"Dhow" - James Welsh, 1830
I like history.
I like travel.
I like politics.
And I like travel books.
Wrap those all together, and you’ve a Robert D. Kaplan book. “Monsoon – The Indian Ocean and the Future of American Power” is the latest book from this globe-trotting author. From the inside dust jacket:
On the world maps common in America, the Indian Ocean all but disappears. The Western Hemisphere lies front and center, while the Indian Ocean region is relegated to the edges, split up along the maps’ outer reaches. This convention reveals the geopolitical focus of the now-departed twentieth century, for it was in the Atlantic and Pacific Theaters that the great wars of that era were lost and won. Thus, many Americans are barely aware of the Indian Ocean at all.
Kaplan takes a swing up and around the Indian Ocean, from Oman to Pakistan, India, Sri Lanka, Bangladesh, Indonesia, Burma, China, and finally, back around to Zanzibar. As with his other books (“Surrender of Starve: Travels in Ethiopia, Sudan, Somalia and Eritrea” or “Balkan Ghosts: Journey through History”), Kaplan does the grunt work of hitting the ground with a backpack and a journalist’s knack for getting in to see influential people in government and business. He has a sharp eye for detail, a wide eye for future trends, and no discernible political axe to grind.
Dhow in Sur, Oman (photo by Ji Elle)
Monsoon was a quick and fascinating read. More than anything, it illustrated the non-violent struggle for power and influence in the Indian Ocean region between emerging powers India and China. China is building sea ports in Pakistan and Sri Lanka, India in turn is funding infrastructure development in Burma/Myanmar.
The massive harbor being built by the Chinese in Hambatota, Sri Lanka, makes very pragmatic sense. As US power wanes, a large harbor at the very southern tip of Sri Lanka is a great location for a re-supply depot and fuel bunkering station for the Chinese navy as it patrols and safeguards its merchant shipping on monsoon trade routes. It also came as a bit of a who-woulda-thunk-it surprise. Although a quick Web search brings up a 2010 NY Times article, this type of geopolitical great game is hardly front-page news.
Some readers may have heard of Robert D. Kaplan based on his notorious essay “The Coming World Anarchy“, published by The Atlantic magazine back in February 1994. In that essay, Kaplan panted a bleak enough picture of the future, where tribalism and resource depletion would to massive instabilities in areas of the world that are well, prone to instability. Areas like the shantytowns of West Africa, through which Kaplan traveled extensively by bush taxi. These travels provided the narrative for the book “Ends of the Earth”.
Kaplan’s article has been considered a seminal essay, both highly praised and widely critized for an excessively dystopian view of the near future. One passage though caught my eye:
Homer-Dixon points to a world map of soil degradation in his Toronto office. “The darker the map color, the worse the degradation,” he explains. The West African coast, the Middle East, the Indian subcontinent, China, and Central America have the darkest shades, signifying all manner of degradation, related to winds, chemicals, and water problems. “The worst degradation is generally where the population is highest. The population is generally highest where the soil is the best. So we’re degrading earth’s best soil.”
China, in Homer-Dixon’s view, is the quintessential example of environmental degradation. Its current economic “success” masks deeper problems. “China’s fourteen percent growth rate does not mean it’s going to be a world power. It means that coastal China, where the economic growth is taking place, is joining the rest of the Pacific Rim. The disparity with inland China is intensifying.” Referring to the environmental research of his colleague, the Czech-born ecologist Vaclav Smil, Homer-Dixon explains how the per capita availability of arable land in interior China has rapidly declined at the same time that the quality of that land has been destroyed by deforestation, loss of topsoil, and salinization. He mentions the loss and contamination of water supplies, the exhaustion of wells, the plugging of irrigation systems and reservoirs with eroded silt, and a population of 1.54 billion by the year 2025: it is a misconception that China has gotten its population under control. Large-scale population movements are under way, from inland China to coastal China and from villages to cities, leading to a crime surge like the one in Africa and to growing regional disparities and conflicts in a land with a strong tradition of warlordism and a weak tradition of central government—again as in Africa. “We will probably see the center challenged and fractured, and China will not remain the same on the map,” Homer-Dixon says.
So that takes us to the next section.
Crew at work mending sails on the foredeck of a dhow, 1938
African Land Grab
On this blog, the topic of investing in food and farmland pops up from time to time.
As arable land and water resources become scarcer in China, Africa has been beckoning as the new land of opportunity for the deep-pocketed Chinese. Chinese agricultural companies have been leasing and buying vast tracts of prime and even marginal land in African countries such as Mozambique, Kenya and Tanzania.
