Kristina Cooke and Maria Aspan of Reuters fall for an old analyst trick of calling a bubble to get attention, today showering a feature article on the observations of Rochdale Securities analyst Richard Bove, who notes that with commodities prices soaring in the face of a decline in global production - farmland may become less valuable if those prices fall.
Grain prices are rising because of demand for grain-fed meat from emerging middle classes in India and China, and crop production problems globally, including a drought in Russia.
This example is another in which the laws of supply and demand are likened to a pure bubble - which is usually defined as investors using leverage to bid up the price of an asset in the face of flat demand. Crops are more valuable now because most of Russia burned to a crisp during the Summer. Investors see that and invest where the crops are still growing.
That isn't a bubble and its dishonest to say so.
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