But if you can set aside peak oil and the indisputable global food crisis for a moment, I want to talk about another threat facing the global economy. In fact, in my opinion, it’s the #1 threat to the global economy: the scarcity of fresh water.

This precious resource is also running in short supply. There’s no argument that water is much more necessary to life than oil. Without water, we die. Without oil…well, we learn to use bio-fuel… or bicycles.

Forget Peak Oil… What about Peak WATER!

Here in Florida, we’re already rationing our water, like many other areas around the world. Even as our “rainy season” begins, I’m restricted to watering my parched front lawn just two days per week. But that’s a very mild inconvenience compared to what’s going on in other parts of the world – and what’s likely to happen in the very near future here in the United States…

Due to global warming, glaciers in the Himalayas are melting fast. That’s bad news for emerging Asia, because a few hundred square miles off the Himalayas is the source for ALL the major rivers in Asia – home to nearly HALF the world’s population.

In places like Florida, where vast underground aquifers supply ALL our fresh water, rainfall isn’t enough to refill the sub-surface water tables.

It turns out water isn’t a “renewable” resource after all. Or at least Mother Nature is not renewing it fast enough to keep up with soaring demand.

“Demand for water continues to escalate at unsustainable rates” according to a recent Goldman Sachs report. “Globally, water consumption is doubling every 20 years. By 2025, it is estimated that about one third of the global population will not have access to adequate drinking water.”

Aging Infrastructure Leads to Short Supply

Water is running in short supply. It’s a global issue, and it’s approaching crisis dimensions. Consider that…

• Billions of people – don’t have access to reliable fresh water supplies
• The U.S. alone needs up to US$1 trillion in new water pipes and waste treatment plants by 2020.
• Half of the world’s population – will live under conditions of “severe water stress” within the next two decades.
• Water is also a vital industrial resource, used in the production of many other goods. For instance, it takes about 1800 gallons of water to produce a pair of jeans, 400 gallons to produce a cotton shirt, and 150 gallons for the Sunday paper.

The fact is, we’re consuming water faster than we can tap new fresh water resources. This growing crisis in the world’s fresh water supply means major profit opportunities are in store for companies working to find solutions.

Part of the solution involves building out new water infrastructure in developing nations where an estimated US$50 million a day will be invested on water supply projects over the next few decades. Meanwhile, aging water systems in modern countries are leaking like a sieve. They badly need infrastructure updates.

Global Water Crisis Will Trigger a Tidal-Wave of Spending

The World Water Council estimates that developing nations alone will need US$4.5 trillion in water infrastructure investment over the next 25 years alone. And this isn’t just a third-world problem…

In modern industrialized countries, municipal water systems put in place centuries ago are woefully inefficient and falling apart at the seams.

In Europe, most pipe systems date from before World War I and many haven’t been upgraded since then. These leaky pipes lose 40% to 60% of Europe’s drinking water before it can be used.

In U.S. municipal water systems 30% of the pipes are between 40 and 80 years old…another 10% of pipes are over 80 years old. As a result, about six billion gallons of treated water leak from American water systems every day.

The global water crisis may soon end up grabbing the headlines away from soaring food prices and sky-rocketing energy costs. This will result in an unprecedented spending boom of more than US$5 trillion over the next 20 years, according to estimates.

That’s about US$250 billion in water-related spending every year – a very big opportunity to profit if you know where to invest…

I’ll be watching this trend very closely over the next few months. Please stay tuned for updates.

MIKE BURNICK, Senior Editor & Global Markets Analyst

P.S. In my research, I’ve discovered one fund that invests in 50 different water treatment and infrastructure companies. In my opinion, it’s the absolute best way to profit from what’s quickly becoming a global issue. Look for full details on this dynamite play coming in the July issue of The Sovereign Individual. Don’t receive our members-only newsletter? Click here to sign up for the next 12 issues – for pennies a day.

Source: Why This Scarce Resource is Also the #1 Investment Opportunity of the 21st Century

— The Great Greenspan Reputation Rehab tour is officially under way.

“I was praised for things I didn’t do,” Greenspan said this morning in The Wall Street Journal. “I am now being blamed for things that I didn’t do.” Not that he spoke up when Bob Woodward hailed him as the “Maestro” …or when Time magazine featured him on its cover as the head of the “Committee to Save the World,” of course.

— Yesterday, we noted fiery comments Greenspan directed at critics in the Financial Times. Today, The Wall Street Journal trots out the results of not one, not two but three recent interviews.

The Maestro’s Last Defense: Look deep into his eyes. When his hand closes into a fist, 18 years of easy money policies will vanish from your memory. Poof!

“Omniscience is not given to us,” Greenspan told the WSJ, dodging one bullet. “There is no way to predict how innovative markets will develop. All you can do is set a general strategy. The choice is between a lightly or tightly regulated economy. The former is highly competitive, innovative and dynamic — but periodically visited by wrenching crises. The latter is more stable, but slower growing.”

