Posted on 11/08/2009 8:38:56 PM PST by FromLori
ust when it looked like the prophecies of Nostradamus may be coming true, a white knight, in the form of Warren Buffett, strode in and saved the day. Buffett’s buy of Burlington Northern (BNI) turned the US equities markets from ugly duckling to suave Prince.
The purchase was hailed by the Oracle himself as a “bet on America”. We see it a little bit differently…it is a bet on Asia/China.
Burlington Northern System Map
The map above (click to enlarge) illustrates the BNSF network. The BNSF system travels through the agricultural heartland, the manufacturing mid-west and the coal rich Powder River basin. Conveniently, the rail tracks extend all the way to the Port of Long Beach. Not only can BNSF transport goods to port for export to China, but on the return trip it can drop off inventory from China at every Wal-Mart (WMT) from L.A. to Chicago.
So while, yes, BNSF is a US company and you cannot drive a train to Asia, it is still a bet on Asian growth.
This is exactly the growth that we have been betting on with our position in Norfolk Southern (NSC) and US Steel (X). Both companies are seeing significant demand as a result of a Chinese hunger for steel. Of course we were quite pleased to have the backing of Warren Buffett to boost our positions.
BNI was a China play. LOLOLOL
bump
China ain’t going to go along with the AGW horsecrap. China has a nearly insatiable appetite for coal, as well as ag commodities.
If the tofu-for-brain ninnies shut down coal-fired power generation here in the US, the coal can find another home - namely, China. The major costs are already sunk into the major mines in places like Utah, Wyoming and Montana. All they have now are the variable expenses of labor, taxes, electrical power, etc. The shovels, loaders, trucks, etc - they’re already bought and paid for. The train terminals are already there. Coal augers just as well as ag commodities, so it takes very few people to handle huge quantities.
Yes, but those same tofu-for-brain ninnies won’t stop at shutting down the plants. They will shut down the mines, also.
End of oil will mean end of trucks and cars. Railway locomotives, currently using diesel fuel, are already more efficient than trucks. But if even that is not enough, they can always go back to coal (and steam.) There is enough coal in the country. While these steamers won't be able to pull as much as modern engines do, they will keep cities supplied with food - and there will be plenty of demand for that, on "name your price" basis.
There are only 2 known reserves of “super low sulfur coal”. One is in Indonesia & own by the Rhiadi family [Friends of the Clintons]. The other is under the {Clinton Created] Escalate Steps Nation Monument.
If America awakens from its Gore induced dreams, and DECIDES to use Coal WHILE improving Air Quality; I foresee progress. If we are forced to sell that National Monument to China, Buffet will {at least] have delayed disaster for his Stock Holders.
I think another part of the story is buffet is bo’s buddy and “has his ear” and is expecting stimulus money.
http://www.businessinsider.com/duh-warren-buffett-is-betting-on-lots-more-stimulus-2009-11
The Chinese won’t need “super low sulphur” coal. They’ll settle for “cheap coal.”
Given the trade imbalance that we have and the problems this is now creating for the Chinese, they’ll be more than happy to buy our coal to help with the trade imbalance and to get something for their stash of US currency that is denominated originally in dollars.
Buffet is not the benign Uncle Warren. He takes a position after finding a way to rig is politically in his favor. He’s gone beyond his initial product evaluation and then buy mode.
Somehow, he’s calculated that the trucking network will be screwed with, so as to create a dominant railroad position.
There’s another aspect which would kill trucking and favor rail, and that’s diesel emissions regs.
There’s far fewer locomotives that would have to retrofitted vs. the number of engines in the trucking industry. The payback for the rails’ expenditure on new diesels is much faster than for a trucker; remember, the rails can run a train non-stop. The only way a trucker can is to have two drivers in the cab - and even now, the Congress has been talking of regs that would make even a team setup have to sit still for four hours a day.
Going to coal/steam for the rails really isn’t an option. You need to see just what is involved in maintaining and operating a steam engine to appreciate what a HUGE cost reduction (not to mention safety improvement) it was for the rails going to diesels. High pressure steam is nothing to trifle with. I’d foresee the rails going electric before they’d go back to steam.
Yup he is one of bo’s benefactors and one of his welfare queens and will undoubtedly be repaid handsomely just like that evil little soros.
http://market-ticker.denninger.net/archives/1299-Buffetts-Inner-Pigman-Shines-Through.html
http://www.economicpolicyjournal.com/2009/08/did-warren-buffett-front-run-tax-payers.html
I sort figured it was an asset play. Lots of real estate under all those tracks.
>>well, if they’re making drops at every Wal-Mart,
>>who’s gonna be buying that garbage if not Americans?
Greetings comrades; and welcome to the People’s mass distribution center. Please have your bread and toilet paper vouchers ready.
Hmmmm.
When you have the cash and can buy large companies, you stand to win big and lose big. China is must another domino in a chain of events that may or may not unfold.
Wal-Mart still purchases less than 10% of their inventory from China but that won't stop the Wal-Mart bashers from doing what they do best.
I just bought a pair of Wrangler jeans at Wal-Mart. Made in Mexico of U.S. components (according to the label). Maybe transported during the process by BNI. That makes me an advocate for illegal immigration, I guess.
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