what is there to lose ? given the volitility of the market lately such an offer by mr. buffett sounds like the shot in the arm that could help investors refuel their retirement portfolios somewhat. right now instead of chasing funds in the market i’m on the sidelines maxing out my savings instead of chasing a market of uncertainty. we’re in a market that has cost some investors dearly. i’m getting ready to retire within a year. fortunately , because saving diligently and less exposure to the market my portfolio hasn’t taken the hits that many have suffered during the last several weeks.
yes the psychology of underlying support is the key. Buffett doesn’t make huge mistakes and this indicates he expects a light at the end of the tunnel for the economy in general.
Taking the less risky at excessive costs and leaving the more risky is helping no one other than BH and would certainly undermine ABK and MIB
This is a pure delay tactic with only temporary potential. We don’t need a business man trolling the best of what’s available in the morgage space (municipals)…while the problem (CDOs) fester. We’ll have the recession after the “spin” wears off. I look for this pump and dump to wear off within a week. Wake up folks…the solution is to clean up the mess by letting the bad players fail; then we’ll have cheaper prices and higher quality companies left to build from.
If these bond insurers go bankrupt the muncipal bonds they hold can be auctioned at about face value….much better than the 1.5 times to be paid for BH to take it from them.
Sub-Prime is to 2007 what credit default swaps (CDSs) are to 2008.
With all due respoct, but the auther of this article is not exactly on top of the subject. Can someone pls tell me how exactly it is helping Ambac, MBIA and XL that Buffet offerred them reinsurance on their muni portfolios that have ZERO credit issues. If they ever agree to do it, it will actually hurt their bottomlines considerably as they they have to share a part of their muni revenue with Buffet. Remeber, even if the monolines are downgraded to BBB they’re still entitled to their insurance premium!
Also, that extract from the Berkshire letter to MBIA talking about “appeal of serving the greater public good” is the a blunt and misleading lie, used to cover his strategy to get rid of the competition in the muni insurance busines. If Buffet indeed cares about “greater public good”, he should either buy one of the monolines or at least sell them reinsurance on their CDO exposure instead of trying to steal the money thet monolines can set aside as reserves against their future CDO losses.
I bet if Berkshire were to reinsure their CDO portfolios, it would definitely prevent another round of write-down at the banks that have exposure to the monolines and certainly stabilize a big chuck of the market. But, obviously, Buffet is not going to do that – high risk & low return.
This isnt some turnaround, he isnt providing some great service and this will do more damage than good. The offer would do little to alleviate the problems the companies are facing on the guarantees they have made to investors who hold securities backed by mortgages, consumer loans and other assets. In fact, reinsuring municipal bonds with Mr. Buffett could make the guarantors more vulnerable because they would be left with the riskiest insurance contracts. It doesn’t make sense to give up the good part of your business.
.Looks like it already helped. End the war be honest with the people,collect the billions owed the govt on oil royaltys and the country will be much better off financiall
no at best it is only temporary inflation of goods and defation of the dollar will still eat our lunch.
Proves once again that it takes a businessman who knows how to make money fix the economy and not government officials who only know how to spend money that they have never earned.
OK Folks regardless of what you think of him personally, this type of thinking is refreshing. Rememeber if he can leverage this kind of cash he can certainly line his pockets any day of the week with market leverage in any one industry. I am not naive enough to think this plan if purely philanthropic, but it will generate some positive buzz, and in that regard has already begun to do what it is set out to do.
In my opinion…it just points out that the people in Washington who are suppose to be running this country are either out of touch with reality, or just don’t care if the economy of the country goes in the tank. BH understands that putting a few bucks in the hand of someone deep in debt folks who are trying to hold onto what they have is not even a short term fix for what is going on in this country! Our current politicians are so involved in fixing problems in other parts of the world, and doing favors at home for the Fat Cats who fill the lining of their pockets, they have forgotten that WE the people of the United States are in trouble. Thanks BH for at least trying. To the folks in Washington D.C., shame on you for letting things go to pot at home while you give away Billions in resources and lives in places where we have no business being in…period!
looks more and more like what I’ve suspected all along — the municipal bond insurance business is fundamentally sound and profitable [Warren Buffet is nobody's fool] while the mortgage insurance business these fools got themselves into is fraught with peril.
It is not inconceivable that insuring mortgages may end up bankrupting one or more of the bond insurance houses.
buyer beware!
This guy is proof that the “real” problem in this country is uneven distribution of wealth. Another text book example of the saying “the harder you work the less you make”. The hardest days work this guy ever did was choking down free meals bought by slobbering, low IQ sheeple.
Idiots! Our politicians are idiots! How many times, how many ways, must we as a people tell them WE DON’T WANT A BAILOUT, WE DON’T WANT WAR, WE DON’T WANT AMNESTY!!! These things create inflation!
Get it together and permit this deflation before we all end up paupers in the streets! Inflation will harm the people! As Thomas Jefferson said, let the banks control the money supply and FIRST BY INFLATION, then by deflation our children and grandchildren will wind up homeless and in the streets!
First off, prove this statement of yours is true: “The Berkshire offer kicked stocks into a higher gear though with the Dow up nearly 200 points early Tuesday morning.”
Then we can sit and discuss whethter or not BH’s offer is going to help.
I’m simply shocked that you would write anything that contained even a whiff of positive economic news. So unlike you in recent months (Yes, that was meant to be sarcastic. Your economic reporting in the past weeks has been the economic pundit’s equivalent of shouting fire in a movie theater. Why, I don’t know. Maybe just because you can!!)
The whole point is he is not trying to save any mortgage related business. He is way too clever to do that. He is just picking the best bits for his company effectively ensuring these companies will be downgraded and out of business if they accept.
Warren Buffet sees an opportunity for himself. I applaud him and Berkshire for that, but to think this is some kind bailout is ludicrous. Buffet only wants the good liabilities. Muni bond insurance is not in trouble. That said this not a bad offer for the bond insurers if they are truly suffering from a cash drain. However, let’s not confuse apples with oranges.
certainly if 800 billibon dollars cant what will. i think buffet will make a dramatic change in the market for a little while then back to the insanity.
Buffet is trying to save the Titanic with a lifering. Even he does not have nearly enough money to correct the excesses of five years of unregulated mortgage underwriting. In the end these excesses will cost nearly $1 trillion to correct, esp. as housing prices continue to plunge, decapitalizing the financial sector.
Buffett is grandstanding as usual just to make himself look good. Too bad his huge investments with Gates in population control in the third world doesn’t get the same play.
Where public and Berkhsire interests collide there may be money to be made, a savvy move. Not bailing out the companies for their poor judgment re: the CDOs but shoring up the municipal funds put at risk secondary to the mortgage debacle induced economic climate. A vote of confidence from Berkshire should sooth some of the bond markets anxiety and hopefully reduce some of the volatility.
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This is an interesting offer from the billionaire. Since the markets responsed positive towards this kinds of offers, it may for the short term boost the market sentiments. But the real problem still haven’t solved! Lets wait and see more…