Thursday, April 29, 2010

Roubini Sees Coming Sovereign Debt Defaults, Greece is "Tip of the Iceberg"

April 29 (Bloomberg) -- Nouriel Roubini, the New York University professor who forecast the U.S. recession more than a year before it began, said sovereign debt from the U.S. to Japan and Greece will lead to higher inflation or government defaults.
Almost $1 trillion of worldwide equity value was erased April 27 on concern that debt will spur defaults, derailing the global economy, data compiled by Bloomberg show. German Chancellor Angela Merkel and the International Monetary Fund pledged to step up efforts to overcome the Greek fiscal crisis, after bonds and stocks fell across Europe in the past week.
“The bond vigilantes are walking out on Greece, Spain, Portugal, the U.K. and Iceland,” Roubini, 52, said yesterday during a panel discussion on financial markets at the Milken Institute Global Conference in Beverly Hills, California. “Unfortunately in the U.S., the bond-market vigilantes are not walking out.”
Credit-rating cuts on Greece, Portugal and Spain this week are spurring investors’ concern that the European deficit crisis is spreading and intensifying pressure on policy makers to widen a bailout package. Roubini’s remarks underscore statements by officials such as Dominique Strauss-Kahn, managing director of the IMF, that the global economy still faces risks.
“The thing I worry about is the buildup of sovereign debt,” said Roubini, a former adviser to the U.S. Treasury Department and IMF consultant, who in August 2006 predicted a “painful” U.S. recession that came to fruition in December 2007. If the problem isn’t addressed, he said, nations will either fail to meet obligations or experience higher inflation as officials “monetize” their debts, or print money to tackle the shortfalls.
‘Tip of the Iceberg’
“While today markets are worried about Greece, Greece is just the tip of the iceberg, or the canary in the coal mine for a much broader range of fiscal problems,” Roubini, who teaches at NYU’s Stern School of Business, told attendees at the Beverly Hilton hotel. Increasing tax revenue won’t be enough to “save the day,” he said.
Greece “could eventually be forced to get out” of the 16- nation euro region, he said in a Bloomberg Television interview yesterday. That would lead to a decline in the euro and make it “less of a liquid currency,” he said. While a smaller euro zone “makes sense,” he said, “it could be very messy.”
The Stoxx Europe 600 Index fell 1.3 percent to 258.24, a six-week low, yesterday after Standard & Poor’s downgraded Spain’s debt by one step to AA. The euro traded near a one-year low against the dollar.
‘No Willingness’
Eventually, the fiscal problems of the U.S. will also come to the fore,” he said during the panel discussion. “The risk of something serious happening in the U.S. in the next two or three years is going to be significant” because there’s “no willingness in Washington to do anything” unless forced by the bond markets.
Roubini, chairman and co-founder of Roubini Global Economics LLC in New York, said the U.S. probably will need a combination of increased tax revenue and lower government spending, while Europe needs to curb spending.
Both he and Michael Milken, the founder of the Milken Institute, supported a carbon tax on gasoline, with Roubini saying it would reduce American dependence on oil from overseas, shrink the trade deficit and carbon emissions, and help pay down the U.S. budget deficit.
Milken compared the excess debt of U.S. consumers, companies and government to the nation’s obesity problem, saying the “best solution” is to become more efficient instead of raising taxes or unnecessarily cutting expenditures.
Slimming Down
“If we could just get Americans to reduce their weight to the same as they weighed in 1991, we could save $1 trillion and the U.S. could create $1 trillion of value,” the junk-bond billionaire-turned-philanthropist said on the panel, moderated by Matt Winkler, editor-in-chief of Bloomberg News.
Roubini, who predicted a bubble in U.S. housing prices months before the market peaked in 2006, said the U.S. invested too heavily in housing during the past 20 to 30 years, and that spending on education and technology would be more beneficial in the long run.
Milken, 63, is the former high-yield bond chief from Drexel Burnham Lambert Inc. who was indicted on 98 counts of racketeering and securities fraud in 1989, ultimately serving about two years after a plea bargain and sentence reduction. For the past decade, he has focused on philanthropy and running the research institute, which seeks ways to generate capital for people around the world.

