A Spruce Tinged Cocktail

Wayne Curtis works to bring back an old flavoring to cocktails:

Chris Hannah, an accomplished bartender from New Orleans, was halfway up a spruce tree in northern Maine, picking at gobs of dried resin, while Misty Kalkofen—also a very good bartender, based in Boston—looked on from below. Under the pretext of a vacation, I’d lured the two of them to a remote corner of the state where I spend a part of each summer. (Cocktail-enhanced games of Scrabble may have been promised.) But when they arrived, I immediately conscripted them into a march through piney forests in search of the resin that oozes from the fissured bark of spruces and then hardens. After we gathered a reasonable amount, we returned home to the kitchen.
Spruce was a familiar flavoring in the 18th and 19th centuries, especially if you lived up north. It was found in tea, in beer, and perhaps most commonly in chewing gum—spruce gum was produced commercially all the way until the 1970s. “I have tended evening meetings up in Maine,” noted the writer Henry Wheeler Shaw in 1877, “and everybody was chewing gum except the minister.”
The taste of spruce resin is quite potent, described by one late-19th-century writer as “sweet, peculiar and balsamic.” In my experience, spruce engages not just the senses of smell and taste, but also a more primitive part of one’s brain, conjuring a dank and loamy forest. I’m mystified that a flavor this large and powerful has been forgotten by consumers.

Using the resin wasn't very easy, but they did come up with a spruce additive for a Manhattan.  

The Edison Money Plan

Bloomberg:

During the sharp recession of 1921- 1922, Thomas Edison turned from making innovative consumer products to reinventing the U.S. monetary system.
He was driven to economics by a sincere desire to be useful in a crisis and by his friend Henry Ford. Ford had proposed that the federal government issue paper dollars -- effectively zero- interest bonds -- to finance the completion of the Wilson Dam on the Tennessee River, which he would then buy from the government. Ford took Edison to the dam site, and Edison was impressed with the proposal.
Responding to Ford’s plan, Edison searched for new ways to stabilize the dollar, the value of which had fluctuated widely during World War I and its aftermath. His goal was to “cast the variable out of money.” Distrusting bankers -- the “money brokers,” he called them -- and a monetary policy based solely on gold, Edison called for a system that used a variety of other commodities as backing for the nation’s paper money supply. (He would have eliminated gold entirely, but he knew that switch- over costs and international economic ties required retaining it, at least temporarily.)
His plan called for the federal government to build warehouses across the country where farmers could bring their wheat, corn, sugar, cotton and other crops and commodities and receive an immediate cash payment of 50 percent of each item’s average price over the past 25 years. The farmer would also receive standardized, marketable certificates indicating ownership of specific quantities of the crop. For example, if the average price of wheat was $1 per bushel, and the farmer brought 1,000 bushels to the warehouse, he would receive $500 and 10 ownership certificates for “100 Bushels of Wheat.”
The government would store the crops for as long as a year for a nominal fee. The farmer could sell the certificates or use them to redeem the wheat. To redeem 100 bushels from a warehouse would require paying $500 and surrendering the ownership certificate. The ownership certificates would fluctuate in value depending on spot prices, but the farmer could sell them at any time short of one year and cash out.
Edison thought the plan would reduce risk to farmers and give them a guaranteed amount of cash to pay off their loans. Gone was the gold monopoly, or so he thought. With 36 commodities backing money, in addition to gold, farmers would no longer have to dump their crops on the market at harvest time. They would have a price floor they knew with certainty, and -- if they wished -- they could try to gain from rising prices by holding their ownership certificates. Meanwhile, the government was warehousing the crops.

Farmers were on board, but most economists were not.  Today, Republicans push for a commodity backed paper money in place of the fiat system we have.  I don't see it happening, although the funds have been using commodities since 2006 or so as a hedge investment against inflation.  Also, Chinese companies supposedly have been buying commodities and using them as collateral to get around government limits on credit.  These have been a couple of the main factors in driving commodity prices to record highs.

From the Department of WTF?

