Putting the "Green" Back in Greenland
Edinburgh, Scotland
Wednesday, May 16, 2007
Global warming...yes, it's that time again,
How you can best invest when water flows uphill,
A couple of new ETFs to keep an eye on, ten boring stocks and a whole lot
more...
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Joel Bowman, reporting from Edinburgh, Scotland...
I heard a fascinating comment the other day. While relaying
details of her recent trip back home to the U.S. to her friends, a young student
made the following observation:
"There was hardly any snow on the ground. You can totally see
the effects of global warming."
An innocent enough comment, to be sure. The fascinating thing
was, at least to me, that this young student couldn't have been more than
twenty-one or twenty-two years of age. How on earth, I thought to myself, could
she possibly notice the effects of global warming? Her recent trip was warmer
than what? The two or three other trips she has made home since leaving to study
abroad? It would seem she has come up a few millennia shy of garnering a
scientific database with enough depth to conduct any real climatic comparisons.
The scary thing is, this kind of subjective science exists not
only in the domain of the student world. Just have a listen the next time you
are in the line at your supermarket. If there were ever a subject that your
everyman could profess unrivaled expertise on, it would have to be the weather.
"No rain on Tuesday...must be that global warming," they will
say.
"Boy, sure is hot out today," will invariably be followed by,
"Haven't you heard? It's global warming...it's accelerated just this week."
From my perch here in Edinburgh, I observe that it is raining
outside. It was raining yesterday and, most likely, it will rain tomorrow. Is
this precipitation more or less that the average rainfall since the beginning of
time? At a glance, I cannot tell. Then again, I am only twenty-six.
Most scientists seem to agree that the earth is going through
a warming phase. The key arguments, it seems, are over both the cause of this
warming and whether humans are in a position to influence it one way or another.
These two points of contention are largely dependent on one and other. For
example: if, as some people vehemently declare, it is carbon emissions that are
to blame for our warming, we may find ourselves in a position to greatly affect
our own output. Most purveyors of the carbon-cause hypothesis forget to include
the fact that humans account for only about 3.0-3.5% of all carbon emissions,
depending on where you get your figures.
That's not to say that we shouldn't work to reduce pollution
levels either. (Just because your doctor tells you that your liver is in great
shape does not mean he is giving you carte blanche to imbibe a bottle of vodka
every night.) It does mean that we should approach the problem of pollution with
a clear definition of our goal...to reduce pollution, not to cool the earth back
down.
On the other hand, if global warming were caused, as some
assert, by minute fluctuations in the irradiance of the sun, it would appear we
just have to accept that there are some things in the universe we cannot change.
There are plenty of other theories, too. Some say climate
change is cyclical. Others are convinced that the whole notion of global warming
is a farce designed to frighten taxpayers into dolling out more money for carbon
taxes and carbon credits. Then there are the apocalyptic types, those who assure
us that mankind is on an uninterrupted downward trajectory ending nowhere but
the fiery pits of damnation anyway, so why even bother?
From this rainy post on Scotland, I'm no closer to the answers
than anyone else. All I know is that it is likely to rain here tomorrow and that
Chris Mayer has today's column for you below. Enjoy...
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Putting the "Green" in Greenland By Chris Mayer
"I'm going to talk about global warming in a way you've never
head of before - I'm going to talk about evidence." So began Dennis Avery at a
recent investment conference. Avery is co-author, along with Fred Singer, of a
fascinating new book titled Unstoppable Global Warming: Every 1,500 Years.
The authors debunk the idea that the Earth is warming
primarily because of manmade carbon dioxide emissions - which the authors say
represent only 3.5% of all carbon dioxide released into the air. Instead, they
present compelling evidence, based on the work of thousands of qualified
research scientists, of a long-term cycle of global climate change. They write:
"The public has remained virtually unaware that the 1,500-year cycle offers the
only explanation for the modern warming that is supported by physical evidence."
Consider the Vikings' dramatic experience with this cycle...
Near the end of the 10th century, the Vikings sailed west from
Iceland in their now-iconic longships. They soon bumped into a huge new
uninhabited island. Its cool waters held plentiful codfish and seals. Green
grass covered its shores. The Vikings named it Greenland.
The Vikings soon settled there. They raised sheep and cattle.
Grew vegetables. Traded sealskins and rope made from walrus hide to get timber
and other things they needed. The colony thrived. By 1100, more than 3,000
people called Greenland home. They had 12 churches. Even had their own bishop.
The Vikings, though they could not have known it, were
beneficiaries of the Medieval Warming. For 400 years, the temperatures in
Northern Europe were 2 degrees warmer than before. Unfortunately for the
Vikings, the Little Ice Age soon followed this period of warming - and lasted
for 500 years.
As the Little Ice Age unfolded, ice formed a crust around
Greenland's shores. Supply ships soon struggled to make their way to Greenland's
coast. Winters grew longer. Summers grew shorter. Storms became more violent.
The Vikings could no longer farm as they once did. In desperation, they ate
their last milk cows. Inuit people came across the ice from the north. Struggles
ensued over a smaller number of seals.
In 1410, the last supply ship broke through the ice. Soon
thereafter, the settlers perished. Denmark recolonized Greenland in 1721 - more
than 300 years later - after the Little Ice Age loosened its grip on the island.