Wednesday, April 28, 2010

Smart Money, Hedge Funds Selling Equities

Bank of America Merrill Lynch is out with the latest iteration of their hedge fund monitor report and we get a glimpse at the latest exposure levels. If you like to follow the smart money, then you should highly consider selling equities because that's exactly what hedge funds are doing. Last week we posted that hedge funds had below average net long exposure and we see this trend continues. Long/short equity funds are now around 25% net long, which is definitely below their historical average of 35-40% net long. Of their long positions overall, hedgies favor small cap and low quality 'junk' stocks. Last week we also touched on how there is a divergence between l/s funds and market neutral funds. This divergence continues as market neutral funds are still net long equities (but they did reduce some beta exposure).

We also see that according to CFTC data, many hedgies have been adding to shorts in S&P futures. Whether they are simply selling longs to lock in some profit or making a market timing call, one thing is clear: hedge funds are definitely cautious in this market. We also got confirmation of this trend from David Einhorn's hedge fund Greenlight Capital. In their latest investor letter, Greenlight discloses that they were 100% long and 70% short, leaving them 30% net long for the first quarter. This is right along the lines of what we've seen across industry-wide data sets.

Turning now to other significant asset class moves from hedgies, we see that they were adding to longs in crude oil and pressing deep shorts in natural gas. Additionally, hedge funds continue to pound the euro short. In interest rates, we learn that for the third consecutive week, hedge funds have very crowded shorts in 10 and 30 year treasuries as they short the long end of the curve. Curve steepeners continue to be hedge fund land's favorite drug.

Lastly, we also get a performance update from BofA regarding their hedge fund generals list. This is a basket comprised of stocks widely owned by hedge funds. It is up 13% year-to-date for 2010 and for 2009, the HF generals index was up 69%. You can compare these figures against individual hedge funds in our first quarter performance numbers post.

Embedded below is Bank of America Merrill Lynch's latest trend report on hedge fund exposure levels:

You can download a .pdf here.

So, the trend remains much of the same across hedge fund land as of late. Hedgies are selling equities, shorting the long end of the yield curve, shorting the euro, and longing crude oil. You can view BofA's previous hedge fund trend report here and make sure to also check out their hedge fund generals list to see what stocks hedge funds love most.

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I've noticed that stock market volume has shown liquidation for the past few weeks.

Spain's Debt Downgraded Too, Market Waits for Fed Statement

Stocks bobbed in and out of negative territory Wednesday after the S&P downgraded its debt rating on Spain. This follows downgrades on Greece and Portugal, which sparked a selloff in the prior session.

Today's downgrade initially sent stocks lower but it wasn't the bloodbath of the prior session and the Dow and S&P actually moved back into positive territory. Helping to asuage the market's concerns were details of a bailout plan for Greece helped assuage the market's concerns.
And traders will be waiting to see what the Fed says, with a statement due out at 2:15pm ET today following a two-day policy meeting.

Tuesday, April 27, 2010

Orszag: "Houston, We Have A Problem"

WASHINGTON, April 27 (Reuters) - President Barack Obama's top budget adviser, Peter Orszag, said on Tuesday that the U.S. government must significantly alter its policies in order to tackle a growing mountain of debt.
Orszag warned that huge deficits could cause the market to lose confidence in a government's creditworthiness.
Out-of-control deficits could also "require increased borrowing abroad which will mortgage our future income to foreign creditors," Orszag told the first meeting of the 18-member National Commission on Fiscal Responsibility and Reform.


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Well, duh!