All Things Considered:

ARI SHAPIRO, BYLINE: At a manufacturing plant in Cincinnati, Mitt Romney was introduced by three women who own small businesses. Each gave a testimonial about the tough times they've experienced under President Obama - starting with the owner of a window company, Laura Derger-Roberts.
LAURA DERGER-ROBERTS: The demand, in our industry, for windows has dropped dramatically over the past four years, as American families don't have the disposable income they once did.
SHAPIRO: Then Kelly Hollis took the mic. She owns a company that sells orange barrels for road construction sites.
KELLY HOLLIS: It's absolutely despicable, the amount of money that I pay in taxes every year. I could employ a large handful of people.
SHAPIRO: Finally, Mitt Romney took the stage, and adopted the mantle that his opponent made so famous four years ago.
MITT ROMNEY: I mean, do you want real, big change in this country? Well, you're going to get it on November 6; you're going to make it happen. We're going to get America on track again.
SHAPIRO: He used that phrase "big change" a dozen times in 20 minutes.

So let me get this straight.  Two small businesswomen speak.  One owns a window company and complains about how bad the housing market is.  I think that market went to shit before Barack Obama became president. The other sells construction barrels and is bitching about how much she pays in taxes.  Does she happen to think that if rich people get tax cuts then the private sector will come in and buy more construction barrels than the government currently does?  Does she realize that you mainly need construction barrels on existing highways that are under construction, and that almost all existing highways are government owned and maintained?  Or is she just one of those businesspeople who is successful in spite of their lack of brains?  Finally, the only change I can see coming from Romney is a change in position from the one he took ten minutes before.  For cripes sake, all he did during the last debate was agree with everything Obama did on foreign policy except for the imaginary apology tour.  And Romney's five point plan is the same one George Bush used to get us into the biggest recession since the Great Depression.  To paraphrase the Republicans about Obama: yes, change, but not for the better. 

Keg of Nails

Who do you have in the big Cincinnati vs. Louisville grudge match tonight?  I'll take the Bearcats.

Chart of the Day

From Big Picture Agriculture:

Is that a bubble I see?  Twin culprits, the Fed and the ethanol mandate.

We Are Primates

All Things Considered:

Some animal leaders have traits that voters might wish all human leaders had — like unfailing honesty, van Vugt says.
Honeybees are a good example, he says. Their scouts lead by finding a food source and then communicating the location to other bees through something called a waggle dance.
"The interesting thing about it is in the signaling of the scout bees, there is no deception whatsoever," van Vugt says. "They want to do what is best for the hive. And I think that is a little bit dissimilar to humans."
Or chimps, whose leaders are often accomplished liars.

We definitely seem to appreciate the liars, and Mitt Romney has definitely tried to accommodate us.

Mission 26 The Big Endeavor

Mission 26 The Big Endeavour from Givot on Vimeo.

Farmland Prices Keep Rising

NYT:

According to an agriculture land survey by Iowa State University, prices have risen 32 percent since 2010. Statewide, farmland prices averaged $6,700 an acre, the highest ever, even after adjusting for inflation. Four years ago, prices averaged $3,900 an acre. Because of the strong demand for farmland, banking regulators fear that farmers could take on more debt to make purchases, a repeat of the 1970s and early 1980s, when overleveraged farmers used their farms as collateral to buy up more land. The resulting debt led to a slew of bankruptcies and plummeting land values. Those days are fresh in the mind of John Kintzle, 68, who lives near Cedar Rapids and attended the auction here in north-central Iowa just to observe. Back then, he said, prices dropped from $3,000 an acre to $1,000 an acre in three years......

Regulators, however, say that despite the continued growth in farmland prices there are reasons to be cautious. Some lenders have reported that a number of farmers are taking out loans based on the current value of their land to take advantage of the farmland boom.

Fed officials and some real estate brokers said these buyers could be in trouble if interest rates rose and crop prices fell. This could cause farmland values to drop by a third to a half, putting farmers at risk of default. Another risk is that if the drought stretches into multiple years, it could interrupt the boom in farmland prices, officials said.

I don't see as many stories about land being bought with cash, so I'm guessing most of the purchases are heavily financed.  At least that meme is going away.

