You turn on the faucet, and-voila-you have a drink of water! Those of us who come from western nations tend to take water for granted. However, after a few years in Israel, we appreciate the fact that whatever water we receive is a gift. The media is filled with reports about how the world is running low on crude oil, but not too much attention is paid to the growing water crisis.
Water as an Investment
As abundant as it appears to be, only about 20% of the global population has access to running water.  Additionally, only one-third of the world’s population has access to clean water. In fact, many estimate that in 40 years, more than four billion people, half the world’s population, will be living in areas that are chronically short of water. Moreover, economic development has placed greater pressure than ever on the supply of fresh water. In 1900, the global annual water use per capita was 350 cubic meters. In 2000, that number had grown to 642 cubic meters. In the United States alone, the demand for water has tripled in the past 30 years, while the population has grown by just 50%.
China, Africa and the United States
The need to increase access to clean water around the world has led some to call water the “oil” of this century. As the world becomes more and more developed, wealthy countries will not only be able to afford, but will also have a moral obligation to provide this basic necessity to their citizens. China and India, which are experiencing economic booms right now, are therefore investing hundreds of billions of dollars in improvements to their water infrastructure, while many sub-Saharan African countries that are beginning to show signs of economic growth will soon need to begin to provide basic resources to their population. In all three of these examples, these are huge populations that are in their infancy when it comes to the basic needs of their citizens. They have been steeped in poverty for decades, and they are emerging only now. As such, they need to start from scratch, which means access to water and building roads.
In terms of the United States, the Environmental Protection Agency estimates that up to $1 trillion will have to be spent on upgrading U.S. water infrastructure over the next few years. The country’s aging infrastructure, much of which is more than 100 years old and has long exceeded its useful life, is in a state of utter disrepair. In the United States alone, the network of drinking water pipes extends more than 700,000 miles - more than four times the length of the National Highway System. This all adds up to the need for new reservoirs, better water canals and more efficient irrigation systems. Israel happens to be a global leader in the innovative technology needed for making such repairs.
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While many experts believe that there will never be substitutes for water, I tend to take a much more optimistic view of things. All kinds of technologies are being created to tackle the issue before it turns into a crisis. If we were to fast-forward 50 years, I am sure that we would be shocked at the technological advances made. Investors should speak with their financial advisers to see what options are available to invest in the water industry.

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Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

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So today the Manufacturers Association of Israel is out calling on the government to implement some kind of emergency rescue program to save the fledgling textile industry. They say that due to the Shekel strength over the last year or so, exports have fallen and about 5% of workers in the industry have lost their jobs in ‘08.

According to a report in Globes: “While textile exports fell 3.3% to $520 million in the first half in real terms, compared with the corresponding period, textile imports (especially from Asia), rose 18.6% to $656 million.”

Unfortunately what they neglect to say is that this is nothing new. Israel has lost textile market share for years, as even local producers have turned to Jordan and other countries with much cheaper production costs. Basically, due to the fact that many in the Israeli textile industry are unionized, they have succeeded in pricing themselves out of the market, forcing companies to turn to cheaper alternatives. It’s the Association’s own fault and now they want the government, i.e taxpayers, to bail them out. Sorry. If you can survive, great. If not, try producing something else.

I realize that government bailouts of certain sectors and populations has become the norm over the last couple of months, as governments in both the UK and the US, have bailed out banks that played fast and loose with their and depositor’s money. And let’s not forget homeowners in the US who were encouraged to purchase homes that they couldn’t afford, couldn’t make monthly mortgage payments, and are now getting bailed out by Congress, the same Congress that encouraged them to make the purchase in the first place. But why can’t we just let the market take care of itself.

If developing countries are able to produce goods on the cheap, let them. Developed countries should concentrate on what they do best, which is producing value-added goods and services. Each country should specialize in what they do best, thus we will get the best goods at the most attractive prices. I am not going to go into an analysis of Francis Fukuyama’s “End of History’ theory, but specialization does have advantages.

The Israeli government should stand strong, and not succumb to a bailout of the textile industry. Either the Israel textile industry should make the necessary changes needed to compete in a global economy, or they should face the music.

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NEW! Introducing Israel Opportunity Investor, our monthly subscription-only newsletter. Stay ahead of the game and make smart decisions in Israel stocks. Go here to learn more.

Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

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Your cell phone bills may start to get cheaper. Why? Well just like traditional fixed land-line prices dropped to virtually nothing due to new technology, most notably Voice Over IP (VOIP), the same thing may very well happen to your cell phone as well. An Israeli hi-tech start-up, Spikko ltd. is set to launch a free cellular telephone service for handsets with at least 3G capabilities.

According to a report in Globes: “Each subscriber receives the company’s SpikkoPhone software and an Israeli telephone number, which is used to make calls and accumulate airtime, allowing for the placing of calls for free anywhere in the world. The service also offers video and chat services, and will soon also offer e-mail and instant messaging.”

Currently it’s available in Israel only, but the company is working on making the service available internationally. The company estimates that customers will save between 40-80% off existing bills.

It will take time for cellular prices to drop down to levels that we pay with our landlines. It’s not something that will happen overnight, but with companies like Spikko, and others trying to do similar things, I have a hunch that cellphone companies better figure out other revenue streams, like content and other value added services, because it does stand to reason that we will continue to see price erosion on airtime charges.

Please see our Disclaimer HERE.

NEW! Introducing Israel Opportunity Investor, our monthly subscription-only newsletter. Stay ahead of the game and make smart decisions in Israel stocks. Go here to learn more.

Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

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It’s no secret that the airline industry has issues. Soaring fuel costs, have left airlines scrambling for ways to increase revenues. Instead of just raising fares and cutting capacity, airlines have decided to nickel and dime travelers to death. Just yesterday the Israeli El Al airlines decided to start charging travelers more for seats in an emergency row. This follows other airlines charging for pillows, food, luggage…etc.

Customers are getting fed up with an ever expanding list of fees. In an age where most industries have made their fee structures much more simple, the airlines have decide to drive us crazy. ” Sir, you’d like ice with your beverage? That’ll be 3 bucks.” Or “Miss, I am sorry but since your shoes have high heels, that’ll be $2.”

You know, if airlines really wanted to be fair about each individuals contribution to the amount of fuel used per flight, and then charge accordingly, they could use the supermarket method. When we go shopping, for many items, we pay per pound. Fruits, vegetables, ground beef all priced according to weight. Why don’t the airlines follow suit? Why should someone who is thin, pay the same amount as someone with a bit more girth? After all, our weight-challenged traveler causes more fuel to be used than our thin traveler.

Stop the madness. Just raise fares. It’s that simple.

Please see our Disclaimer HERE.

NEW! Introducing Israel Opportunity Investor, our monthly subscription-only newsletter. Stay ahead of the game and make smart decisions in Israel stocks. Go here to learn more.

Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

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