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How to Profit in the Years of Living Dangerously

Guest post by: Michael Farrell

Article Overview: Looking ahead, oil supply is a problem however the world has other critical resource-based problems, suggests Mike Farrell with aspenIbiz. Read this short post is it will reveal how to profit in a future of multiple problems, crises, and conflicts trigger by shrinking access to water, food, and many other kinds of minerals.

How to Profit in the Years of Living Dangerously

Do you remember the good old days ... maybe three years or so ago? Back then, in the early days of the Global Financial Crisis, you could worry about the future in terms of just Peak Oil. Back in 2008, world crude output was fairly flat due to geological and technical issues. Oil demand was rising especially in the emerging markets, like China. It looked like market forces would cause oil prices to rise and energy-based industries would suffer big financial losses (airlines come to mind but there are many others).

Indeed, just a few years ago, it was safe to say that the world would go to hell in a hand-basket mainly due to "not enough oil." But you can not say that any more.

Looking ahead, oil supply is a problem. However, we also have to face the fact that the world has other critical resource-based problems. It is not just oil. We are looking ahead to a future of multiple problems, crises, and conflicts triggered by shrinking access to water, food, and many other kinds of minerals.

Let's focus on a different form of global disruption that we have seen lately. It relates to the price and availability of food.

We saw food riots in Pakistan last year after flooding wiped out vast swaths of agricultural land. Food prices skyrocketed even if food was available to sell. In many parts of Pakistan, life became a nightmare.

In the first months of 2011, we saw food riots in Tunisia and Egypt as well as many other nations throughout the Middle East. The riots began in the same manner as in Pakistan with food shortages and price increases.

These riots reflect the abject poverty in which people live in many parts of the world. That is, hundreds of millions of people truly hang on by a thread, literally at the edge of biological existence. In regions where many households have an income of as little as $2.00 per day, the change in price for wheat or vegetables by just a few pennies is a matter of life and death.

The Tunisian and Egyptian food riots quickly morphed into government-changing revolutions. While there are always people out there working to toss out old rulers and install new faces at the top, for sure the spark of revolution in Tunisia and Egypt began at the food market.

Half way through 2011, there is a vast swath of uprising from Syria to Oman, from Morocco and Libya to far-distant Pakistan and we have got our "year of living dangerously." It all began with rising food prices however we could very well be living in an era when every year is going to be a year of living dangerously.

It is hard to predict exactly when or where the next social explosion will occur. With food prices still climbing, job creation and wages stagnant in many regions, and other economic pressures mounting, expect more upheavals to occur for a long time to come.

While the Middle East is blessed with rich geological hydrocarbon formations, there are vast populations of urbanized, under-educated and underemployed people. There is the obvious water scarcity and that makes it tough to grow food in that climate. According to a 2009 report by the World Bank, "Arab countries are the largest importers of cereal in the world and must import at least 50% of the food calories they consume."

Some wealthy oil states in the Middle East, with their sovereign wealth funds, have been buying arable land across Africa to produce food dedicated to their own national interests. Predictably, the foreign effort to gain food security is perceived by affected local African people as a modern colonial land grab. There is mounting anger in African countries where governments are permitting vast tracts of farmland, viewed as the continent's last great resources, to pass away to foreign control with hefty profits to insiders. In August 2010, there was even a coup in the Indian Ocean island of Madagascar, off the shores of East Africa, after the sale of prime farmland to foreigners restricted domestic production, leading to food riots.

The bottom line is that there are serious structural problems with the world's overall food supply. Starting with energy issues and moving to food issues, nothing is really getting better. We need to accept the fact that we will likely involve living in a tough world and we will be suffering from "not enough" of many things and it is not just having enough oil. We have many years of living dangerously before us.

What should you do? Obtain more financial education and learn how to protect yourself during these trying times of massive money printing, fiat currency, and runaway inflation. Purchase precious metals, including gold, to hedge or protect your net worth against the decreasing value of the US Dollar, which is just paper money.

I favor a quote from Steve Forbes ... Forbes says that pursuing additional financial education and the resulting increase in our financial literacy will open our eyes to being savvy with our money and using alternative wealth creating strategies; this will be they key to resolving our financial crisis.

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Article Tags: Alternative Wealth Creation, Financial Education, Food riots, Mike Farrell aspenIbiz, Peak Oil, Resourcebased problems, Worlds food supply



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