Money and Finance
- Mckinsey Report: Resource Revolution: Meeting The World’s Energy, Materials, Food, And Water Needs
Published in November of last year. It looks similar to the things that Jeremy Grantham discussed in his Q2 letter. Resource prices are rising and becoming more volatile. Without a resource revolution, we all face the prospect of damage to global growth,...
- The Food Crisis Should Not Be Left To Cowboy Capitalists – By Jeremy Grantham
The worst US drought in half a century is further evidence that we are in the midst of a global food crisis. In 2007-08, there were riots in more than 20 countries, as the cost of commodities surged. After a brief respite, prices of corn and soya have...
- Bill Gates: Growing Enough Food To Feed The World
How can we feed a growing population in the midst of climate change and an appetite for more meat? These factors and more are straining the world’s agricultural capacity and pushing up the cost of food, which makes it difficult for the world’s poorest...
- Nyt: Can Jeremy Grantham Profit From Ecological Mayhem?
Found via Paul Kedrosky. Sitting in a Panera in Boston’s financial district in early July with Jeremy Grantham, I suddenly found myself considering how I might safeguard my children’s and notional grandchildren’s future by somehow engineering the...
- Arithmetic, Population, & Energy And The Crash Course
In Jeremy Grantham's 2nd Quarter Letter, he mentioned the fact that "....population growth is on a direct collision course with increasingly scarce resources." And near the end of his letter he wrote: Well, dear readers, happy thoughts and wishful...
Money and Finance
Jeremy Grantham’s 1Q Letter: Time to Wake Up: Days of Abundant Resources and Falling Prices Are Over Forever
Very important letter.
As the title implies, Jeremy Grantham's 1Q 2011 Letter discusses the effects of our dwindling natural resources on the prices of commodities in the context of a rising world population.
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Excerpt:
Summary
- Until about 1800, our species had no safety margin and lived, like other animals, up to the limit of the food supply, ebbing and flowing in population.
- From about 1800 on the use of hydrocarbons allowed for an explosion in energy use, in food supply, and, through the creation of surpluses, a dramatic increase in wealth and scientific progress.
- Since 1800, the population has surged from 800 million to 7 billion, on its way to an estimated 8 billion, at minimum.
- The rise in population, the ten-fold increase in wealth in developed countries, and the current explosive growth in developing countries have eaten rapidly into our finite resources of hydrocarbons and metals, fertilizer, available land, and water.
- Now, despite a massive increase in fertilizer use, the growth in crop yields per acre has declined from 3.5% in the 1960s to 1.2% today. There is little productive new land to bring on and, as people get richer, they eat more grain-intensive meat. Because the population continues to grow at over 1%, there is little safety margin.
- The problems of compounding growth in the face of finite resources are not easily understood by optimistic, short-term-oriented, and relatively innumerate humans (especially the political variety).
- The fact is that no compound growth is sustainable. If we maintain our desperate focus on growth, we will run out of everything and crash. We must substitute qualitative growth for quantitative growth.
- But Mrs. Market is helping, and right now she is sending us the Mother of all price signals. The prices of all important commodities except oil declined for 100 years until 2002, by an average of 70%. From 2002 until now, this entire decline was erased by a bigger price surge than occurred during World War II.
- Statistically, most commodities are now so far away from their former downward trend that it makes it very probable that the old trend has changed – that there is in fact a Paradigm Shift – perhaps the most important economic event since the Industrial Revolution.
- Climate change is associated with weather instability, but the last year was exceptionally bad. Near term it will surely get less bad.
- Excellent long-term investment opportunities in resources and resource efficiency are compromised by the high chance of an improvement in weather next year and by the possibility that China may stumble.
- From now on, price pressure and shortages of resources will be a permanent feature of our lives. This will increasingly slow down the growth rate of the developed and developing world and put a severe burden on poor countries.
- We all need to develop serious resource plans, particularly energy policies. There is little time to waste.
………………..
Related previous letter: Jeremy Grantham's 2Q 2009 Letter
- Mckinsey Report: Resource Revolution: Meeting The World’s Energy, Materials, Food, And Water Needs
Published in November of last year. It looks similar to the things that Jeremy Grantham discussed in his Q2 letter. Resource prices are rising and becoming more volatile. Without a resource revolution, we all face the prospect of damage to global growth,...
- The Food Crisis Should Not Be Left To Cowboy Capitalists – By Jeremy Grantham
The worst US drought in half a century is further evidence that we are in the midst of a global food crisis. In 2007-08, there were riots in more than 20 countries, as the cost of commodities surged. After a brief respite, prices of corn and soya have...
- Bill Gates: Growing Enough Food To Feed The World
How can we feed a growing population in the midst of climate change and an appetite for more meat? These factors and more are straining the world’s agricultural capacity and pushing up the cost of food, which makes it difficult for the world’s poorest...
- Nyt: Can Jeremy Grantham Profit From Ecological Mayhem?
Found via Paul Kedrosky. Sitting in a Panera in Boston’s financial district in early July with Jeremy Grantham, I suddenly found myself considering how I might safeguard my children’s and notional grandchildren’s future by somehow engineering the...
- Arithmetic, Population, & Energy And The Crash Course
In Jeremy Grantham's 2nd Quarter Letter, he mentioned the fact that "....population growth is on a direct collision course with increasingly scarce resources." And near the end of his letter he wrote: Well, dear readers, happy thoughts and wishful...