— Then there’s this water issue.

“Water is absolutely not fairly priced or realistically priced,” Peter Brabeck-Letmathe, CEO of Nestle, said yesterday, citing frequent and lavish subsides to farmers in both the developing and developed worlds. “People are using water as if it is a resource that will be free of charge forever. That is the reason we are running out of water.”

Oy, we can’t catch a break on these themes.

Of course, our Chris Mayer has been sounding the alarm about water for nearly two years now. The newest addition to his Blue Gold Portfolio is already up 12% — in part because of news that it just landed a contract to rehab a couple miles’ worth of sewer pipe in Manhattan.

We’re also covering “peak everything” in our investment symposium in Vancouver this July. A View From the Peak: Investing Profitably in a Time of Risk and Scarcity will feature the most successful resource investors on the planet and over a 1,000 individual investors — like you — striving to stay ahead of the next investment trends. Don’t hesitate to join us. Details here.

— The International Monetary Fund announced yesterday that it plans to sell 13 million ounces of gold — about 12% of its total holdings. That could drive up supply in the market and take gold to the woodshed…

Selling its gold will help the IMF raise cash to shore up its balance sheet. To that same end, the IMF will make an uncharacteristic move for a bureaucratic colossus — cutting about 15% of its work force. That means 380 people will have to find something productive to do in Washington, D.C.…rather, they’ll have to move.

Gold traders shrugged off the news. The U.S. Congress would have to sign off on the sale, and chances are that it’s not even going to be brought to the floor until after the election. The yellow metal closed yesterday at $920, up about $5.

— The paper currencies were “boring” yesterday, in the words of our currency counselor Chuck Butler. The dollar index closed essentially unchanged.

But today, the British pound closed at a record low against the euro. A survey on the U.K. housing market that suggests interest rate cuts from the Bank of England are just over the horizon. Maybe the pound fancies a sprint to the bottom against the U.S. dollar? That would be fun to watch…from the sidelines, at least.

— One of Europe’s more famous watering holes — indeed, one of Ernest Hemingway’s hangouts — has taken pity on dollar holders, posting this sign on the outside:

“Harry’s Bar of Venice,” the sign reads, “in an effort to make the American victims of subprime loans happier, has decided to give them a special 20% discount on all the items of the menu during the short term of their recovery.”

Harry’s Bar of Venice: 20% Isn’t Really Much of a Discount With the Euro at $1.57, Is It?

The offer applies to all Americans. You don’t even need to show your passport; they’ll judge by your accent and attitude. Arrigo Cipriani, the bar’s 76-year-old owner, says he can’t afford to be picky. “Since the start of January, we noticed a drop in (American) customers of between 5-10%, and now that we are in April, it looks really frightening.”

One catch: The discount applies only to the restaurant tab. Drinks remain full price. “Huh? What good is that?” “Extreme” Ian might have written this morning, if he weren’t learning how to surf in Costa Rica this week.

Special thanks, by the way, to Dave “Dollar Bear” Gonigam, of The Daily Reckoning’s Desidooru Saloon fame. Dave’s pinch-hitting for the week, while Ian gets his ya-yas out down south. Thanks, Dave.

— “Who’s getting bailed out?!” responds an incredulous reader to another’s beef with the media’s characterization of the Bear Stearns “bailout.” “I believe the answer is the bondholders of Bear Stearns and the counterparties to the derivatives held by Bear or those that held derivatives to which BS was the counterparty.

“J.P. Morgan is said to be the largest holder of derivatives, to the tune of 400% of its capital. If true, that means that the Fed is bailing out J.P. Morgan and the other large investment banks that could have also gone under if a large number of the counterparties to the derivatives they were holding defaulted.”

“Taxpayers are guaranteeing 100% of their principal,” agrees another. “Why should we do that?”

The 5 responds: In this age when “socialized risk” is not only acceptable, it’s the lifeblood of the system, what do you expect?

— “When will you guys give a farmer a break,” writes a Nebraskan who’s had enough of our ethanol bashing, thank you, “and let him make some money from the market once? You talk about the vast amount of waste using corn to make ethanol. Just go to the edge of any Midwestern city and see all of the arable land going to waste being cemented over.

“Think of all the water, fertilizer and chemicals used on lawns in cities. Transporting ethanol? How about transporting oil halfway around the world to use in the U.S.? Would you rather be supporting a U.S. farmer or the Middle East? Sounds to me you like to support the Middle East.”

“We American farmers have sold our food too cheap for too long,” writes another, putting it more succinctly, “It’s time the price goes way up to keep up with postage. For instance: 1960 — 4 cents versus corn $1. Postage is now 41 cents, so corn should be up 10 times also, or $10. Or how about cars in 1960? $2,300. Now $30,000, or 15 times as much. Any way you look at it, we have been taken advantage of. Maybe now the price can go up another two or three times so we can live too.”

The 5 responds: Food riots…angry farmers…water and energy crises…hmm. What century is this? Did we miss something on the way to work this morning?

Hope you’re having a good day,

Addison Wiggin
The 5 Min. Forecast

P.S.: To our surprise, we also discovered the newly revised and updated version of our book The Demise of the Dollar is available on Amazon this morning. We originally released the book in 2005, but its tense was mostly future. Many of the things we forecast two years ago came to pass in a way that surprised even us.

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