I love it when financial gurus diss each other.
Anyway, Peter Schiff called Warren Buffett's bluff.
Buffet seems to think that in these doldrums, he has to help cheer up the US.
He says, 'I'm bullish on America' 'Uh...Ya. Buy US stocks and dollars'
ACTUALLY, he's also bullish on Goldman and derivatives, now, and on government protection.
(see below)
Meanwhile, Buffett's investing in transport! Which means that he thinks oil costs are going to skyrocket.
Other's (like India) are buying gold, on a large scale, which is what wise guys do when currencies (like the dollar) and stocks are due to fall, and inflation is going to rise.
Save your money folks. and canned food
-Costick67 (8^P
watch and learn:
the seer of omaha, is gonna see more money:
from Les Leopold on alternet
Let’s Hold Benedict Arnold Billionaire Warren Buffett Accountable
Buffett taken to defending the biggest shysters in the country -- and argues that his own questionable derivatives should be shielded from government regulators.
May 9, 2010 |
The derivatives genie is now well out of the bottle, and these instruments will almost certainly multiply in variety and number until some event makes their toxicity clear. Central banks and governments have so far found no effective way to control, or even monitor, the risks posed by these contracts. In my view, derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal. (Berkshire Hathaway annual report, 2002)
Those were some wise words from Warren Buffett, the Will Rogers of the financial world. He used to say such things at his stockholder meetings, where tens of thousands come to savor his homilies and celebrate their own good fortune--a kind of Woodstock for people who dig money more than sex, drugs and rock n roll. His fans love to party with the iconic multi-billionaire from Omaha with the sparkle in his eyes. The guy makes people feel proud to be Americans and capitalists, big and small.
Buffett's reputation is as a straight shooter. For years he had only contempt for fantasy finance securities that contain nothing but air and risk. He was among the first to see that if we let toxic securities like synthetic collateralized debt obligations run wild, we'd soon be engulfed in a financial crisis. (For an easy- to- read account of these "financial weapons of mass destruction" please see The Looting of America.)
But times have changed. Today, Buffett is all about the bottom line. He's taken to defending the biggest shysters in the country--and argues that his own questionable derivatives should be shielded from government regulators.
If this were just about Warren Buffett, it wouldn't be worth giving him more ink. But his betrayal comes at a time when Congress is finally realizing that most of us are truly upset with Wall Street's looting of America. While big bank profits and bonuses are reaching record highs, April's unemployment statistics show that there are over 29 million of us without work or forced into part-time jobs. The BLS U6 jobless rate is at 17.1 percent.
There's a genuine populist upsurge that might force the Senate to pass legislation that would bust up the largest banks, reintroduce Glass-Steagall, control dangerous derivatives and provide consumer financial protection. Buffett has decided instead to lend his credibility to defend Wall Street against Main Street. (Hey Warren, how about that high speed trading that tore the stock market apart yesterday. Are you for that too?)
[corruption! Ole!- Costick67]
Apparently something happened on the way to the bank--or actually, on the way to the bank bailout. Good old Mr. Buffett is no dummy. When he saw the Goldman Sachs alumni and groupies in government (like Henry Paulson at Treasury and Tim Geithner at the Fed) shoveling billions (not millions) of taxpayer dollars into Goldman, one of the richest financial institutions in history, he knew where next to put his own money. (Bob Kuttner's Presidency in Peril provides a virtual yearbook of Goldman Sachs graduates now in top government posts.)
The government, led by Paulson, the former Goldman Sachs CEO, pumped $10 billion of TARP money into Goldman Sachs at 5 percent interest. But the oracle of Omaha, put in $5 billion and got 10 percent interest plus extra goodies if the stock price rose. Now that's a smart businessman.
Mr. Buffett also knew that Goldman Sachs would probably snag lots more ($12.9 billion, in fact) in bailout funds via AIG, which had insured billions of Goldman's toxic assets--including a bristling arsenal of financial weapons of mass destruction. Goldman Sachs was going to get a free ride on two colossal bad bets. One bet was on complex derivatives that turned bad and festered on its balance sheet. It had been a big gamble for Goldman to hold those assets, but the returns (while they lasted) and the upfront fees were just too juicy to resist. Goldman's second big bet was that AIG was sound enough to insure those risky derivatives against default. Wrong again. Had AIG gone into bankruptcy, Goldman Sachs would have received pennies on the dollar for their bad bets. Hey, that's capitalism, isn't it? Well, maybe once upon a time.
Fortunately for Goldman, their old colleagues who were now in control of the government purse strings decided that AIG was way too big to fail. So we bailed them out to the tune of about $180 billion. But the Goldman Sachs alumni went one step further. They allowed AIG to pay off its debts in full to Goldman Sachs: $12.9 billion went straight to the company's bottom line and bonus pool. And pass those interest payments over to Mr. Buffett! If the journalists around Buffett weren't so awestruck by his wealth and rock star status they might've asked him: Is this capitalism too?
So here's Mr. Buffett holding a big fat slice of Goldman Sachs, and now the SEC comes busting in, accusing the bank of fraud. Goldman Sachs is charged with loading up investors with a package of financial transactions called Abacus that it knew amounted to toxic junk--thus enabling a hedge fund friend, John Paulson (no relation to Henry), to make a billion by betting against the Abacus deal. What kind of toxic junk are we talking about? The very same synthetic collateralized debt obligations that Buffett once called "financial weapons of mass destruction." Mr. Buffett, Berkshire Hathaway and its delirious stockholders are now the proud owners of said weapons.
So what does Mr. Buffett do? The plain speaking dude from the Great Plains takes a stand--in defense of Goldman Sachs and its CEO Lloyd Blankfein. Then he steps smack into the financial cow pie by endorsing the Abacus financial weapons of mass destruction.
