Everybody knows

Originally published April 9

We are told that the economy is in recovery. Things are getting better. Facts and figures bolster the argument: Lower unemployment figures. Higher GDP numbers. Affordable health care for all.

I look at my personal world and it doesn’t reconcile with the narrative.

Is it just me?

I expand the circle and take at those around me.

They don’t seem to be doing so well either.

Local oil companies, (the majors, anyway, which aren’t the majors that come to mind), continue to operate, but everyone knows the current price of crude does not come anywhere near the cost of exploration and exploitation.

The large outfits lay off a portion of the help and speak of hedged oil prices that allow them to continue for six more months.

The little guys did not hedge their oil. So, they lay everybody off, aside from perhaps a skeleton crew to keep remaining assets from being stolen. The service companies don’t get paid.

Hotels, recently booked two years in advance, sport vacancies, and even more soon-to-be-new hotels have yet to open their doors.

The truck that sold tacos to passing oil field trucks quit coming.

Pickup truck salesmen watch nervously through shiny glass windows for non-existent buyers, worrying about bills at home, knowing their only income is derived from commissions; the trucks don’t sell.

Farmers plant crops, hoping government subsidy programs bridge the widening gap between production costs and the current price of grain, knowing that without this assistance, they lose money for their efforts.

Bankers watch accounts dwindle as clients pilfer retirement reserves to pay bills; the day arrives when the retirement account is retired and those bills go unpaid.

Then it’s, I can’t pay you because he didn’t pay me, only hetells the same story about another.

A scene from the movie, Cinderella Man, comes to mind: The Depression era boxer Jim Braddock, (played by Russell Crowe), arrives at an upscale apartment of a believed-to-be wealthy associate, looking for a loan, only to discover a cold, empty home, devoid of furniture, sold to maintain the appearance of wealth.

Cattle are high. But many places no longer have cows, which were sold during the droughts. Truth be known, just about everyone raising cattle has a day job to support the habit, and it has been this way for the last 40 years.

Today’s beef prices are necessary to break even, not to make a profit, just to pay expenses.

There’s no way in hell this endeavor justifies the supposed value of the land those cattle are raised on.

Meanwhile, meat has become inaccessible for many consumers due to current prices.

A few years back, I received a windfall.

I distrust and dislike banks and lending institutions.

So, rather than place money in a bank account, which would then be lent out to others, others not of my choosing, I decided to lend money to friends and associates I thought had viable enterprises in need of funding.

The recipients covered a wide array, from farmers and ranchers, here and abroad, to musicians and even a start-up insurance salesmen. There was a flower salesman and even a medical marijuana guy in a state where such is legal.

One guy trained race horses.

My wife opened a business, built from scratch from raw land.

We restored an old store from ruins.

Bought a small irrigated farm in West Texas.

And, bought way too many fine Thoroughbred horses.

None of the people I loaned money to were able to pay me back. All are decent, hard-working people; all made honest efforts, yet none could repay their loan, aside from one of minimal value and he sold a house his grandfather gave him before dying to do so.

Most of these people continue to work, vigorously. Some have a few remaining assets; most don’t.

Those assets could not be sold for a fraction of the money it cost to buy them.

I can’t throw a rock at anyone, because my personal situation is similar.

While I don’t owe money to any institution, I have borrowed money and goods from my father and have been unable to repay him.

Both of us are in essence, broke. Not yet insolvent, but broke. We got no cash. Or maybe we are insolvent and don’t yet know it.

What happens when the value of assets becomes zero?

Nearly all the horses I bought were acquired at pennies on the dollar from their previous value, some of which arrived from other failing operations—high scale operations.

To this day I receive calls from yet others, offering to sell me horses, good horses, cheap.

And there’s no shortage of decent mares to be had for free.

I decline.

I’m already overstocked.

For those that advise selling the horses I own to fix my own situation, I ask: To whom?

It’s not like there are people lined up at my door with money waiting to buy a horse.

Aside from that, they’re worth more than money to me.

They’re living creatures. They know me. They trust me.

They’re magnificent.

They cost money to maintain.

I’ve made mistakes for lack of money I needed to provide proper care.

Recently I fed hay we grew containing Klein grass, good for cattle, but potentially dangerous to a horse. Times past, I got away with this.

This year, I lost three foals. I suspect Klein grass was the culprit.

We had the hay and I didn’t have money to buy something better without allowing some other obligation to go unmet.

In river bottoms, the shit encroaches from places upstream, whether you plant it or not.

Try explaining this to an anxious mare watching over a foal that won’t get up to eat because it died.

And if I sell the horses to someone else that can’t care for them (whether they realize it or not), or send them to slaughter, then where do the people in my employ that care for these animals go?

These are tough times.

To any and all that owe me money:

Your debt is forgiven.

Circumstances beyond your control created your demise.

I know you tried. I’ve been watching. Struggling alongside you.

Lord, have mercy.

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Don Henry Ford Jr.

10 CommentsLeave a comment

  • Take care of others and they’ll take care of you.
    It worked remarkably well for thousands of years – until Capitalism reared its ugly head.

    Excerpts from Thriving in the Age of Collapse
    – 2005 – Dmitry Orlov

       An economy collapses one person, one family, one community at a time. First, the dreams evaporate: the future starts looking worse than the present, and ever more uncertain.

       For several decades now, the U.S. Dollar has been able to keep its value in the face of ever larger trade and fiscal imbalances largely because it is the currency most of the world uses when buying oil. Other nations are forced to export products to the United States because this is the only way for them to gather the dollars they need to purchase oil. This has produced a continuous windfall for the U.S. Treasury. This state of affairs is coming to an end: as more and more oil-producing nations find alternative ways of doing business with their customers, trading oil for Euros, or for food, the U.S. Dollar erodes in value.

