Warren Buffett on the Bailout

Warren Buffett had some interesting observations on the bailout plan. He dumped all over Bernanke’s “hold to maturity” pricing plan. He wants the government to buy the securities at the lowest possible price (the market clearing price). He thinks Hank Paulson is the right man for the job at hand and was even suggesting that the next President keep him on as Treasury Secretary. I think his argument is that if we can get the bonds cheap enough, we don’t have to worry about the warrants, because we can resell them once the market calms down.

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0 Responses to Warren Buffett on the Bailout

  1. pete says:

    Well I know we all love Warren, but he does now have $5 Billion of conflict of interest there, doesn’t he?

    And what he said was that he was doing it because he was betting on a no-strings attached bail-out. Hell, if I thought that and I had $5 billion to spare, I’d be buying into the Hank Paulson cash cow.

    I think his argument is that if we can get the bonds cheap enough, we don’t have to worry about the warrants, because we can resell them once the market calms down.

    Surely that cuts both ways under the Dodd plan, though? If the government can resell them once the market calms down, the Banks don’t need to worry about the warrants either.

  2. JR says:

    Yeah, let’s get some warrants, too. Warren got ’em. Why not US?

    Didn’t Warren just “front run” the US taxpayer?

  3. JR says:

    Yes, Warren is “talking his book” just as Goldman did last fall when they predicted $150 oil.

  4. jwojdylo says:

    Of course the government should buy these things for as cheap as possible if the MUST buy them. in my opinion, they should be bought out by other firms or let them all go bankrupt!


  5. Brian says:

    Don’t let the door hit you in the ass on your way out Paulson as you go to bask in your wealth.

    Rich take care of the rich.

    Call me a cynic. :)

  6. museincognito says:

    Warren knows what’s what. It’s going to be a very-few-strings bailout.

    Wealth isn’t the problem. It’s what is done with it.

  7. Eric says:

    This is obviously a good bet on Buffet’s part. I don’t think Goldman (or most of the really big/smart hedge funds) are actually wearing that much exposure to CDOs. There issue is liquidity right now (borrowing short and lending long sucks when noone will lend you short and your longs are getting margin called).

    Buffet gets a nice 10% senior position on Goldman, who’s name alone is worth $5B. Plus he gets the vig on the ultimate recovery once liquidity is restored.

    And BTW, I don’t think his comments about buying the debt at market is front-running. He’s saying that the American taxpayer is entitled to the return on those assets, and I agree. The two plays are either “buy at hold-to-maturity, but with warrants” or “buy at market and liquidate for a profit”. I personally think that the later makes more sense provided that removing the uncertainty will result in a rapid re-cap of the banking sector. I’m not sure how orderly that would be. In either case, current investors will be diluted farily significantly.



  8. Eric says:

    Excuse me “their” issue, in the first para.

  9. Adam says:

    Warren Buffett is buying when things are on sale like he always does. Plain and simple. As soon as a deal gets done, almost any deal, he makes out. In the meantime, he’s calling for reasonable measures that also take care of American taxpayers. Warren is good people in my book.

  10. Ken Ballweg says:

    And, an Oboma go to guy for financial advice. How’s that for a smart choice.

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