* Short term vs. long term outlook for the dollar,
* The Rude reaction to the credit conditions on the street,
* Plus, multiplying cotton shirts in China and plenty more...
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Joel Bowman, with a few quick words from Taipei, Taiwan...
In this week's feature column, Rude favorite and editor of Mayer's Special Situations, Chris Mayer, takes on two (and a half) of our favorite subjects: China and water scarcity (and a bit about India).
"The water use per capita in China and India are still well below global averages," Mr. Mayer explains. "As these countries industrialize, they'll consume exponentially more water. It takes water to make just about everything. For example, to make a 1 tonne passenger car takes more than 100,000 gallons of water. Just to make a cotton shirt takes over 1,000 gallons of water. And most of our water goes into making our food.
"So, population growth by itself guarantees increased water demand," Mayer continues. "Globally, water consumption increases at more than twice the rate of population growth. These two countries already have big populations and both will get bigger. When you look at demographic trends, China and India alone will add close to 600 million people over the next 30 years. That's two present-day United States."
Long time Rude readers will be well aware (pardon the pun) of our fascination with both the water scarcity issue and that of growing consumption in the developing world. As we move forward, it seems only natural that these subjects will become increasingly intertwined.
Just this week, China announced that its industrial output increased to hit a new 12-month high, even as exports to the weakened U.S. economy continued to slow, down 23.4% from a year earlier. So, what does that mean, exactly?
"Clearly, it shows that the domestic economy is doing much better because of the (government) stimulus, and external demand is still quite weak," the New York Times quoted Tao Wang, an economist with UBS in Beijing, as saying.
"I don't think weakness in exports is going to derail the fact that the general economy will continue to recover," said Mr. Wang.
No government statistics bureau could plead innocent to the crime of number torture, of course, least of all China. Nevertheless, the Chinese government's 4-trillion yuan ($586 billion) stimulus plan is finding its way into all crevices and nooks of the greater economy.
Put simply, that means a lot more cotton shirts and a lot, LOT more water. Oh yeah, and a lot more opportunities in the water investment area, as Chris explains below.
From California comes word that the summer program of Singularity University came to an end this week. The idea of SU is simple enough. Put smart people together with the latest technology; let them figure out solutions to the world's problems.
Sometimes less is not more; sometimes it is even less. According to a Federal Reserve report released in Washington this week, consumer credit contracted at an annualized rate of 10% in July. So what's really happening on the ground? Here's what the Rude Readership had to say...
The dollar will probably go up. Still, we'd stay away…
Here is Warren Buffett's view:
"Last fall, our financial system stood on the brink of a collapse that threatened a depression. The crisis required our government to display wisdom, courage and decisiveness. Fortunately, the Federal Reserve and key economic officials in both the Bush and Obama administrations responded more than ably to the need.
What makes investing particularly difficult now is the distortion in prices, as if reflected in a funhouse mirror. Normally market prices should reflect underlying demand and supply. As in a vegetable stand, the prices come from the buying and selling of people in the market.
[Rude Endnote: Let's wrap it up with a quick note from Rude reader Mary, checking in from the Gulf Coast of Mississippi...
"More than 4 years after Hurricane Katrina, the dismal housing market here is returning to "normal," but $40,000 houses are no longer available. You can still find lovely housing and condos for under $150,000 and there is plenty of work here...so come on down now that housing is available!
"For the first time in 5 years two homes are for sale and one rental on my street. Another bonus if you are over 65, NO PROPERTY TAX. Now you know why I left my home in Calif - FOR THE MONEY!"
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