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"It's One of the Scariest Moments in History."
According to famed economist Harry Dent and Reagan's former budget director David Stockman: "America is in unchartered waters. We're heading for the largest economic collapse in our lifetimes."
No central bank has printed this much money. We've never had deficits this high. We've never kept interest rates at zero for this long. We've never been inside a money bubble this big.
The Greatest Depression is approaching at breathtaking speed. What will happen to you, your family and your wealth?
Details on how to both prepare and endure are in David and Harry's brand-new video: Sundown in America.
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Mega-Profits From the Mega-Drought
Drought-stricken California has just started its countdown to doomsday. A top scientist has warned that the state has about one year of water left. After that... well, nobody knows.
But I've got some ideas that could make you buckets of money.
Here are the facts:
- California is in the fourth year of its drought. I first started chronicling this drought in August of last year. As I mentioned back then, California was in the midst of not only an epic drought, but also a record-breaking heat wave. Conditions haven't improved at all since then. In fact, despite some wintertime rain, the drought conditions have only worsened.
 - The drought lasted through the winter. In those parts of California that get snow, people are basically skiing on dirt because the snow didn't show up. The snowpack was less than 25% of normal in the Cascades and Sierra Nevada mountains. Northern California's snow-water content was at 10% of normal on March 16, a record low.
- If you thawed all of California's snow at once, the state would have only 3.7 inches of snow-water equivalent. On average, California has 28.5 inches of snow-water equivalent by this time of year.
- Disappearing fast: NASA satellites reveal that the total amount of water stored in the Sacramento and San Joaquin river basins - all of the snow, river and reservoir water, water in soils, and groundwater combined - was 34 million acre-feet below normal last year. That's 1.5 times the size of Lake Mead, America's largest reservoir.
- It's the worst drought California has experienced in 850 years. The word "mega-drought" is being tossed around. The problem is that mega-droughts can last a long, long time: a decade, or even longer. And that means California's water-wasting days may be over.
According to Park Williams, a bioclimatologist at the Lamont-Doherty Earth Observatory of Columbia University, "When considering the West as a whole, we are currently in the midst of a historically relevant mega-drought... More area in the West has persistently been in drought during the past 15 years than in any other 15-year period since the 1150s and 1160s."
A drought this severe cannot be cured by a few big storms.
California's dire, bone-dry situation led NASA scientist Jay Famiglietti, who is also a professor at University of California-Irvine, to say the state had about one year of water in reservoir storage. He added that the backup supply, groundwater, was also low.
And let's talk about groundwater. California farms and cities are drilling deeper and deeper for water. They are now tapping into water that fell to Earth during the last ice age.
What happens when that's gone?
California has been depleting its groundwater for generations. As wells are drilled deeper, pumping costs soar. In some areas, the ground itself is starting to sink as water is pumped out.
In fact, Famiglietti's work has focused on the shocking recent drops in groundwater across the West. Excessive pumping has caused the ground to sink at rates of up to a foot per year. This can cause billions of dollars in damage.
The Farming Elephant in the Room
Recently, the California state government imposed new mandatory restrictions on lawn watering and offered incentives to limit water use in hotels and restaurants as part of its latest emergency drought regulations. But these restrictions don't address the biggest user of water in California: agriculture.
Agriculture uses 80% of California's water. And 10% of that is used just to grow almonds. Each almond takes 1.1 gallons of water to grow.
Does that sound like a lot? It takes 3.3 gallons to grow a tomato... 3.5 gallons to grow a head of lettuce... 4.9 gallons to grow a walnut... and 5.4 gallons to grow a head of broccoli!
California grows nearly half of America's favorite fruits and vegetables. But most of the state's farm country is in areas that are worst hit by the drought.
Lack of water forced California farmers to abandon 400,000 acres of cropland last year, and they'll leave over a million acres unplanted this year.
California's ranchers are also feeling the drought. There is less grass for beef and dairy cows to graze, forcing ranchers to cull or sell their herds.
Do you think you'll escape the effects of this mega-drought because you don't live in California? Sorry, buddy. Lower production on drought-stricken farms and ranches means higher food prices for everybody.
Three Big Ideas
There are no easy solutions. However, one answer lies in the biggest cash crop California has besides fruits and nuts.
No, I'm not talking about marijuana (a very thirsty plant, by the way). I'm talking about technological innovation.
I'm talking about ideas like...
1. Seawater desalination. Last year, Carlsbad started building the largest ocean desalination project in America. The $1 billion project will provide 50 million gallons of drinking water a day for San Diego County when it opens in 2016.
The problem is, desalinated water is expensive - about double the cost of water obtained from building a new reservoir or recycling wastewater, according to a 2013 study from the state Department of Water Resources. It's also four times as expensive as just saving water through conservation methods.
Finally, the desalination plant will use an enormous amount of energy - about 38 megawatts, enough to power 28,500 homes - to force 100 million gallons of seawater a day through a series of filters that remove the salt from the water.
Fifteen desalination projects are proposed from Los Angeles to San Francisco Bay. The Metropolitan Water District of Southern California, the largest wholesale supplier in the region, is offering local agencies as much as $340 per acre-foot to subsidize desalination projects.
Engineering companies that build those plants could do very good business indeed.
2. Stormwater capture. It's not that it never rains in California ("but girl, don't they warn ya?"), it's just that most of the billions of gallons of water that fall on, say, Los Angeles County, keep right on going - out into storm drains, lost to the ocean.
Now, towns and counties are talking about networked water storage, using captured stormwater. Monitoring systems will be high-tech, and probably a liquid gold mine for the right companies.
3. Wastewater recycling. Would you want to drink recycled wastewater? EEKS! Yuck!
Well, relax. California already recycles wastewater - over 525,000 acre-feet of wastewater each year. About half of that (48%) is used for agricultural irrigation. Another 20% is used for landscape irrigation. About 12% is used for groundwater recharge.
What's more, the Orange County Water District already has a wastewater treatment facility that recycles sewage and returns it to the drinking supply. The plant is expanding production from 70 million gallons to 100 million gallons per day, enough for 850,000 people. That's enough to supply water to one-third of the county. The recycled water is mixed with the main groundwater supply for more than 70% of residents.
Now, California is ready to spread this model around. The state has put $1 billion into funding water recycling for drinking use ($800 million of that in low-interest loans), with new initiatives in Los Angeles, San Francisco and San Diego.
These are all great solutions. However, they're expensive. They also take time to implement. California doesn't have a lot of time. The race is on, and the clock is ticking.
How You Can Profit
You can start investigating and investing in companies in each of those three technologies I named. Or, you can take advantage of the fact that the ongoing drought will both squeeze farm production and at the same time put money in farmers' pockets (due to insurance payments).
That means farmers will have plenty of money to spend, and they'll probably invest in new equipment and drought-resistant seeds to try and boost yields by other means. I think they'll spend money on the products of companies held in the Market Vectors Agribusiness ETF (NYSE: MOO).
Those companies include Syngenta (NYSE: SYT), Monsanto (NYSE: MON), Deere & Co. (NYSE: DE) and more.
It sure looks like dry times ahead for California. But it doesn't have to be a dry time for investors. Good luck and good trades.
All the best,
Sean Brodrick
for Free Market Café
How to Beat the S&P by 1,000%
Take a look at these three groups of stocks.
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