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If you've been following the worrisome and escalating South China Sea controversy, you know that China has been flexing its muscles laying claim to thousands of square miles of islands and ocean that other countries - Japan, Vietnam, Taiwan and the Philippines, to name the main ones - also claim to control.
This isn't some foreign skirmish that we can easily dismiss because of its distance, and because it doesn't affect us here at home.
The fact is, it affects the United States directly - and you could feel the fallout as soon as 2013.
Let me show you why.
As my Private Briefing subscribers know, I'm a regular listener to the world band radio broadcasts of the Voice of America, the BBC, NHK World/Radio Japan International, Radio Voice of Vietnam, China Radio International, and many others.
Granted, some of what they say is propaganda. But those broadcasts also include a lot of really excellent international and regional news and analyses - including viewpoints we don't often hear from monopolistic U.S. news outlets.
The South China Sea controversy is a terrific example of a story that's not getting much play in the U.S. media.
It should be, though, since the ramifications are huge: This region is flush with resources - as much as 213 billion barrels of oil (10 times the proven U.S. reserves) and 900 trillion cubic feet of natural gas (equal to all the reserves held by Qatar). There's also a rich fishing ground that feeds millions and employs thousands.
This "spat" has already resulted in naval standoffs between China and the Philippines, allegations that China sabotaged oil-exploration gear put in place by Vietnam, and an overt move by China to seek oil-exploration bids for areas that Vietnam says are part of its territorial waters.
In June, China even "formed" a city on islands that both Taiwan and Vietnam claim control over. And this month, China approved a military garrison for that island. It may be why Vietnam recently held "live-fire" exercises off its own coast - a move that Beijing interpreted as "an overt act."
Still say this doesn't affect the United States?
Well, U.S. Secretary of State Hillary Clinton would certainly disagree. She has been involved as a moderator in the dispute since 2010, and the conflict was a top agenda item during her recent visit to Southeast Asia.
In fact, in early July, Philippines President Benigno Aquino said he was thinking of asking the United States to deploy spy planes in the South China Sea to help monitor the disputed waters.
What This Crisis is Really All About
So let's identify this South China Sea spat for what it really is: An advanced look at the extreme conflicts that we're going to see with increasing frequency in the next few years.
Many of these conflicts will be ignited by energy. Others by disagreements over mineral rights and natural-resource deposits. Food shortages will be a big catalyst.
And some of the biggest, believe it or not, will be touched off because of disputes over, of all things, water.
As you can see, I wasn't surprised by the South China Sea donnybrook. I had been anticipating it - or one very much like it.
But I have a confession to make: I have a bit of an advantage over you.
You see, for more than a year now, our publisher Money Map Press has been working on a major investigation of the "ultimate pyramid scheme" - a government-backed contrivance that's setting the world financial system up for the ultimate fall.
Headed by Chief Investment Strategist Keith Fitz-Gerald, energy specialist Dr. Kent Moors, and best-selling author Chris Martenson, the Money Map Press investigators scrutinized the latest research, secret government reports and even some new discoveries that we made along the way.
Their findings ran the gamut from sobering to shocking to downright terrifying.
But the bottom line is this: The exponential growth that we've seen in the global economy - that our entire way of life is based upon, in fact - is unsustainable. Shortages in energy, food, water, natural resources, and so-called "rare earth" minerals are inevitable.
Our findings were so dramatic, and so well-supported, that we decided to turn our investigation into a documentary to better present them.
We even hired an Emmy Award-winning director to help produce it.
But here's the point I really want to make. Before you dismiss us as a group of economic Cassandras - or say "what's the use?" and give up - let me assure you that this situation is far from hopeless as far as individual investors like you are concerned.
There are several steps you can take now to protect yourself and your family when the inevitable breakdown arrives.
In fact, investors who make the moves that we recommend - and do so when we say - will actually prosper when the fireworks begin. That's because, in addition to the documentary, we put together a series of recommendations that you can put to good use immediately.
If you do so, the odds are much better that you won't be stung by predicted future events - in fact, they'll work to your favor.
In the year that we've been publishing Private Briefing, I've used the research from this ongoing investigation to help shape both the service and its recommendations. I've also seen the "rushes" (the periodic raw footage) from the documentary, so I know that what we're recommending is part of our core "belief system" here at Money Morning.
Make it part of yours.
If you haven't already, click here to watch this critical new documentary. It will be the most important thing you do today.
Good Investing,
William Patalon III, Executive Editor
Money Morning
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About the Author
Before he moved into the investment-research business in 2005, William (Bill) Patalon III spent 22 years as an award-winning financial reporter, columnist, and editor. Today he is the Executive Editor and Senior Research Analyst for Money Morning at Money Map Press.
Seems like Money Morning is saber rattling. Not a word about the heat & drought in the Midwest and great plains? Seems some discussion about our rapidly changing climate might be better discussion.
I noticed that Singapore was not included in your list. I was there on R&R in feb 67. It was a Brit protectorate aty the time but the island, city, state was run by the Chinese that escaped the mainland when Mao took over. The Chinese that I met treated me like royalty and the reason, I was/am a U.S. Marine. In fact those men who had fought along side Marines in all their wars since the boxer Rebellion through 1947 were like brothers. The point is that while there, my buddy and I heard gunfire outside a club that our Chinese Guide and driver took us to. Being fresh in from Nam we headed for the door but he stopped us stating that it was only the Singaporese police shooting a confirmed communist. Apparently it was and may still be illegal to practice or even advocate Communism or Socialsim in Singapore. That is the reason it is the Jewel of the Orient, not only financially but socially and physically. Of all the places I have been in my life, other than the USA, Singapore is the one that I would go back to if at all possible.