Contagion Spreads In Europe

ATHENS -- Ratings agency Standard & Poor's pushed Greece to the brink of a financial abyss Tuesday and downgraded Portugal's debt, too, fueling fears of a continent-wide debt meltdown in Europe.
Stocks around the world tanked when Greek bonds were lowered to junk status and investors saw that Greece's financial contagion was spreading to at least one other eurozone country.
Major European exchanges fell more than 2.5 percent, and on Wall Street, the Dow Jones industrial average finished down more than 200 points. The euro slid more than 1 percent to nearly an eight-month low.
"We have the makings of a market crisis here," said Neil Mackinnon, global macro strategist at VTB Capital.
Greece is struggling with massive debt, and with prospects for economic growth weak it could end up in default. Its 15 eurozone partners and the International Monetary Fund have tried to calm the markets with a euro45 billion rescue package, but it hasn't worked.
Standard & Poor's warned that holders of Greek debt could take large losses in any restructuring, but a greater worry is that Greece's debt crisis is mushrooming to other debt-laden members of the eurozone.
One bailout can be dealt with but two will be stretching it, and there are fears that other weak economies could be pulled down in the Greek spiral - including Europe's fifth-largest, Spain. Can Germany, Europe's effective paymaster, continue to bail out the weaker members of the eurozone?
The crisis threatens to undermine the euro and make it harder and more expensive for all eurozone governments to borrow money.
It has also disrupted cooperation between eurozone governments, with Germany resisting the idea of bailing out Greece unless strict conditions are met.
Many investors think Greece will have enough money to avoid default in the coming weeks, but the future is cloudier.
Both Standard & Poor's and the Greek finance ministry insisted that the country will have enough money to make the euro8.5 billion bond payments due on May 19.
Even if it does, Greece faces years of austerity with living standards sharply reduced. Standard & Poor's warned that the Greek economy was unlikely to be as big as it was in 2008 for another decade.
Junk status sinks Greece's hopes even deeper. Losing investment-grade status for its bonds means that Greece will have to pay higher costs to borrow if it taps debt markets again, and increases the chances that existing debt will have to be restructured.
"The latest developments mean that the chances of Greece solving this situation without restructuring its debts are now dim," said Diego Iscaro, senior economist at IHS Global Insight.
German Chancellor Angela Merkel reiterated her position that Greece should first conclude the current negotiations with the IMF and the European Union about austerity measures for the coming years before receiving the international loan package.
Speaking at an election rally Tuesday afternoon, Merkel said it is appropriate to tell Greeks, "You have to economize, you have to become fair, you have to be honest; if not, nobody can help you," according to the German news agency DAPD.
A government spokesman said Tuesday evening he could not tell if Merkel was at that point aware of the latest downgrade. He declined to be named in line with government policy.
The FTSE 100 index of leading British shares closed down 2.6 percent, Germany's DAX slid 2.7 percent and the French CAC-40 in France ended 3.8 percent lower.
Greek and Portuguese stocks were pounded - down 6.7 percent and 5.4 percent, respectively - while their market borrowing costs went through the roof. The interest rate for Greek two-year bonds jumped to a massive 18 percent.
The interest rate gap, or spread, between Portugese and benchmark German 10-year bonds rose about half a percentage point Tuesday to reach its highest point since the euro came into circulation. The higher the gap, the less confidence in Portugal; its bonds on Tuesday had an interest rate 5.86 percentage points higher than German bonds.
Both the Portugese and Greek governments have imposed budget cutbacks against political resistance from unions at home. Markets have been skeptical that they can push through enough cuts, given political resistance, to put their finances in order.
Both governments responded with alarm at the downgrades.
"This decision will not help markets to calm down, but will, on the contrary, contribute for their turbulence," Portugese Finance Minister Fernando Teixeira dos Santos said.
Greek Finance Minister George Papaconstantinou said the downgrade "does not reflect the real state of our economy, nor the fiscal situation, nor the ongoing negotiations which have the very realistic propects that they will be completed successfully in the next few days."
Papaconstantinou said Greece will pull through.
"One wishes that Europe had acted a little differently. Three and four months ago we were saying that the mechanism must be ready and it must be detailed, that the markets must know what exactly is going. Unfortunately, for a series of political reasons, we are down to the wire," he said.
The crisis has highlighted the eurozone's inability to keep governments from undermining the euro by running up big debts. Rules that limit deficits to 3 percent of gross domestic product have been widely flouted, and EU officials are talking about ways to strengthen them.
