Archive for the ‘Water’ Category

Marc Faber reassures me that we are doomed

December 21, 2009 Leave a comment

It’s mildly reassuring when another analyst is suicidal about the future.  It reassures me that I am not totally alone.

I disagree with Faber on two points however. 

First, it’s unlikely we will see hyperinflation and the “pure” monetisation of the trillions in US debt.  No hyperinflationist thinks through the precise mechanism of monetisation.  To increase the budget deficit by even more, the US govt will have to increase its own debt levels.  Bonds yields will likely spike at some point.  Then the Fed will try to buy the bonds to keep prices up (yields low).  This will allow relatively limited leakage of money to the US govt’s friends, but in no way plug the hole left by the collapse in the housing bubble.  Not only will govt spending not replace the hole left by Peak Credit, govt spending further distorts the economy, resulting in more failed private businesses the further away you get from the US govt’s largesse. 

You’ll end up with millions of debt-slaves sycophantically praying to the bankers and the Fed govt, running around doing the bidding of their Masters, and economic chaos and widespread starvation beyond the tiny green gated communities of bankers and govt employees.

Kabul is a good future model for the major Western economies (especially the US): There are some massive luxury (tasteless!) villas going up in Kabul.  I’ve seen them.  They are the houses for the govt ministers and associated hangers-on from the opium trade.  Nearby are the hotels the UN employees frequent.  Beyond these few blocks, hundreds beg for food from aid agencies and there’s complete chaos.  But within these tiny communities connected close to the corrupt govt, the opulence is incredible.  Govt banquets are frequent, whilst literally right outside the banquet halls, local Afghanis are starving.

That is our future.  Kabul is our future. 

And remember – Kabul is a city now created by the US.  It is what the US govt “wanted” to create (or at least what it did create after taking over). 

So that’s the best the US and UK govts can do today when “creating” a city.  That’s the proof regarding what they are capable of.  Sad, but true.

So that’s what they will continue to produce at home.

“Kabul” does not spell hyperinflation to me.  It spells stag-deflation with a possible sudden depreciation of the US dollar at some point – but not hyperinflation.  So I still think US govt bonds and gold are a better bet than US stocks if I was forced to choose.  Of course, long-term, farmland, security services, and govt jobs will all be highly sort after.  But I wouldn’t be buying canned food just yet.  You don’t want it to go out-of-date before you need to eat it.

Second, there will be war, but it won’t be to distract people from their debt problems.  It will be over the rapidly diminishing supply of food and water and oil.  The malinvestments caused by the decade-long low-density housing boom in the West have actually caused massive environmental destruction as well as financial chaos.  Literally millions of acres of fertile arable land across the US and Australia and other countries has been re-zoned and “redeveloped” (destroyed) for what is euphemistically termed a “more intensive use” (i.e. “for speculative property development”) – just at the time when unprecedented climate change has destroyed many “food basins” around the world (Myanmar, Thailand, Cambodia, Australia, China, Europe and the US have all experienced tsunamis, typhoons, hurricanes or drought in their vital farming areas).

CCD is also a massive threat to our food supply.  It is still a problem that no media organisation wants to talk about.  The cause is unknown (I suspect GM crops, but who knows?).

No one seems to have connected up the housing boom and bust with massive unprecedented and irreversible environmental destruction. 

But they will.  Eventually.


Baiji “fundamentals”

December 17, 2009 1 comment

This is going to be an even “crazier” post than usual, so please keep up with me and just go with the flow for a little while and hopefully things will make sense at the end.

Assume you’re a fan of freshwater dolphin meat.  I know you’re not, but just go with me here.  Assume you’re also an investor.

The “fundamentals” regarding freshwater dolphins from an “investor” perspective are very good.  The baiji on the Yangtze are dying due to their food source (fish) being massively overfished and appalling pollution problems contaminating the Yangtze from China’s industrialisation.  Some have declared that the baiji are “functionally extinct.”

As an investor, it would be wise to try to “invest” in baiji, wouldn’t it?  Supply down, demand either steady or up (on anticipation of limited supply).  Price should be higher.

Two points immediately need to be addressed from this hypothetical.

First, for those who think it’s “distasteful” to even consider valuing dolphins in terms of their meat, I say to you – think it through carefully.  The harsh reality of life is that animals and plants which are useful to humans are “protected” by humans and flourish. 

Those with no value to humans are vulnerable to extinction.

This has been proven time and time again throughout modern history.