Inequality Down On The Farm

Bloomberg:

“It’s almost like ‘The Beverly Hillbillies,’” said David Kohl, an economist at Virginia Polytechnic Institute and State University in Blacksburg, describing the unprecedented good fortune of grain farmers. “They just shot in the ground and up came bubbling crude oil, and they became millionaires.”
Nowhere is the surging value of property more evident than in O’Brien County, Iowa, a perfect square of 24 miles in each direction, tucked near the corner of the South Dakota and Minnesota borders. An acre of O’Brien land in 2011 was valued at $9,513, a 33 percent increase from 2010 and the state’s highest average, according to Iowa State. Income disparity also has escalated. The top 10 percent of wage-earning households collected 54 percent of the county’s income in 2010, compared with 40 percent a decade earlier. Of more than 3,000 U.S. counties, O’Brien had the 23rd highest jump in income inequality from 2000 to 2010, based on census data.

Farmers have been doing great the past few years, but their neighbors are falling further and further behind.  Behind both their farmer neighbors and folks in the cities.  As for farmland, it can't keep going up forever.  Somebody is going to get burned.

A Day In The Life Of A Fire Lookout

Is it just me, or does this job look boring?

A Day in the Life of a Fire Lookout. from Gary Yost on Vimeo.

The Shale Gas Boom and Bust

NYT, via Ritholtz:

“The country has stumbled into a windfall on the backs of these entrepreneurs,” said Edward Hirs, a finance professor at the University of Houston who contributed to a report that estimated that the nation’s economy benefited by more than $100 billion last year alone from the lower gas prices.

But while the gas rush has benefited most Americans, it’s been a money loser so far for many of the gas exploration companies and their tens of thousands of investors.

The drillers punched so many holes and extracted so much gas through hydraulic fracturing that they have driven the price of natural gas to near-record lows. And because of the intricate financial deals and leasing arrangements that many of them struck during the boom, they were unable to pull their foot off the accelerator fast enough to avoid a crash in the price of natural gas, which is down more than 60 percent since the summer of 2008.

Although the bankers made a lot of money from the deal making and a handful of energy companies made fortunes by exiting at the market’s peak, most of the industry has been bloodied — forced to sell assets, take huge write-offs and shift as many drill rigs as possible from gas exploration to oil, whose price has held up much better.

Rex W. Tillerson, the chief executive of Exxon Mobil, which spent $41 billion to buy XTO Energy, a giant natural gas company, in 2010, when gas prices were almost double what they are today, minced no words about the industry’s plight during an appearance in New York this summer.

“We are all losing our shirts today,” Mr. Tillerson said. “We’re making no money. It’s all in the red.”

Damn fools.  I just don't understand the oil and gas economics and culture, but I do understand that if Wall Street bankers are pushing an investment on you as a can't miss, run away as fast as you can, because the losses will pile up as fast as the bullshit they are spreading.  The whole article is worth a read.

Tax Reform Bullshit

Ezra Klein interviews Charles Schumer:

EK: Tax experts will tell you, though, that we’re hitting the outer limit of how much pressure we can put on the income tax code, even if you’re just talking about the rich. If you believe that the retirement of the baby boomers means federal spending will rise, then we really need to be looking at adding something like a consumption tax or a carbon tax so we don’t have huge economic drag from the income tax.
CS: I do think there’s a limit.  And that, by the way, is another difference between what we’re saying and what happened in 1986. The top rate was 50 percent then. It was too high.
To introduce a whole new tax regime, that would be modern tax reform. But that’s too big a task. I take seriously the idea that in addition to revenues, we need to cut back on costs, and we can do a lot more of that in ways that keep the basic structure of Medicare and Medicaid but save a lot of money.

Can somebody please clarify for me how a carbon tax or a consumption tax wouldn't have a huge economic drag on the economy, but a higher income tax rate on wealthy people will?  I'm under the impression that the main problem is that median wages aren't growing, and may be shrinking (excluding health insurance as wages), while incomes at the top are growing at an unsustainable rate.  Wouldn't a consumption tax or carbon tax whittle away more of that already stagnant income at the low end of the scale while not being a blip on the radar screen of those at the top?  I would think that would be a much larger drag on the economy than "punishing" the wealthy.  Many of their so-called investments are just ways of skimming more of the money out of the economy and into their pockets.  Private equity, anyone?  There seems to be a real bias in the centers of power against the people who are struggling and for the people who are winning big.  It just doesn't make sense to me.  Tax reform is just another way of screwing the middle-class.