ATHENS -- Ratings agency Standard & Poor's pushed Greece to the brink of a financial abyss Tuesday and downgraded Portugal's debt, too, fueling fears of a continent-wide debt meltdown in Europe.
Stocks around the world tanked when Greek bonds were lowered to junk status and investors saw that Greece's financial contagion was spreading to at least one other eurozone country.
Major European exchanges fell more than 2.5 percent, and on Wall Street, the Dow Jones industrial average finished down more than 200 points. The euro slid more than 1 percent to nearly an eight-month low.
"We have the makings of a market crisis here," said Neil Mackinnon, global macro strategist at VTB Capital.
Greece is struggling with massive debt, and with prospects for economic growth weak it could end up in default. Its 15 eurozone partners and the International Monetary Fund have tried to calm the markets with a euro45 billion rescue package, but it hasn't worked.
Standard & Poor's warned that holders of Greek debt could take large losses in any restructuring, but a greater worry is that Greece's debt crisis is mushrooming to other debt-laden members of the eurozone.
One bailout can be dealt with but two will be stretching it, and there are fears that other weak economies could be pulled down in the Greek spiral - including Europe's fifth-largest, Spain. Can Germany, Europe's effective paymaster, continue to bail out the weaker members of the eurozone?
The crisis threatens to undermine the euro and make it harder and more expensive for all eurozone governments to borrow money.
It has also disrupted cooperation between eurozone governments, with Germany resisting the idea of bailing out Greece unless strict conditions are met.
Many investors think Greece will have enough money to avoid default in the coming weeks, but the future is cloudier.
Both Standard & Poor's and the Greek finance ministry insisted that the country will have enough money to make the euro8.5 billion bond payments due on May 19.
Even if it does, Greece faces years of austerity with living standards sharply reduced. Standard & Poor's warned that the Greek economy was unlikely to be as big as it was in 2008 for another decade.
Junk status sinks Greece's hopes even deeper. Losing investment-grade status for its bonds means that Greece will have to pay higher costs to borrow if it taps debt markets again, and increases the chances that existing debt will have to be restructured.
"The latest developments mean that the chances of Greece solving this situation without restructuring its debts are now dim," said Diego Iscaro, senior economist at IHS Global Insight.
German Chancellor Angela Merkel reiterated her position that Greece should first conclude the current negotiations with the IMF and the European Union about austerity measures for the coming years before receiving the international loan package.
Speaking at an election rally Tuesday afternoon, Merkel said it is appropriate to tell Greeks, "You have to economize, you have to become fair, you have to be honest; if not, nobody can help you," according to the German news agency DAPD.
A government spokesman said Tuesday evening he could not tell if Merkel was at that point aware of the latest downgrade. He declined to be named in line with government policy.
The FTSE 100 index of leading British shares closed down 2.6 percent, Germany's DAX slid 2.7 percent and the French CAC-40 in France ended 3.8 percent lower.
Greek and Portuguese stocks were pounded - down 6.7 percent and 5.4 percent, respectively - while their market borrowing costs went through the roof. The interest rate for Greek two-year bonds jumped to a massive 18 percent.
The interest rate gap, or spread, between Portugese and benchmark German 10-year bonds rose about half a percentage point Tuesday to reach its highest point since the euro came into circulation. The higher the gap, the less confidence in Portugal; its bonds on Tuesday had an interest rate 5.86 percentage points higher than German bonds.
Both the Portugese and Greek governments have imposed budget cutbacks against political resistance from unions at home. Markets have been skeptical that they can push through enough cuts, given political resistance, to put their finances in order.
Both governments responded with alarm at the downgrades.
"This decision will not help markets to calm down, but will, on the contrary, contribute for their turbulence," Portugese Finance Minister Fernando Teixeira dos Santos said.
Greek Finance Minister George Papaconstantinou said the downgrade "does not reflect the real state of our economy, nor the fiscal situation, nor the ongoing negotiations which have the very realistic propects that they will be completed successfully in the next few days."
Papaconstantinou said Greece will pull through.
"One wishes that Europe had acted a little differently. Three and four months ago we were saying that the mechanism must be ready and it must be detailed, that the markets must know what exactly is going. Unfortunately, for a series of political reasons, we are down to the wire," he said.
The crisis has highlighted the eurozone's inability to keep governments from undermining the euro by running up big debts. Rules that limit deficits to 3 percent of gross domestic product have been widely flouted, and EU officials are talking about ways to strengthen them.

