here are the turkeys in one pen, with the lid removed, just before the pen is to be slid down to the next eight-foot patch of weeds. Clearly, they’re wondering what’s taking me so long.

As for me, I can hardly wait for Thanksgiving.

Done

Well, it’s official. With today’s bailout vote, the country is now officially on Hayek’s Road to Serfdom. And I wonder what will ever be able to pull us back.

Kudos to our congressman, Mike Rogers, for voting the right way on this atrocious assault on the free market. And to Senator Debbie Stabenow, who cast perhaps the first vote that I’ve agreed with. No doubt she and I opposed the bill for different reason, but I’ll take my political allies pretty much any way I can get them.

I need to organize my thoughts before I say much more, or anything that might be taken the wrong way. Went out for a good ride on my road bike this afternoon, cranking up and down some hills, and that cleared my head a little. But I need more of that before I say much else about what’s happened to this country and what’s becoming of our freedoms.

For now, I think this succinct summary of Hayek’s book sums up most of what I’m thinking:

Hayek’s central thesis is that all forms of collectivism lead logically and inevitably to tyranny, and he used the Soviet Union and Nazi Germany as examples of countries which had gone down “the road to serfdom” and reached tyranny. Hayek argued that within a centrally planned economic system, the distribution and allocation of all resources and goods would devolve onto a small group, which would be incapable of processing all the information pertinent to the appropriate distribution of the resources and goods at the central planners’ disposal. Disagreement about the practical implementation of any economic plan combined with the inadequacy of the central planners’ resource management would invariably necessitate coercion in order for anything to be achieved. Hayek further argued that the failure of central planning would be perceived by the public as an absence of sufficient power by the state to implement an otherwise good idea. Such a perception would lead the public to vote more power to the state, and would assist the rise to power of a “strong man” perceived to be capable of “getting the job done”. After these developments Hayek argued that a country would be ineluctably driven into outright totalitarianism. For Hayek “the road to serfdom” inadvertently set upon by central planning, with its dismantling of the free market system, ends in the destruction of all individual economic and personal freedom.

Hayek published this book in 1944. Sounds like it could have been written literally last week.

Starting to Get Funny

Following up on yesterday’s post…another day of supposedly frozen global credit markets, ready to cut off capital flows and shut down businesses. And what does my mail bring?

1) From [NAME OF CREDIT CARD COMPANY] Small Business: 0% APR on purchases and transfers until January 2010!

2) From [NAME OF OTHER CREDIT CARD COMPANY]: Rewards for Professionals! 0% APR for 12 months. 3% back on eligible business expenses. No annual fee!

Again, I realize that credit marketing efforts are separate from the actual granting of credit. But I’ll believe we’re in a global credit market freeze when I stop finding these things in my mailbox every single dang day.

Better Hope…

This is addressed to those who argue that the 451-page monstrosity working its way through the Congress is not really a “bailout,” but rather a “purchase” of “assets” that will always have market value, because real estate is always worth something. Putting aside the philosophical questions about whether the government has any business intervening in private transactions, or whether such interventions only encourage future moral hazards, I’d like to bring a more practical issue to your attention:

You’d better hope that these exotic packages of mortgage-backed securities don’t contain many properties from Saginaw, Michigan like the one that just sold on Ebay. I suppose $2.20 is technically more than “zero,” but I’d wager it’s a whole lot less than what was owed on any mortgage. And, while you’re at it, better check for anything in Detroit — like the house I blogged about a few weeks back, that sold for one whole dollar.

And while the government is going on a shopping spree for new “assets,” maybe their next purchase should be all those unsold cars that the automakers have been sitting on. After all, those will have value some day, too, right?

Don’t laugh. I bet some legislator from Michigan will propose an “unsold auto asset” purchase next week.

One Answer

In my previous post, I asked why, if credit markets are supposedly frozen, I’m still getting so many offers for new credit cards and credit lines.

After emailing that same question to someone I know, who has worked extensively in mergers/acquisitions and other credit-intensive fields, he explained that marketing efforts often continue despite what may be happening in other departments of a financial institution. The idea is to keep bringing prospects through the door, and to decide later whether those prospects ought to be granted credit. And those prospects can always be sold to another firm if need be. (Thank you, Danby, for posting a similar comment on my original post.)

