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Corn+Soybean Digest

The Fork in the Road

The Fork in the Road
The economy is at a fork in the road and can go in one of two directions.

The economic high road would point to a budget surplus, government spending reductions, a continued strong housing market and consumer sentiment, further interest rate cuts (25 to 75 basis points), tax rebates, and global capital flows to the U.S.

The economic low road finds the budget surplus declining, high consumer debt levels, continued job layoffs, energy costs at 20 to 30 percent higher, and a weak or weakening global economy with Japan, Germany, Mexico, Canada, and Asia with a negative savings rate.

The signpost of a possible recession includes the following:

Unemployment exceeding 5.0 to 5.5 percent

Dow below 9000

NASDAQ below 1800

In the last recession of 1990-91, the Fed funds rate was as low as 3.0 percent. Greenspan still has 25 to 75 basis points of interest rate reduction.

With Brazil and Argentina’s declining currency it actually makes their prices of agricultural products increase as much as 70 percent.

The Taxi Driver
I have traveled over 4 million miles in my lifetime and I had a real treat in Cincinnati while speaking at a Farm Credit conference. My flight was delayed as usual and I missed one hotel shuttle. I got to the taxi dispatcher and ordered a car. She said car #43 would be there shortly. I giggled because I have always liked NASCAR and Richard Petty. Just then, around the corner came Car #43 with big numbers and a car painted just like Richard Petty’s old stock car. It was bright and all waxed shiny with steel wheels and wide tires. After an 80-mph trip to the hotel with a very engaging driver (talking about how he used this car to differentiate his service and wished he could get Mr. Petty’s permission to put STP stickers on the car) I gave him a six dollar tip and a return trip.

At the conference where I delivered my speech, I mentioned the taxi ride. After the talk, it just so happened that a man in the audience is Richard Petty’s next door neighbor and good friend -– and also a dairy farmer and Farm Credit board member from Level Cross, N.C. He came up to me later and said he would see what he could do.

Bottom line: Life is about people, networking and enjoying what you do.

Sports Perspective
Still waiting to hear what VA Tech has to say about their lineup.

Next week – my trip to Wisconsin! I am checking up on "Barbzilla’s" observations (see last week’s column in the archives).

Final Note
Fires to the West of me and rains finally to the East. Here I am, stuck in the middle of an airport!

My e-mail address is:

Editors' note: Dave Kohl, Soybean Digest Trends Editor, is an ag economist at Virginia Tech. He currently is on sabbatical and working with the Royal Bank of Canada.

To see Dave Kohl's previous road warrior adventures click here

This online exclusive is brought to you by Soybean Digest

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