via Trader Mark, Fund My Mutual Fund

Jeremy Grantham's quar­terly let­ter was out Fri­day.  It is an in depth explo­ration of his Q1 letter.

Sum­mary points (full let­ter below embedded)

Sum­mary

• We humans have the brains and the means to reach real plan­e­tary sus­tain­abil­ity. The prob­lem is with us and our focus on short-term growth and pro ts, which is likely to cause suf­fer­ing on a vast scale. With fore­sight and thought­ful plan­ning, this suf­fer­ing is com­pletely avoidable.
• Although we will have energy prob­lems with peak oil, this is prob­a­bly an area where human inge­nu­ity will indeed even­tu­ally tri­umph and in 50 years we will have mud­dled through well enough, despite price prob­lems along the way.
• Short­ages of met­als and fresh water will each cause severe prob­lems, but in the end we will adjust our behav­ior enough to be merely irri­tated rather than threat­ened, although in the case of met­als, the pres­sure from short­ages and higher prices will slowly increase forever.
• Run­ning out com­pletely of potas­sium (potash) and phos­pho­rus (phos­phates) and erod­ing our soils are the real long-term prob­lems we face. Their total or nearly total deple­tion would make it impos­si­ble to feed the 10 bil­lion peo­ple expected 50 years from now.
• Potas­sium and phos­pho­rus are nec­es­sary for all life; they can not be man­u­fac­tured and can­not be sub­sti­tuted for. We depend on finite mined resources that are very unevenly scat­tered around the world.
• Glob­ally, soil is erod­ing at a rate that is sev­eral times that of the nat­ural replace­ment rate. It is prob­a­ble, although not cer­tain, that the U.S. is still los­ing ground. The world as a whole cer­tainly is.
• In par­tic­u­lar, a sig­nif­i­cant num­ber of poor coun­tries found mostly in Africa and Asia will almost cer­tainly suf­fer from increas­ing mal­nu­tri­tion and star­va­tion. The pos­si­bil­ity of for­eign assis­tance on the scale required seems remote.
• The many stresses on agri­cul­ture will be exac­er­bated at least slightly by increas­ing tem­per­a­tures, and severely by increased weather insta­bil­ity, espe­cially more fre­quent and severe droughts and floods.
• Cap­i­tal­ism, despite its mag­nif­i­cent virtues in the short term– above all, its abil­ity to adjust to chang­ing con­di­tions – has sev­eral weak­nesses that affect this issue.
• It can­not deal with the tragedy of the com­mons, e.g., over­fish­ing, col­lec­tive soil ero­sion, and air contamination.
• The finite­ness of nat­ural resources is sim­ply ignored, and pric­ing is based entirely on short-term sup­ply and demand.
• More gen­er­ally, because of the use of very high dis­count rates, mod­ern cap­i­tal­ism attrib­utes no mate­r­ial cost to dam­age that occurs far into the future. Our grand­chil­dren and the prob­lems they will face because of a warm­ing planet with increas­ing weather insta­bil­ity and, par­tic­u­larly, with resource short­ages, have, to the stan­dard cap­i­tal­ist approach, no mate­r­ial present value.

Grant Ham

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