Water World

A friend of mine passed along this article today about our water supply. It's refreshing, no pun intended, to see more and more awareness about these types of problems.

One of the biggest issues that most people are completely unaware of is how tenuous our fresh water supplies really are. As more and more people move to the desert ( Arizona, California, Nevada ) the supplies will continue to deplete. This is before factoring the impact of global warming which will like make these regions more arid.

More importantly, what the heck is in the water that we currently do drink? Apparently, a lot of chemicals and drugs that we probably would rather not be exposing ourselves to.

So what are we to do? Drink more bottled water? That's certainly not the answer since most of the bottled water we drink is the same or worse for us than tape water. Plus, when you factor in the energy and landfill waste it takes to package and ship it doesn't seem worth it.

I guess the next time someone asks you what you have been drinking when you are acting a little weird you can reply.....just tap water!

http://online.wsj.com/wsjgate?subURI=%2Farticle%2FSB121910526011851511-email.html&nonsubURI=%2Farticle_email%2FSB121910526011851511-lMyQjAxMDI4MTE5OTExMDk1Wj.html

You have got to be kidding?

I think we can chalk this up in the "you have got to be kidding me file." What were they going to do, have a grand jury investigation into his death? What do we need to know? A Hollywood actor took too many pills and died while waiting for his massage girl to come over. Can you imagine a panel of Senators grilling that Olson twin? For some reason I can. It's a tragedy, but not a surprising one.

"http://news.yahoo.com/s/ap/20080807/ap_on_en_ot/heath_ledger">http://news.yahoo.com/s/ap/20080807/ap_on_en_ot/heath_ledger

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GMO Letter

Here is a great quarterly letter from GMO and it's well known steward, Jeremy Grantham. I would encourage everyone to read it. He is a tremendously successful investor who's goal is absolute return; not relative. In other words, his goal is to make money, or at least not lose it. One would think that all mutual funds would operate this way, but the dirty little secret is that they don't. Many, including some of the largest, operate for relative returns. This means that the only desire they have is to not lose more than the other guy. Thus, when we get a chance to read what someone like Grantham thinks, I think it's worthy of the time.

Here is the link ( you need to register to get the letter. it's the 2nd quarter letter to shareholders ):

http://www.gmo.com/america

He makes a lot of great points in this letter about the continued housing market bubble, at what level it might end ( on average another 17% to the downside or 4 flat years ) and it's implications. This assumes that it does not overshoot to the downside, which is a very high probability. I guess we should consider ourselves lucky that we don't live in the UK. He predicts that they are just starting their collapse and it will be as much as 40% to the downside!!

A large part of his investment philosophy is the belief that all bubbles eventually revert back to their statistical means. This certainly has been true in regards to Internet stocks and housing. Are we about to experience the unwinding of the credit boom bubble that began in 1982. One year now into the credit bubble burst seems to say yes. Both Grantham and Soros seem to think so. I wouldn't want to bet against them.

So what is an investor to do? Well, we probably would be all well served to reverse condition ourselves to buying the dips. If you look at his table he provide on page 6 you will see that in real terms returns have been awful over the past decade. Most people aren't even aware of it. If you are lucky to catch some of the panic drops along the way, then be sure to take some profits. If there is anything that has proven to be true in this bear market, there is a good chance that you will get another chance to buy things cheaply again.

If you don't have a chance to read this whole letter, try to take a look at his essay at the end. It's truly fascinating and ties into the current environmental issues we all face. As a proponent of a stronger energy policy focused upon renewables and a less wasteful way of life in general, I think Grantham nails it when he encourages us to think of our resources as irreplaceable. What is the alternative?

"The prices of commodities are likely to crack short term
(see fi rst section of this letter), but this will be just a tease.
In the next decades, the prices of all future raw materials
will be priced as just what they are: irreplaceable. Oil,
for example, will never again be priced on the marginal
cost of pumping a marginal barrel from some giant Saudi
oil fi eld, as has been the practice for most of the last 100
years of oil production. Real cost is always replacement
cost and oil, a precious feedstock for chemicals and
fertilizers, simply cannot be replaced. Using marginal
cost as a substitute was ignorant and conducive to wasteful
consumption of scarce energy resources. It also enabled
us to put our collective head in the sand and ignore the
growing need for an enlightened long-term energy and
climate policy"

Really?

Earlier this spring Obama dissented from both Hillary and amazingly McCain when he said that he did not advocate a reduction in the national gasoline tax. At the time, I was impressed as it seemed that he was the lone voice of reason as to what would have been a wasteful and largely unhelpful policy. There are no quick and easy fixes to our energy problems. It requires creating incentives to use less gasoline, not more, in combination with a lot of investment in alternative fuel sources. ( sorry beltway boys - I was not referring to corn based ethanol ).

Any 8th grader that has taken an economics class can tell you that the plan below would do nothing to help us out. But I guess it might help him gather some votes from uninformed ( most ) voters.

My disdain for all politicians continues to grow....

DrumBeat: August 1, 2008

Obama proposes $1,000 energy rebates for consumers

ST. PETERSBURG, Fla. - Democratic presidential candidate Barack Obama is calling for a $1,000 "emergency" rebate to consumers to offset soaring energy costs.

Obama says the rebate would be financed with a windfall profits tax on the oil industry.

"This rebate will be enough to offset the increased cost of gas for a working family over the next four months," Obama said in remarks prepared for delivery Friday at a town hall meeting in the crucial swing state of Florida.