The Economy–Debt Doom: “Can they pay it back?” by Colin Campbell at www2.macleans.ca, via lewrockwell.com today, sports this sub-line, “The U.S. is about to go broke and they’ll take us down with them”. Scary but apparently somewhat sensational unless you read on to find that this article very much revolves around the views of Peter Schiff. Here then are some of Mr. Schiff’s views and the articles highlights:

• “Peter Schiff was making the rounds on U.S. cable news shows in 2007, warning about the collapse of the housing market, anchors and fellow guests literally laughed in his face when he launched into his gloomy predictions. That kind of meltdown could never happen, they said. The economy was on rock-solid ground.. In those rosier economic days, Schiff, the president of Darien, Conn.’s Euro Pacific Capital, was repeatedly cast as a successful broker who’d gone off the deep end.”
• “These days, a vindicated Schiff is back on the talk show circuit with an even darker message. The current recession, he argues, is only the beginning of a larger economic restructuring. The American economy has been destroyed by years of reckless spending and borrowing. And now, the U.S. government is so deeply in debt that at some point in the very near future, he says, its lenders–namely China– are going to come to their senses and cut America off. …”When the system collapses –and it inevitably must, he insists–inflation will run wild as the U.S. prints money to support its spending habit. Interest rates will jump and everyone will suffer. The real day of reckoning is still to come.”
• “Late last month, well-known bond guru Bill Gross, founder of Pacific Investment management Co., warned the U.S. could eventually lose its AAA investment grade ranking.”

A PrudentHome Note: Peter Schiff is one of a dozen or so financial and economic players who have been pretty much spot-on regarding the condition of the economy and future national and international economic conditions. It’s our view that this relatively small group (i.e., Jim Rogers, Nouriel Roubini) who have proven their predictive mettle, should  have our attention when they speak to the future. The government and the “blue Sky” business news employees predictions and opinions should be very suspect.

Food–Wheat: survivalblog.com (Jim Rawles’ blog) led us to an interesting site (marketskeptics.com) this 6/21/09 and an article entitled “USDA Deliberately Misleading Investors To Hide Looming Food Shortage” by Eric deCarbonnel. The article’s contents were not all that surprising, that the USDA was “finessing” the wheat production and consumption numbers to suppress grain prices, but what caught our eye as we finished this informative article was a 6/15/09 post entitled “Wheat: Living On The Edge”: … “a batch of entries on the world’s agricultural situation from Nogger’s Blog.” Here are a couple of entries we thought you might find as interesting as we did:

• “So the top six exporting nations that account for over half of world production and 87.%5 of global trade in wheat are set to see their output fall by around 35.5MMT in the year ahead.”
• “…it looks a nailed certainty that Argentina (a world class wheat producer and exporter/PH) won’t even have any wheat to export at all in 2009/10, and will probably be a net importer (despite the fact the USDA currently has them down to export 4MMT next season).”

Interesting, no?

Next time we’ll plan on finishing our post on farmland investment (Part 2) and how this effects the individual family. Until then, keep your eyes on the horizon as the weathers changing fast.

‘Investments’: “Rogers & Soros:  Farmland ‘One of the Best Investments of Our Time‘ ” is today’s “Top Story” By Contrarian Profits at contrarianprofits.com. Here are some highlights:

• “The fundamentals are easy to understand. Over the next 40 years the population of the world is projected to grow from 6 billion to 9 billion, hugely increasing the strain on arable farmland worldwide.”
• “Land is scarce and will become scarcer as the world has to double food output to satisfy increased demand by 2050. ” Joachim von Braun, director general at the International Food Policy Research Institute, told Fortune Magazine.
• “With limited land and water resources, this will automatically lead to increased valuations of productive land. And it goes hand in hand with water. Water scarcity will probably increase more than land.”
• “I’m convinced that farmland is going to be one of the best investments of our time.” says commodities guru Jim Rogers.

‘Investments’: A ‘thank you’ to survivalblog.com for this sourcing: “Peak Soil Investment: This Quiet Land Grab is Just Beginning” by Q1 Publishing – June 12, 2009 at wallstreetpit.com. Here are some of the articles key points:

• “According ti the Economist, “Saudi Arabia, Kuwait, and China have been “quietly buying up more than $20 billion of this asset.”
• “Right now, official estimates for this year’s crop are far too optimistic. Currently, the U.S. Department of agriculture (USDA) expects world grain production to rise 4% this year. And they’re expecting an increase of 3.1% in 2010.”
• “…these are very rosy expectations for so many reasons. First, …2008 was one of the top three crop production years in history.
• “…agriculture production doesn’t grow that fast. …An average year will see about 1% to 2% growth – maximum.”
• “The final thing the USDA is missing is AGRICULTURE PRODUCTION GOES HAND IN HAND WITH THE ECONOMY (caps/PH). According to a report by Credit Suisse, “[2009] would be the first global recession to coincide with increased crop production.”

“When it comes to farmland though, there isn’t much more farmland left in the world.”

“…the world has practically reached ‘Peak Soil.’”

The middle of next week should see us here at PrudentHome completing, for the time being, our discussion of increased interest and investment in farmland. You can probably begin to see the outline of our subject with the information presented today but stick with us; there’s more. Also, there’s an honest look as to how this effects the individual family, what the prudent home can do to deal with this development, and what to look for in the future along these lines.

Until the end of the week then: keep your eyes on the horizon as the weather’s changing fast.

1. “Roubini: U.S. Bank Losses Total $3.6 Trillion”, from moneynews.newsmax.com, by Dan Weil. This article quotes Nouriel Roubini, the “uber bear” NYU economist, as saying, “I’ve found that credit losses could peak at a level of $3.6 trillion for U.S. institutions, half of them by banks and broker dealers,” and “If that’s true, it means the U.S. banking system is effectively insolvent, because it starts with a capital of $1.4 trillion.” Professor Roubini continues by noting that, “This is a systemic banking crisis.”
2. “Levitt: Banks Will Be Nationalized”, from money news.newsmax.com. This piece comments on some of Arthur Leavitt‘s, a former SEC chairman, pronouncements that U.S. banks will be nationalized. Mr. Levitt is quoted: “The whole question of ringing banks, of having good banks and bad banks doesn’t make sense. Clearly we’re moving toward nationalizing banks,” Leavitt, a senior advisor to private equity firm Carlyle Group, told Bloomberg TV.

The article notes that the government has to choose between winners and losers among the banks and Levitt says, “ Nothing less will work.”

THE ECONOMY– A MINER’S CANARY?: “Pound Slumps to Record Versus Yen; Rogers Says U.K. Finished” notes a Bloomberg.com article of 1/21/09 by Paul Gordon and Candice Zachariahs.

The article remarks on the pounds drop to a record low versus the yen and the U.S. dollar as the British economy slips into its worst recession since the Second World War.

The piece continues by quoting Jim Rogers, Chairman of Singapore-based Rogers Holdings, as saying the “U.K. is finished” and that investors should sell the currency.

In another interview, PrudentHome has observed Mr. Rogers saying that what has saved the U.K. over the last 26 years has been the sale of North Sea oil and that will run out within 10 years leaving the U.K. a net importer of oil.

The question the U.K.’s current recession and looming dependence on foreign oil raises to us here at PrudentHome is, “Does the U.K. represent a miners canary-type of warning of possible collapse among other western industrialized nations given their deepening recessions and increasing fossil fuel dependence ?

Until a little later then, keep your eyes on the horizon.