“Monetary policy is process based on probabilities,” he continued, dodging another, “I don’t remember a case when the process by which the decision making at the Federal Reserve failed. Events often did not proceed as we anticipated, but that resulted from a lack of foresight, not from a flawed decision making process.”

Nearly 300 years ago, John Law, a Scottish gambler and womanizer, conducted the first modern experiment with paper money in early 18th-century France. While the party raged, Law became the richest man in the world and was hailed a hero by king and court. Before it was all over, Law barely escaped France with his life after having his carriage smashed by an angry mob. We recounted the story in Financial Reckoning Day in 2002, at the height of Greenspan’s Maestro-ness.

The fabulous destiny of Alan Greenspan awaits…we’ll keep you posted.

— Likewise, the sunny optimism breaking over Wall Street — thanks to the Washington Mutual rescue plan — turned cloudy yesterday. Traders are getting jittery about first-quarter earnings announcements.

Perhaps, rightfully so.

Alcoa, the first Dow component to report, did so yesterday after the close. It came in at 44 cents per share… analysts were expecting 48. But we don’t expect the aluminum producer will have much of an effect. Most of the financials begin reporting next week. That’s when the fireworks will begin.

For the day yesterday, the Dow and S&P each lost a skosh. The Nasdaq dropped about a quarter percent…down 0.26% Otherwise, trading was quiet.

— We’re detecting a theme in much of the day’s news. Something you might call “Peak Everything.” Oil, food, water — you name it — supplies are falling and prices and tensions are rising. The world appears to be entering one of those phases in history that will take generations of library-sequestered historians inventing new theories to explain.

— But let’s dive in, starting with oil. It’s approaching record levels again. Light, sweet crude closed up nearly $3 yesterday, at $109.09. One reason for the rise: a decline in production from Russia — the world’s second biggest oil exporter.

“Production has been flat the last three months,” explains our Byron King, citing an obscure report from oil analyst Aram Mäkivierikko, “and it’s still below the maximum of under 10 million barrels per day set last October. That’s putting a strain on global supply, despite what OPEC ministers say.”

In a worst-case scenario, the study says, Russian production has already peaked. And even in the best-case scenario, production can’t increase by more than 5-10%. Should this report bear scrutiny, the implication of “Peak Oil” in Russia will be dramatic.

On the home front, Byron’s keeping his eye on a company that claims it can transform used tires into fuel…and it’s going into commercial service no later than May 31. Down the road, the same technology could be used to breathe new life into American oil wells that have been abandoned for decades.

And it has a one-of-a-kind leg up on all competing technologies when it comes to extracting oil shale — the hard-to-extract stuff in the Rocky Mountains that’s estimated to total three times Saudi Arabia’s proven reserves. We’ve reserved details for paying members of Byron’s Energy and Scarcity Investor — on sale this week. If you’re interested in learning more, you can do so here for a limited time.

— Just days after Robert Zoellick, president of the World Bank, warned 33 countries are at risk of riots because of food prices — the risk is already becoming a reality in several of them.

Four people have been killed in Haiti, where the prices of rice, beans and fruit have risen 50% in the past year.

Food riots were reported in four West African nations yesterday, and a nationwide strike was called for today in a fifth. Plans for a general strike in Egypt to protest rising food prices have been squelched, but only because police arrested more than 200 people.

“I think what we are facing is a perfect storm,” comments Bettina Leuscher from the World Food Program. “More and more people are going hungry and need food aid. At the same time, we’ve got the lowest food reserves in some 30 years on the markets. And prices have gone up tremendously, sometimes doubled in the last few months and you’ve got climate change with less harvest, droughts, floods.”

No riots in New York — not yet, anyway — but food pantries report major shortages because donations are way down.

– “We need to be concerned,” U.N. Secretary-General Ban Ki-moon commented yesterday, “about the possibility of taking land or replacing arable land because of these biofuels.” This, two years after the United Nations Food and Agriculture Organization forecast that biofuels would wipe out hunger and poverty for up to 2 billion people.

“I’ve heard from at least a dozen farmers,” counters Kevin Kerr, who has been on the biofuel beat for years, “in Illinois, Minnesota, Iowa, Wisconsin and Indiana. They’re all telling me the same stories of either ethanol plants under construction that have ceased operations or plants that are declaring Chapter 11. Looks like the ‘dream’ of the new gold rush in corn-based ethanol is starting to unravel, and fast.”

— How about the outlook for U.S. crops this spring? Says Kevin: “Not great.”

“The wet, muddy conditions and continued rain make it next to impossible to get equipment in the fields,” Kerr writes. “Also, farmers run the risk of putting seeds in too early and, basically, losing the crop. The situation is pretty grave this year, as demand for all the grains is very high, as are the costs to plant them. The hope seems to be that we will have another year like last year and Mother Nature will be kind. It may not end up that way.”

Kevin heads out next week for his annual trip to the upper Midwest. “I knew corn would be going to $6 three years ago largely because of what I found out by visiting farms and seeing what was going on long before the ethanol boom landed on the front page of Barron’s.” We’ll keep you posted on Kevin’s travels.

Oh…some angry farmers respond to our coverage of the ethanol boom, too, below.