       There are some steps you can take to prepare yourself for life without money [] so find out just how little money you need to stay active and healthy. Learn to rely on family, friends, and acquaintances. Find out what you can take from them, and what you have to offer in return.

       [] you may continue to receive checks from the government, but it will not be enough to live on. [And] there will not be any actual official paid work available to them to make up the shortfall.

       It is human nature to want to postpone making unpleasant decisions until the last moment, and we can do so with impunity, provided we leave enough options open for us to choose from. Every day that we live contentedly within the status quo, we restrict our options further and further, by making ourselves increasingly dependent on more and more systems over which we have no control, and on which we cannot rely.

  • I grew up on a small hobby horse farm, that my parents nevertheless tried to run as a self-sustaining business. At some point my mother, who was the driving force behind the whole thing, entrusted a friend of hers with running the operation. Her friend Heidi was a tax accountant by trade, but also obsessed with horses. At the time she ran the estate of the locale castle, that back then still housed the old baroness (this is in Southern Germany).

    A couple of years everything seemed fine until my parents noted that Heidi was bleeding our farm dry and tapped out all accounts. Things got ugly when they confronted her and of course the friendship did not survive. Turned out she had way too many horses to take care off, her funds were literally eaten up, yet she could not make herself sell a single one, pleading under tears that they were like family to her.

    Parting ways my parents only learned many years later that during a thunderstorm some of her horses panicked and she got kicked in the head. Not fatal but bad enough that she lost an eye and her capacity to keep working as an accountant. This being Germany at some point the welfare state will have kicked in to arrest her fall, but horses were literally her undoing.

    • I have broodmares and raise horses specifically for sale.

      However, between a weakening economy, and poor legislative choices keeping Texas horse racing in the stone age, I am in imminent danger of doing the same to my family as Heidi did yours.

      We are one of very few states with live horse racing that prohibits on-line or phone wagering. In today’s world, that’s pretty much a death sentence.

      • “… that prohibits on-line or phone wagering. In today’s world, that’s pretty much a death sentence.”

        That is outright luddite, but then again this is Texas.

  • Where I live, there is a lot of hopeful “it’s getting better” sentiment. I work around construction people most of the time. The contractors are experiencing trouble finding sufficient skilled labor and for the first time in six or seven years bid prices are spiking sharply. Realtors (who are incessantly optimists) are also sensing some modest churn in the residential market, but there are no great changes in the construction of new residences. Within state government, all I see are legislated cut-backs. Universities are in their 5th or 6th straight year of cutting the previous year’s operating expenses in the range of 8 to 10%. People don’t seem to grasp the fact that no business can be cut indefinitely, yet the political climate and expectations remain the same. Academic programs are being cut (repeatedly) all the while claiming the “core mission” of the university will be “protected”—a lie of course. In come the one year adjunct contracts, and nobody becomes tenured anymore. Facilities at many institutions are 60-70-120 yrs old, and their budgets for repair and maintenance have also been reduced yearly for the past decade.

    So, I guess I don’t see much tangible evidence of improvement. I hear a lot of hopeful talk and watch people keeping-on as though things will inevitably get better.

  • Of course we are being told that things are getting better; it’s an election year. Wait. 2016 is next yea, but candidates are collecting campaign funds and announcing candidacies. The presidential election costs $1 billion per side and lasts two years. We are fucked.

  • I see and experience every day the downward spiral. Out here in California the language being used by politicians in relation to the drought is like none other heard in my life time. There is political talk about upending senior agricultural water rights that were set in 1914. The groundwater being pumped out will never be replaced that is making up the difference of lack of water delivered through the different Fed and State agency’s. Water can’t be delivered if there is no water in the dams and reservoirs. 80 % of all surface water that is handled by the massive plumbing of California goes to agriculture. 20 % goes to city use. Water flows uphill towards money in California. Large corporate, hedge fund managed new plantings of Almond groves continues at an accelerated levels, mostly for export to China. Almond trees take 10% of the water in California. Almonds can’t go fallow and then be reinvigorated, water is needed to keep the tree viable. The beat goes on and we go dry.

  • At Least You Are Trying…,
    to make those horses pay for themselves Don. I can make no such pretense. I call ours my “cash crop”…, as in, “That’s where all my cash goes.” About a month ago I hookup the gas guzzling big Toyota to the horse trailer to drive seventy miles to get some more hay. The little red barn won’t hold enough to last until the next hay crop is ready closer to home. But I am one of the lucky ones who has a day job that covers the expense…, knock on wood…, for now anyhow. And those old horses will probably be the last indulgence I give up if thing get tough. One of my favorite books is Thomas McGuane’s “Some Horses”…, and I once quoted from my favorite novel of his “The Cadence of Grass”, on my blog. It mentioned how during WW II some folks had to turn their horses loose because they could no longer afford to feed them. I hope that you and I…, and us all…, never have to a day like that.

    And as always…, right on partner…, write on.

    • When the accepted economic model says there’s no viable reason for a horse to exist, and all adhere to that model, then all the horses get killed. We’re closer to that scenario than many realize. Humans are not the only creature entitled to a place on this planet.

      In the last few months I have received several calls from previously large breeders trying to sell or give me mares.

  • How can you expect a better economy when the economic system is set up to produce the opposite results? Of course, you have to define your terms. If we are talking about a system to produce good results for the 99.9%, then we are doomed. Meanwhile, the 0.1% are loving it. For example, we all know that we have a consumer driven economy and we also know that the consumers’ income and benefits are going down, despite more jobs. So how can you expect the economy to improve?

    Expect nothing better until we see significant power returned to labor vs capital, but I see little evidence for that right now.

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