NASA Photo of the Day

October 17:

Aurora Over White Dome Geyser
Image Credit & Copyright: Robert Howell Explanation: Sometimes both heaven and Earth erupt. Colorful aurorae erupted unexpectedly earlier this month, with green aurora appearing near the horizon and brilliant bands of red aurora blooming high overhead. A bright Moon lit the foreground of this picturesque scene, while familiar stars could be seen far in the distance. With planning, the careful astrophotographer shot this image mosaic in the field of White Dome Geyser in Yellowstone National Park in the western USA. Sure enough, just after midnight, White Dome erupted -- spraying a stream of water and vapor many meters into the air. Geyser water is heated to steam by scalding magma several kilometers below, and rises through rock cracks to the surface. About half of all known geysers occur in Yellowstone National Park. Although the geomagnetic storm that created these aurorae has since subsided, eruptions of White Dome Geyser continue about every 30 minutes.

Picking Through Financial Wreckage

Des Moines Register:

Real estate brokers, bargain seekers and asset liquidators sifted through the wreckage of a ruined life last week in Cedar Falls as they wandered among the former belongings of disgraced business leader Russell Wasendorf.
The founder of Peregrine Financial Group had an affinity for the best of everything. Now the homes, businesses and luxurious furnishings of his former empire are being sold off to raise money for his nearly 25,000 victims.
The property and buildings already are for sale. Everything else — from his 4,000-bottle wine collection to his autographed Lance Armstrong jersey — is scheduled for auction Dec. 5.
The asset sales are part of a $60 billion liquidation industry that’s cleaning up the debris of the global economic slowdown. Hard times have helped expose both marginal businesses and financial scams. Wasendorf has pleaded guilty of stealing as much as $200 million from customer funds at his Peregrine Financial Group futures brokerage.
“He was a generous guy; the only problem was that it wasn’t his money,” bail bondsman David Lederman, 42, of Waterloo said Tuesday as he marveled at the Wasendorf estate’s enormous pool house. “This is a nice piece of property. The crazy part is that the pool is probably worth more than the entire house.”

I'm guessing the value of the autographed Lance Armstrong jersey has decreased significantly in the past couple of weeks.  That would fit nicely in my collection beside the Bengals helmet autographed by Chris Henry.

Revisiting Crop Rotation

Wired:

Liebman, inspired in part by a pioneering Iowa farmer named Dick Thompson, wanted to bring integrated pest management back, but augmented with technology’s new tools. On 22 acres at Marsden Farm, his team planted three plots with different rotations of crops. The first followed a two-year rotation, alternating between corn and soybeans, as is customary in the region. It was managed the usual way, with lots of chemicals.
For the second plot, the researchers rotated over three years between corn, soy and oats, with red clover planted in winter. The clover, which absorbs atmospheric nitrogen, was planted between crop rows and plowed under as soil-replenishing “green manure” in spring. On another plot, instead of red clover the researchers planted a fourth-year crop of alfalfa, which can be used to feed livestock. The animals’ manure came back as fertilizer.
On these fields, the researchers still used herbicides and pesticides, but not the usual way. Rather than spraying them routinely over large areas, Liebman’s team applied them only when necessary. “We use low-dose products in the smallest quantities possible,” he said. “We’re not against their use. What we’re arguing for is using them as carefully deployed tactical options.”
Liebman called these applications “therapeutic measures.” Therapy wasn’t often needed. Having different crops with different life cycles made it harder for weeds to grow. What might flourish among corn and soy, for example, was disrupted by oats. When red clover and alfalfa were mowed, weeds were chewed up before they flowered. As for insect problems, low pesticide use, along with habitat provided by cover crops, allowed pest-eating bugs and birds to flourish.
After eight years, Liebman and Davis used eight times less herbicide in the three- and four-year rotations than in the conventional plot, they report in the new study. Ecotoxicity in surrounding water was two orders of magnitude lower. Thanks to clover and alfalfa, the experimental plots also used 86 percent less synthetic fertilizer.
Most important of all, the experimental plots were as productive as the conventional.

My old neighbor Woodie ran a four crop rotation almost his entire life.  My neighbor up the road uses corn, soybeans, wheat followed by hay, which he pastures in the fall and winter, chops in the spring, then tears up and plants corn which he chops or picks.  The problem with implementing such a rotation in many places is that most farmers don't want to do all that work, and don't want to have the livestock around to provide the manure.