Could Sovereign Debt Cause Run on Banks?

We ran this chart earlier, but it's worth running again, considering the Europe-wide carnage we saw today.
This is not just about sovereign debt. This is about a major freakout about the banking system.
The word from S&P is that Greek debt holders will take a major haircut on their holdings, and that means serious problems for banks. (See the full list of victims here)
Ths surging CDS of Portuguese and Spanish banks is a major red flag.

400 Days Without a Correction

from Chad Brand at Peridot Capital:
For several months I have been holding elevated cash levels (above 10%) in most client accounts, due to the fact that the stock market appears overbought and has gone a very long time without a standard 10% correction. In fact, we have now gone more than a year without a 10% drop which is a long time historically. I decided to look at the data to see exactly how overbought this market is relative to other bull markets.
It turns out that the current streak of more than 400 days without a correction represents only the 14th time this has happened since 1928. Of those instances, the current bull market (up more than 80% from the March 2009 intra-day lows) places fourth on the list. The three stronger bull market streaks (1953-1955, 1990-1996, and 2003-2007) ranged from +97% to +131%.
Depending on your time frame, the current streak could be either alarming or unimportant. One could argue that the fourth longest streak in 82 years indicates near term problems on the way, but one could also conclude that the last streak of this length was only a few short years ago, so maybe it is becoming more and more common.
I prefer to look at the longest set of data we have, which is why I continue to hold above-average cash levels. The fewer data points you consider, the less reliable the data will actually be. This can explain a lot of things in various topics, including why there is such a heated debate about global warming right now. If you look at the last 5 years you might conclude that global warming is no longer happening. Conversely if you look at the temperature trends over the last 100 years, it is pretty obvious that global warming is occurring.
Looking at historical stock market data tells me that the current bull market is near the top of the list historically, but of course that does not mean stocks are going to fall anytime soon. Just three years ago the S&P 500 went 4 years without a 10% correction. Today it has only been a little more than 1 year. As a result, I prefer to hold extra cash to use should the correction come, but still have most of my clients’ capital invested in attractively-priced stocks.

The Limits of Technical Analysis, part 1

from CSS Analytics blog:

