I have two things to cover in this email. The comments of Seth Klarman and our deep water drillers; Atwood and Ensco.

In my December 14, 2009 email I wrote the following:

“My expectation is that the U.S. is in for another lost decade. I made money in the last lost decade and I am going to try to do so in the next. If it is not a lost decade, fine. That will make my job easier. If it is a lost decade, I need to be prepared and scared as I said in my last email.”

“Actually, if a chef were to concoct a gourmet investment recipe, he would likely blend a teaspoon of intelligence with a tablespoon of common sense.” Bill Gross

I’ve seen many articles and commentaries comment that the U.S. debt loads aren’t like that of Greece so we have nothing to worry about. To me, that is like saying your cholesterol level isn’t 1000 so you don’t have to worry.

A Closer Look at Debt

So, it is now over two years since the “Great Recession” began. It was debt that got us into trouble. Has anything changed for the better? Apparently not! The following information is from some recent comments from the managers at First Pacific Advisors. These are all people I know personally:

Freddie & Fannie

“The impact on the broader economy and financial markets of the problems in the subprime markets seems likely to be contained.” Ben Bernanke, March 28, 2007

In my May 6 email I wrote about Freddie. Fannie’s losses were reported last week. Now, let’s get started:

So What’s With the Market?

It seems the androids have taken over for real people. The terminator lives!!!!

Actually, that is much of the reason. Computer trading has replaced much of the trading that humans used to do. I’m going to cover a certain nefarious type that I really didn’t want to cover. I’ve known about it for a long time. Much like when I tackled the topic of Credit Default Swaps in 2006, I really didn’t want to try to explain it but I did. Sometimes there’s a limit to blood and gore.