Paul Farrell On The One Thing Buffett, Gross, Grantham, Faber, And Stiglitz All Agree On: “Bernanke Plan A Disaster”
by ilene - November 2nd, 2010 2:50 pm
Paul Farrell On The One Thing Buffett, Gross, Grantham, Faber, And Stiglitz All Agree On: "Bernanke Plan A Disaster"
Courtesy of Zero Hedge
By now it is more than obvious except to a few economists (yes, we realize this is a NC-17 term) that QE2 will be an absolute and unmitigated disaster, which will likely kill the dollar, send risk assets vertical (at least as a knee jerk reaction), and result in a surge in inflation even as deflation on leveraged purchases continues to ravage Bernanke’s feudal fiefdom. So all the rational, and very much powerless, observers can do is sit back and be amused as the kleptogarchy with each passing day brings this country to final economic and social ruin. Oddly enough, as Paul Farrell highlights, the list of objectors has grown from just fringe blogs (which have been on Bernanke’s case for almost two years), to such names as Buffett, Gross, Grantham, Faber and Stiglitz. And that the opinion of all these respected (for the most part) investors is broadly ignored demonstrates just how unwavering is the iron grip on America’s by its economist overlords. Which brings us back to the amusement part. Here are Farrell’s always witty views on the object which very soon 99% of American society will demand be put into exile: the genocidal Ph.D. holders of the Marriner Eccles building.
From Paul Farrell’s latest: Sell bonds now, Fed’s QE2 is doomed to fail.
Warning, Fed Chairman Ben Bernanke’s foolish gamble to stimulate the economy will backfire, triggering a new double-dip recession. Bernanke is “medding” too much in the economy, say Marc Faber, Bill Gross, Jeremy Grantham, Joseph Stiglitz and others.
The Fed is making the same kind of mistakes Japan made that resulted in its 20-year recession. The Washington Post says Larry Mayer, a former Fed governor, estimates that to work it would take QE2 bond purchases of “more than $5 trillion …10 times what analysts are expecting.”
Bernanke’s plan is designed to fail. And, unfortunately, that will make life far more dangerous for American investors, consumers, taxpayers and voters.
“I’m ultrabearish on everything, but I believe you’ll be better off owning shares than government bonds,” said Hong Kong economist Marc Faber at a recent forum in Seoul. He sees a repeat of dot-com-bubble insanity today. Faber publishes the Gloom, Boom & Doom Report.
And Warren Buffett agrees,
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DiggWARREN BUFFETT’S POOR RISK ADJUSTED RETURNS
by ilene - October 14th, 2010 2:52 pm
WARREN BUFFETT’S POOR RISK ADJUSTED RETURNS
Courtesy of The Pragmatic Capitalist
Here’s something I’d never seen done before – an analysis of Warren Buffett’s risk adjusted returns. Insider Monkey has run an interesting analysis on the Buffett portfolio calculating his alpha since 1977. The conclusion – as Buffett has aged and grown in size his returns have become substantially worse on a risk adjusted basis:
“Warren Buffett had a phenomenal annual alpha of 19% between 1956 and 1968. Our current analysis shows that his alpha was more than 30% between 1977 and 1981. During the 80′s and 90′s, his annual alpha declined but was still better than 12%. For the ten years leading to mid-2003, his annual alpha stayed around 12% per year. Since then, it started a steep decline; by the end of 2004 it was (still a respectable) 6% per year. Between 2005 and 2008 Buffett’s alpha averaged only 3% per year. Finally, in the ten years ending in 2009, it went virtually to zero. (For regression results and Buffett’s style drift, visit Insider Monkey)”
Is Warren Buffett another casualty of the tough investment environment? Looks like we can chalk this up under the “many myths of Warren Buffett” file.
This is the Remix: Classic Wall Street Quotations for 2010
by ilene - October 6th, 2010 2:45 pm
Very funny, don’t miss these… I know, I know, can’t seem to get off Joshua’s site. – Ilene
This is the Remix: Classic Wall Street Quotations for 2010
Courtesy of Joshua M Brown, The Reformed Broker
Soros, Buffett, Templeton, Livermore, Rothschild – This is the remix. I’ve updated their classic quotations for the modern investment world. Vote for your favorites below…Enjoy!
