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Works and Days

The Great California Land Rush

May 7th, 2013 - 12:06 am

The optimists believe that at last the supply/demand ratio has tipped their way. My late mother, dying from a brain tumor in the bust of the mid-1980s, was desperately trying to keep our money-losing farm. She used to plead with me: “Some day, land will be precious. Please, please don’t sell.” Maybe she was right about “some day,” but much of her efforts went for naught, and the land was sold under duress in the bust, for about one-sixth of what that land is worth now. The owners of my siblings’ land do not live nearby, but they are gracious people who magnanimously allow me to venture beyond my own 45-acre remnant and in the evenings walk the contours of the original farm of my ancestors. But now land is for money, money is for land — nothing more, nothing less.

4) Another reason for the boomers’ optimism: everything but land and food is bad and almost everywhere but the U.S. things are even worse off. There is no interest on passbook savings. Urban real estate is dicey after 2008. When — not if — the soaring stock market dives is the current betting. Land and the profits it provides are seen as good investments. The EU and its agricultural subsidies are in shambles. California’s competitors — mostly Europe’s Mediterranean agriculture — are bankrupt. India and China need food for their new yuppies. California agriculture is real: wonderful land, superb weather and climate, innovative farmers, and adequate water — for now.

5) Most importantly, this boom is said to be profit-based. The others in the past were more inflation- and speculation-driven, as hedges for inflation or brief aberrant commodity price rises. This land rush is supposedly based on bottom-line arithmetic. If almond orchards are high at $25,000 an acre, so are almond profits: 3,700 pounds per acre at $3 dollars a pound leads to a theoretical (everything in farming is theoretical) gross of over $11,000 an acre, and perhaps $7,000-$8,000 an acre net profit — or a 30% percent return on the investment the first year. (One local just bragged to me he could pay off his land in four years.) In the old days, booming land prices were never justified by such highly spiked commodity prices. I think the fast talkers are drunk who say “buy now at $25,000 an acre before it goes to $40,000.” But then I confess I thought they were inebriated two years ago when they were buying orchard at $12,000 an acre.

I want to be mistaken and believe the boom will only grow, but I have seen too many busts destroy too many lives of my friends and family. Still, whatever the truth, it is fascinating to watch, this mad scramble to make lots of money off the land — shysters, crooks, the audacious, the capable, the noble, the cynical, they are all out here involved in the way of the forty-niners. The old sandy hill with the half-dead vineyard down the road? No longer is it marginal land that is either poorly planted or sandy. So $6,000 an acre is poured into it — and, presto, out goes the pathetic vineyard and in comes hybrid almonds on computerized drip lines, overseen by corporate agribusiness experts. Who now cares about its sand, unleveled ground, and bad location? For investment purposes it is now “a California almond orchard” and that is all ye need to know.

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Top Rated Comments   
You're all missing it - including you, Doc.
When the Venetian trading merchants saw their shipping and banking businesses stalling out from competition with Spain, France, England and Holland, what did they do? They bought land in the Veneto and became wealthy aristocratic farmers. As Roman power declined, wealthy merchants in Roman cities moved out and bought land to settle on as....aristocratic farmers. Who do you think is buying California land now? "Latifundia" is a very accurate description of what's going on.
And 'Silicon Valley'? It's DEAD, folks. 3 years ago, the remaining companies started farming out their DESIGN ENGINEERING departments to china and india. Within the next 5 years, you'll see Marvell transfer it's corporate HQ to Shanghai, and the Bay Area chip outfits will be reduced to sales offices with some marketing people, while all the product definition, development and manufacturing happens overseas. Watch acres of office parks (many of them empty for over a DECADE) get plowed under in Silicon Valley so that the land can return to it's farming character pre-1970.
Energy? Fair enough. If there's oil in them thar hills, the hypocritical progressives in Sacramento will ignore their own environmental dogma in order to tax the new growth. But notice where that leaves California - a state with lots of agriculture and energy/raw material output. That's EXACTLY what you can say about the most economically active THIRD WORLD NATIONS.
Everyone should take a very careful look at LA and SF as well. It's clear as daylight that both cities are becoming very Third World, with tiny strips of very prosperous, pretty and well guarded neighborhoods stocked with private security, and a vast expanse of run down, dirty, disheveled hovels and ghettos where people scramble to scratch out a miserable living while dodging rampant criminality. I can see SF and LA turning into a Rio De Janeiro or Sao Paolo within the next decade.
50 weeks ago
50 weeks ago Link To Comment
I'm not buying what youre selling Mr Hanson. I live in the other valley over the hill from yours and I can assure you the wave of illegal South Americans do not want to come here to be "American". They want to bring Mexico with them here and demand I conform. The ONLY growth industries in Gilroy are Mexican restaurants and Mexican stores. And when I say "Mexican" I mean Mexican ONLY. The modern Liberal demands I give up my life and culture to a group of the 3RD World selfish miscreants... And for what again? SO they will buy our stuff? Hardly... Reconquista is well underway.
50 weeks ago
50 weeks ago Link To Comment
"California is hard to destroy in a generation."