My early education was quite typical: I went to business school to get my MBA in Finance and then tackled the CFA designation. I was typically instilled with the “Efficient Markets Hypothesis” and often could be found reading arcane issues of “The Journal of Portfolio Management.” That was also a distant time when I thought CAPM was the single greatest equation in finance. I started my career many years ago in equity research, and then moved on to a stint in wealth management and investment advisory. I had the unique benefit of spending most of early years without looking at technical analysis. I spent years doing both macro-economic and company research, and also invested heavily in research using fundamental scoring systems. My early heroes were Joel Greenblatt, Michael Price, and David Dreman–all pioneers in original fundamental research. While it may be unbelievable to loyal blog readers, I distinctly remember the days when I used to scoff derisively at anyone who begged me to look at a stock chart! Now, after becoming a technical analysis convert so to speak, I have a fair degree of perspective to share on what technical analysis can and cannot accomplish.
First, let me state a unique premise: without other market players believing in fundamental analysis, I believe that technical analysis would not work. Huh? Well the truth is, all major trends including both bull and bear markets are a function of the belief in some theory about fundamentals. Few individuals with serious wealth are willing to risk their own money on the basis of an interpretation of a chart pattern. Imagine telling a client that has given you $25 million to invest that you are going to be investing $5 million in China Telecom because “the chart looks good.” Or how about trying to tell that same person that you are going to increase your exposure to Citigroup in 2008 “because my indicators show that the stock has hit a bottom.” You better have a good reason to explain to this same person why you are risking their hard-earned money on a bunch of chart squiggles. For this reason, most of the money in the mutual fund and pension fund universe is invested using fundamental research and macro-economic theses about a specific stock, sector or commodity. Typical examples include statements such as: “the world is running out of oil”, or that “the internet is going to take over brick and mortar business.”
Not some, but nearly ALL major bubbles or parabolic moves are created by feedback loops that start with a few people believing in a given theory and end with the majority achieving a consensus that a theory is true.
One implication of this process is that the proximity to a long-term top or to a bottom can be better approximated using gauges of sentiment rather than classic technical indicators. Based on the theory postulated above, major moves will start occuring when the majority of people do not believe that a market will reverse course based on fundamental reasons. The smart/more informed money will often be placing their bets ahead of the crowd without moving the market. By extension, this also means that major turning points will be difficult to distinguish since the money flow into a given stock or market will likely be offset by the majority of investors betting in the opposite direction. No technical indicator in my experience is capable of telling you with any accuracy where the top or bottom is. I have never tested or seen anything that can accomplish this significant feat of prediction. Strangely, it seems that most newsletters and market pundits spend most of their time calling tops and bottoms. Perhaps this is why they always seem to underperform buy and hold or a simple 200-day moving average rule despite having arguably excellent knowledge of a wide variety of truly predictive indicators.
The reality is that the fallability of technical indicators is a major limit of technical analysis that cannot be addressed adequately by trying to be more precise. The sad fact is that this never-ending quest for precision is the undoing of many great chartists. Many technical analysts fall prey to “confirmation bias” after analyzing a market because they are desperately looking for some “non-confirming divergence” or other magical signs that they are still correct in their analysis. This same problem also affects quants that trade mechanically: no hidden mathematical transform of price and/or volume (or combination thereof) holds the key to predicting all markets with significant accuracy. At some point no matter how sophisticated you are in your analysis, you will reach a maximum bound of profitability that can be achieved by looking at prices and volume in isolation. This bound can only be surpassed by incorporating variables that are not multi-collinear with price-based indicators. Not only is it easier to improve your precision with other variables, but you also run a much lower chance of having a poor reward to risk ratio.
to be continued………
original story

Stocks Plunge on Fresh Worries of Sovereign Debt Contagion

S&P has down-graded Portugal's debt, causing the Dow to drop 120 points in just a few minutes. Gold is up $20/ounce since the announcement.

Europe Debt Crisis Deepens

April 27 (Bloomberg) -- Most U.S. stocks fell, sending the Standard & Poor’s 500 Index down for a second day, as growing concern Europe’s debt crisis is spreading overshadowed better- than-estimated earnings and consumer confidence.

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Fitch has just cut Portugal's debt rating. The Dollar is surging, the Euro is plunging, gold has risen $20 in ten minutes, and stocks are plunging also.

