But hardly anyone dares talk about it.
LOL . . . . LOL !
Posted on 08/27/2011 5:25:35 PM PDT by CutePuppy
I don't. He has more money than I'll ever see in many lifetimes. His stupid ideas of raising taxes on the rich will do nothing more than raise taxes on the middle class a few percentage points. The rich will still get their loop holes--regardless of a rate increase-- and the working individual will get stuck with less of a refund or end up paying.
Write a check to the gov't if you don't think you pay enough you greedy bastard.
Barry Half-White is the PeeWee Herman of childish democrats..
So, YOU'RE the one!
Buffett deserves no respect. 1. he says he feels guilty about not paying more. Yet, he doesn't do it.
2. He uses the tax breaks he complains about to donate the bulk of his fortune to the Gates foundation which goes to prove that he knows damn well private citizens know better how to put money to good use than the government does.
is that what they call people who tell it like it is?
Excerpt:
There be a violent wind coming ashore very soon carrying odors of foul shi'ite with it. All caused by international bankers who only desire more insane profits.A more severe crash than the one triggered by the collapse of Lehman Brothers could be on the way, according to alarm signals in the credit markets. * * *
Insurance on the debt of several major European banks has now hit historic levels, higher even than those recorded during financial crisis caused by the US financial group's implosion nearly three years ago.
Credit default swaps on the bonds of Royal Bank of Scotland, BNP Paribas, Deutsche Bank and Intesa Sanpaolo, among others, flashed warning signals on Wednesday. Credit default swaps (CDS) on RBS were trading at 343.54 basis points, meaning the annual cost to insure £10m of the state-backed lender's bonds against default is now £343,540. * * *
"I think we are heading for a market shock in September or October that will match anything we have ever seen before," said a senior credit banker at a major European bank.
LOL . . . LOL !
I don't see how White House benefits or even fits into the PR picture here. If this WH could destroy a major TBTF bank like BoA (all the Dem states AGs are working hard to do it) and create a phony "crisis" they would do it in a second and nationalize it (and/or allow Buffett consortium to take over BAC, the way Soros et al took over IndyMac / OneWest) rather than "bail out" BoA. This would still go into "Bush's fault" column and would provide Obama administration with much-needed opportunity for "heroics" and demands for more "stimulus" and more "financial oversight" laws from what would become practically paralyzed crisis-driven Congress.
This definitely helps BoA's PR, which is one big reason why they are doing the deal. They were getting killed in the press and in the market on perceptions of reserves for Countrywide potential legal liabilities and problems with "foreclosures".
... and simultaneously providing the “oracle of omaha” seal of approval for BAC, which was the unison media chorus the morning the deal was made public.
Exactly, it's a win-win deal for both - "Oracle of Omaha" gets the handsome low-risk profit, and BAC gets the "seal of approval" which takes care of perception (and short-selling) issues and worries in the market. That's what they are really buying and paying up for - the Buffet's "halo effect" - even if their capital reserves currently do not require it. The jump in BAC market value on that one day alone makes the price of the deal pale in comparison. I know it's not a one day issue and market price goes up and down with the news and rumours, but that's a real consideration for the future behind the deal. SI in BAC is huge, and BAC dropped much more this year than most other bank stocks (about 33% for average stock in XLF sector on European sovereign defaults fears) mostly due to its exposure to Countrywide and mortgage foreclosure mess. It trades at huge discount in P/B compared to even other banks.
IMHO, only to the masses does this look like a “vote of confidence” from Buffett.
How it looks to the "masses" is not really a consideration for either party; it's the market and business perceptions about reserves that needed to be shored up, and this (along with the expected sale of its stake in HK-listed China Construction Bank) should about do it. That also puts BAC into a much stronger negotiation position for settlement or legal fight, if the opposition can no longer hope and rely on the "market" or short-sellers to put pressure / force BAC into an unfavourable deal. Now the pressure to deal may well be on the other side of the table, which could more than pay for this capital infusion. In issues like this, capital matters and capital counts.
BAC, if healthy, could certainly borrow at a lower rate.
Certainly, but it would be useless for at least two reasons. Borrowing doesn't make or turn someone "unhealthy" into "healthy," it's usually used for working capital or investment.
