Skip to main content

Fun Facts



  • The European bank stress test assumed a 1% economic contraction, the American bank stress test assumed a 4% contraction.  If the European stress test had used 2% contraction instead of 1%, the amount of additional equity required by European banks jumps from €4.5 billion to €24 billion.

  • European banks need to refinance senior unsecured debt to the tune of €3.3 trillion, about three times as much as US banks, which stand at USD1.3 trillion.

  • Greek trucker are entering their 4th day of strike, oil foodstuffs are becoming scarce.  Government has implemented War measures to no effect (yet).

  • China’s second largest steel producers increased capacity by 26% in 2010 to 45 million tons, number one producer’s capacity stands at 47 million tons.  The entire US steel production capacity is 16 million tons.

  • America has 140 million homes 19 million house for sale, about 8 million empty homes.  China has 65 million empty homes (on purpose) being held as a hedge against inflation.

  • America has 80 million baby boomers that are beginning to retire at a rate of 10,000 per day, Generation X includes 65 million who are much poorer then their parents.  The implications for house price are important, as it will require lower home prices going forward.  Housing, as an investment strategy is no longer a sound idea.

What do these things mean for Canada, its economic development and growth?  One certain fact is that problems in Southern Europe have not been solved; they’ve just been on holidays for a few weeks.  Greece is now entering a difficult stage where the early “victims” of the austerity measures will set the tone for what happens next (think Thatcher’s showdown with the miners in the early 80s).  A banking shock could easily occur in Europe – a failure of Greece would certainly impact the European banks’ balance sheet.  Moreover, any sign of weakness will have a huge impact on the banks ability to refinance their long term debts.  The implication for banks is that they will either have to borrow from the ECB, or reduce loans outstanding.  I would suggest that both avenues will be explored.  Banks will increase their lending standards, which will lead to a recession, which will cause further bank losses.

On this side of the pond, the economy is clearly having a hard time.  Despite quantitative easing, massive government surplus and very low interest rates, the economy is sickly, especially after the Q1/Q2 inventory boost is now over, virtually every economic indicator (except for corporate profits) is indicting a slowing economy.  The impact on China is certain to force the government there to undertake a second round of stimulus.  

Popular posts from this blog

Ok so I lied...a little (revised)

When we began looking at farming in 2013/14 as something we both wanted to do as a "second career" we invested time and money to understand what sector of farming was profitable.  A few things emerged, First, high-quality, source-proven, organic farm products consistently have much higher profit margins.  Secondly, transformation accounted for nearly 80% of total profits, and production and distribution accounted for 20% of profits: Farmers and retailers have low profit margins and the middle bits make all the money. A profitable farm operation needs to be involved in the transformation of its produce.  The low-hanging fruits: cheese and butter.  Milk, generates a profit margin of 5% to 8%, depending on milk quality.  Transformed into cheese and butter, and the profit margin rises to 40% (Taking into account all costs).  Second:  20% of a steer carcass is ground beef quality.  The price is low, because (a) a high percentage of the carcass, and (b) ground beef requires process
Post a Comment
Read more

21st century milk parlour

When we first looked at building our farm in 2018, we made a few money-saving decisions, the most important is that we purchased our milk herd from a retiring farmer and we also purchased his milking parlour equipment.  It was the right decision at the time.  The equipment dates from around 2004/05 and was perfectly serviceable, our installers replaced some tubing but otherwise, the milking parlour was in good shape.  It is a mature technology. Now, we are building a brand new milk parlour because our milking cows are moving from the old farm to the new farm.  So we are looking at brand new equipment this time because, after 20 years of daily service, the old cattle parlour's systems need to be replaced.  Fear not it will not be destroyed instead good chunks will end up on Facebook's marketplace and be sold to other farmers for spare parts or expansion of their current systems. All our cattle are chipped, nothing unusual there, we have sensors throughout the farm, and our milki
Post a Comment
Read more

So we sold surplus electricity one time last summer...(Update)

I guess that we will be buying an additional tank for our methane after all.   Over the past few months, we've had several electricity utilities/distributors which operate in our region come to the farm to "inspect our power plant facilities, to ensure they conform to their requirements".  This is entirely my fault.  Last summer we were accumulating too much methane for our tankage capacity, and so instead of selling the excess gas, that would have cost us some money, we (and I mean me) decided to produce excess electricity and sell it to the grid.  Because of all the rules and regulations, we had to specify our overall capacity and timing for the sale of electricity (our capacity is almost 200 Kw) which is a lot but more importantly, it's available 24/7, because it's gas powered.  It should be noted that the two generators are large because we burn methane and smaller generators are difficult to adapt to burn unconventional gas, plus they are advanced and can &qu
Post a Comment
Read more