Monday, April 26, 2010

Americans Ignorant of Blessings of Modern Ag Techniques

It was truly a butt kicking. An old fashioned whipping. We lost the debate, and it wasn't even close.
I had been invited to New York City to debate the statement, "Organic food is marketing hype." We had 20% of the Manhattan audience on our side when the debate started and the same number on our side at the end. The undecided audience members at the beginning of the evening broke almost unanimously for the opposition. You can see the whole thing at In the window at the end of this blog.
The debate winner is the side that changes the most minds, and we were beaten like a rug. It will take a long time and much thought for me to come to final conclusions about the experience, but here are some first impressions.
Ferocious attacks I was totally unprepared for the ferocious attacks on conventional farming. One of our opponents said that one in eight children have birth defects, and strongly implied that my farm chemicals are the cause. The food critic for Vogue Magazine, who is a regular on the Food Channel, informed us that the days of the conventional farmer are numbered.
I was unprepared for the concentration on animal welfare. Sure, I expected they'd accuse farmers of being careless about the land we farm, but I never thought that I would be accused of "raping" the soil with the fertilizers I apply. 'Great Lakes-sized lagoons full of Poo?' What's this poo business? You can't say manure? Animal waste?
Actually, poo was much on the mind of the most effective debater on the other side. Poo fed to cows, poo falling on chickens' heads in cages, human poo prohibited as fertilizer for organic farmers, but used by conventional farmers.
Most of the poo in this debate was thrown against the wall by the other side, and a good deal of it stuck. They were more skilled, and more shameless. There are no fact-checkers in a debate, no editors, and no chance for a do-over. I've thought of a reply to most every claim…72 hours too late.
People in the audience laughed when I said that the application of science to farming had been a good thing; that it has been a boon for the human race that yields are increasing; that genetically modified seed and fertilizer and pesticides have helped feed the world; that we were richer because of modern agriculture.
They laughed when my team member pointed out that modern pig farming has actually lessened the chance of swine-to-human movement of flu viruses. The knowledge about actual food production in that auditorium was nonexistent. If we are to continue to engage our critics, we're going to have to start at the beginning. People really don't have a clue about on-the-ground facts of farming.
Better story-telling I'm not sure how we tell our story better. I'm not sure how we win this argument. It didn't seem adequate to point out that there are environmental costs to organic farming. (Our Vogue food critic informed us that organic farmers didn't till the soil, and that knee high weeds in the field didn't hurt yields.)
This audience, at least, wasn't particularly interested in the fact that people would be hungry if organic farming is so widely practiced that a quarter of U.S. crop ground is in legumes to provide nitrogen for the next years' corn or wheat crop. The fact that plants produce natural pesticides, and that many of those natural pesticides are carcinogenic, didn't change a single mind.
An audience member asked if there was a scientific test to determine whether a crop had been raised organically. Our opponents dodged the question, but it was clear that testing wouldn't show many discernible differences in quality. When one of our team members said there was a test that would show whether commercial fertilizers had been applied to a crop, the other side wasn't the least bit interested.
A cynic might say they were afraid that testing organic crops might prove that some food marketed as organic...isn't. It did seem odd to me that every restaurant, food stand, and small grocery in Manhattan advertised organic produce. If total organic production nationwide is only 3% of the supply, the market penetration in Manhattan is closer to 100%.
We have to learn what messages work, and what messages do not. I'd love to see a focus group study the debate, and find out if anything we said had an effect on the audience.
We conventional farmers have to get better at this, or we're headed toward some major changes in the way we farm. I don't want to face that future, and I don't think it's good for our nation, or the world. But we're losing this battle, and our debate was just one small indication of that terribly depressing fact.

ORGANIC FOOD IS MARKETING HYPE from Intelligence Squared US on Vimeo.

Economist Survey Says Stimulus Didn't Help

NEW YORK (CNNMoney.com) -- The recovery is picking up steam as employers boost payrolls, but economists think the government's stimulus package and jobs bill had little to do with the rebound, according to a survey released Monday.
In latest quarterly survey by the National Association for Business Economics, the index that measures employment showed job growth for the first time in two years -- but a majority of respondents felt the fiscal stimulus had no impact.

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The stimulus package did only one thing -- dig us a bottomless pit of debt! Eventually, it will drag our economic vitality into that same bottomless pit.