The Rude Awakening
Istanbul, Turkey
Thursday, August 30, 2007 ------------------------- - The "standing grandee" of Chinese water plays,
- A distinct lack of resources…and brains to manage them,
- Your quick trip around a scorched earth, a snapshot from Turkey and plenty more…
------------------------- Joel Bowman, reporting from a parched Istanbul… At seemingly sporadic intervals throughout the day, prayers sing out over the loud speakers arrest your attention. Mounted on the minarets of the great mosques, these speakers chorus songs of praise across the city to millions of Muslims. Some carry on their daily work, others place sajjad (prayer mats) on the ground and take to their knees to face Mecca. Here, in the streets of Istanbul, Muslim peoples pray for guidance, for a watchful eye over their family and for the courage and discipline to lead an obedient and respectful life. In recent months, they have added another prayer to their list: A prayer for rain. Mustafa Cagrici, the mufti or chief cleric of Istanbul, recently told a news channel, "In times of trouble, it is natural for people to seek Allah's help for problems that they cannot solve." On August 1, Istanbul's reservoirs stood at an average of 31% capacity. Just 20 days later, they had dropped to an alarming 23%. Despite severe shortages here, precious water still cascades from fountains out front of the Hagia Sofia and the Blue Mosque. Tourists, your Aussie editor included, still snap shots of the famous landmarks…but pay inflated prices for bottled water at nearby restaurants. 
A few hours away, in the nation's capital of Ankara, the situation is far worse. On the first of this month, the director general of the State Hydraulic Works (DSI) announced that Ankara had enough water for just 78 days. There, water reserves are lapping the 5% mark in the catchment basins…and even that level is depleting rapidly. From Ankara to Arkansas, Istanbul to Innisfail, Tennessee to Toowoomba, the world is struggling to meet the demands of its hungry, rapidly expanding population. Below, we follow droughts around the scorched earth and find some food for thought in an unlikely place… ---- Mayer Special Situations - Final Week ---- Blue Gold: Investing In Water What's the one investment that's crushed every major index… beaten most major stocks… and doled out 49 times better gains than the S&P 500? Nope, not oil, gas, gold, or silver. Not Google, not Microsoft. Nor tech or biotech. Instead, says Lehman Brothers, it's the one investment with a market destined to "grow 500% over the next 10 years." But I'm ready right now to give you three of the world's best ways to get in… plus, a full year of more "special situation" stocks like these… absolutely FREE and backed by my absolute "300% payoff" guarantee…Learn More Here . -------------------------------------------------- Praying For Rain
By Joel Bowman Citizens of Ankara are thirsty…very thirsty. Two Friday's ago a good portion of the city's 4 million residents took to their prayer mats, imploring divine help to solve their worsening drought crisis. "Drought has struck the world suddenly," said Melih Gökçek, the city's mayor. "We didn't presume that God would allow such a disaster…God knows everything. If God wills it, our water shortage will immediately end." Whether God has a greater plan, or was simply out of the office for the day, we are unsure. We do know that since this city-wide prayer was offered the drought has worsened considerably. Local newspapers report horrendous stories of diseases spreading due to desperate consumption of contaminated water. Stray dogs are dying in the streets. Comments made by Mayor Gökçek, imploring residents to "take a holiday, but only wash your hair," have done little more than enrage the city's residents. In an ill-conceived attempt to stave off a crisis earlier this month, Gökçek divided the city in to two sections, alternating supply with a two-day-on, two-day-off water conservation plan. The plan backfired. Some districts suffered through three and four day periods without water. The constant diversion of this precious commodity placed huge strains on already insufficient infrastructure. On August the 4th, and then again two days later, parts of the city became flooded when water mains finally gave out. Following the burst, the municipality announced it would be unable to provide the entire city with water for three days. Hospitals were forced to stop admitting patients and non-vital surgery had to be postponed. Predictably, angry protests erupted around the city. Since this catastrophe, the price of bottled water in Ankara has skyrocketed. Water containers, which sold for 6 Turkish lira (US$4.50) before the water cuts, are now selling for 17 Turkish lira (US$13). Turkey's agriculture industry has also been hit hard. According the country's Agriculture Union, farmers in the western and southern Anatolia regions have lost crops to the value of more than 5 billion Turkish Lira (US$3.9 billion). "This is the most destructive summer we have ever suffered," says Semsi Bayraktar, president of the Turkish chambers of agriculture, which compiled the figures. Some will undoubtedly fob this off as just another foreign crisis, a catastrophe restricted to the plight of second- or third-world countries and far off deserts. This is simply not the case. Rainfall does not discriminate on grounds of a region's economic prosperity. It takes account of no race, GDP or, despite enthusiastic prayers from millions of people here in Turkey, of religion. But rainfall is only one part of