But my email correspondent added something else, that I found more troubling:

Lastly, this crisis is not overblown at all. If congress doesn’t do anything, we will most likely go into a depression that many think will be worse than the Great Depression. Our world revolves on credit to a ridiculous extreme, moreso than most people can even possibly fathom. When credit stops, so does the economy.

A lot of Investment Bankers used to joke about how the whole economy was a house of cards supported by debt markets that would stop if banks decided to stop lending. The response of economists was that this would never happen because there is too much money to be made in lending. Well, it could be upon us and it will get ugly.

I’m not sure I agree with the premise that the current crisis extends beyond investment banks; I think some of these folks may be deliberately freezing interbank lending as a means of forcing Congress to act (a big game of “financial chicken”). But my larger question is this: if the current economy truly is a house of cards, supported by debt markets (a premise I do not dispute, by the way), is that an economic structure we really want to continue propping up? How many hundreds of billions of tax dollar interventions will that prop-up require? All to continue living in a house of cards?

I’m not saying I want to blow down the house of cards, start another Great Depression, make everybody do penance, and hope we all learn the value of thrift. I’m asking why we don’t seize this opportunity to restructure our economy and our lifestyles in a way that doesn’t require a sea of debt markets to keep us afloat?

I love my credit cards; they’re an incredible convenience. I use them to pay for nearly everything, meaning I don’t need to carry cash (which can be lost or stolen). And I can write a single check each month. But here’s the key: I write that check. And I write it for the full amount. We never carry a balance. But as George Will points out in his brilliant piece today, far too many Americans have been thinking they can budget like the government does: constantly carrying a balance, and “hitching outlays to appetites.”

In running my own business, I don’t depend on “commercial paper.” When a client hires me to conduct a public opinion survey, my only real cost is to hire a fieldhouse to make the phone calls and tabulate the results. I have one fieldhouse I send almost all my projects to, and we have developed a solid relationship of trust. The moment I get paid, they get paid. And they have the cash reserves to live with that. Likewise, for me, I know my clients and trust they will pay when I deliver their results. If it’s a new client, or someone I’m not yet comfortable with, I ask for a chunk of the total once the interviewing begins. That way, even if I get shafted for the balance (which, BTW, has never happened), I can still pay my fieldhouse. I’d rather starve than shaft the company that collects my data. Again, it’s a matter of maintaining cash reserves and not depending on “commercial paper” to keep me afloat. And it’s also a matter of trust — knowing and evaluating the people you’re doing business with, and making judgments about who you will grant your own informal short-term credit to. I have clients who are notorious late-payers. But I continue doing analysis work for them, because my only “expense” is my own time — and I’ve known them for many years, and they have never failed to pay. Trust.

The Yeoman Farmer wonders if we’d all be better off in the long run if the current house of cards does fall down, and we can rebuild the system on a foundation of saving and thrift — and personal relationships, and trust, and cash reserves. But have we gotten ourselves into a situation where such a transition is impossible without massive dislocations for massive numbers of good families and businesses who have acted in good will?

Back in Illinois, we had many neighbors who’d lived through the Great Depression and could still tell vivid tales describing what it was like. I couldn’t imagine making a deliberate choice to put my family through that. But I pray that if our nation does undergo some kind of massive dislocation, the transition is swift and the ultimate resolution is truly beneficial to us all.

Can Someone Explain this to Me?

Can someone with more knowledge of financial and credit markets please explain something to me?

If the credit markets are in such a crisis situation, with banks no longer lending to each other, and millions of small businesses are in danger of losing their vital credit lines, why is my mailbox still jammed every day with credit card offers?

Just today, I got an offer from one of my current credit card companies, offering me thousands of dollars in cash advance convenience checks at a really low interest rate and no fee. And I got another offer from another company, for a whole new credit card account. And this is just a typical day. Sometimes I get even more offers than that — particularly since I own a small business, I seem to get several offers a week for small business credit cards and lines of credit.

Granted, Mrs. Yeoman Farmer and I have good credit ratings, have lived within our means for many years, and pay our bills on time. But we don’t have a particularly large income. And these new credit lines they’re offering us are completely unsecured, with no collateral needed.

I realize we’ve proven ourselves to be good credit risks. But the local shoestore is probably just as good of a credit risk. Why are they in danger of losing their credit, while we’re still getting all this new credit thrown at us?