Friday, May 21, 2010

So you can't trust BP, and you can't trust the Euro

So, we can’t trust BP. The estimates keep getting bigger, and their dispersants don’t work, etc.

Here’s a CNBC interview by Lee Brodie on oil stocks.

The sane position seems to be, hold onto it. In the long run, it will still do well. Outside of BP, oil stocks have been hammered recently because of fear of regulation, problems in the euro (which makes it more expensive to buy overseas), and fear of future mishaps.

Oil and energy stocks are important components of portfolios of many retirees, who may feel exposed to the “moral hazard” personally of oil accidents. I bought Exxon in 1975, and had a substantial stake personally at the time of the Exxon Valdez spill in March 1989. At the time, I was working in one of the more unusual episodes of my employment career, a small health care consulting company about to go through a merger.

And on Friday May 21 New York Times reporter Ian Urbina raises one of my pet topics, "conflict of interest", in a story, "Conflict of Interest Worries Raised in Spill Tests", link here.  The federal government is going to use a lab at TDI-Brooks International (link) at College Station, TX, to do the pollution tests for litigation, but the same lab works for many oil companies.

On the markets, Anthony Faiola, Howard Schneider and William Branigin report that Germany has “cooperated” with a Euro-rescue plan; the reporters claim that Germany’s actions were primarily responsible for the Street’s tailspin Thursday (story).

But stocks continued their losses early Friday. MSN flashed a “breaking news” about the Dow falling below 10000 over global jitters, but when one went to the link, the market had just climbed back to 10000!

Will markets calm down now that the Senate has just passed the Financial Reform Bill (Moody story here)? Note the discussion of proprietary trading. The text of the "Restoring American Financial Stability Act of 2010" appears to live here.  Apparently this is S 3217 with govtrack link here.

Tech Ticker on Yahoo! has an interesting video saying that we need to worry about both inflation and deflation simultaneously!

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