I don’t like this either, and I wish the human population would not grow exponentially.  Then again, I wish I was a dictator so I could turn this loser nation of overconsuming mindless debt-drones on to a more sustainable path of development.  In both cases, I’m dreaming. 

We have to deal with reality.

And the reality is that animals that we can eat survive in this crazy world much better than animals that serve us no purpose. 

The absolutist thinking of so-called conservationists drives me crazy.  This kind of “leave alone!” thinking is naive and dangerous and infects so much of the environment movement.  I cannot believe their basic naive stupidity.

The ban on the sale of elephant tusks in my mind is crazy.  Elephants have become less valuable to local communities in Africa.  Elephants “compete” for arable land.  Guess what’s going to happen when you ban the sale of elephant products?  There’s going to be ongoing tension between local communities and international organisations who don’t have to live with the problem (and who coercively scream for a ban on the sale of anything elephant related).  Ultimately, the local communities will have even more of an incentive to kill the elephants and not help sustain the elephant population.  What do you think is going to happen over the long-run? 

Obviously, land will be taken over by local communities in need of food.  Elephants will die due to lack of natural habitat.  They will not have been “killed” literally by a gunshot, so the zealots in the international conservation organisations will be silent.  But the elephants will die just as surely as if they had been killed for their tusks.

Same with whaling.  Why we are so paranoid about Japanese whaling I will never understand.  We overfish, we pollute the waters with oilspills, chemicals, toxic sludge and refuse, we kill the natural habitat of the whales with a massive toxic plastic waste dump in the middle of the Pacific Ocean – and yet we criticise the Japanese for “hunting” the poor whales.  We kill them slowly but just as surely through starvation, through the destruction of their natural habitat, but because that’s one step removed, because it doesn’t involve a direct bullet to the head, somehow everyone is OK with that.  But when the Japanese actually kill a single whale – whoa… that’s barbaric! 

I can’t stand this hypocrisy, this stupidity, the childish incapacity to directly connect up destruction of natural habitat with the death of an animal.  As an animal I’d prefer the quick and relatively painless death of a bullet to the head (safe in the knowledge that some of my family would survive and possibly even by protected by my killers) rather than a slow and excruciating and depressing death by starvation and destruction of my whole natural habitat, grieving knowing my children will slowly but surely starve to death, perhaps be forced to eat toxic plastic… knowing that none of us will survive. 

Which would you prefer, if there was no other choice?  And don’t say there’s a third choice.  There isn’t. 

Unless humans agree TODAY to stop all human reproduction and start consuming less, there is no third option.

Given this sad reality, I have another invariable rule for environmentalists to consider:  Once an animal is valued by man, it is protected by man.

Sheep outnumber New Zealanders for a reason – sheep are valuable.  New Zealanders take care (good care) of their sheep. 

Kiwi birds can’t be eaten.  They have no direct intrinsic value.  They are difficult to spot in their natural habitat so they are not even valuable from a tourist perspective.  Guess what – they are dying and are nearly extinct.

So discussing dolphin meat for me is perfectly reasonable.  Ironically, if freshwater dolphin meat was more valuable perhaps the baiji would not be functionally extinct today.

But this is not even the main point of this post.

Let’s continue with this thought experiment. 

In a superficial sense, you would think as a naive investor (supply down, demand up) that somehow “getting into” freshwater dolphins would be a good idea.  BUT THE WHOLE HABITAT OF THE DOLPHIN IS BEING WIPED OUT.  This is not a matter of being able to “invest” in dolphins.  What we are witnessing in the case of the baiji, I’m sure you would agree, is inevitable extinction.

Similarly, Jim Rogers consistently states that the “fundamentals” for agriculture are incredibly positive.  He states that investors should get into agriculture.  Supply is down.  Demand (with population growth and rising Asian incomes) will inevitably go up.

Although I respect Jim Rogers as an investor, this shows his limited thinking, his inability to see the full implications of the trends here.  He has spent his whole life as a commercial trader and investor, not as a social scientist or economist or philosopher.  He sees the problem, thinks in terms of supply and demand and then concludes that investment in agriculture is a good idea.

I beg to differ.  Although I respect Jim Rogers as an investor, I don’t respect him as a deep thinker.


Overfarming cannot be reversed.  Topsoil is irreplaceable.  Phosphates, once lost, cannot be replaced if there is no supply.  The water table once polluted cannot ever be cleansed of chemical toxins.  Destruction of arable land is in most cases irreversible.