“We simply attempt to be greedy when others are fearful and to make others fearful when we do not have enough long positions on our sheets.” - Warren Buffett![[George-Soros_Dr-Evil.jpg]](http://3.bp.blogspot.com/_azimCSzqNnc/Sj5vBSv9ZEI/AAAAAAAAB5Y/eugRvIpOdXk/s1600/George-Soros_Dr-Evil.jpg)
“Capital goes to where it can escape taxation and be used to pay employees in sacks of rice." -Walter Wriston
“Stock market bubbles don’t grow out of thin air. They have a solid basis in the creation and marketing of ETFs.” - George Soros
“It takes 150 years to build an investment bank and only five minutes to convince you to sell me preferred stock in it at a 10% interest rate.” - Warren Buffett
"The four most dangerous words in investing are ‘It’s the Lightning Round!’". - Sir John Templeton…
Paul Farrell Explains Why The Fed-Wall Street Complex Will Self Destruct By 2012
by ilene - October 5th, 2010 3:52 pm
Paul Farrell Explains Why The Fed-Wall Street Complex Will Self Destruct By 2012
Courtesy of Zero Hedge
Some rather scary predictions out of Paul Farrell today: "It’s inevitable: Wall Street banks control the Federal Reserve system, it’s their personal piggy bank. They’ve already done so much damage, yet have more control than ever.Warning: That’s a set-up. They will eventually destroy capitalism, democracy, and the dollar’s global reserve-currency status. They will self-destruct before 2035 … maybe as early as 2012 … most likely by 2020. Last week we cheered the Tea Party for starting the countdown to the Second American Revolution. Our timeline is crucial to understanding the historic implications of Taleb’s prediction that the Fed is dying, that it’s only a matter of time before a revolution triggers class warfare forcing America to dump capitalism, eliminate our corrupt system of lobbying, come up with a new workable form of government, and create a new economy without a banking system ruled by Wall Street." And just like in the Hangover, where the guy is funny because he’s fat, Farrell is scary cause he is spot on correct.
Handily, Farrell provides a projected timeline of events:
Stage 1: The Democrats just put the nail in their coffin confirming they’re wimps when they refused to force the GOP to filibuster Bush tax cuts for billionaires.
Stage 2: In the elections the GOP takes over the House, expanding its strategic war to destroy Obama with its policy of “complete gridlock” and “shutting down government.”
Stage 3: Post-election Obama goes lame-duck, buried in subpoenas and vetoes.
Stage 4: In 2012, the GOP wins back the White House and Senate. Health care returns to insurers. Free-market financial deregulation returns. Lobbyists intensify their anarchy.
Stage 5: Before the end of the second term of the new GOP president, Washington is totally corrupted by unlimited, anonymous donations from billionaires and lobbyists. Wall Street’s Happy Conspiracy triggers the third catastrophic meltdown of the 21st century that Robert Shiller of “Irrational Exuberance” fame predicts, resulting in defaults of dollar-denominated debt and the dollar’s demise as the world’s reserve currency.
Stage 6: The Second American Revolution explodes into a brutal full-scale class war with the middle class leading a widespread rebellion against the out-of-touch, out-of-control Happy Conspiracy sabotaging America from within.
Stage 7: The domestic class warfare is exaggerated as the Pentagon’s global warnings play out: That by 2020
…
BUFFETT: THERE WILL BE NO DOUBLE DIP
by ilene - September 13th, 2010 5:11 pm
BUFFETT: THERE WILL BE NO DOUBLE DIP
Courtesy of The Pragmatic Capitalist
Warren Buffett is seeing a broad recovery in his many Berkshire businesses. In comments today at the Montana Economic Development Summit Buffett detailed why he is very bullish on America:
“I am a huge bull on this country. We will not have a double-dip recession at all. I see our businesses coming back almost across the board.
