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Joel Bowman, with a few introductory words from Taipei, Taiwan... By now you're probably aware that Addison Wiggin's new research advisory is almost up and running. Actually, it's currently in "beta- test" mode (which is great news if you haven't yet taken advantage of Addison's complimentary test-phase trial...more on that below). In today's Weekend Edition, we're excited to be able to present an extract from the first beta-test issue of Addison Wiggin's Apogee Advisory. The service, as Addison explained to us when we visited H.Q. in Baltimore a few weeks back, aims to connect the dots between the themes you read about everyday in his various newsletters and books and the actionable investment ideas those trends spawn. It's where the "rubber meets the road," as Addison put it. This particular essay comes replete with some characteristically diligent research from one Ian Mathias, Addison's co-pilot over at The 5-Minute Forecast. (See how all these dots connect?) Anyway, we hope you find it of interest... Battle of the Youth Bulge By Addison Wiggin Baltimore, Maryland How certain large populations of idle young men will likely change the world... for the worse "Between 1970 and 1999, 80% of civil conflicts occurred in countries where 60% of the population or more were under the age of thirty... Today there are sixty-seven counties with youth bulges, of which sixty of them are experiencing social unrest and violence." - Council on Foreign Relations A surge in youth population leads most nations in one of two directions: Economic boom or social bust. While much of the world is currently focused on the aging populations of powerhouse nations like the US and Japan, certain regions of the world are growing startlingly younger. Social scientists call these phenomena "youth bulges." By necessity, they take time to play out. But even in these early stages, it's easy to see what's coming...and a lot of it is pretty unsettling. Yemen has captured American attention just a few times in the last decade. The assailants of the USS Cole were from there, and the infamous "underwear bomber" - who was trained in Yemen - tried to spoil Christmas Day 2009. In both cases, we as a nation spent the proceeding weeks tripping over ourselves...searching for answers as to how this came to be, who to blame, and how to stop it from happening again. But, as usual, few ask "why?" That's a more stinging question, of course. One of the few easy answers is this: Yemen is overflowing with disaffected kids. An amazing 46% of the Yemeni population is under 16 years old. That's the highest youth ratio for any nation in the world outside of Africa. By comparison, only 20% of Americans occupy this demographic. Recipe for Disaster If there's a better model out there for youth bulges at risk, we can't find it. Yemen has been plagued with civil war for most of the last century. 45% of the population lives in poverty. Social mobility is a rarity. Barley half the population can read. Life expectancy is relatively low (60 years old for men). Only 3% of the land is arable and most of the nation suffers a constant shortage of potable water. What little land and water is available for agriculture is mostly used for growing khat - the same amphetamine-like narcotic that helped turn Americas' brief occupation of Mogadishu into "Black Hawk Down." The drug is hugely popular in Yemen, where as much as 90% of men chew it everyday. A headline of a recent TIME article gives the addiction credence - "Is Yemen Chewing Itself to Death?" The icing on Yemen's sheet cake of problems: The nation's one great source of income - oil, which accounts for 75% of government revenue - will likely run dry by 2020. In other words, the country has less than ten years to completely reinvent its economy. Yet despite it all, the Yemeni population has doubled since 1975 to 22 million, now the second most populous nation in the Arab peninsula. Today, the average woman in Yemen has 6.5 children. Why the West Should Listen Up Does Yemen's "youth bulge" matter to the Western world? Ask the passengers of Northwest Airlines Flight 253, or seamen of the USS Cole, or all the travelers, soldiers and businesses that will be affected by subsequent policies. Yemen's porous borders, lack of police force, predominantly Muslim population and disaffected youth are ideal breading grounds for Islamic radicalism. Yemen was second only to Saudi Arabia in the number of soldiers sourced to fight the USSR in Afghanistan in the '80s...the very group of soldiers that would one day form a group called "Al Qaeda." Any government or business that plans on sailing through the Red Sea should take notice. Other than sailing around Africa, there is simply no way to connect the Indian Ocean and Mediterranean Sea without brushing up against Yemen. Its narrow Mandab Strait is the only way into the Red Sea and Suez Canal. Over 3.3 million barrels of oil pass through this strait every day, roughly 7% of daily global tanker loads. Worse yet, what can be said for Yemen is hardly dissimilar from many of its Middle Eastern neighbors. At least 40% of the populations of Iraq, Afghanistan, Sudan and Oman are under 14 years old. In the whole Middle Eastern region, 65% of the population is under 30. Suffice to say many are struggling with plights themselves...food and water scarcity, peak oil, Jihadism, political instability, etc. The same goes for most of Africa, too - though few nations there wield the same kind of petrol- power