the problem. What to do with the water once it has descended from the heavens is at least equally important. Gross mismanagement (as has been seen here in Turkey) and insufficient infrastructure is also to blame. Here in Turkey, for example, real GDP growth hummed along at an impressive 7.2% for the period between 2002-06. Its largest city, Istanbul, is a bustling metropolis of some 12 million residents and joining the European Union looks likely in their not-too-distant future. Despite this, resource management in the capital city of Ankara has been nothing short of a disaster. The State Hydraulic Works warned Mayor Gökçek about possible water shortages back in 2004. The official warning proposed Mayor Gökçek take immediate steps to tap reserves from nearby Gerede. Rather than heed the call to action, Mr. Gökçek stubbornly persisted with his own pet project, a subway system. The daily newspaper "Hurriyet" quoted him as saying, "We will not be able to be involved in the financing of the water supply project because we must secure our financial resources for the priority project." It is worth noting that no other city in Turkey, including Istanbul, has a subway system. Of course, it is difficult to manage water that is simply not there. Other nations around the world are suffering through serious dry spells. Australia, one of the world's strongest performing economies over the last decade, is in the throws of its worst drought in recorded history. Earlier this year, Prime Minister John Howard told a largely non-religious Australian population to, "hope and pray there is rain." Down Under, drought is wreaking havoc on the nation's major export crops. Production of cotton, a notoriously "water-heavy" crop is predicted to fall by 29% this year. Given that Australia is the fourth largest cotton producer in the world, this is bound to have widespread effects. Many industry analysts believe the chance for Australia's cotton industry to recover for the 2008 period has already expired. Wheat is another crop that has been all but decimated by lack of irrigation. In Australia, the world's third largest producer of wheat, the 2007 crop fell a staggering 29%, down almost 10-million tones. On the other side of the equator, droughts in Canada have contributed to their wheat production forecast being cut by up to one fifth and China's output is estimated to come up around a tenth lower thanks to water-related catastrophes - both drought and floods. Over in the Ukraine, the world's 7th largest wheat producing country, shipments will be a full 58% lighter this year thanks to, you guessed it, drought. These shortages, coupled with rapidly increasing demand from emerging nations, has seen wheat prices soar to record levels. Last week, wheat traded for $7.44 a bushel on the Chicago Board of Trade. In the UK, bread making wheat was trading at almost $400 per tone…double last year's price. And it goes on… In Kentucky, TN., cattle farmers are desperately selling their herds off at local auctions, unable to feed them any longer. Pastures are simply non-existent and bales of hay, which some farmers have had to drive interstate to obtain, are selling at up to triple their usual price. From Turkey to Kentucky, parched lands and the people that live off them are desperate for water. Smart investors will see this as an opportunity to top their portfolio up. [Joel's Note: Earlier this week, my friend and colleague, Chris Mayer, cast his "investor's eye" over the situation. "The agricultural markets are abuzz these days." Chris wrote in Tuesday's Rude. "The prices of corn, barley, soybeans, coffee and cocoa are all well above their averages over the past five years. Meat and poultry prices are also on the upswing…As an investor, I think I'd like to own companies that make the stuff that everybody else wants to pay more for. So it's not hard to see why I should gaze at those lush farmlands in South America. "South America has about 26% of the world's water supply," Chris continued, "but only 6% of the world's population. Asia, by contrast, has many more people to support with its water supply. Most of China's water supply is in the south, while most of its people live in the north." Chris was very early on the whole water story. Recognizing that a lack of adequate supply would decimate crops around the world, Chris issued a special report to readers of his Mayer's Special Situations service, urging them to buy a handful of water related stocks. Just two weeks ago, he instructed his readers to sell one of those stocks, Lindsay Corp. (LNN), for a 100% gain. Thing is, there are still four holdings in the portfolio, up an average of 46%. One stock that I particularly like is perfectly positioned to capitalize on the booming Chinese market. Chris calls this one, "the standing grandee of Chinese water plays." You can take a peek at the report by following this link: Mayer's Special Situations --- For the next 6 days only --- Get 6 Months of the World's Most Valuable Undiscovered Stock Research… FREE Every Year for the Rest of Your Life …As Long as I Hear From You by Midnight Sept. 4. Click Here To Learn How ----------------------------------------- Rude Endnote: All this talk about drought has been making us thirsty. Although there is plenty of water in beer, the spread between the price of a bottle of water and a can of Efes Pilsen has closed to within a single Turkish Lire. That's good enough for us. Your 5 will be along from our Baltimore desk shortly. Until then… Cheers, Joel Bowman
Rude Awakening aussiejoel@the-rude-awakening.com | 