One, the borrowing doesn't change the balance sheet - it adds assets but it also adds the same amount of liabilities, so it nets zero. It does add temporary liquidity (which is exactly what the banks and the financial system needed during the liquidity crisis in 2008 and what the Fed and the Treasury delivered, i.e., TARP) but BoA has no need for liquidity - it needs to change the false perception that it doesn't have enough reserves for potential adverse legal or administrative resolutions of mortgage-related events.
Two, today any "inexpensive" borrowing that could be done on this scale - that doesn't involve M&A activity - would be only for relatively short term duration, so it would only add to the perception that BoA needs quick liquidity injection and is in trouble, i.e. "unhealthy". This would only make matters worse and the stock weaker - exactly opposite of desired outcome.
Moynihan and the board are not idiots. They must have considered and discarded this option almost immediately, since it doesn't solve any of the problems and, if anything, would be counterproductive and add to the perception that BoA is "unhealthy" and in trouble. Though both deals are structured similarly, the main difference between Buffett's GS deal in 2008 and this deal with BAC is that GS needed liquidity at the time, and BAC needs actual capital now (which may become just a liquidity deal later on, depending on how Countrywide legal issues get resolved).
No one in the press that morning asked “why would BAC need this capital if their assets were rock solid ?”
Probably because they were afraid to ask for risk of looking ignorant or offending Buffett, or it was explained to them beforehand why BAC was willing to pay for more capital reserves, and because in the world of politics and finances the perception often trumps reality. When Bear Stearns lost the Street's confidence they also lost a lot of BD business and, with it, liquidity and access to capital.
IMHO, Buffett must have received some tremendous assurances. The administration certainly would want to give those assurances in exchange for the good PR from Buffett's deal
There is no government backstop because BoA is in no danger of going belly up (U.S. banks are in much better shape now than they were in 2008-2009 or than most European banks now with the heavy exposure to PIIGS bonds). There is practically no risk to Buffett's investment with this structure - at worst, he might end up with the larger share of a smaller bank. And Buffett is too good an investor to rely on any Obama's assurances if TBTF bank he invested in would actually fail; we can be sure that he examined BoA books carefully before making an investment, just like he did with GS, and long time ago with his "success story" AXP (he did fail but eventually broke about even on his Citi investment).
Buffett is an "opportunistic" investor, and this seems just like a good opportunity (i.e., the fundamentals of the company are not broken) in a financial sector which is what Buffett knows and does best. Sometimes things really are what they seem and the Occam's Razor explanation really works.
When the lofty ones deliberately destructively play
tiddledeee winks with millions of lives
pretending they are doing good . . .
run for the hills.
One doesn’t have to to check the CDS on the European banks to know they are in trouble, loaded with PIIGS sovereign debt bonds; their capital reserves are currently about half or less than those of the U.S. banks.
Two of Greece’s largest lending banks (EFG Eurobank Ergasias and Alpha) are merging, I’d expect the similar action repeating itself in other European countries - they may have too many weak financial institutions...
But that doesn’t really solve the main problem with Europe - runaway government spending and sovereign debt accumulation. Bank troubles (and/or failures, if they occur) are the symptoms, not the cause of what ails much of Europe. The question is whether the governments there can reverse the course and whether the people there will understand and allow it to happen.
It’s been a no-brainer to call for a market “shock” (or “crash”) in September or October - that’s pretty much a given almost every year, even in “good” years... and this year has been far from “good” for global financial / banking sector (and markets in general).
There will be several new financial or economic Cassandras “born” every year around September-October period.
Buffet often ays one thing to mislead everyone then does another. Sorry, but anyone following his words is gullible.
Paint me as you wish (not that you personally paint me bad)...read “Road to Serfdom”. Hayak himself proposed this before me.
bump
Where the truly wealthy actually hide their income to virtually no beneficial economic purpose is in tax-exempt “charitable” foundations, too often used for both fun and profit.
I hear Buffet was once rather conservative, until after he married a young, very leftist wife. Connection?
i did put in sarcasm tags
I read the recent biography on Buffett. He is so tight he squeaks. 40 years ago, his wife wanted a Cadillac. He went out and bought a Series 63 stripped Cadillac. A few years after that, she left him : )
But hardly anyone dares talk about it.
LOL . . . . LOL !
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