The following is republished with the permission of Gary Scott. Gary, publishes one of the few newsletters I make a point to read every day and highly recommend it to my readers. He also runs several seminars throughout the year in both Ecuador and North Carolina that cover everything from Spanish courses, holistic health, import/export, investing and real estate. Be sure to check his site and sign up for his newsletter at http://www.garyascott.com/ !
—————————————————————————————
The Real L A W of Commerce – Land – Air – Water
The image problem of Chinese products has no real quick fix because a huge part of the problem goes beyond China. This is a global environmental concern.
Chinese fish is one example. Seafood has always been treated as high-risk but the newer problem is that half the fish consumed in the U.S. is now farmed. This is due to the huge demand created by the ever growing global population. Growing healthy fish requires plenty of land, lots of clean water and enough pure air. Otherwise the fish get crowded. They become stressed and disease breaks out. Chemicals and antibiotics become necessary to keep the fish alive and these become poison for the consumer.
Chinese problems are magnified because it has the largest population in the world and is going through an industrialization where everyone in the economy becomes materialistically wealthier and consumes more. The problems in China simply shine a bigger light on the tension created by increasing demand on finite resources.
The real LAW of the future global economy will be governed by availability of Land, Air and Water.
LAND
The demand for land is easy to see. According to a Mercer Human Resource Consulting 2006 survey, eight of the most expensive cities in the world are already in Asia, two in China. This is because there are so many people who want to be in the Asian industrialized space.
March 2006 Rank City March 2005 Rank
1 Moscow, Russia
2 Seoul, South Korea
3 Tokyo, Japan
4 Hong Kong, Hong Kong
5 London, United Kingdom
6 Osaka, Japan
7 Geneva, Switzerland
8 Copenhagen, Denmark
9 Zurich, Switzerland
10 (tie) Oslo, Norway
10 (tie) New York City, United States
12 St. Petersburg, Russia
13 Milan, Italy
14 Beijing, People’s Republic of China
15 Istanbul, Turkey
16 Paris, France
17 Singapore, Singapore
18 Dublin, Ireland
19 Sydney, Australia
20 Shanghai, People’s Republic of China
AIR
A reader recently sent me this note “Gary: Interesting that China has passed us as the top air polluters. Even so, according to Investor Business Daily they are adding a new coal fired power plant big enough to light San Diego every seven to ten days.”
The British newspaper, the Telegraph, recently reported: “China has surpassed the US as the world’s largest producer of carbon dioxide, the most important greenhouse gas. Surging demand for energy in the world’s most populous nation has led to a surge in construction of coal-fired power stations, pushing China’s production of CO2 to 6,200m tons of CO2 last year, compared with 5,800m tons from the US. By comparison, the UK produced about 600m tons, according to research produced for the Dutch government. The announcement that China tops the league of CO2 emissions by a clear eight per cent comes a number of years earlier than expected.”
This problem will not be solved soon.
WATER
A reader sent me this note: “GaryI had no idea things were as bad as this extract from MONEY AND MARKETS appears to indicate that the United Nations says two-thirds of the planet could soon suffer a shortage of this amazingly precious natural resource. In China, an estimated 500 million people go without access to clean water every day. In India, the crisis is even worse. Over half the cities in India are suffering from a shortage of potable water. They have essentially become nothing more than cesspools, causing tens of thousands of men, women and children to die every year. Even Australia, a country loaded with natural resources, is being hit hard by water shortages. So much so that a 10-year, $10 billion national spending bill was introduced this year in Sydney. Globally, every 45 seconds of every hour … of every day …a child dies from lack of potable drinking water including adults, an estimated 1.1 BILLION people in the world now live without access to clean drinking water. According to the World Health Organization, more than 4 billion could be living under stressful water conditions by 2050. This is a problem. A big one. So much so that Fortune magazine recently stated that "Water promises to be to the 21st century what oil was to the 20th century: The precious commodity that determines the wealth of nations. This article says that governments around the globe are about to spend nearly $1 TRILLON trying to solve the shortage. So they’re aware of the problem — acutely aware. That’s especially true in China, where hundreds of billions of dollars will be spent. Looks as though you were right on the button with your ideas. Best regards”
The water crisis is not going to be overcome in a short time either. Regulators can make rules. Nations can create borders and barriers and tax. Businesses can distort markets. Yet in the end the real LAW will prevail.
Invest in Land, Air and Water. These are the biggest trends we will have seen in numerous decades.
Until next message, I hope your investments and business are supported by this LAW.
—————————————————–
Gary’s doesn’t mention this in this email but it brings up the important point again. As the #1 polluter, why is China exempt from Kyoto?
The easiest way to invest in the water industry? Take a look at the Powershares Water Resources Portfolio ETF (PHO) which I wrote about last summer over at my ETF portal. It’s up 26% in that time. I’d recommend getting in at pull backs to the 50 day moving average from this point on.. For a diversified way to play alternative energies, take a look at the PowerShares Clean Energy Portfolio ETF (PBW). I first wrote about PBW over at my ETF portal a year and a half ago and continue to believe you should add on the dips.
Disclaimer: I own shares of PHO and will continue adding shares.