Not to be outdone, India is joining the rush:
India Joins The Rush To Grab Africa Farmland
India Joins Scramble for African Land
Land Grab in Africa, Brought to You By India
So, Indian ag companies are buying up farmland, trying to keep up with Saudi and South Korean and other companies with cash to burn and poor land resources at home. How does this tie back to the book Monsoon and investing?
Potash
Along with nitrogen and phosphorus, potassium is a component of inorganic NPK compound fertilizers. As the world’s population grows from a current 8 billion to an forecast 9 billion for 2025, food production will have to expand accordingly. Acres will be plowed and sown, and fertilizer will be spread, no matter where they are.
Dhow Postage Stamp, Zanzibar, 1944
A few weeks ago I posted an interview with the CEO of Mesa Exploration (MSJAF). Since then, the company has acquired a nifty new property, the Bounty Potash Project. In geologist-speak, the potash deposit is “potash-rich brine aquifer hosted in near-surface sand-silt-clay beds. These types of deposits are well known and understood from an exploration, development and production perspective.” In non-geo-speak, brine deposits are fairly easy to mine (no shafts or open pits), carry low capital expenditures (no massive trucks or crushing mills), and are relatively low-impact to the environment ( at least as compared to other mining operations – no waste dumps or tailings).
This deposit is also close to Intrepid Potash’s (NYSE: IPI) Wendover operation, a brine potash operation with an annual production of 100,000 tons of potash.
So, what to do?
I already bought 1,500 shares of MSJAF at $0.44 a couple weeks ago. It’s since then floated to $0.53, and settled today back to $0.50. Really, I should have bought back when the interview aired, the stock was at $0.24, but such is hindsight.
I’m now looking hard at IPI. Growing profits (on the last Q4 report), little debt, and reasonable return on equity, and significantly beaten down from a high of $39 early last year. But that’s the subject for another day, this post’s already long enough.
By the way, if you’d like to hear more on the book from the Robert D. Kaplan himself, check out his his interview on Financial Sense podcast.
Wow, that’s a roundabout way of researching and ultimately purchasing a stock. I assume this Robert D. Kaplan writes non-fiction?
I hope your investment goes well and your research ends up paying excellent dividends! I can hardly wait until I have some money to play with in single stocks. This blog will be an awesome reference.
Matt recently posted..Free Money is Just a Phone Call Away
@ Matt – not a conscious way, more like a long-term view not associated with any type micro tech analysis. Works for me, so far.
Correct, Kaplan writes non-fiction.
Another great post. I really enjoyed Balkan Ghosts, even though his style is sometimes controversial. Next on my list from Kaplan is Eastward to Tartary. After that I will be geographically ready for Monsoon. Headed over to read that essay now.
John | Married (with Debt) recently posted..Food Insurance: 2 Weeks of Emergency Food
Hi John – another Kaplan fan!
I’ve taken his books on trips to re-read, including Balkan ghosts. Kaplan is opinionated, no doubt, but some of his conclusions are dead on. Furter into his “Coming Anarchy” article he talks about the great Turkish hydropower dams impounding the Tigris and Euphrates rivers. He correctly notes that they’re not necessarily and ultimately a Turkish resource, right smack dab as they are in Kurdish areas.
and I like reading.
Thanks, 101, just put this book to the top of my list. With a Goan wife born and raised in Zanzibar, this Chicago kid has spend a bit of time in and around the India Ocean.
Now I’ll get to read the insights I should have gleaned on my own.
jlcollinsnh recently posted..Travels with “Esperando un Camino”
Ah, you’re the one, then. I vaguely remembered about a blog/reader having ties to Zanzibar, but could quite pin it down. Goa is one place I’d really like to visit.
yep, that’s me.
next time you are in India, Goa is definitely worth the time. Beautiful beaches with local fishing boats pulled up on the sand.
It has been sometime since we’ve been back though and I understand it has been “discovered”
jlcollinsnh recently posted..Muk Finds Success in Tahiti
One of my coworkers is from Goa… great guy, and really proud of his roots. He did talk about how it’s become a popular tourist destination (he mentioned a Portugese influence). I still want to eventually get over there to check it out.
PK recently posted..The Psychology of Passive Investing
Goa, unlike the rest of India, was a Portuguese colony. Your Goan pal likely has a Portuguese last name.
This influence is why many Goans, like my wife, are Catholics and St. Francis Xavier is the patron saint. His toe is in the Cathedral as a holy relic. I have even been blessed by said toe.
maybe I should have mentioned that in my blog post on luck….;)
jlcollinsnh recently posted..What Poker, Basketball and Mike Whitaker taught me about Luck
MSJAF reminds me of ARW 101, featured them at $0.32 and never got to buy any..now they’re around $0.90.
BeatingTheIndex recently posted..Xtreme Coil Drilling: Undervalued Drilling Company on the Cusp of Strong Growth
I know, I’ve got more than a few of those myself. How about selling EXK at $3.00, and thinking I’d cut a fat hog?
While we are busy trying to heal a wounded economy a different battle game is going on in the east. I don’t know if the future is bright or bleak, but I do know it will be interesting!
MoneyCone recently posted..Unconventional Wisdom In Personal Finance
Hi MC – always interesting to see how events literally halfway around the world can affect us in our back yard. Pays to keep an eye out.
That’s a doozy. It remind me to be take a more global view. We are always so busy with the day to day chores that we don’t hear about these big moves.
retirebyforty recently posted..Go Bungee Jumping
RB40 – with Google Alerts, it’s almost effortless. That’s where those links on the Indian land grab came from. They showed up in the Inbox over a period of time.
I love these posts because it covers areas that I typically do not research very heavily.
I have to admit, when I read the opening lines which ultimately stated what the book was about I thought “sounds like a ‘guy’ book”. Every male I know loves non-fiction, historical books.
By the way, hindsight is 20/20, but had you bought at .24, it would now be at .15…
Kris @ Everyday Tips recently posted..Housing More Affordable Than Ever?
A ‘guy’ book??! I guess it’s a little humbling to be so pigeonholed. In my defense, I must say that I’ve read more than my share of romance novels. In my younger years when holed up in desert work camps for months at a time, all there was available from the rec room to read was romance books, some of them even with a Fabio look-alike on the cover. It was either those or the same tired Betamax movies. Or both.
Oh no, I didn’t mean to offend! I just know that my dad, brothers, husband, etc all would have jumped at the book you mentioned. However, many women tend to go more “Oprah”. I am somewhere in between…
Kris @ Everyday Tips recently posted..Housing More Affordable Than Ever?
No offense, Kris, I thought it was funny…
101 – Oil vs. Potash? The more I read, the more I’m recognizing that the more devastating depletion (or even just scarcity) would be in potassium. Peak oil has had its day, but we know about alternative forms of energy – not about alternative forms of fertilizer, haha.
That said, maybe GM crops, for all of their weaknesses (I won’t get into it now!), are the answer to the world’s future food woes? I know the last predicted famines were solved in a similar way (and we have 7 billion people now…) and I’m no Malthusian, but something will have to come down the pipe eventually.
PK recently posted..The Psychology of Passive Investing
Hi PK – the situation with phosphorus is actually even more dire than potash. That’s OK, on a long enough timeline, we’re all dead anyway.
My own preferred alternative forms of fertilizer are worm castings and compost, but they don’t scale up well to massive mechanized mono-culture operations.
As for GM crops, they should be blasted back to the labs from whence they came, especially the ones that are Roundup-ready. And Monsanto execs tarred and feathered and run out of town on a rail. But that’s just me…
Wow! This is a great article. Thorough, interesting and well written. I like travel, history and politics, so I guess I am going to have to add you to my “Must Read” list!
Thad P @ thadthoughts.com recently posted..Future Looks Cloudy for Kindle Fire?
Hi Thad – thanks for the kind words and for stopping by!
That’s certainly a different way to research a stock, but I certainly hope the investment ends up being very profitable. This sounds like a fun investing experiment.
Roshawn @ Watson Inc recently posted..How To See A Bright Financial Future
Hi Roshawn – potash is going to be a long-term portfolio builder.
hey 101….
I like this post so much I linked to it in my latest.
Just FYI.
Cheers,
JC
jlcollinsnh recently posted..The Casanova Kid, a Shit Knife, a Good Book, Having No Regrets, Dark Matter and a bit of Magic
They’re dated now, but have you read the Jim Rogers Adventure Capitalist books? Lots of politics, travel and investment discussion (it’s amazing to go back and read them to to see just how spot-on much of his predictions were at the time).
AverageJoe recently posted..Cuppa Joe #1: The Hotel – How to Treat Your Customer
@ Joe – I read a couple of Rogers’ books, Commodities and the one where he gallivants off w/ his new wife in that customized Mercedes. I missed the earlier one on the bike. I do like Jim Rogers, another guy whose predictions have to be considered in the long term.
Malthus wasn’t wrong, he was just pessimistic about rates of growth versus rates of technology growth and development. A large enough population would exhaust all the resources of the universe.
The key going forward will be to ensure that we can keep technological rates of progress ahead of population growth. As solar power continues to progress and nanotechnology continues to progress, most of current-day resource problems will seem as quaint as a shortage of … I don’t know, horses?
If you want to get really sci-fi, Robin Hanson is big on emulated minds, and thinks that an explosion in their population within the next few decades is going to bring many of us back to a Malthusian existence. Sure, there will be plenty, but there will be so many of us that we will overwhelm all of the gains.
I’m not sure how I got on this track, but thanks for the thought-provoking post.
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