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Thursday, 17 March 2016

Heartland #Iowa Farmers Heading for Cleaners

No repeat of farm crisis

Still, this downturn is unlike the 1980s farm crisis, say Northey and others.
Iowa farmers and investors purchased land with healthy down payments, limiting how much they're leveraged, experts say. And interest rates are significantly lower.
Farmers in the 1980s were paying rates as high as 20 percent, Northey said.
"We still have solid demand," he said. "We've just had some big production years — back to back."


American Cash-Strapped Farmers Struggle to Pay Cropland Rents  

Faced with declining profits, some Iowa farmers are defaulting on cropland rents — a largely unheard of move given the intense competition for the state's fertile farmland and a sign that financial pressure and debt are mounting.
With farm real estate debt across the United States at its highest levels since the farm crisis years of the early '80s, farmers are increasingly nervous about trying to turn a profit while paying sky-high rents.

As a result, more growers are severing ties on rented land that some have farmed for decades — and they're doing it with the spring planting season nearly upon them.
Most farmland rent payments were due March 1, with spring planting typically starting in mid-April.


 Almost a quarter of insurers could fail to meet obligations in

 the coming years if interest rates remain low for a prolonged 

period, Europe's insurance and pensions regulator warned in 

2014. Since then, 10-year yields on German government 

bonds have fallen to zero and the amount of European debt 

trading with negative yields has swollen to around 3 trillion 

euros ($3.33 trillion).

 The total amount of US credit card debt is approaching the one trillion dollar mark for the first time, leaving many experts to express concern that consumers have returned to their old spending habits. Following the recession, many made an effort to pay down credit card debt or at least stop adding to it, but the last quarter of 2015 shows that most have returned to their old spending habits. During that quarter alone, consumers charged up more new debt than was accumulated during the combined years of 2009, 2010, and 2011. However, this is just one sign that the economy may once again be headed into a downward spiral.

 Finance Minister Bill Morneau, who delivers his first budget on March 22, warned last month that the deficit would be much larger than the campaign target of C$10 billion, as low commodity prices are weakening growth. Government sources have said it would not be bigger than C$30 billion.


   Linn Energy Says Bankruptcy May Be "Unavoidable" 


"The writing has been on the wall for quite a while now," said Kevin Kaiser, an analyst at research firm Hedgeye. Kaiser recommended in 2013 that investors short Linn.

"The company took on way too much debt, primarily in an effort to make distributions to its equity holders that it could never afford."  

"Sure is..."

Linn Energy LLC (LINE.O) said on Tuesday that bankruptcy may be unavoidable as the oil-and-gas producer missed interest payments amid a slump in oil prices.

The company, which operates in California, Wyoming and North Dakota shale fields, said there was substantial doubt about its ability to continue as a "going concern" after it decided to skip interest payments due on Tuesday.

It said it has a grace period of 30 days to make interest payments totaling around $60 million.

"We are continuing to work with our advisors to review a full range of strategic alternatives to reduce the company's overall debt," Linn Chief Executive Mark Ellis said in a statement.

With around $10 billion in debt, Linn would be the largest U.S. oil company to seek bankruptcy protection in the current energy rout.

About 40 oil and gas producers across the globe have filed for bankruptcy since oil prices began to decline in late 2014, and up to a third of all energy companies may fail unless prices recover, consulting firm Deloitte said last month.

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