Re: What was the 80's recession like?

Posted by CRC on November 21, 2001 at 07:08:15 from (65.28.172.108):

In Reply to: What was the 80's recession like? posted by Poppin' Johnny on November 20, 2001 at 15:20:18:

I have a friend (now retired) who was an ag loan officer in one of the largest ag lending banks in our state in the 1980's. When two smaller banks in our area went under in the 80's, many of the producers from those areas came to him to try to stay afloat (most didn't). Part of the problem, in his opinion, was that farmers from these areas became land speculators. Ground that should have been bringing $1500-$1600/acre was being bid up to $2500-$3000/acre, more than it could ever be cash flowed for. This went on for several years; guys knew if they bought a farm and couldn't pay for it, they could turn around the next year and sell it for $200-$300/acre more than they paid. Then prices got bad, credit got tight, and suddenly guys found themselves saddled with $3000/acre ground that was suddenly only worth what it would cash flow, about half what they had paid. The federal regulators started knocking at the bank doors, the bankers started knocking at the farmers' doors, and you can guess what happened next.

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