I’ve seen sentiment turn sour in the last three months or so, generally in the media. I don’t see that in our businesses. I see we’re employing more people than a month ago, two months ago.”
I don’t think Mr. Buffett has ever been too bearish about the long-term outlook of this country (and I entirely agree with that), however it is nice to see his increased confidence based on his underlying companies. Buffett has amassed an impressive and broad group of companies through which he gauges economic
****
Picture from Jr. Deputy Accountant
Municipal Market A “Terrible Problem” Says Warren Buffet
by ilene - June 3rd, 2010 4:54 pm
Municipal Market A “Terrible Problem” Says Warren Buffet
Courtesy of Bondsquawk
The $2.8 trillion municipal market concerns Warren Buffet, the Chairman for Berkshire Hathaway as states may face defaults in the months ahead according to a Bloomberg article.
Warren Buffett, whose Berkshire Hathaway Inc. has been trimming its investment in municipal debt, predicted a “terrible problem” for the bonds in coming years.
“There will be a terrible problem and then the question becomes will the federal government help,” Buffett, 79, said today at a hearing of the U.S. Financial Crisis Inquiry Commission in New York. “I don’t know how I would rate them myself. It’s a bet on how the federal government will act over time.”
Berkshire’s investment portfolio included municipal bonds valued at less than $3.9 billion as of March 31, down from more than $4.7 billion at the end of 2008. The company had a maximum of $16 billion at risk in derivatives tied to such debt, according to the company’s annual report for 2009.
Read the Full Article
THREE THINGS I THINK I THINK
by ilene - June 3rd, 2010 4:25 pm
THREE THINGS I THINK I THINK
Courtesy of The Pragmatic Capitalist
- Are the problems in
Europe having a real impact on corporations yet? Peter Boockvar at Miller Tabak has a smattering of opinions:
The new big question for the US economy is of course what impact the prospect of European weakness will have on our growth. While its still early on and thus uncertain what the impact will be, here are some comments today from some US co’s: “DOW ceo says seeing strong demand in Europe.” The ceo also said “China is still very robust.” “GM sees euro zone effect to be neutral.” Warren Buffet said “European crisis not yet threatening Berkshire.” Avnet, a large distributor of computer and related products, said at a conference today that they are not seeing any impact on demand right now from Europe.
I expect to hear a lot of this during the upcoming earnings
- The hypocrisy of Warren Buffett just never ceases to amaze. Regular readers know I think Buffett is one of the most misunderstood investors of all-time. He has sold his folksy image to the American public and they’ve swallowed it up like it was a delicious Cherry Coke. This time, Buffett is defending the ratings companies. Meanwhile, FCIC Chairman Phil Agelides (and just about every other rational American) thinks the ratings agencies played a central role in misleading investors. This fact is plain as day to anyone who doesn’t own millions of dollars worth of their stock. This is the second major blow to the Buffett ego (and portfolio) in as many months (Goldman Sachs of course being the first). Are investors beginning to see Buffett for what he truly is – just another Wall Street banker who just happens to live closer to a corn field than a skyscraper?
- A reader recently asked me what I think of the oil spill in the Gulf of Mexico. I wrote the following:
“The…
Oracle Of Omaha Honors Subpoena
by ilene - June 2nd, 2010 12:19 pm
Oracle Of Omaha Honors Subpoena
Courtesy of Karl Denninger at The Market Ticker
So much for "transparency", "fair dealing" and similar.
Warren Buffett was "invited" to testify before the FCIC today. He declined.
Now one must understand that when a Congressionally-authorized panel "invites" you to appear, you’re not really being asked. Right behind said invitation, should you refuse, is nearly-always a subpoena.
Buffett, believing that he has no duty to actually talk about what happened (especially with the ratings agencies of which he has, until fairly recently, held a major stake in via Moody’s), decided to say "nuts" to the invitation.
That in turn led to a subpoena, as expected.
True to form of a snubbed "King" (remember, there’s kings and there is everyone else – the law applies only to the "everyone else") Buffett has failed to provide any sort of prepared testimony in advance to the FCIC. That’s a snub too – it is common practice, and considered good form, to provide a written document containing your opening testimony a day or two before you appear so that the panel is prepared to respond to the gist of your comments.
