Some know the price of everything and the value of nothing. The farmers buying land know the value of an adjacent farm, and as to price, may say "damn the torpedoes and full speed ahead."
Where else can they park their cash that will do any good.
My unscientific research to date shows that some banks are lending only $4000 per acre on land around Adams County that may be selling for more than twice that much, so this is not a credit bubble. I have posted the Article below on Facebook using the Wall Street Journal's own link and have cut and pasted it here.
"A Bubble Down on the Farm? online.wsj.com
The big question mark hanging over the farm economy is whether a bubble is building in Midwest cropland. Prices have doubled over the past five years in states such as Nebraska and Indiana."...WSJ (I accessed the entire article via Google News. This link asked me to subscribe to WSJ.)
Unlike gold, land offers a return. I don't yet know if the ethanol market for corn out-weighs the increase in world population, or if one would substitute for the other should one collapse, but I don't see either going away any time soon. If weather patterns remain eratic, so will world food production, so edible crop prices should/could remain strong. If land for sale remains at the 1-2% of the total as suggested in the article, scarcity could hold up land prices as long as the neighbors have cash that needs a safe haven and no better alternatives are available. On the other hand, land futures are not traded on the stock market, so in the big city who really cares? There it is the commodity prices that matter.
The farm land market may be driven only by people who know the VALUE of something and don't care about price. That is the opposite of the Las Vegas bubble. Perhaps those who don't know the value of things should be afraid ... very afraid. It is almost 2012.
Seriously, I do wonder if the so-called "business cycles" that we came to know and love in the 20th century might be twisting like a strand of DNA.
I don't claim to know what will happen, but when the issue is mentioned on Google News, people are beginning to pay attention. Stay tuned.
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