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Saturday, May 22, 2010

Blood in the Streets, Ash in the Air, Oil on the Water, and Retirement in the Toilet

 Retirement in the Toilet

The Federal Reserve is setting up the investing public for slaughter. By artificially keeping interest rates at 0% the Fed is driving people out of the safety of savings accounts, CD's, and money market funds into riskier assets. This will end badly.

Legendary investor, Seth Klarman, is sounding an alarm:

The government is now in the business of giving bad advice... By holding interest rates at zero, the government is basically tricking the population into going long on just about every kind of security except cash, at the price of almost certainly not getting an adequate return for the risks they are running. People can't stand earning 0% on their money, so the government is forcing everyone in the investing public to speculate.
And it's not easy to figure out what people should do, as Mr. Klarman told the Wall Street Journal:
I asked Mr. Klarman what he would suggest for smaller investors who share his worries.

"All the obvious hedges"—commodities and foreign currencies, for example—"are already extremely expensive," he warned.

Especially gold. "Near its all-time high, it's a very hard moment to recommend gold," said Mr. Klarman...
Wall Street Journal:  Legendary Investor Is More Worried Than Ever
related:
Zero Hedge:
Seth Klarman Sees Another Lost Decade For Stocks, "Artificial" Market Reminds Him Of A "Hostess Twinkie"
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Blood in the Streets

Washington Post:
Thai officials use a powerful visual to explain violence -- After regaining control of the Thai capital by force of arms, the military and government mobilized Saturday for a new battle that will help decide the outcome of the most tumultuous political struggle in Thailand's modern era...
related:
Montreal Gazette:
B.C. filmmaker injured in Thailand protests awake after brain surgery -- Victoria filmmaker Chandler Vandergrift, who was seriously injured during the violent protests in Thailand this week, squeezed his doctor’s hand after making it through brain surgery, a friend and co-worker said late Thursday...
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 Oil on the Water (how much?)

The Independent:
The black hole at the bottom of the Gulf -- Some 33 days, nearly a billion dollars of expenditure, and umpteen official statements after the Deepwater Horizon oil rig blew up in the Gulf of Mexico – and the world is still none the wiser about how many millions of gallons of oil are leaking into the ocean every day, how much has already been discharged into the sea, and – more to the point – how this, maybe the world's worst oil disaster, can be stopped.
 related:
Houston Chronicle:
New BP statement further clouds spill size estimates -- BP backed off of its statement that it had begun siphoning 5,000 barrels of oil a day from a leaking well on the Gulf of Mexico seabed, throwing into further confusion efforts to estimate how much crude is flowing...

Bloomberg BusinessWeek:
BP May Owe U.S. $1 Million a Day in Royalties on Spilled Oil


Washington Post:
Lessons from the Gulf oil spill
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Ash in the Air

LA Times: 
For travelers, an Icelandic pain in the ash -- Figuring out whether travel insurance covers your canceled trip can be as hard to fathom as the pronunciation of the volcano causing all the trouble (Eyjafjallajokull)...
related:
Guardian.uk:
British travellers face 'ash tax'

Calculated Risk

MishTalk - Mike Shedlock

Paul Krugman - NY Times

The Big Picture - Barry Ritholtz

naked capitalism - Yves Smith

Pragmatic Capitalism

Washington's Blog

Safe Haven

Paper Economy

The Daily Reckoning - Australia