Wow, lots of money and opinions runnings around out there. I wish I had Warren Buffet's $5b, Everyone is saying he is showing confidence in the US financial system with his investment in Goldman Sachs. I see an extraordinary sweetheart deal, not "confidence". Confidence would be to buy their common stock, straight-up. Instead, he got bonds at a 10% yield AND he got the right to buy up to $5b in stock at $115 per share for the next 5 years. That is all upside with no risk of downside, nor does he have to layout the cash. Can you spell "sweetheart"?
The other billion dollar debate sloshing out there is the $700B "economic plan" the congress is considering. I guess my reaction to the Buffet deal that if he can get that sweetheart deal for his $5b, the govt should get something great for their $700b.
I have attached two links that I think are great reading about the $700b. One is by Jim Jubak, who is well-known. The second is by John Hussman,a Phd who runs several mutual funds and has been extremely astute in weekly commentary about the markets. I'd encourage everyone to bookmark his site and read every Monday morning.
Let's not rush to blow $700 billion
September 22, 2008 - An Open Letter to the U.S. Congress Regarding the Current Financial Crisis
Subscribe to:
Post Comments (Atom)
Posts
1 comment:
Nice post, I liked in the second article describing the balance sheet and that the govt taking on the bad assets won't necessarily solve the problem. There needs to be some mechanism that encourages banks to become less leveraged. What's interesting is that the solution to another crisis enron with sarbox is partly causing this crisis in that they have to value assets at current market value. Fingers crossed that we get some kind of decent legislation out of the jokers up in Washington.
Post a Comment