The Quiet Coup

THE CRASH HAS LAID BARE MANY UNPLEASANT TRUTHS ABOUT THE UNITED STATES. ONE OF THE MOST ALARMING, SAYS A FORMER CHIEF ECONOMIST OF THE INTERNATIONAL MONETARY FUND, IS THAT THE FINANCE INDUSTRY HAS EFFECTIVELY CAPTURED OUR GOVERNMENT—A STATE OF AFFAIRS THAT MORE TYPICALLY DESCRIBES EMERGING MARKETS, AND IS AT THE CENTER OF MANY EMERGING-MARKET CRISES. IF THE IMF’S STAFF COULD SPEAK FREELY ABOUT THE U.S., IT WOULD TELL US WHAT IT TELLS ALL COUNTRIES IN THIS SITUATION: RECOVERY WILL FAIL UNLESS WE BREAK THE FINANCIAL OLIGARCHY THAT IS BLOCKING ESSENTIAL REFORM. AND IF WE ARE TO PREVENT A TRUE DEPRESSION, WE’RE RUNNING OUT OF TIME.

By Simon Johnson

Read more: http://www.theatlantic.com/magazine/print/2009/05/the-quiet-coup/7364/

Sorry, Facebook Investors: It's Mostly Your Fault

Stop me if you've heard this one.

Thousands of largely novice investors line up for what's been billed as "the opportunity of a lifetime" to buy a "can't-miss" investment destined for easy gains. Pundits take position and say it's worth buying at "any price." People whisper in anticipation over how much they'll make. Fifty percent? Double their money? More?

In the end, the floor drops out and they're left with hefty losses -- totally predictable losses. Furious investors want answers. What went wrong, they ask? The answer is usually complicated, but has a common denominator: You overpaid. Fell for the hype. Gambled and lost. It happens.

This could explain the dot-com bubble or the housing collapse. But it also sums up what's happened to Facebook (Nasdaq: FB  ) over the last few days.

 Read more: http://www.fool.com/investing/general/2012/05/24/sorry-facebook-investors-its-mostly-your-fault-.aspx

WORLD BANK BOSS: We're Headed For "Impending Catastrophe" -- "A Rerun Of Great Panic Of 2008"

Read more: http://www.businessinsider.com/world-bank-boss-impending-catastrophe-a-rerun-of-great-panic-of-2008-2012-6#ixzz1wgfhXu3V

The head of the World Bank, Robert Zoellick, is about to step down after a 5-year term.

That means he can say what he really thinks.

The Correlation Conundrum and What to Do About It: With the rise in correlations, diversification is more important than ever

The Correlation Conundrum and What to Do About It: With the rise in correlations, diversification is more important than ever

Over the past two decades, the amount of equity assets invested passively has increased from roughly 10% in 1993 to about 30% today. At the same time, correlations between individual stocks have generally risen. Let’s take the S&P 500 as an example: Based on the average daily correlation over the trailing six months, correlations have risen from roughly 10% in 1994 to 66% at the end of 2011

The Hour Glass Economy

While global diversification is important, America remains the largest economy on the planet. So, how do you successfully invest in the USA?

This article offers some insights into America's "hour glass economy".

http://www.algemeiner.com/2012/04/09/corporations-plan-for-post-middle-class-america/

Some Helpful Tips if You are Just Starting Out

Morningstar has some suggestions for investing newcomers looking for diversification, especially if you don't have a lot of money to get started.

http://www.morningstar.co.uk/uk/news/article.aspx?articleid=102876&categoryid=5&refsource=newsletter

There's been some negative press about ETFs. This article is about why ETFs (and ETPs - exchange traded products) are a good investment choice.

http://www.morningstar.co.uk/uk/news/article.aspxarticleid=102268&categoryid=5&refsource=newsletter