Buffett, of course, deigned to schedule an interview with Tout TV just before going on, it has been announced. So rather than provide his testimony to the Congress, he will instead give it to CNBS and allow them to spin it into whatever they’d like just before going in the dock.
That’s nice.
The oligarchs are such a sniveling pack of frauds. If there’s nothing to be disclosed of importance, why not show up at…
Moody’s Receives Wells Notice, SEC To Commence “Cease & Decist” Proceedings Against Rating Agency
by ilene - May 8th, 2010 1:02 pm
Moody’s Receives Wells Notice, SEC To Commence "Cease & Decist" Proceedings Against Rating Agency
Courtesy of Tyler Durden
And now for today’s bombshell – lietarlly at the very end of Moody’s 10-Q filed last night, we find this stunner:
On March 18, 2010, MIS received a “Wells Notice” from the Staff of the SEC stating that the Staff is considering recommending that the Commission institute administrative and cease-and-desist proceedings against MIS in connection with MIS’s initial June 2007 application on SEC Form NRSRO to register as a nationally recognized statistical rating organization under the Credit Rating Agency Reform Act of 2006.
Well at least it took Moody’s under two months to report this massively material development, which while we are not positive on how to read the C&D action on the NRSRO registration, could mark the beginning of the end for the rating agency. If the firm is enjoined from providing additional rating research should the SEC action find fault and proceed with a lawsuit, it would mean game over for the business. Egan-Jones: it’s IPO time.
We will be shocked, shocked we tell you, to find that Mr. Buffett has sold out his entire position in MCO when BRK’s next 13-F is filed.
h/t Jing
Buffett Defends the Indefensible: Goldman Sachs and Rating Agencies; Goldman’s Sweetheart Deal With Buffett Revisited
by ilene - May 5th, 2010 11:51 am
Buffett Defends the Indefensible: Goldman Sachs and Rating Agencies; Goldman’s Sweetheart Deal With Buffett Revisited
Courtesy of Mish
In the midst of the stock market crash, Warren Buffett got a great deal on Goldman Sachs preferreds. Those preferreds are making him $15 a second.
I do not fault Buffett one second for taking that deal. It seemed like a great deal at the time, and it was. The problem is, it’s important to distinguish between a deal good for his shareholders, and the integrity of Goldman Sachs.
Sadly, Warren Buffett is now caught in no man’s land, unable or unwilling to see the difference.
With that backdrop, please consider Buffett strongly defends Goldman; Berkshire net up.
Speaking at Berkshire’s annual meeting, Buffett also said Berkshire swung to a $3.63 billion first-quarter profit, compared with a year-earlier $1.53 billion loss, helped by an improving economy and gains from investments and derivatives.
Buffett said he did not hold against Goldman the U.S. Securities and Exchange Commission civil fraud lawsuit alleging the bank hid from investors that securities underlying a risky debt transaction were chosen by Paulson & Co, a hedge fund firm that was betting they would lose value.
News that investigators opened a criminal probe into Goldman has led to increased speculation about Blankfein’s job security, but Buffett expressed strong support.
Asked who should run Goldman if Blankfein were replaced, Buffett said: "If Lloyd had a twin brother, I would vote for him. I have never given that a thought."
The $5 billion investment consists of preferred shares that throw off $500 million in annual dividends, plus warrants to buy an equal amount of common stock. Goldman can buy back, or "call," the preferreds at a premium.
GOLDMAN, DERIVATIVES
"We love the investment," Buffett said. "Our preferreds are paying $15 a second, so as we sit here, ‘Tick, tick, tick, tick,’ that’s $15 every second," he said.
Buffett added that the SEC lawsuit was not a serious enough event to raise reputational issues that would call into question the Berkshire investment.
That last sentence is complete nonsense at best. At worst it is a blatant lie.
Goldman’s reputation most assuredly has been called into question by the SEC. Moreover, Janet Tavakoli calls it into question every day of the week. So do many others. Arguably so did the the market, judging from its reaction.…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
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