Reader numbers were down this week. Way down. Proves you shouldn’t whine about your work. At such times, the sensitive-to-statistics-person tends to write about the subject of Oil, for that’s sure to boost reader numbers. Always worked before! That’s something of an ongoing in-joke between Sandra and I. Fortunately, writing out there in the public sphere tends to dull sensitivities, and Oil is a rather uninteresting topic, after all what more need be said about what is essentially a rapidly depleting finite energy resource?
Nope, what piqued my interest this week was the restaurant where we dined out for dinner was packed full of happy well fed people. It was hard to explain, not the food bit, but the packed restaurant. The food was very good. What was weird, was that earlier that day the central banksters had raised official interest rates on debt another 0.25%. Except they mystified the entire process by using the technical terms: Twenty Five basis points. It’s hard to even know what such tech-talk means. Probably the (basis) point of the exercise.
The long dead English bard Shakespeare, penned to paper the words: “Neither a borrower, nor a lender be. For loan oft loses both itself and friend. And borrower dulls the edge of husbandry”. Wise words, and you have to wonder whether the central banksters worry if all the cheap loans issued in recent years do get repaid? One of the central themes of debt being that it is repaid, otherwise it’s a gift. And what a fine gift it would be if it didn’t have to be repaid. Bummer about that part of the arrangement.
The subject of debt has made little sense to me this last decade or so. I just don’t get it. In some ways it’s sort of like one of the last few television shows I watched, Breaking Bad. For those who don’t know, the show was something of a cult classic where a humble chemistry teacher progresses to big time meth manufacturer and dealer. About half way through the series I had to stop watching because the characters did the exact opposite of what I would have done in the same circumstances – every single time. It did my head in. They chose badly, so perhaps the name of the show was suggestive of the narrative. It really did stress me out though, and who needs that? So I stopped watching and did something else with my time, and this blog is one of those things.
Debt for me, produces a similar reaction to that show. What the… Why would anyone do… You know, those sorts of searching questions. One of the hard lessons I took away from my experience with the recession of the early 1990’s is that debt can take you down, and then out. Interest rates got jacked up back then to something crazy like 18%. And over the last decade or so with cheap debt all the rage, there was a nagging feeling in the back of my mind that this latest incarnation of the story might not end so well. It’s not like the same sort of numpties aren’t pulling on the policy levers as way back then.
Back in the early 1990’s as interest rates went up, people dumped their assets. Holiday houses, expensive cars, those sorts of nice to have, but unnecessary things got dumped whilst they still had some value. And the mass dumping of assets drove down prices at the exact same time that the cost of debt increased. The result was an economic bloodbath. I recall at the time attending a mortgagee auction for a double story Victorian terrace house where the bank had taken possession of the house and wanted to recover it’s funds. The house had a really weird layout, mostly because it had been used as a brothel (inexplicably lots of spa baths), and the banks auctioneer was begging anyone in the crowd to purchase the house. Anyone. It failed to sell for $49,000. If I were smarter…
Nowadays, I’m not entirely certain that we’ll see the same sort of asset dumping in response to suddenly higher interest rates. It’s not lost on me that back in the 1990’s it was the over-supply of assets which drove down asset prices. There’ll probably be a bit of that, but to the same extent, nope. Don’t think so. With a 100,000 additional people added to the state each year (and that’s consistent over the past decade and a bit), there’ll be someone who wants to buy whatever is being sold, regardless of the costs. It’s a truth universally acknowledged, that bad as they are, things might be worse elsewhere on the planet. And here might look pretty good to those folks.
Managing the costs of debt and supply and demand that way looks pretty brutal to me. The average mortgage in this state is now around $600k, and at the previous low interest rates of around 3% that’s $18k mad cash per year just to come up with the interest. And I’d hate to imagine how many of those el-cheapo loans were interest only, because those arrangements come to an end after only a few years. Right now, interest rates are heading up to around 6% which is double that amount of mad cash, plus possibly now the debt itself has to be repaid – no easy feat for a household to manage. But what’s the alternative? That’s the unpalatable bit. With 100,000 extra people every year, selling your house might be easy, but getting a rental property is bonkers due to the high demand and lack of supply. From what I’m reading, it’s a nightmare out there. Nope, people won’t be selling their necessary assets, they’ll be staying put. What they won’t be doing, is going out for dinner and all the other unnecessary extras. And there will be consequences for that. But right now, before those el-cheapo loans revert to the norm over the next year, people are still heading out and about. I doubt that circumstance will last.
What was amazing this week was that there were two warm-ish days. The other days were so cold that we sometimes ran the wood heater, and one overnight was so cold the bed was covered with four blankets and the alpine areas of the state had significant snowfall. Brr! But the two warm-ish days were nice.
The combination of lots of regular rain and summer strength extreme UV radiation from the sun, despite the cool air, means that the grass is growing. Lots. We partly mowed the place again this week. There’ll probably be five cuts this growing season if things continue as they have been. The grass in the orchards looks almost manicured like a golf course.
The two days of sunny warm-ish weather brought a break in the rain, and we poured a couple of cement steps on the new staircase leading up and into the garden terraces.
Observant readers will note in the above photo that there is a timber post where the cement staircase will eventually lead. That timber post was installed last week, and it was a mistake. We’d misjudged where the staircase would end, and then had to remove the timber post. It didn’t take much effort to remove, and an electric jackhammer with a rock breaking bit was used. A much wider four foot wide gate will be installed over the next week or so.
With the post removed, we poured another cement step.
We’d recently decided to finish the garden terraces, thus the work on the new staircase and gate leading into it. The fence for the western end of the terraces had never been completed as we had a vague idea we’d extend the terraces. The extension idea has now been killed off and instead we’ll fence the western end. But first, all of the vegetation which had grown in there over the past couple of years had to be cleared out so we could see what we were dealing with.
We’ll probably get to the fencing job over the next week or so depending upon the weather. The forecast for the next week does not exceed 18’C / 64’F and most days rain is forecast, so hopefully it warms up, soon. It’s raining heavily as I type these words. Far out, what a year!
We have a long established rule that I’m not allowed to write about the subject of soil, despite it’s many fascinating aspects. Oh well, the occasional mention of soil won’t hurt anyone! Long term readers will know that for about a decade, most weeks I bring back a huge quantity of coffee grounds to the farm. According to wikipedia, dry used coffee grounds contain potassium (11.7 g/kg), nitrogen (2.8 g/kg), magnesium (1.9 g/kg), and phosphorus (1.8 g/kg) (edit: and yawn 100.9g/kg). Basically, it’s a lot of potassium and some other minerals, and so in the past couple of years I’ve added agricultural lime / calcium carbonate into the mixture to provide a better balance. With that addition, the growth in the fruit trees has been astounding, and far exceeds my expectations. However, one or two fruit trees which should have fruited this year, didn’t, and that was something of a mystery. Looking into the matter further, I noted a reference to an over supply of nitrogen relative to phosphorus. With this in mind, and for economic reasons I’ll now cut back on the agricultural lime by about half, and instead substitute blood and bone meal, which is a very useful source of phosphorus. We’ll see how it goes for the next growing season, it should be exciting!
The farm jumps with life. There are insects and birds and a whole bunch of other critters, everywhere. The other day I spotted a stick insect sitting on top of one of the timber fence posts used in the fencing for the garden terraces. Stick insects are cool.
Onto the flowers:
The temperature outside now at about 10.00am is 9’C (48’F). So far this year there has been 1,392.2mm (54.8 inches) which is up from last weeks total of 1,366.4mm (53.8 inches)