Dear Peter:
Thanks for the taking the time to comment. We've found that folks like you who take the time to post a comment — and who actually contribute some thoughts of their own to the posting — tend to be very well informed folks.
And believe me when I tell you that we like and respect a lot.
I zeroed in on your comment in particular because I agree with part of it — the part about the drought. I've written a number of columns about that issue in Private Briefing over the last month or so, including one in back in June that that warned readers that the crop numbers were going to be a lot worse than the government was saying. In recent weeks, that's just what's happened. (Fortunately, we also showed readers how to protect themselves).
I just covered this topic again early this week.
So, again, you and I are on the same page when it comes to the drought.
Now, as far as this business about our South China Sea coverage being "saber rattling," I have to say that I very much disagree. Part of the problem is that this isn't getting much coverage in the mainstream U.S. media (and I spent more than 20 years as a mainstream media journalist, and spent time abroad, so I understand this very well).
This is a tinderbox just waiting for the right spark. And believe me when I tell you that this scares the hell out of our government. We could very well end up being caught in the middle. On one hand, we want to maintain our allegiances with Taiwan and the Philippines, and want to build an economic bridge to Vietnam (our leaders in Washington realize that a bigger economic presence in Asia is one of the only things we can do to jump-start the economy in the long run). But we also don't want to square off against China, and lose out on that potential (and create another military headache at the same time).
This is a huge issue in Asia, where it's causing considerable angst. A hefty portion of Radio Voice of Vietnam's broadcast to North America last night (Wed. July 25) was devoted to this. And that's telling. As you and I both know, those broadcasts are, in part, carefully crafted propaganda. So Vietnam wants us to know how upset it is over China's alleged incursion into its territorial waters. And the fact that an Asian country would admit, well, weakness in such a public forum tells us that they are more interested in us understanding how problematic this is than they are in projecting the image of a strong, in-control emerging economic power.
Two final points – one dealing with the U.S. economy, and the second dealing with a future filled with natural-resource shortages.
Regarding that first point, understand (as I mentioned earlier) that Washington sees this South China Sea mess as a major potential problem — at a time when we can't afford anymore major potential problems.
U.S. Sec. of State Hillary Clinton has been working on this issue for two years. Beijing wasn’t happy when we first got involved via Sec. Clinton two years ago. And it was a major focal point of her recent visit to Southeast Asia.
You see, Clinton’s bosses realize that close economic ties with Southeast Asia are one of the few long-term solutions to this country’s economic malaise. So a standoff that forces us to choose sides is the absolutely the last thing Washington wants right now.
And the potential for this situation to turn military is very real.
Just this week, a new report by a think tank called the International Crisis Group warned that the risk of escalation was high. The think tank also urged the countries that all claim control of this area of islands and ocean to find a way to collaboratively manage the fishing and energy resources and to create a forum to handle the “incidents” that will inevitably take place in such a disputed area.
Warned the report: “In the absence of such a mechanism, tensions in the South China Sea could all too easily be driven to irreversible levels.”
That brings me to my second final point – shortages.
You need to look at the big picture here (just as you so shrewdly did with the drought issue). China's aggressiveness in the South China Sea region is fascinating. The country is being as sweet as honey in all of its public statements and via acts of diplomacy. But it's being aggressive as hell (including allegedly sabotaging Vietnam drilling rigs in this region) in its actual actions.
And this aggressiveness isn’t confined to the South China Sea.
Throughout the world, China is buying up energy, food, water, mineral and any other natural-resource asset someone is willing to sell (or lease into a long-term contract).
Just this week, Chinese companies agreed to spend $15 billion to buy a major Canada-based oil-sands player and $1 billion for a natural-base pipeline that serves more than 7 million customers in the United Kingdom.
China is snapping up or leasing natural-resource assets in Latin America, Africa and the Pacific region.
And with $3.4 trillion in foreign reserves, the country can shop ‘til it drops for a long time to come.
Beijing sees this aggressive buying as necessary for China’s continued growth. But most of these resources are finite – either in terms of reserves (oil) or in terms of how much can be created in any single year (food).
So whether we’re talking about the South China Sea, or the oil-sands purchase in Canada, there’s only one conclusion to reach: All of these stories, taken together, demonstrate that future shortages of oil, gas, food, water and other natural resources are a mathematical certainty.
In other words, in the long run, these shortages cannot be avoided.
And some of those shortages will start to appear sooner than later.
Investors and consumers who prepare for these eventualities will be able to navigate the whipsaw markets that are headed our way – and may actually fare quite well.
Investors who ignore this will do so to their own detriment – and to the detriment of their families.
Take another look at this, Peter, and you’ll see what I’m saying. Take a look at our documentary investigation on this (you’ll see notes about it on the MM Website). Given the excellent thinking you demonstrated with regard to the drought (where, as I said, we’re in complete agreement), I think you’ll come to the same conclusion as us on this other topic, too.
Thanks again for taking the time to offer your comments and insights. I hope you write again very soon.
Very respectfully yours;
William (Bill) Patalon III
Executive Editor
Money Morning & Private Briefing
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Ok, first all, inorder for someone to invest and protect its family when this things comes, do you have a very inexpensive program to teach a complete newbie to learn about it first before thrawing himself to this very risky stock business.
Can you tell me then what are the chances of earning a good living for someone who never have experience in these area, I mean as if you were going to show us step by step how to win in investing thro your expertist, so you must have a program to teach all the technicality and can someone be able to start investing with as little as just 1k and grow from it slowly.