The price mechanism cannot transform houses into farmland, cities into arable land.  Once destroyed these things (vital for our very survival) cannot ever be put back in place. 

Similarly, once the freshwater dolphin is extinct no amount of hedge fund investment is going to get its natural habitat back.

So Jim Rogers is right to see the trend, but he hasn’t worked out the full implications. 


If you think I’m crazy, please read this article and this previous post and then tell me you’re 100% confident that governments and investors will get us through this little problem.

Sometimes the price mechanism has become so corrupted by bankers and governments that the warning bells don’t go off until it’s too late

I don’t believe we are watching a “bull market” in agriculture.

What we are watching is the massive extinction of our various food sources, resulting in a massive food crisis for the (much higher!) human population in a few short decades.

No amount of hedge fund money will turn Asian cities back to rice paddies, Western suburbs back into farmland, or polluted toxic African mining towns back to unspoilt Savannah.

It’s already too late, in my view.  The trends are “locked in”. 

We are the next freshwater dolphin.   We are killing ourselves.  Climate change, if it exists, will simply accelerate this process.

Those institutions supposedly designed to “forward plan” us out of this mess also happen to have control of the guns.  History records that when a crisis hits, governments turn from protector to predator, plundering the people for food.  Chile.  Zimbabwe.  Cambodia.  Talk to indigenous peoples in Australia, in New Zealand, in Hawaii, in North America, in South America, in Asia, in Africa about what elite governments do to those they supposedly have a duty to protect.

Sorry, that’s right. You can’t.

Because they’re already dead.

This is NOT a natural disaster!

December 16, 2009 1 comment

The tragic loss of farmland and livelihoods in central NSW is NOT a natural disaster. 

The NSW government has stemmed the flow of the Lachlan River, so farmers around Lake Cargelligo are dying just as much as the Lake is dying.

This is too important to treat lightly.  My heart is heavy seeing these pictures in my own State:

To quote directly from SMH:

Lake Cargelligo, a settlement of 1300 in the geographical heart of NSW, was once a holiday haven for swimmers and waterskiers. Now empty shops line the street and even the post office is for sale.

On Tuesday hundreds of those who are still here gathered to listen to a travelling roadshow of water bureaucrats about what was going to be done with the little bit of water that remains in the dam upstream.

The Lachlan River, muse of Banjo Paterson and lifeblood to tens of thousands in the region, is being cut off at Condoblin, with only small flows being released below. Towns further south-west will go without.

If they did not do this, State Water staff told the meeting, the dam would be sapped by February.

The plan was met with uproar.

”Why are we expected to take the pain for the whole valley?” one man yelled. ”You’ve forgotten a whole section of the river,” a woman said through tears.

In splitting the river, the State Government has split the people of this region. It is not the first time water has been held back to conserve what is left. A similar plan involving controlled releases is in place for the Namoi River.

But since the Water Minister, Phil Costa, made a decision to restrict the river earlier this month, tempers have flared among those downstream.

Farmers with thirsty cattle want to know why people upstream in Forbes are still allowed to put sprinklers on their lawns, and why fruit farms still receive water, albeit at reduced rates.

They also want to know if this is the future of water management in a state where almost 74 per cent of the land is in drought, and hotter and drier conditions are on the way.

”If this is the Government’s climate change policy,” said Patti Bartholomew, a cattle farmer, ”then God help NSW.”

The Lachlan River winds from Wyangala Dam, through Cowra, Forbes, Condoblin and almost to the Victorian border. It is a region heavy with grain, cattle and sheep that has endured three devastating droughts in the past century.

”Just now there is a howling drought. That pretty near has starved us out,” wrote Paterson more than 100 years ago of Boolilgal, a town at river’s end.

But this is a dry like no other.

Ten years ago Wyangala Dam was at 99 per cent, a wall of water 25 storeys high licked the top of its wall. Since then the inflows have been the lowest on record, less than half of what they were during the Federation drought. The dam is now less than 5 per cent full.

As water disappears, cracked creek beds and muddy embankments are left exposed. Animals searching for water are getting bogged up to their necks.

The Herald saw a farmer crawl out on logs and sink his hands deep into the thick mud to wrench out his neighbour’s sheep. Most of the people the Herald spoke to are sceptical about climate change, but according to CSIRO and other climate models, they are some of the hardest hit. ”Certainly the southern part of the Murray-Darling Basin, which includes the Lachlan, [is] looking at hotter and drier projections in the future,” a senior research fellow at the Climate Change Research Centre at the University of NSW, Dr Jason Evans, said.

