"The fox knows many things, but the hedgehog knows one big thing."


Glenn Reynolds:

Barack Obama:
"Impossible to transcend."

Albert A. Gore, Jr.:
"An incontinent brute."

Rev. Jeremiah Wright:
"God damn the Gentleman Farmer."

Friends of GF's Sons:
"Is that really your dad?"

Kickball Girl:
"Keeping 'em alive until 7:45."

Hired Hand:
"I think . . . we forgot the pheasant."

I'm an
Alcoholic Yeti
in the
TTLB Ecosystem

Thursday, May 19, 2011

Doomsday: Not Just For Crazy People Anymore

We don't know much about the Mayan calendar, or Nostradamus, or the coming Zombie Apocalypse. But we do know that for some time now we've been cautiously confident that the Western world is increasingly likely to experience hyper-inflation, the collapse and possible worthlessness of the paper dollar, with inevitable social and infrastructure disruptions. In short, your lights will be out, your money wouldn't buy anything if you could find anything to buy, and the police wouldn't show up even if your cell phone was working.

In planning to meet this situation we have the disadvantage of being of modest means, but the advantage of not caring who thinks we're crazy. We have thus accumulated a modest horde of gold, silver, food and ammunition, and have a secure source of drinking water. Depending upon the exact nature, severity and duration of the collapse, we might be able to hold out for six months or a year.

But we've also speculated about what we would do if we won the lottery, and were suddenly worth $100,000,000. And the answer is clear: we'd buy a large, self-sustaining farm that supported cows, pigs and horses, and produced food for them and vegetables for us. It would come with enough tenants (not to say serfs), to continue working it indefinitely. Everyone above the age of 10 would practice on the rifle range twice a week.

Which brings us to a report in Tuesday's New York Observer, headlined "Hedge Farm! The Doomsday Food Price Scenario Turning Hedgies into Survivalists."
On the rare occasion that New Yorkers talk about farming, it's usually something along the lines of what sort of organic kale to plant in the vanity garden at the second house in the Adirondacks. But on a recent afternoon, The Observer had a conversation of a different sort about agricultural pursuits with a hedge fund manager he'd met at one of the many dark-paneled private clubs in midtown a few weeks prior. "A friend of mine is actually the largest owner of agricultural land in Uruguay," said the hedge fund manager. "He's a year older than I am. We're somewhere [around] the 15th-largest farmers in America right now."

"We," as in, his hedge fund.

It may seem a little odd that in 2011 anyone's thinking of putting money into assets that would have seemed attractive in 1911, but there's something in the air-namely, fear. The hedge fund manager and others like him envision a doomsday scenario catalyzed by a weak dollar, higher-than-you-think inflation and an uncertain political climate here and abroad.
It may turn out that this is no more than an excellent hedge against inflation, but it's worth noting also that the world's economy is presently one major natural disaster -- volcano, earthquake, tsunami (or maybe just an extended patch of bad weather) -- away from a cataclysmic disruption of food production and supply. But then . . . The article goes on:
There is, of course, a slightly more sinister reason to develop a sudden interest in agriculture. Last year, Marc Faber recommended to anyone: "Stock up on a farm in northern Norway and learn to drive a tractor." He sees a "dirty war" on the horizon, playing on fears of a biological attack poisoning food supplies. Those sort of fears drive capital into everything from gold (recently at an all-time high and a long-time safe haven for investors with currency concerns) to survivalist accoutrements. In this particular case, one might buy the farm in order to avoid buying the farm.

That may seem extreme, but even the lesser scenarios are frightening to some. When asked if this is an end-of-the-world situation, the hedge fund manager replied: "It really is. I tell my fiancée this from time to time, and I've stopped telling her this, because it's not the most pleasant thought." He pauses for a moment. "We just can't keep living the way we're living. It'll end within our lifetime. We're just going to run out of certain things. We'll just have to learn how to adjust."


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