or propensity for global terrorism as the Middle East. "The 'War on Terrorism' promises to be expensive," Bill Bonner and I observed in Financial Reckoning Day seven years ago, "simply because there are so many potential terrorists to fight. Westerners constitute a decreasing minority of the global population: In 1990, they amounted to 30% of humanity; in 1993 that number had dropped to 13% and by 2025, following current trends, the percentage will fall to 10%. At the same time, the Muslim world is growing younger and increasing in numbers. "In fact, Muslims' market share of the global population has increased dramatically throughout the twentieth century and will continue to do so until the proportion of Westerners to Muslims is inverse that of the 1900 ratio. By 1980, Muslims constituted 18% of the world's population and, in 2000, more than 20%. By 2025, they are expected to account for 30% of world population." Thus, like the Protestant Reformation, the French Revolution, the Iranian Revolution or even the "free love" '60s here in the US - a very large, disaffected population in the Middle East is coming of age. If social and political conditions there remain the same - and we see little reason why they wouldn't - the worst from the region is likely yet to come. And if the social and political scene there deteriorates - with the help of peak oil, religious wars and constant Western intervention - darker times are practically guaranteed. Joel's Note: To help get his Apogee Advisory moving in the desired direction, Addison has kindly offered to waive the first three months subscription cost...in exchange for your constructive feedback on his service. If you're interested in taking part in this project, and want in on the ground floor, be sure to check out the info page here. In his next issue, Addison plans to explore several specific ideas on how best to play our Trade of the New Decade - sell US Treasuries, buy Japanese Stocks. You'd do well to get yourself on the test list before that one. After all, our last Trade of the Decade - sell stocks on rallies, buy gold on dips - worked out rather well, wouldn't you say? Get on board here. --------------------------------------------------------------- | |
ALSO THIS WEEK in The Daily Reckoning... By Addison Wiggin Baltimore, Maryland In recent years, foreign students snagged 60 percent of engineering doctorates in the United States. If you widen the pool to doctorates in engineering, mathematics, computer science, physics and economics, foreigners still accounted for 50 percent. Immigrants were CEOs or lead technologists at over 50 percent of Silicon Valley startups in the last decade. Immigrants co-founded Google, eBay, Intel, and Yahoo, among others. By James Turk The US money supply is much bigger than the official numbers indicate...$1.25 trillion bigger, to be exact. If you care about the value of the dollars in your pocket, this information should matter greatly to you. As the financial crisis has unfolded over the last two years, the Federal Reserve has been responding in a variety of unprecedented ways. Therefore, it is logical to assume that these never-before-used actions have altered long-established ways of measuring the US dollar money supply. By Doug Casey La Estancia de Cafayate, Argentina Louis James (Senior Editor, Casey Research): Doug, last time we spoke, you said quite a bit about debt, in the context of your expectation that the euro is on its way out. At the end of that conversation, you mentioned, of course, that the problem is not limited to Greece, nor the eurozone. America as a country has become a world-class debtor, and many Americans seem to think a maxed-out credit card is a reason to get a higher credit limit, not to economize. It's like a global epidemic. Let's talk about debt. By Doug Casey La Estancia de Cafayate, Argentina Doug: There's a titanic battle right now between the forces of inflation and deflation. When a big corporation like General Motors, or Fannie or Freddie, defaults on its debt, hundreds of billions of dollars disappear. Assets people thought they had and could have been converted into cash disappear. That's deflationary. In a sound banking system, in which money is a commodity like gold, money can't disappear. It can change ownership, but it can't disappear. But in our current system, it can dry up and blow away as easily as it can be created. By Bill Bonner Mumbai, India We have come to Bombay to get a good look at India - at least the part of it you can see from a 10th floor room at the Taj Mahal Hotel. Which isn't much. The air is too dense. Still, we can make out the figures of whole families eating and sleeping on the pavement near the dock. The Weekly Endnote: Finally this week, a reminder to get your penny stock investing questions in to our resident small cap man-on-the- scene, Greg Guenthner. Greg will be conducting an online Q&A in the very near future, where he will examine the ins and outs of investing in this explosive stock universe. So, if you've got a query, make sure you drop him a line here. We'll let you know the moment the [entirely free] event goes live. Until next time... Cheers, Joel Bowman Managing Editor, The Daily Reckoning --------------------------------------------------------------- Here at The Daily Reckoning, we value your questions and comments. If you would like to send us a few thoughts of your own, please address them to your managing editor at joel@dailyreckoning.com | |
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