Upstream, at a meeting in Forbes on Monday, scenes were very different. There were no interjections from the floor. People stayed for tea and sandwiches. One man, who asked not to be named, said he would be voting Labor for the first time at the next state election.

Ian Smith, a cattle farmer, has bores on his property that provide him with a secure water supply. ”I can’t really see they’ve mismanaged anything,” he said. ”There’s just been no rain.”

Bores are being sunk all along the Lachlan as towns such as Boolilgal and Oxley look to shore up their supply of water. But it is not an option for many Lake Cargelligo farmers. Some have invested heavily only to discover the water is salty and useless.

Rod Middleton and his wife Leanne live with their three sons on a cattle and grain farm.

The creek that has been their water source, a tributary of the Lachlan, is dry. The pump sits on the exposed creek bed. ”I think the worst thing about it is the mines and fruit trees still getting water and we’re not,” Mr Middleton said.

The young farmer, whose parents came to the area 30 years ago, said he would have preferred to see the river run its course, whatever the consequences. ”The fairest thing would’ve been to let it run till everyone’s out, rather than have the top end get themselves through till next year and us being out now.”

Let history record that this is not a natural disaster, that this was and is  perfectly predictable, that this is one of the worst cases of government negligence in the long history of government stupidity and insane zoning and planning, that this is comparable to the loss of the Aral Sea in Central Asia due to EXACTLY the same idiotic short-term government planning!

First, maps showing average rainfall are now available for all of NSW (indeed for the whole country).  We all know these areas are subject to drought.  This is a once-in-a-hundred year drought – but these droughts should occur once in a hundred years, so they are going to happen.  You have to plan for them.

What is the obvious solution?

The obvious solution was never to grant farming leases and farming rights on areas of NSW land that would be subject to sustained drought or over-farming.

Farming land should have been retained in areas of high rainfall, close to the population centres of NSW, so that food security for the NSW population was maximised.  Areas in Dural, in Hornsby, in Penrith, in Southern Sydney… all these outer “suburbs” of Sydney should have had their zoning as farmland preserved.  Farmers should be on this land – not on land in drought-striken central NSW!

Why are they way out there and not close to the cities?  Zoning decisions of a NSW govt bureaucrat!

The “natural market” would have prevented this if there were no zoning laws arbitrarily imposed by govt.  Farmers on marginal land (without drought assistance) would have given up on farming in central NSW decades ago and focused on farming in more productive high rainfall areas.  Most farmers in these productive areas would never have sold their land to residential developers, because the returns from farming would have been strong.

You don’t believe me?  Go to Europe.  Before insane govt bureaucrats took over zoning, people “naturally” organised themselves.  In old European cities you can still see farms within 20 kms of major metropolitan areas.  There are farms within a 20 minute drive from Paris!  A 15 minute drive from Amsterdam!

Why?  Because these “plans” were not drawn up by a NSW govt bureaucrat, but by God.  This could be considered “anarchic” – but it works!  Farms are still close to cities.  People can still buy farm-fresh produce produced locally.

In Australia, as a young, highly bureaucratised nation, local govts wanted to squeeze every last drop of money out of surrounding land so re-zoned ALL the land around cities as either residential, or industrial/commercial.  There is no mix of residential and rural anywhere in Australia close to our major cities.

This is not natural.  This is not the way it should be.  Sydney has one of the highest rainfall yields of any area in NSW.  People originally settled here because it was fertile land.  Then govt came along and tried to squeeze every last drop of development rights from our highest yielding farmland.  Millions of megalitres in Sydney gets flushed down stormwater drains, whilst farmers get pushed to the edge of the earth, pushed into marginal areas never meant to be farmed.

If I hear from one more idiotic govt spokesperson that this is a “tragic” natural disaster, I think I’m going to puke.

There is no hope for this State with idiots like this in charge of our future. 

And just recently, adding to the pain, Kristina Keneally (possibly the dumbest person in politics – and that’s saying something!) took a photo opportunity beside a central NSW dam at 4% capacity, trying to show compassion to the local people for this “natural” disaster. 


(1) The dam is man-made, by govt (so is its location).

(2) Govt zoned the area fit for human settlement years ago.

(3) Govt gave excessive water rights to farmers that produced the disaster.

