The Rude Awakening
Wall Street, New York
Friday, September 15, 2006 ------------------------- - The raging commodity bull on nobody's lips,
- 13 inches goes a long, long way in California,
- The 9 best places to retire on, how to live in luxury
on $19 dollars a day, the week's data and more...
------------------------- Eric Fry, reporting from the Tropic of Laguna... Laguna Beach, like many California towns, contains elements
of fantasy. It contains, for example, the fantasy that
sunshine and healthy living – rather than surgery and
bulimia – can convert "ordinary" women into overly-endowed,
waif-thin specimens. But Laguna also contains the fantasy that 13 inches of
annual rainfall can produce a lush, quasi-tropical
paradise. Roses, bougainvilleas and flowering plants of
infinite variety seem to be growing everywhere...amongst
the palm trees and lush green lawns. The place is as verdant as a rain forest, even though the
rain hardly ever falls. From Memorial Day to Halloween, the
rain almost NEVER falls. (Your editor has not seen a drop
all summer). And yet, this parched landscape produces
abundant flora, thanks to waters from distant locales. Most of Southern California quenches its thirst from the
Colorado River and the various waters of Northern
California. Thanks to this liquid bounty from the east and
north, we Southern Californians can grow our roses,
construct our golf courses, wash our Escalades...and
irrigate our lime trees. "Hey Daddy! Look at this," your editor's daughter exclaimed
yesterday. "We've got a lime tree in our yard." "Oh really," your editor replied, unaware that his new home
possessed this amenity. "Yeah, and look at this," she continued. "There's mint
growing here too. Now you can make your own mojitos!" "Well, you're almost right," your editor joked. "But do you
see any sugar cane out there?" "I don't think so." She was right; sugar cane is not growing in your editor's
new backyard. But the lime tree is flourishing – a lime
tree that would normally require 80 to 100 inches of
rainfall every year. 
The nearby photo illustrates the magic of irrigation,
Laguna Beach-style. About 200 feet from your editor's new
home, a neighbor maintains some very magnificent
landscaping, a small portion of which this photo captures.
But just 30 feet from the edge of the neighbor's verdant
property lie the parched, virginal Laguna Hills – a
landscape conspicuously devoid of flowering shrubs, and
heavily populated by cacti. In other words, it's a dessert, an honest-to-goodness
dessert. But here in this very privileged dessert, water
never fails to flow from the tap. Here in this dessert,
fresh clean water is always readily available... How ironic, that in so many parts of the world, even in
those parts of the world where rain falls abundantly,
fresh, clean water is rarely available. Water mis-
management can parch the landscape as thoroughly as a
drought. But since these "economic shortages" are man-made,
many of the solutions will also be man-made, as Chris Mayer
explains below.
--- Special ---
BLUE GOLD: The $661 Billion Market Your Broker Didn't See
It's not oil...it's not gas... This liquid gold is raking in 49 times better gains than
the S&P 500. This global industry is set to grow 500% over the next
decade. And it's just one brand-new "Special Situation" that can
net you 300% gains this year - guaranteed! http://www.isecureonline.com/Reports/MSS/EMSSG903 ---------------------------- Front-Page News...Almost
By Chris Mayer The global water crisis is not a front page story...yet. But over the coming months, I expect this "middle-page"
story to make its way to the front of newspapers worldwide.
Already, "Water crisis" articles are appearing with
increasing frequency... "Shortages of water are growing faster than expected," the
August 22nd edition of the Financial Times warned.
"Scientists had forecast in 2000 that one in three people
would face water shortages by 2025, but water experts have
been shocked to find that this threshold has already been
crossed." Think of it; a forecast of an event that was not supposed
to happen until 2025. Yet, here we are in 2006 and that
forecast is already a reality. The idea of investing in
water-themed stocks has been kicking around the fringes of
the investment world for decades, but these stocks are
anything but fringy now. I believe we'll look back on the
current decade as the one that launched the most serious
natural resource crisis of the 21st century. The water crisis that is now underway is both a physical
and an economic phenomenon. On the physical side, much of the world's population
resides in locales where water is naturally scarce. Too
often, however, the supplies of fresh water become UN-
naturally scarce, due to reckless industrialization,
breakneck urbanization and chronic mismanagement. Water is naturally scarce throughout Egypt, Australia and
the American Southwest. Even so, the Southwest hosts one of
the fastest growing populations in the country. Obviously,
when rapid population growth confronts a lean supply of
water, problems ensue. So it should be no surprise that the
U.S. is having increasing disputes with Mexico over sinking
levels of water in the Colorado River. Elsewhere in the
West and Southwest, cities and small towns are tussling
with one another over water rights and restrictions on
water use. How bad can it get? Here's an interesting little tidbit: In
1944, Governor Benjamin Moeur sent the Arizona National
Guard during the construction of Parker Dam to prevent
California from stealing Arizona's water. When the unit of
about 100 men, with machine guns mounted on trucks,
arrived, construction stopped, as you might have guessed.
This issue was later resolved in the Supreme Court. Could
such standoffs happen again? In Australia, water plays a big part in political
elections, where they are debating the reclamation of
sewage water and turning it into drinking water. "As
campaign promises, these are hardly pleasing," notes the
typically understated Economist. "Yet it illustrates the
increasing prominence of water, or the lack of it, in
Australian politics." According to the magazine, Australia
faces a water shortage unlike anything experienced in the
200 years since Europeans arrived. 
