I think this is the beginnings of an economy based on perpetual growth and fossil fuel energy running headlong into geological energy constraints. Basically I see an undulatory downward path for the rest of my life. From here out, I think any rallies in our economic condition are going to be met with spiking commodity prices that knock us right back down.
Joined: May 20, 2008 Posts: 946 Location: I have a whole ward
Posted: Tue Sep 23, 2008 9:49 pm Post subject: Berkshire buying $5 billion of Goldman Sachs
KD made a good observation. Why did Buffet just write a 5 Billion dollar check to Goldman after closing today?? Is the fix In??? 5 Billion is serious money for even the oracle of omaha. Or is the bailout not even needed?
"Berkshire is buying $5 billion of perpetual preferred shares, New York-based Goldman said today in a statement. Goldman, which this week transformed itself from the biggest U.S. securities firm to the fourth-largest bank by assets, also plans to raise at least $2.5 billion by selling common stock in a public offering."
Posted: Tue Sep 23, 2008 10:01 pm Post subject: Re: Why is Berkshire buying $5 billion of Goldman Sachs?
That's pretty simple to answer. About 90% of the crazy sh*t going on lately...outlawing short-selling, making goldman a bank by law, the bailout. Most of this is to position Goldman as "Last Man Standing" on the heap of smoldering banks. Goldman will pick through the rubble collecting the scattered treasures.
If the "bailout" passes, then Goldman basically owns the US treasury. What other bank is Berkshire going to invest in? There might not be any other banks soon.
Joined: May 20, 2008 Posts: 946 Location: I have a whole ward
Posted: Tue Sep 23, 2008 10:09 pm Post subject: Re: Why is Berkshire buying $5 billion of Goldman Sachs?
Paulson Calls In Buffet
"Very sad times. Remember the Maria Bartiromo interview with Buffet, when he slipped and said Paulson called him on the big Sunday a couple of weeks ago? Many people wondered why Paulson would call a private citizen to discuss Fed matters? Obviously, we now know.
Sham Deal - Buffet gets special stock with a 10% dividend and he gets the right to by another $5B at $115, when the stock was trading at $125 and the deal makers knew it would spike on this kind of news. So why didn't Goldman set a higher price on the stock? Buffet would have never done the deal. He probably cut this deal with Paulson himself when they spoke on that funky Sunday."
Behind Enemy Lines _________________ Viddy well, little brother. Viddy well.
Joined: Mar 26, 2008 Posts: 1362 Location: Seattle
Posted: Tue Sep 23, 2008 10:09 pm Post subject: Re: Why is Berkshire buying $5 billion of Goldman Sachs?
Why is it a big deal that it was announced after the close? Big financial announcements made after the close of trading are pretty routine. Many companies wait to announce their quarterly earnings until after a day's trading is over, for example. _________________ Abundance - what a concept!
Posted: Tue Sep 23, 2008 10:13 pm Post subject: Re: Why is Berkshire buying $5 billion of Goldman Sachs?
Quote:
Paulson Calls In Buffet
"Very sad times. Remember the Maria Bartiromo interview with Buffet, when he slipped and said Paulson called him on the big Sunday a couple of weeks ago? Many people wondered why Paulson would call a private citizen to discuss Fed matters? Obviously, we now know.
And you believe this quote, hey, ya wanna buy a bridge?
Joined: May 20, 2008 Posts: 946 Location: I have a whole ward
Posted: Tue Sep 23, 2008 10:14 pm Post subject: Re: Why is Berkshire buying $5 billion of Goldman Sachs?
Because Buffet moves on solid information only. The bailout must be going through.........the hearings are a sham, a ruse, just a big show for the masses.
Would this still be a good deal if the bailout did not happen? _________________ Viddy well, little brother. Viddy well.
Last edited by AlexdeLarge on Tue Sep 23, 2008 10:43 pm; edited 1 time in total
Posted: Tue Sep 23, 2008 10:19 pm Post subject: Re: Why is Berkshire buying $5 billion of Goldman Sachs?
Oh man, how do we wake this guy up? When you unscrammble benny's name you get break bank, get it? Mcfly, hello, Mcfly, it is all preplanned. Ah, forget it, you're hopeless, back to the tv set with you.
Joined: Mar 26, 2008 Posts: 1362 Location: Seattle
Posted: Tue Sep 23, 2008 10:30 pm Post subject: Re: Why is Berkshire buying $5 billion of Goldman Sachs?
I see conspiracy theories are alive and well on this forum.
Buffet is no idiot. Would he have bought 10% of Goldman without the impending bailout? Probably not. But since the bailout is about to happen, thus helping Goldman's prospects, you can't blame the guy for taking advantage of what he probably sees as a good deal. _________________ Abundance - what a concept!
Last edited by OilFinder2 on Tue Sep 23, 2008 10:34 pm; edited 1 time in total
Posted: Tue Sep 23, 2008 10:33 pm Post subject: Re: Why is Berkshire buying $5 billion of Goldman Sachs?
AlexdeLarge wrote:
Sham Deal - Buffet gets special stock with a 10% dividend
US Government got better deal on AIG lending at 11%.
AlexdeLarge wrote:
and he gets the right to by another $5B at $115,
And Goldie has the right to buy back the first $5B with 10% premium to cover Buffet funding costs...
Buffet is not a raider so the deal could have been better but clearly Goldie was selected to be the last bank standing... Buffet would make hist couple billions and.... when is he up for retirement?
IMHO however Buffet move raise a question is $700B bailout truly needed? Some type of bailout would surely happen but I think they would settle on a bit less then $0.5T or a bit less then Pentagon budget for the next year.
