The Other Side of Leverage

[blackpowder]

Agree.
The tricky one is defining expensive.

[Old Cowzilla]

Flipping combines every time the ashtray is full is likely more expensive than some outfits are penciling.

[AlbertaFarmer5]

Are the opportunities to use that leverage more likely to look like pre-purchasing cheaper inputs, hedging production or inputs, holding inventory either for tax purposes or marketing opportunities?

[AlbertaFarmer5]

Agree.
The tricky one is defining expensive.

Land has never been defined as not expensive "here" in my lifetime.

Only in hindsight.

[fjlip]

List of creditors here, read and weep for them!

https://monette.buperac.com/#creditors

[AlbertaFarmer5]

You are right. Continual expansion makes it hard to benchmark against similar operations. It takes atleast 3 average years to level out.

I think Monette's problem was continual losses told the tale. Tough to come up with a good story for the banker year after year.

But despite hitting a wall, he did what few are able to.

So if it was possible to fool the bankers with continual growth, is it possible that the borrower himself could have also fooled himself as to the depth of the hole until it was too late? Or is that being too generous?

[LEP]

A loan package with this many zeros would have been deliberated by the most senior credit committee in the bank.

Likely no practical ag experience, just another business with numbers.

[AlbertaFarmer5]

I see I accidentally said lender not borrower. My question is whether borrower himself could have also missed the signs early enough.

[LEP]

Well, he created the situation and made some bold wrong moves. At that point he was probably scrambling to keep it going.

He well knew the cash crunch he operated through the last few years.

Not sure how he thought buying BC ranches from a company that had bled red ink would help his bottom line.

The same as venturing into vegetable production or running a processing plant where he had zero expertise would help either.

He had bought farmland that had appreciated enough to fix his problemproblems if he had "rightsized" earlier.

The debt he has to deal with is after he has sold $85 million in land this winter.

[biglentil]

For everyone's sake let's hope this bust cycle isn't all part of the agenda spelled out in the excellent read "The Great Taking" and Mark Carneys vision of "stakeholder capitalism" in which according to the predictions of his handlers at the WEF, "You'll own nothing and be happy" by 2030. The everything bubble sure is smelling ripe.

Under the debt based fiat currency system, dollars only come into existance as debt with interest owing. This makes paying back the debts an impossibility as more dollars must always be created to cover the interest on existing debt. The real value exchange happens during the manufactured bust when the credit is tightened. The hardwork and the real property of the debt slave is transferred to those that produced nothing at all but the illusion of money. Quite the value proposition, something for nothing. Those like Monette aren't bright, they just ran further into the trap after a bigger chunk of cheese. "Mortgage" after all loosely translates to death grip in Latin.