Fort Knox Security Theater

Michael O'Malley:

In speeches explaining the change, Roosevelt paradoxically stressed the importance of gold reserves.“By making clear that we are establishing permanent metallic reserves in the possession and ownership of the federal government,” he told Congress in 1934, “we can organize a currency system which is both sound and adequate.” But the U.S. already had “metallic reserves” -- the act had actually eliminated that gold’s legal function.
Roosevelt turned to Fort Knox, which had been an Army base since 1918 and was used in the 1930s primarily as a training site for mechanized cavalry. Putting the U.S. Bullion Depository at Fort Knox amounted to a kind of psychic compensation.
No one at the Treasury Department or the Federal Reserve was asking for a new vault. The Treasury’s gold had been stored at mints in San Francisco, Philadelphia and Denver, and in the assay office in New York. Lack of space could have been the reason: The country’s stock of gold tripled from 1933 to 1936. But it doesn’t take much space to store gold. John Maynard Keynes famously calculated that all the gold in the world would fit easily in the cargo hold of an ocean liner. The Federal Reserve banks probably offered more than adequate physical space, and safety, for gold deposits. But creating and publicizing a new fortress offered a kind of “security theater.”
The government made a great show of moving its bullion to Kentucky after the gold vault was completed in 1936. “Fifty armored trains to carry Federal gold,” announced the New York Times. Soldiers and Treasury agents with submachine guns rode with the gold as it moved by rails along a secret route. “Dummy” trains decoyed would-be thieves. Tanks and infantry protected armored transports as they drove the bricks from railhead to vault.

Isn't gold itself monetary security theater?  Does anyone really think they will be able to utilize gold as a currency?  It is just a dumb idea.

The Business Of Slavery

Smithsonian features a history of Jefferson's slave enterprise (h/t nc links):

The critical turning point in Jefferson’s thinking may well have come in 1792. As Jefferson was counting up the agricultural profits and losses of his plantation in a letter to President Washington that year, it occurred to him that there was a phenomenon he had perceived at Monticello but never actually measured. He proceeded to calculate it in a barely legible, scribbled note in the middle of a page, enclosed in brackets. What Jefferson set out clearly for the first time was that he was making a 4 percent profit every year on the birth of black children. The enslaved were yielding him a bonanza, a perpetual human dividend at compound interest. Jefferson wrote, “I allow nothing for losses by death, but, on the contrary, shall presently take credit four per cent. per annum, for their increase over and above keeping up their own numbers.” His plantation was producing inexhaustible human assets. The percentage was predictable.
In another communication from the early 1790s, Jefferson takes the 4 percent formula further and quite bluntly advances the notion that slavery presented an investment strategy for the future. He writes that an acquaintance who had suffered financial reverses “should have been invested in negroes.” He advises that if the friend’s family had any cash left, “every farthing of it [should be] laid out in land and negroes, which besides a present support bring a silent profit of from 5. to 10. per cent in this country by the increase in their value.”
The irony is that Jefferson sent his 4 percent formula to George Washington, who freed his slaves, precisely because slavery had made human beings into money, like “Cattle in the market,” and this disgusted him. Yet Jefferson was right, prescient, about the investment value of slaves. A startling statistic emerged in the 1970s, when economists taking a hardheaded look at slavery found that on the eve of the Civil War, enslaved black people, in the aggregate, formed the second most valuable capital asset in the United States. David Brion Davis sums up their findings: “In 1860, the value of Southern slaves was about three times the amount invested in manufacturing or railroads nationwide.” The only asset more valuable than the black people was the land itself. The formula Jefferson had stumbled upon became the engine not only of Monticello but of the entire slaveholding South and the Northern industries, shippers, banks, insurers and investors who weighed risk against returns and bet on slavery. The words Jefferson used—“their increase”—became magic words.
Jefferson’s 4 percent theorem threatens the comforting notion that he had no real awareness of what he was doing, that he was “stuck” with or “trapped” in slavery, an obsolete, unprofitable, burdensome legacy. The date of Jefferson’s calculation aligns with the waning of his emancipationist fervor. Jefferson began to back away from antislavery just around the time he computed the silent profit of the “peculiar institution.”

The whole article is worth reading. This gives the true basis of slavery.  Like Amish raising horses, it makes a good business model to be able to breed you farm machinery.  The 4% quote lays bare the reason why Jefferson never reached the point where it was completely self-evident that "all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness."