Valuetainment - Global Water Crisis： Why Michael Burry is Investing in Blue Gold

00:00:00.000 So if I was to ask you right now, if an enemy wanted to attack our country, U.S., let's

00:00:03.420 just say, how would they do it?

00:00:04.400 You may say, well, Pat, they're going to do cyber.

00:00:06.020 They're going to do biowarfare.

00:00:07.420 No, they're going to do nuclear. 0.85

00:00:08.820 What if I told you they could do it with water?

00:00:10.780 If U.S. had a water crisis and you and I don't have water, you know how long we can go without

00:00:15.180 water?

00:00:15.660 Three days.

00:00:16.420 Some say up to a week, but most studies say three days.

00:00:20.300 And one of the biggest crises we're dealing with right now worldwide is water crisis.

00:00:24.780 When I show you some of the statistics on what it's looking like, when you watch the

00:00:28.740 movie Big Short, if you remember the movie Big Short with Michael Burry, one of the biggest

00:00:32.800 investors that everybody worldwide follows, he's got this hedge fund called Scion Hedge

00:00:37.940 Fund that I think he manages nearly $2 billion.

00:00:40.140 You know what it said at the end of the movie?

00:00:41.900 They said Michael Burry, his next investment and commodity that he's focused on is only

00:00:47.160 one thing.

00:00:47.760 And what do you think it was?

00:00:48.960 Water.

00:00:49.520 We're going to take a deep dive why so many people around the world are worried about the

00:00:54.280 water crisis.

00:00:58.740 Okay, so if you get value out of this video, give it a thumbs up, subscribe to the channel.

00:01:07.820 Let's get right into it.

00:01:08.600 According to a UN Water Conference, the world faces a 40% shortfall in fresh water supply

00:01:13.940 by 2030.

00:01:15.020 And when we break down water on how much we use worldwide, we use more than 4 trillion cubic

00:01:20.700 meters of fresh water per year.

00:01:22.620 And just to kind of put that in context on how much 4 trillion cubic meters is, one cubic

00:01:27.800 meter equals 264 gallons of water, one cubic meter.

00:01:32.280 So now, let's continue.

00:01:33.280 Pat, what do you mean by all this water?

00:01:35.000 Don't we have all this water?

00:01:36.060 The ocean?

00:01:36.780 Why should we be worried about water?

00:01:38.620 71% of Earth's surface is covered by water.

00:01:42.200 That should be good news.

00:01:43.280 No?

00:01:43.660 Well, there's a difference between what kind of water we drink.

00:01:46.220 Watch this.

00:01:46.720 97% of Earth's water is salt water.

00:01:49.480 2% is fresh water trapped in glaciers.

00:01:52.100 0.65% is the fresh water that we use for everything, such as drinking.

00:01:57.340 Let's focus on this 0.65%.

00:01:59.340 Where do we get this fresh water from?

00:02:01.140 Here's what it looks like.

00:02:02.280 75% of it is withdrawn each year from rivers, lakes, and reservoirs.

00:02:07.520 25% comes from groundwater aquifers.

00:02:10.460 And 80% of water withdrawn in the U.S. is used for cooling electric power plants and

00:02:16.100 for irrigation.

00:02:17.400 So I just want to give you a visual here.

00:02:18.820 When you look at two of the reservoirs, the largest reservoirs we have in U.S., you'll

00:02:22.380 see Lake Mead and Lake Powell.

00:02:24.380 And if you look at these pictures, both of them have experienced critically low levels

00:02:28.580 recently.

00:02:29.360 Here's what it looks like in 2000 versus today.

00:02:32.480 In 2000, these two reservoirs were full.

00:02:35.740 95% they were full.

00:02:37.320 Today, they're roughly 25%, said Brad Udall, a water and climate scientist at Colorado State

00:02:43.500 University.

00:02:44.260 It's hard to overstate how important the Colorado River is to the entire American Southwest.

00:02:48.900 Now, you may say, I'm not a math guy.

00:02:50.780 Look, 95% just 23 years ago to today, 25%.

00:02:56.200 No matter what the number is, that's not a good thing on what the numbers are looking

00:02:59.500 like, where we've gone to where we are today.

00:03:01.580 Today's sponsor is BetterHelp.

00:03:02.800 And it's interesting because just today we were doing a podcast.

00:03:05.000 And one of the articles that we read by Wall Street Journal said that four out of 10 Americans

00:03:09.600 don't have a best friend.

00:03:10.780 What does that mean?

00:03:11.520 And a couple months ago, another article came out talking about the lonely epidemic.

00:03:14.460 People don't have somebody to talk to during COVID.

00:03:16.260 We were alone.

00:03:16.800 We were by ourselves.

00:03:17.940 Half the time, you need somebody to talk to.

00:03:20.100 Even as a business owner, entrepreneur, founder myself, the last 20 years, many times I've

00:03:24.680 been by myself.

00:03:25.440 I can't talk to my wife.

00:03:26.440 I can't talk to my family.

00:03:27.420 I chose to start a business.

00:03:28.740 Who am I going to go complain to?

00:03:29.980 Sometimes you just need somebody to talk to.

00:03:31.660 What BetterHelp does is, on their website, BetterHelp offers 30,000 licensed and experienced

00:03:36.420 therapists.

00:03:37.060 You get to pick and choose the questionnaire.

00:03:38.700 You get to pick and choose the topics.

00:03:40.320 You answer a certain set of questions.

00:03:41.880 And they match it with therapists that are best suited for you.

00:03:44.560 And then from there, you get to have a conversation with somebody.

00:03:46.820 And if it doesn't work out for you, they'll replace it with somebody else as well.

00:03:49.840 So if this is something that you're dealing with and you want to talk to somebody, go to

00:03:52.880 BetterHelp.com forward slash value team.

00:03:54.680 You'll get 10% discount on your first month.

00:03:56.960 Again, go to BetterHelp.com forward slash value team.

00:03:59.500 You'll get 10% discount on your first month.

00:04:01.780 So now let's take a look at how much water we domestically have been withdrawn since 1960.

00:04:06.780 When you look at this chart, here's what it shows.

00:04:09.200 If you look at the dark blue, it's domestic, then industrial, then total irrigation on livestock.

00:04:13.620 So obviously 600% increase since 1960.

00:04:15.980 That's 73 years ago to today.

00:04:17.480 That's not a good thing to see.

00:04:18.540 However, 70% of freshwater withdrawals are used for agriculture purposes, 20% for industrial

00:04:23.940 use.

00:04:24.480 The rest of the 10% are used for domestic.

00:04:26.900 You and I drinking water.

00:04:27.920 By 2050, water demand is expected to increase from 20% to 30%.

00:04:31.680 And by the way, when we're saying 2050, I want to show you what the comparable was of where

00:04:35.700 we were in 2010 and what they're expecting to be by 2050.

00:04:39.520 In 2010, 1.9 billion people lived in severely water-scarce places.

00:04:44.440 And this number is expected to increase to 3.2 billion by 2050.

00:04:49.380 So now if you wanted to find out where is the freshwater scarcity trend worldwide, here's

00:04:53.760 what we would look at.

00:04:54.420 If you look at this chart here, you will look at the numbers to the right that says 100%.

00:04:58.760 So Northern Africa, 100%. 0.91

00:05:00.800 Middle East, South Asia, they're not in a good place. 0.95

00:05:03.480 And second worst would be East Asia, and you could look at Southern Africa. 0.90

00:05:07.700 And if you were to say which ones are the best, you got North America, South America, and

00:05:11.360 Australia Pacific, all at 25%.

00:05:13.620 Now, when you look at this, you know, the issue with water, there's been many scandals

00:05:17.740 with water over the years.

00:05:18.820 I'll give you one of them, especially with Nestle.

00:05:20.620 When it was discovered that Flint, Michigan's lead-tainted pipes created a local water crisis,

00:05:25.560 the government originally gave out free bottled waters, but it eventually ended.

00:05:29.220 And at the same time, Department of Environmental Quality had approved Nestle's request to increase

00:05:33.340 the amount of water it pumps from the Great Lakes.

00:05:35.860 In the same month, the state decided to stop giving free bottled water to Flint.

00:05:39.020 It was effectively deciding to give away millions of gallons to multinational corporations,

00:05:43.580 besides a one-time $5,000 permit application fee, under Michigan law, Nestle, the largest

00:05:50.140 food and beverage company in the world, must pay the state only $200 every year.

00:05:55.640 Administrative fee to bottle and sell 400 gallons a minute of Michigan groundwater.

00:06:02.040 And that's just Nestle in Michigan.

00:06:03.800 Now, let's look at Nestle in California.

00:06:05.440 Nestle has maintained that its rights to California spring water date back to 1865, but a 2017

00:06:10.820 investigation found that Nestle was taking far more than its share.

00:06:14.080 In 2020, the company drew out about 58 million gallons, far surpassing the 2.3 million gallons

00:06:20.320 a year it could validly claim.

00:06:22.240 According to the report, Nestle has taken on average 25 times as much water as it may have

00:06:27.540 a right to, according to the story of a stuff project and environmental group that has been

00:06:32.080 fighting to stop the bottled water company's operation in California for years, while California

00:06:36.060 is facing record droughts and wildfires.

00:06:38.460 So now, every time there's a crisis, there's opportunity.

00:06:41.280 Why?

00:06:41.580 Because a capitalist or an entrepreneur can come in and say, let's solve this problem.

00:06:45.740 If we can solve this problem, there could be a lot of incentives for it as well.

00:06:49.200 So watch what's been happening with this.

00:06:50.900 Matthew Deseri, the president and co-founder of the hedge fund Water Asset Management, that's

00:06:56.700 literally what it's called, called the U.S. water business, the biggest emerging market

00:07:00.440 on earth, a trillion dollar market opportunity.

00:07:03.880 And matter of fact, like I told you earlier, even Michael Burry at the end of the movie in big

00:07:07.440 short, said that his focus had become on one commodity, and that is water.

00:07:12.300 Here's what he said in an interview in 2015.

00:07:14.660 Transporting water is impractical for both political and physical reasons, so buying up

00:07:18.880 water rights did not make a lot of sense to me.

00:07:20.920 What became clear to me is that food is the way to invest in water.

00:07:24.180 That is, grow food in water-rich areas and transport it for sale in water-poor areas.

00:07:28.860 This is the method for redistributing water that is least contentious and ultimately can be

00:07:33.440 profitable, which will ensure that this redistribution is sustainable.

00:07:37.260 And he said the following about wine.

00:07:38.480 Those of you guys that drink wine, you ready for this?

00:07:40.460 A bottle of wine takes over 400 bottles of water to produce the water embedded in food

00:07:47.200 is what I have found interesting.

00:07:49.160 Church just tells you, guys that are thinkers, they're going to see opportunities to fix this

00:07:52.980 problem, which means that's a good thing for us long term.

00:07:55.460 There are three ways to invest into water.

00:07:56.960 Number one, purchasing water rights.

00:07:58.500 Number two, invest in water-rich farmland.

00:08:00.260 And number three is invest in water utilities, infrastructure, and equipment.

00:08:03.900 So now, one of the technologies that can solve the problem is a process called a desalination,

00:08:08.600 which is a process by which the dissolved mineral salts in water are removed.

00:08:12.900 Currently, this process is applied to seawater, one of the most used to obtain fresh water for

00:08:16.940 human consumption or agriculture purposes.

00:08:19.540 So if you look at this flow here, step number one is seawater intake.

00:08:23.380 Step number two, the intake screening facility.

00:08:25.920 Then it's pretreatment filters.

00:08:27.480 Then it's reverse osmosis membrane.

00:08:30.040 Units remove salt and other impurities from water.

00:08:32.780 And then step number five is post-treatment to drinking water standard.

00:08:35.880 Then you got step number six, drinking water supply tank.

00:08:38.760 And the last but not least, step number seven, seawater concentrate outlet.

00:08:42.500 All of this process turns seawater into drinking water.

00:08:46.560 It looks like a technical process, but one of the largest desalination plants in the world

00:08:51.680 is Sorek desalination plant is located south of Tel Aviv, Israel, and it produces 137 million

00:08:57.560 gallons of potable water a day.

00:08:59.660 And the largest plant we have in the U.S. is in Carlsbad, San Diego, which produces roughly

00:09:04.600 50 million gallons of water per day.

00:09:07.120 So this is all good news because once, you know, the world found out that this was a problem,

00:09:11.440 people started looking into it.

00:09:12.600 And this started in 1960.

00:09:13.960 And if you look at this chart here, you'll see the growth of desalination globally.

00:09:17.180 From 1960 to 2020, it's climbing, and the cost of desalinated water has been coming down

00:09:22.740 as the technology evolved.

00:09:24.020 Matter of fact, in the last three decades, the cost of desalination has dropped by more

00:09:27.240 than half.

00:09:27.940 And even globally, more than 300 million people now get their water from desalination plants

00:09:32.120 from the U.S. southwest to China.

00:09:34.260 But there are some that focus on it more than others, such as Saudi Arabia, which produces

00:09:37.880 20% of the world's desalinated water.

00:09:40.200 With 9 million cubic meters produced per day, 60% of its water is desalinated.

00:09:45.380 And according to Statista, if you look at this, Saudi Arabia is investing heavily in

00:09:49.520 desalination.

00:09:50.220 Here's what it's looking like.

00:09:51.180 If you look at the left, you'll see Saudi Arabia at the top, then it's UAE, then it's

00:09:54.700 Jordan, Egypt, Oman, Morocco, Tunisia, Algeria, Kuwait, and others.

00:09:59.060 So when you're looking at this, of course, any way we see as a solution, you think about

00:10:02.600 it and say, okay, the future looks bright.

00:10:03.820 There's people that are working on this.

00:10:05.020 Now, there's certain people that say there's downsides to desalination, with one of them

00:10:08.420 being it uses a lot of energy, could be bad for the environment, it hurts to fish.

00:10:12.400 Desalinated water is more expensive than imported water.

00:10:14.680 And for every gallon of fresh water created, one and a half gallons of salt water is created

00:10:18.780 and sent back into the ocean.

00:10:20.160 And some argue that this is a problem, and the state of California has increasingly taken

00:10:24.760 an anti-desalination position, citing environmental reasons.

00:10:29.020 So final thoughts on this water, on how I'm processing it.

00:10:32.020 Number one, I trust capitalism.

00:10:33.600 What do I mean by capitalism?

00:10:34.940 Whoever's going to be negatively impacted by this has to fix this.

00:10:38.240 So let's look at drink companies.

00:10:39.540 Who would be negatively impacted by this?

00:10:41.340 Coffee relies on water.

00:10:43.120 So that's who?

00:10:43.820 Coffee being Starbucks, 7-Eleven.

00:10:45.680 Soda is going to be impacted by this, which is who?

00:10:47.900 Coca-Cola, Pepsi, all the other guys have got to figure this out.

00:10:50.360 Water companies are going to be impacted.

00:10:51.740 There's so many companies that are going to be impacted by this.

00:10:54.240 If it got so bad, they would all gather their resources to figure out a way to fight against

00:10:59.720 the water crisis.

00:11:00.440 So that's one.

00:11:01.140 There's too much money involved that there's no way they're going to allow this to happen.

00:11:04.280 Number two, technology advancement.

00:11:05.760 When I was at Harvard, one guy sitting there from Lagos, and he says, here's what we created.

00:11:10.240 We're raising money right now.

00:11:11.260 Each plant is $100 million, and we're able to raise this much money.

00:11:14.140 And if we do this, this is how many gallons of water we can produce on a daily basis.

00:11:17.300 I'm like, okay, this is good.

00:11:18.460 It was a creative way that they were doing it, creating clouds and all this stuff.

00:11:21.580 Very interesting the way he was doing it.

00:11:23.400 It was very different than desalination.

00:11:25.140 But outside of that, I want to give you a project, an operation that the CIA worked on

00:11:29.340 in the 60s called Operation Popeye.

00:11:31.600 I don't know if you've heard about this or not, but we've known how to make rain, fake

00:11:35.660 rain, look real for decades.

00:11:37.860 And we've kept it kind of on the hush-hush, and we use words such as allegedly.

00:11:41.320 But let me kind of read this to you so you can kind of get an idea what this Operation

00:11:44.460 Popeye was about.

00:11:45.540 It wasn't about the Popeye with the big forearm you're talking about.

00:11:48.060 It's a different kind of a Popeye.

00:11:49.020 So Operation Popeye was a military cloud seeding project carried out by the U.S. Air Force

00:11:54.020 during the Vietnam War in 1967-72.

00:11:57.720 The highly classified program attempted to extend the monsoon season over specific areas

00:12:02.740 of the Ho Chi Minh Trail in order to disrupt the North Vietnamese military supplies by softening

00:12:08.160 roads, surfaces, and causing landslides.

00:12:10.760 The former U.S. Secretary of Defense Robert McNamara was aware that there might be objections

00:12:14.980 raised by the international scientific community, but said in a memo to the president that such

00:12:19.180 objections had not in the past been a basis for prevention of military activities considered

00:12:23.600 to be in the interest of U.S. national security and the chemical weather modification program

00:12:27.940 was conducted from Thailand over Cambodia, Laos, and Vietnam, and allegedly sponsored by

00:12:32.660 Secretary of State Henry Kissinger and the CIA without the authorization of then-Secretary

00:12:37.700 of Defense Melvin Laird, who had categorically denied to Congress that a program for modification

00:12:43.220 of weather for use as tactical weapon ever existed.

00:12:46.320 So remember, key word, allegedly, right?

00:12:48.620 Allegedly that this happened.

00:12:50.100 But if that's something they did back in the days, and it turned into a story like this,

00:12:54.680 that means there's plenty of people that have the technology that if they really wanted

00:12:58.060 to create rain, and even Michio Okaku had on the podcast before we interviewed him, he

00:13:03.200 was once sitting down, I think it's with Good Morning USA, Good Morning America, whatever

00:13:07.000 the show is, and he's explaining to them how through laser technology, they're able to manipulate

00:13:11.720 to create rain.

00:13:12.840 And this has been around for a long time, and we can do this today.

00:13:16.060 So again, advancement, I trust it's out there.

00:13:19.660 Capitalists, I trust, are going to figure out a way through using technology.

00:13:23.020 And I just want to put this one thought in your head for you to be thinking about, because

00:13:25.940 I truly believe only the paranoid survive, which is what Andy Grove said.

00:13:29.280 FDR once said the following, in politics, nothing happens by accident.

00:13:33.060 If it happens, you can bet it was planned that way.

00:13:36.160 Why am I saying that quote to you?

00:13:37.460 If in the future, you all of a sudden find yourself with news that's being shared to you

00:13:41.360 to scare you with water crisis, and this is why we have to, whatever, shut down, eat,

00:13:47.060 you know, mosquitoes, or eat this, or eat that, or whatever way they're going to try

00:13:50.540 to figure out to scare the hell out of you, always go back to, wait a minute, we've been

00:13:55.700 able to create rain, we've been able to do all this stuff for so many different decades,

00:13:59.280 why are you using the scare tech?

00:14:00.600 To just go back to, you know what the solutions are, put that together, don't use another crisis

00:14:04.420 to be able to control me and scare the crap out of me so I can vote for you.

00:14:07.540 Be tempted to question and push back when somebody uses that crisis against you.

00:14:12.780 Having said that, if you got value out of this video, give it a thumbs up and subscribe

00:14:15.540 to the channel.

00:14:16.260 If you've never seen the video we did on a vertical farming, incredible video we did

00:14:20.800 on vertical farming, it's another crisis that has to do with farming.

00:14:24.100 If you've not seen it, click here to watch it.

00:14:26.120 Take care, everybody.

00:14:26.820 Bye-bye, bye-bye.

Valuetainment - September 13, 2023

Global Water Crisis： Why Michael Burry is Investing in Blue Gold

Episode Stats

Summary

Transcript