The Economist quotes an Australian agricultural scientist,
Peter Cullen, who says, "People are frightened of running
out of water." But clean water is not only in short supply where rainfall
levels are low; it is also in short supply where financial
resources are low. In other words, today's water crisis is
as much an economic problem as a physical one, perhaps more
so. Although more than one billion people face physical water
shortages, the Financial Times notes, "a further one
billion people face economic water shortages because they
lack the necessary infrastructure to take water from rivers
and aquifers." The "economic shortages" also result from
inadequate or non-existent waste treatment. Throughout many
parts of the Developing World, wastewater receives minimal
– or no – treatment before flowing into lakes, rivers and
seas. Then there is China, which no water enthusiast can ignore.
"China's Water Problems Set to Worsen" reads one headline.
The Chinese have found that despite massive investment in
water infrastructure over the last few years, water
pollution is actually worsening. Qiu Baoxing, minister of
Construction in China, said: "This is a critical point in
time – we are at a crossroads." Indeed they are. Water is a major health issue in China – a
country that leads the world in incidences of stomach and
liver cancer, both traced to exposure to polluted water. In my recently published water report, I examine the main
threads of the global crisis. But if there are still any
lingering doubts whether this crisis is real, consider this
alarming fact from my report: "Contaminated water is deadlier than any other evil on
earth; deadlier than AIDS; deadlier than cancer; deadlier
than contagious diseases; deadlier even than World Wars.
During the Second World War, one soldier died every 8
seconds. Today, one human being dies every 6 seconds from
drinking contaminated water. The scale of this ongoing
international tragedy boggles the mind." Fortunately, a growing water crisis is not a foregone
conclusion. But the effort to combat the crisis will
require an enormous commitment of planning, effort
and...yes...money. As the campaign against the water crisis
progress, hundreds of billions of dollars will flow into
the coffers of water-treatment and water infrastructure
companies. Therefore, the long-term efforts to clean up and transport
the world's water supplies will provide extraordinary
investment opportunities for forward-thinking investors. But mainstream newspapers are just starting to cover the
story. "Declining water supply brings a deluge of ideas,"
declares one headline from the Financial Times. "Global
shortages are giving companies a chance to develop
initiatives in infrastructure, filtration and irrigation." Few people realize how much water agriculture and
manufacturing use up. There is this concept called
"embedded water" where analysts figure out how much water
it takes to make food and consumer goods. For example it takes 200 liters of water to make one
kilogram of rice; 500 liters for 1 kilogram of potatoes.
That might seem like a lot of water until you consider that
producing one kilogram of beef requires a whopping 100,000
liters of water. (The "typical" American lunch - hamburger,
fries, and a soft drink - takes more than 5,000 liters of
water to produce). It takes 200,000 liters for a kilogram
of cotton. And perhaps most surprisingly, it takes about
150,000 liters of water for Ford Motor to produce a single
Transit van. These facts are butting up against the reality of rising
water demand and falling supplies. In India, analysts
project water demand from industry alone will more than
triple over the next 20 years. Every industry from textiles
to electronics will have to consider risks in water supply. "This explains why a company such as Unilever has
initiatives ranging from a detergent that requires less
rinsing for the Indian market to support for tomato farmers
in Brazil to introduce drip irrigation, which cuts water
use by 30 to 70 percent," the FT reports. Developed countries could spend over a trillion dollars
upgrading water and wastewater systems over the next two
decades. That's a tremendous opportunity for companies
providing the skeletal basics of water systems – things
like pumps, pipes and filtration technology. It's a huge topic, and I've only scratched the surface. In
the last few months I've recommended a number of water-
related companies: a water pump company, an irrigation
equipment company, a water pipe company and more. Several
of these recommendations are up over 20% already. But we
are in the very early stages of a water-infrastructure
boom. James Cameron, vice chairman of a U.K. bank focused on this
area, says, "Managing water will be a premium business to
be in." It already is. Now's the time to explore for attractive water-focused
investments...before the water crisis becomes front-page
news. [Joel's Note: Come all ye contrarian investors! Unlike
other natural resources there are not going to be any new
water discoveries. There will not be any "water
alternatives." There will be no abating of thirst for this
increasingly precious commodity. Already water restrictions are encroaching on the thirst of
first world countries...and this is just the beginning.
Predictably, companies are scrambling to get in first with
innovations in piping, filtration, membrane technology,
purification...the list goes on. In his latest report, Chris Mayer has identified a handful
of companies that are poised to capture major market share
for their investors. Read the shocking facts and learn just
how important the next big move in the resource sector will
be...it's happening Right In Your Backyard
http://www.isecureonline.com/Reports/MSS/EMSSG903
--- Special ---
RETIRE OVERSEAS! Learn about the world's 9 best places to live or retire. Live well on $19 a Day Own an exotic beachfront getaway for $35,000. Or romantic
pied-a-terre for under $60,000. Enjoy fine restaurant
dining for $7 per person. Employ a maid or gardener for $6
a day. Buy comprehensive health insurance for $20 per
month. Get the details in your FREE report now. http://www.isecureonline.com/Reports/IL/EILVG920/ ---------------------------- 
| 