Unfortunately, the Democrats consider that a challenge.
50 weeks ago
50 weeks ago Link To Comment
All Comments   (81)
All Comments   (81)
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Why does no one excoriate the connection between corporation and state? Everyone knows that corporations are creatures of the state. The corporation is bound by the laws governing its very existence and is therefore beholden to the state. You don’t have to be a politician to see how this begets crony farmers. The statists in power favor the cronies of corporate farms and the twain becomes one. Corporations that favor the criminals in power get their lobby loopholes and the criminals in power keep getting reelected by their crony popular majority by bestowing generous favors on their benefactors, and the vicious cycle keeps repeating. The only way to break the cycle is for crony voters to wake up and smell the stench of their own ill-begotten favors from the state.
49 weeks ago
49 weeks ago Link To Comment
There is a more important factor.
Governments can only be buddie buddie with chrony capitalists if the government has the size and power to influence things in the chrony's favor. That's why government needs to be very, very small, perhaps 1/10 of it's current size, with the rest of the power devolving back to the states and municipalities.
49 weeks ago
49 weeks ago Link To Comment
1/10 of the government's current size takes you back about 30 years, 1983. And Ronald Reagan was elected to cut back on the size of THAT government. (He failed.)

Even 1/100 of its present size is too big.

It pretty much doesn't matter what gets cut. Cut, cut, and cut yet again I say. Then dig out the roots. There has been no point in my life at which government has been too small.
46 weeks ago
46 weeks ago Link To Comment
Right on Stallion!!thanhks for giving us all the whole facts.Liz
49 weeks ago
49 weeks ago Link To Comment
RE: Farming Cannot Move

I live in Northern Minnesota, where as of today the lakes are still frozen and the frost is still deep in the ground. Not a great area for farming.

Yet all winter I've been able to buy reasonably good, reasonably priced, fresh tomatoes grown 80 miles away in Superior, WI, and blueberries better than we can pick here in July, delivered from Chile!
50 weeks ago
50 weeks ago Link To Comment
VDH wrote: "An engineer would rather have his family live in a 1,000 square-foot box in Mountain View than bring them up in a palace in Tulare."

Why doesn't the engineer tear down the small house on expensive land and replace it with a big house on expensive land? Seems to me that smart people would find a way to at least build an addition, a basement, or something on that land. Here in Texas we'd replace the 1000 square-foot box with a 3000 square-foot starter castle. Farmers Branch, TX even gives homeowners a tax break to demolish small homes and build larger more expensive less illegal immigrant friendly ones in their place. https://www.farmersbranch.info/live/participate/demolition/rebuild-program
50 weeks ago
50 weeks ago Link To Comment
Taxes and regulation, my friend. Just try getting the permits. Required environmental impact surveys, city and county taxes, etc., plus the increase in taxes on land values. Then the materials in California are ridiculously expensive. Then there's the nightmare of meeting the building code. California building inspectors are notorious for actively seeking to sabotage projects with red tape. It's so bad a neighbor back home actually threatened one with a rifle, just so he could build a garage. Improving land in California is a nightmare that just gets worse every year. It's so bad I saw a documentary that said it's actually cheaper and easier to strip a building to four standing walls and rebuild from that point because it avoids a huge portion of taxes and regulations.
49 weeks ago
49 weeks ago Link To Comment
from the Golden State to the Gold, 'n State

doo dah, doo dah

sand sun sea site a scene seen sad sight

do diddly dude ah day, YO!
50 weeks ago
50 weeks ago Link To Comment
Just moved from LA to the Midwest, to a beautiful and peaceful farming state. Anyone who stays in Calif. is in deep deep denial, even the brilliant Dr. Hanson. The funny thing is, my friends feel sorry for me because I had to leave fab LA due to high cost of living. I haven't told them yet that I will never even visit that toilet again, and I am a native Angeleno.
50 weeks ago
50 weeks ago Link To Comment
Congrats! I'm an escaped Californian myself. You're probably going to live an extra ten years from decreased stress alone. Take my advice, get a rifle and go shooting with your new red-state neighbors, then make it a point to gripe about Obama and the unions while you're there with them. If you're sincere about it, they'll know you're not a locust. Plus a range day is ALWAYS good for lowering your blood pressure.
49 weeks ago
49 weeks ago Link To Comment
The booms and busts are a result of Federal Reserve policy that sucks in greedy investors and then bankrupts them. This is what happened with Fannie and Freddie with securitizing Sub-prime mortgages. The Fed pumped lots of money into the system until they decided it was time to stick a pin in it. Chucky "cheese" Schumer inserted the needle with the IndyMac scare right there in Southern CA. The banks were forced to write down the value of the securities and the market collapsed.
It was not an accident. Allot of Wall Street guys from the CFR and politicians cashed in on the deal. They sell high, engineer the collapse, wait for the suckers to go into foreclosure and buy their property on the cheap. That is what will happen when the Fed cuts off the spigot or something big happens such as 9/11/2001.
The lesson to be learned is to not over leverage or they will take you to the cleaners.
50 weeks ago
50 weeks ago Link To Comment
CA is standing tall on a foundation of quick sand. Their arrogance and ignorance of human nature doesn't allow them to see they are slowing sinking. It will be too late for them once the natural resources are either used up or a natural disaster incapacitates it and the brain drain is complete.
50 weeks ago
50 weeks ago Link To Comment
For what it's worth, we still have plenty of water in Michigan. Top that.
50 weeks ago
50 weeks ago Link To Comment
There is only one universal truth. Everything cycles.
50 weeks ago
50 weeks ago Link To Comment
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