The Viking experience shows how the temperature of the planet
ebbed and flowed over the course of hundreds of years. In addition to the
Vikings, we have evidence from other early civilizations. The Romans recorded a
warming period between 200 B.C. and A.D. 600. They grew grapes in Great Britain
and Northern Europe.
Evidence mounts from many sources. Ice cores give us climate
histories going back 900,000 years. Seabed sediments, stalagmites, tree rings,
fossilized pollen - all point to a roughly 1,500-year cycle of warming and
cooling stretching back nearly a million years.
"The Earth continually warms and cools," the authors note.
"The cycle is undeniable, ancient, often abrupt and global. It
is unstoppable." What causes it? Small changes in the irradiance of the sun.
Boiled down to its barest essentials, a weaker sun creates a cooler Earth. A
more active and stronger sun warms the planet. In short, solar variations drive
the Earth's surface temperatures.
Scientists found a 95% correlation between sunspot numbers and
global temperatures. That means that the two move in tandem nearly all of the
time. This is a far better predictor than carbon dioxide emissions, which do not
explain long periods in which carbon dioxide levels rose while the planet
cooled, nor do they explain long stretches when the planet warmed as carbon
dioxide levels fell. There are many more flaws in the popular greenhouse theory,
detailed in the book. But the bottom line is that the theory does a poor job of
explaining the temperature variations of the Earth's history.
In any event, the Earth has been warming slowly since about
1850. It will have an impact on human civilization. That impact is not as
frightening as global warming advocates such as Al Gore want you to believe. In
fact, human history tells us that the warming periods were prosperous times.
Warmer climates in Canada and Russia will aid food production. The higher levels
of carbon dioxide will stimulate plant growth and increase crop and forest
yields. Longer growing seasons, fewer frosts, more rainfall - all of this will
be good for agriculture.
There will be fewer storms in warm weather. A warmer planet
means the temperature gap between the poles and the equator is smaller - lending
less power to winds, waves and currents.
The fiercest storms occurred during periods of cooling, when
those temperature gaps were large. During the Little Ice Age, from 1701-1850,
the Caribbean experienced three times as many hurricanes as from 1950 to today.
This evidence comes from numerous sources, including the meticulous records of
the British navy - because of Britain's large sugar plantations in the region,
its navy was also active in the area. Colder climates actually kill far more
people than warmer climes, the authors show.
Yet, not all the effects of warming are good. For example,
Avery said that as the tropical rain belts moved north, Canada and Siberia would
get wetter, while the Southern U.S. would get drier. Some places would
experience more flooding, others more drought.
One final thought: The authors point out the real fear should
be the next ice age, which is inevitable. Then, places including Ohio and
Indiana (forget Canada) would be covered with ice sheets a mile thick.
California and the Great Plains would suffer century-long droughts.
The good news? As Avery and Singer note, "It may still be
thousands of years away..."
So what investment insight that we can infer from Avery and
Singer? Just this: Almost everyone agrees that the Earth is warming a bit and
that global weather patterns are becoming more volatile. The debate rages only
over the "Why?" So if the Earth is actually warming and droughts are becoming
more common, certain resources, like water, should become more precious
throughout the world.
But that's just one possible idea. If you've got any others,
please share them with your fellow Rude readers by emailing your thoughts to -aussiejoel@the-rudeawakening.com.
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Did You Notice? – Waterworld By Eric J. Fry
Whether one believes in global warming or global cooling or
global nothing, the businesses that focus on energy diversification or global
resource management should become increasingly prosperous. Innovative
capitalists, for example, will seek ways to power the world's electricity
infrastructure with energy sources other than fossil fuels. Other innovative
capitalists will seek ways to purify and transport the world's strained water
supplies.
Already, many businesses that reside within the broad category
of "sustainable resources" have been delivering sustained profits for investors.
"Cleantech" stocks of various stripes have been rallying for months. Recognizing
this trend, Van Eck Associates and Claymore Securities have launched a couple of
brand new ETFs. (We are not recommending these securities, merely mentioning
them for the benefit of those readers who wish to know about "cleantech"
investment vehicles).
The Van Eck product, dubbed the "Market Vectors Global
Alternative Energy ETF" (NYSE: GEX ) invests in a basket of alternative energy
stocks worldwide. Unlike previous ETF offerings in this sector, GEX emphasizes
foreign stocks. Its nine largest positions are foreign companies, representing
more than half the portfolio.
Likewise, the new ETF from Claymore Securities also emphasizes
foreign stocks. This ETF, called the "Claymore S&P Global Water ETF" (AMEX: CGW
) holds a larger percentage of foreign water companies than ETFs like the "Powershares
Global Water Portfolio (AMEX:PHO )."
But as the nearby chart illustrates, water stocks of all types
have been flowing uphill for a good, long while. Water investors, therefore,
would do well to remember that water stocks can also flow downhill...at least
for a while.
Joel's Note: You may remember a while back Eric and Chris
coauthored a report on the best ways you can invest in the global water trend.
The companies in the report have all tended heavily to the upside, but that
doesn't mean the action is over...far from it actually. The report, titled Blue
Gold, has been updated with an eye to future investing in the water sector. To
learn more about this exciting opportunity you can find the new and updated
report right here:
Blue Gold: Investing in the Global Water Trend
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