Posted: Tue Sep 23, 2008 10:38 pm Post subject: Re: Berkshire buying $5 billion of Goldman Sachs
There's also the other side of the coin. Extortion.
Is it not possible that Lord Paulson went to Buffet and said "My consolidation of power is nearly complete. Soon we will have the Treasury. You saw what we did to Bear Stearns and then Lehman. If you don't want Berkshire on the short list you better pay up and pay up good Nebraska boy."
Posted: Tue Sep 23, 2008 10:51 pm Post subject: Re: Berkshire buying $5 billion of Goldman Sachs
Either way this stinks. I agree with Alex: Buffet doesn't bet. He moves on information and strategy. Whether he was tipped, or had his arm twisted, you don't bet $5 Billion on a bank that may or may not exist in a week. You don't even risk 10% on $5 Billion.
seldom_seen wrote:
There's also the other side of the coin. Extortion.
Is it not possible that Lord Paulson went to Buffet and said "My consolidation of power is nearly complete. Soon we will have the Treasury. You saw what we did to Bear Stearns and then Lehman. If you don't want Berkshire on the short list you better pay up and pay up good Nebraska boy."
Joined: Mar 26, 2008 Posts: 1362 Location: Seattle
Posted: Tue Sep 23, 2008 10:59 pm Post subject: Re: Berkshire buying $5 billion of Goldman Sachs
As I said, the conspiracy theories are alive and well here.
Quote:
you don't bet $5 Billion on a bank that may or may not exist in a week. You don't even risk 10% on $5 Billion
Goldman wasn't in nearly as dire straights as the other investment banks. Nobody (except maybe you) had any doubt Goldman would still be around next week. Especially given the bailout, and given that Goldman re-classified themselves Sunday night as a regular bank, the combination of the two took away a fair amount of risk, and Buffet saw a good opportunity. _________________ Abundance - what a concept!
Joined: May 20, 2008 Posts: 946 Location: I have a whole ward
Posted: Tue Sep 23, 2008 11:10 pm Post subject: Re: Berkshire buying $5 billion of Goldman Sachs
OilFinder2 wrote:
As I said, the conspiracy theories are alive and well here.
It's not a conspiracy to assume the big players talk to each other. Buffet does not gamble with that kind of money. Goldman's position is better off now with the changes, but without the bailout, I would think the price would drop even lower and it would be better to snatch it up later in the year. With the bailout, it would be a good time to buy. _________________ Viddy well, little brother. Viddy well.
Joined: Mar 26, 2008 Posts: 1362 Location: Seattle
Posted: Tue Sep 23, 2008 11:45 pm Post subject: Re: Berkshire buying $5 billion of Goldman Sachs
AlexdeLarge wrote:
OilFinder2 wrote:
As I said, the conspiracy theories are alive and well here.
It's not a conspiracy to assume the big players talk to each other.
Of course they do. I'm sure Warren Buffet's phone has been ringing off the hook for the past 3 weeks or more, with people practically begging him to bail out one or another financial institution.
But so what? Everybody knows he's got gobs of money, so who else would they call in such a time of need? Ghostbusters?
AlexdeLarge wrote:
Buffet does not gamble with that kind of money. Goldman's position is better off now with the changes, but without the bailout, I would think the price would drop even lower and it would be better to snatch it up later in the year. With the bailout, it would be a good time to buy.
Agreed, it might have been the case that without the bailout, Goldman would have become even cheaper months from now - but it also would have been riskier. However, with the bailout and the switch to a traditional bank, Goldman suddenly became safer, and thus more palatable to Buffet (who tends to invest pretty conservatively). As I said, without the bailout I doubt he would have injected the $5 billion. _________________ Abundance - what a concept!
Posted: Wed Sep 24, 2008 1:01 am Post subject: Re: Berkshire buying $5 billion of Goldman Sachs
Interesting. JP Morgan did exactly the same thing in 1929.
Quote:
Reporters learned that an important meeting was taking place at the office of J.P. Morgan and Company, involving many of the most important men in banking. After the meeting broke, Thomas Lamont, senior partner at Morgan – a company founded by a man who had help stop a panic in 1907, made the following statement to newspaper reporters: “There has been a little distress selling on the Stock Exchange… due to a technical condition of the market” and that things were “susceptible to betterment.”
The market moved up a bit after Lamont’s statement, but the real recovery came at 1:30 pm, when self-confident Richard Whitney, vice-president of the NYSE and floor broker of J.P. Morgan and Company, walked into the exchange floor. The crowd went silent. Everyone expected an announcement that the NYSE would be closed. Instead, Richard Whitney surprised everybody…
Whitney asked for the latest bid on U.S. Steel. “195” someone shouted. Then he promptly announced that he was buying 10,000 shares of U.S. Steel at 205. He immediately received 200 shares and then left the rest of the order with the specialist. He continued to make similar orders for over a dozen more stocks. Fear evaporated as investors became worried that they would miss the new boom. The market would have closed much higher if stop loss orders from earlier that day hadn’t been triggered during the upward surge. Needless to say, the recovery on Black Thursday was impressive, but so was the massive sell off earlier in the morning that gave it its name.
Buffett has a lot more to lose if the economy goes into the toilet. He gets a sweetheart deal from Hank, on one of the remaining banks that is still functioning, giving him a chance to really fatten up if it ever turns around, and has done all he can to keep the situation from falling apart. If he succeeds, he makes a lot of money. If he fails, whether he loses 5 or 10 billion or 50, it doesn't really matter that much. So, why not do the deal?
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