(4) Govt zoned other areas closer to major cities as exclusively residential, so that’s why farmers are pushed out to these unsustainable areas.

This is a classic example of criminally negligent, short-term govt planning, resulting in a predictable man-made disaster.

And now a govt idiot sits there beside the dam they built, looking on forlornly as though this is an act of God.

These are the same idiots who want to tackle climate change.  When these govt disasters follow them in the Co2-laden jetstream to Copenhagen.

I really can’t stand this level of stupidity any more.  I just can’t take it.

Fake environmentalists

November 29, 2009 Leave a comment

are easy to spot

They are the ones screaming about climate change and an ETS, whilst SIMULTANEOUSLY ignoring the after-effects of the shocking West Atlas oil spill off the WA coast and the culpability of PTTEP and the govt in minimising and covering up the seriousness of these long-term effects; ignoring the seriousness of repeated dust bowls affecting Sydney, which signal the loss of irreplaceable top soil from central and western NSW plains; ignoring dry land salinity, which threatens 12 million hectares of arable land; ignoring toxic landfill which in turn threatens the already-compromised integrity of our exhausted aquifers and poisoned water table.

Some call them “watermelons” (green on the outside, red on the inside).

I just call them government employees.

Do the math

November 26, 2009 1 comment

Up to half of all water in Australia is sourced from aquifers, from the underground water table.

Deforestation has poisoned much of the water table with salt.  Over 12 million hectares of arable land is threatened with dry land salinity, killing off the fertility of this land for generations.  This desertification is occurring mainly in WA, central NSW, and in rural SA and Vic.

Further dispersed pollution is occurring through poisoned run off from farmland and land fill, further polluting the water table near urban populations (removing underground water as an option for many urban areas).

With ongoing drought in many urban areas, some cities (such as Sydney and Melbourne) are looking at energy intensive desalination plants as dam levels systematically decline, just as infrastructure and population pressures in urban areas intensify.

If energy supplies were ever interrupted, our water supplies would now be very vulnerable.  “Natural” supplies (from bore water and aquifers) have been removed from many urban areas and will continue to be removed.

This unprecedented and irreparable damage is occurring with a population in Australian of around 22 million.  This is planned to increase to 35 million by 2050.

Collapsing arable land = need for higher and higher food productivity = eventual catastrophic collapse in food production through excessive depletion of phosphate and water. Simple

November 24, 2009 2 comments

I thought I should put it all the heading this time.   The Economist is starting to worry, which is good.  Except it’s about 20 years too late. 

Ever painted yourself into a corner?  Well, the system of fractional reserve banking induces supernormal profits for residential housing, which in turn distorts the economy towards debt-induced housing production and against farming and agriculture (which cannot “live” sustainably in a debt-based monetary system because the returns on farming cannot compensation for the higher uses the land can be developed into via re-zoning).

We’ve only been able to feed ourselves through more and more intensive use of less and less arable land.  At some point that’s going to be unsustainable.  We know the world’s human population could not live on 1,000 megalitres of water a year, feeding 1000 hectares of arable land.  But what is the limit?  And are we reaching that limit? 

With exponential growth in human population, depletion of natural habitat, exhaustion of soil and river systems, the reliance on oil for food production (at a time of peak oil production) and an aging population I can see this is not going to work out well.

We will need a miracle for it to work out well.  And that already happened with the green revolution increasing farming productivity in the 1960s and 1970s.  That trick ain’t gonna happen again – and may have painted ourselves into a smaller corner by allowing more arable land to be gobbled up for residential development on urban fringes when this land would have been ideal for agricultural production when peak oil hits (meaning long-distance transport of food no longer becomes feasible).

To think the likes of Monsanto are going to get us out of this whole is madness.  GM foods are more likely to destroy agriculture in the long-term, not save it.

Again, the insane depletion of the world’s tuna stocks – right under the world’s collective noses, with modern, sophisticated governments apparently powerless to stop it – is the “model” for all food crises in the future. 

Lots of words, lots of plans, no action, the robbing of future generations’ food supply to pay down today’s debts, with two-faced politicians deploring the desperate environmental situation on the one hand, whilst trying to give their own fishermen every hidden advantage on the other.

To think this is going to work out well is madness.

Malthus was not wrong.  He was just early.

It’s so hot in Hell that the water is drying up

November 11, 2009 Leave a comment

The Asian equivalent of Sin City is apparently running out of water.

How sad.  Especially for anyone who invested in Hell.