"I don't have a problem with the Abacus transaction at all, and I think I understand it better than most."
You betcha. Those darn critters are really kind of cute--when they're paying off big time for Berkshire Hathaway.
Buffett didn't stop there. He's lobbying hard on Capitol Hill to protect his own special derivatives, which he developed just before the crash. The financial reform Congress is considering would require companies like Berkshire to set aside large sums to cover potential losses on their risky investments. But if Buffett gets his way, the legislation will include a provision to "largely exempt existing derivatives contracts from the proposed rules," reports the Wall Street Journal. "The change thus would aid Berkshire, which has a $63 billion derivatives portfolio, according to Barclays Capital." [neither bull nor bear, but poisonous blowupfish- Costick67]
In other words, Mr. Buffett is following in the footsteps of AIG, which made hundreds of billions of bets without posting collateral. But what the heck, Warren is as good as gold, isn't he?
Since Buffett says he understands these shady financial products "better than most," maybe he can explain to us what economic value his special derivatives added to our economy. I can hear echoes of Claude Raines in Casablanca: "I'm shocked, shocked to find that gambling is going on in here!" It sure is and Mr. Buffett is now making himself quite at home at the poker tables. It seems casino capitalism is fine with him after all, even if it's a criminal scam.
I hope Buffett's fans realize that their dividends and capital gains are partly derived from taxpayer bailouts and from those financial weapons of mass destruction Buffett used to denounce. You know, the ones that blew up the global economy and put tens of millions of Americans out of work?
Maybe it's time to hold our billionaires to account, even the nice ones.
Les Leopold is the executive director of the Labor Institute and Public Health Institute in New York, and author of The Looting of America: How Wall Street's Game of Fantasy Finance Destroyed Our Jobs, Pensions, and Prosperity—and What We Can Do About It (Chelsea Green, 2009).
-----end of story
Does that look like a man who's bullish on America, or one who's looking to bleed it dry? The bull's gonna gore the country. Gore! Get it?
Fears that Greece's sovereign debt crisis could spill into the banking sector and prompt another credit crunch hammered bank share prices today amid warnings that Britain's banks remain "vulnerable".
Shares in the major banks dominated the top 10 fallers in the FTSE 100, led by Barclays, which ended 6% lower at 301p. The falls wiped out any lingering hopes that a new government would be able to point to gains on the taxpayers' stakes in Lloyds Banking Group and Royal Bank of Scotland, which plunged through their break-even levels.
The shares fell after Moody's ratings agency warned that Britain's banks were "vulnerable" and could take a hit to their profitability if the country's sovereign debt rating is downgraded.
In an assessment of the crisis gripping Greece and the eurozone, Moody's warned that banks in the UK and Ireland as well as those in Portugal, Spain and Italy all faced challenges if the countries suffered the same fate as Greece in being downgraded by the credit-rating agencies.
The warning by Moody's came as analysts at the French bank BNP Paribas calculated that one of the measures they use to measure risk of defaults had reached "unprecedented" levels, topping those registered in the days after Lehman Brothers collapsed in September 2008.
"The market is implying that the financial system is backed by the sovereigns," said Rajeev Shah, credit strategist at BNP Paribas. "A lot of the risk has moved from the financial system to the sovereigns but if contagion keeps spreading it effectively moves back to the financial system."
He made his remarks after analysing an index that measures credit default swap prices – which assess the risk of default – on a number of banks and comparing it with one that measures top-rated credits. The difference is now five times larger than it was when Lehman collapsed.
The Moody's analysis followed the downgrading of Greece to "junk" status. While Greece has slumped to "junk" status and the UK currently enjoys a top-notch triple-A rating – if Britain took even a small downgrade, the government's borrowing costs would increase and would also be felt by the banking sector. The UK banking industry is four times larger than Britain's gross domestic product. "In the UK the weakness of the banks has had a large impact on the economy, given the banking sector's relatively large contribution to GDP. Any impact on sovereign creditworthiness can therefore have a relatively strong impact on the banking system and vice versa," Moody's said.
"At the same time, the generally accepted need to reduce leverage in the system will be challenging as it can have severe consequences on GDP," the agency it said.
It noted that the crisis that has struck Greece meant that its banks were "almost totally reliant" on the European Central Bank for their funding as international banks were reluctant to lend to them. "Market pressure on the Greek government has also affected Greek banks as market participants are no longer prepared to roll over Greek bank or sovereign bank debt," Moody's said.
"There has been little impact of the banking crisis in Italy and the Greek sovereign issue has also, to date, not had a major impact on Italian banks. However, the potential for a Mediterranean contagion in investors' perceptions, leading to pressure on banking systems, remains our biggest concern," Moody's said.
Banks in France and Germany are among those with the largest direct exposure to Greece and yesterday The French bank BNP Paribas revealed it had €5bn (£4.2bn) of the country's debt and €3bn of loans to Greek companies.
"The banking systems of Portugal, Spain, but also Ireland, the UK and Italy are increasingly moving into the focus of the markets. Although the challenges in these six countries are different, the potential for contagion from their sovereign [credit profile] as observed in Greece is also spreading to some other countries and to the extent this affects these countries it could dilute some of the inherent differences in the banking systems and impose a common threat," Moody's said. Moody's said the concerns over Greece could spread to Portugal – which is at the forefront of investor concerns – but also Spain, Italy, Ireland, Greece and the UK. "A key factor ... will be the market's view of likely success or otherwise of the recently agreed IMF and European Union support package," it said.
see also:
UK budget deficit 'to surpass Greece's as worst in EU'
European commission's spring forecasts put UK budget deficit this year at 12% of GDP – the highest in the European Union and worse than Treasury estimates
http://www.guardian.co.uk/business/2010/may/05/uk-budget-deficit-worse-than-greece
