PrefBlog

The Kansas City Fed has released the Fall, 2011 edition of TEN Magazine, with an interesting article on farmland prices:

As crop prices pushed toward record highs in 2011, farmland values have followed. After slowing somewhat during the 2007-09 recession, cropland has surged since 2010, with values jumping 20 percent or more compared to a year earlier. In some cases, fertile land that sold for $6,000 an acre in 2009 is now going for $12,000 an acre.

But, this surge in farmland values has raised some concerns about its sustainability. Recent figures from the U.S. Department of Agriculture show that while farmland values have risen 40 percent since 2004, cash rents
have risen only 17 percent.

and another on the knock-on effects of payday-loan regulation:

However, restricting payday loans could lead to some inadvertent outcomes, says Kelly Edmiston, a senior economist at the Federal Reserve Bank of Kansas City, who recently researched the effects of payday loan restrictions. His research shows consumers without access to legal payday loans, for the most part, don’t use traditional credit as an alternative.

“This suggests these consumers don’t have access to short-term credit of any type or may end up turning to other options that are more costly than payday loans,” he says, citing over-the-limit credit card purchases, bounced checks, pawn brokers and loan sharks as examples.

My latest sure-fire money-making bumper-sticker idea is: “If payday loans are outlawed – only outlaws will make payday loans.” I’ll make a fortune, I tell you, a fortune!

Herman Cain, a front-runner for the Republican nomination is being criticized for not knowing in 2005 that there was a housing bubble. Was it forseeable? Some say yes. Some say no. What bugs me about the US is that they have so many smart guys doing all kinds of really good research on public policy issues – and none of this makes it into the political arena. Canadian political and regulatory decisions are also a pile of hopeless crap, of course, but since the research performed is also a pile of hopeless crap it doesn’t bother me so much.

It was quite a strong day for the Canadian preferred share market,with PerpetualDiscounts winning 61bp, FixedResets up 23bp and DeemedRetractibles gaining 41bp. With numbers like that, there can be no surprise that the Performance Highlights table is lengthy today – but there was one loser! Volume soared, all the way back up to average levels.

PerpetualDiscounts now yield 5.41%, equivalent to 7.03% interest at the standard equivalency factor of 1.3x. Long corporates now yield about 5.0%, so the pre-tax interest equivalent spread (also called the Seniority Spread) is now about 205bp, a sharp plunge from the 240bp reported on October 5, with bond yields up 20bp and interest-equivalent preferred yields down about 15bp.

This entry was posted on Wednesday, October 12th, 2011 at 10:14 pm and is filed under Market Action. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.