Buffett’s bet: $5B down, $695B to go

As far as I’m aware, a “billion” in the US is 1 followed by 9 zeroes (unlike in the rest of the world, where it would be 12. This, I believe, is in the US called a “trillion”). If you divide 85 US billions by 200 000 000 US citizens, you end up with 425 $ per head. This isn’t going to take you anywhere. Even if you use the famous 700 billion bailout figure, you end up well below 4 000 $ per capita.

This was sent to me via email.

I’m against the $85 Billion bailout of AIG, as well as the $700 Billion for the rest of the selfish crooks! Instead, I’m in favor of giving the $85,000,000,000 to America in a “We Deserve It” Dividend.

To make the math simple, let’s assume there are 200,000,000 bonafide U.S. Citizens 18+. Our population is about 301,000,000 +/- counting every man, woman and child.. I figure there’s about 200,000,000 adults 18 and older. Dividing 200 million adults 18+ into $85 billon that equals $425,000.00.

Here’s my plan. Give $425,000 to every person 18+ as a “We Deserve It” Dividend.

Of course, it would NOT be tax free. So let’s assume a tax rate of 30%. Every individual 18+ would pay $127,500.00 in taxes (which returns $25,500,000,000 right back to Uncle Sam!). But it also means that every adult 18+ has $297,500.00 in their pocket. Think about i t:

A husband and wife has $595,000. What would you do with $297,500.00 to $595,000.00 in your family? Pay off your mortgage? Housing crisis solved. Repay college loans? What a great boost to new graduates. Put away money for college? Why not? Open a saving account at a bank and help create loan money for mortgages and entrepreneurs. Buy a new car (create jobs); invest in the market (capital drives growth); pay for your parent’s medical insurance; there’s lots and lots of things an extra $297,500 might improve, don’t you think?

If we’re going to re-distribute wealth, let’s really do it, instead of trickling out a puny $1000 ( “buy your vote” ) economic incentive being proposed by one of our candidates for President.
If we’re going to do an $85 billion bailout, let’s bail out every adult U S Citizen 18+!
As for AIG – liquidate it. Sell off its parts. Let American General g o back to being American General. Sell off the real estate.. Let the private sector bargain hunters cut it up and clean it up.
Here’s my rationale. We deserve this money; AIG doesn’t. You may think this is a crazy idea that’ll never work. But just imagine the “We Deserve It” Coast-To-Coast Block Parties! Can you say, “Economic Boom?”

I trust my fellow adult Americans to use their portion of the $85 Billion (remember, my plan actually costs $59.5 Billion because $25.5 Billion is returned in taxes to Uncle Sam) to boost the economy much more than Congress or the Executive Branch ever could!

Who’s with me?

Buffett has a big interest in keeping the stock market from crashing.

700 billion + Government management = 2.1 trillion

SO THE NEXT MELT DOWN WILL BE HEALTH CARE, AS THE MIDDLE CLASS LOSE JOBS OR ENOUGH HOURS TO PROVIDE INSURANCE COVERAGE. MAYBE WE COULD GET THE OLDER (BABY BOOMERS) ON MEDICARE OR SOMETHING AND GET THEM OUT OF THE WORKFORCE AND LET THE YOUNG WORKERS MAKE SOME MONEY……….

Warren Buffett is lining up at the trough for the GREAT TREASURY GIVE-AWAY.

You’ve heard of the “Great Jewlry Heist”.

This is the GREAT TREASURY HEIST.

Suckers!!!!!

I find it funny that when people make bad investments they like to blame Bush. Sound principles of dollar cost averaging protects investments from volatile markets swings. If there was no risk there would be no market. Nothing is guarenteed. Congress attempted to but a bill on the floor that would create oversight for Freddy and Fanny. It was blocked and not even allowed on the floor. There is plenty of blame to go around for the Bush Admin, Congress, Corporate Fat Cats,and Banks. However, the root of the problem seems to be a lack of common sense by home owners getting in mortages that they could not afford in the first place, or they were betting on refinacing their ARM’S gambling on home values rising. Americans trying to live above their means is the real problem. I just hope we all don’t have to learn the hard way.

Mr. Buffet is at once buying a bank that holds a lot of mortgage backed securities and at the same time he is advocating for the bail out. This sounds like a strategy to turn a quick billion or so at tax payer expense.

And what, bailout the big guys but don’t let bankruptcy judges change the terms of mortgages on first houses. This is abominable. Judges can already change the terms for second houses. Once more evidence that the bailout is just a way to give the rich more money at taxpayer expense.

To M. Virlaid: thank you. Rich Wall Street bankers being bailed out by middle-class and poor tax-payers is nonsense. Congress should not do it. Our country will go on, and the world will not end. We need to inject some common sense, the kind that is possessed by cabbies, engineers, farmers, homemakers, truckers, and welders, etc., who understand the value of a dollar.

Also, I have noted from my Canadian friends that your country did not get caught in this mess. I don’t know how you did it, but congratulations.

Going back to the bailout question, why dont we ask the oil companies who have made millions in profit over the last few years to bail out the banks!

Why is this greedy old man still chasing money? At his age, he should be in a church.

Excellent comment Mike of Redwood City, CA!

I think Warren Buffett’s US$5B investment with Goldman is not because he has strong confidence that this is the best bet at this current state of economy to position. But he is just trying to show to the world that he cares as all people in all walks of like are staring and watching in the U.S. congress deliberating on this proposed bailout package. Afterall at 78 years old he doesn’t care for his wealth anymore as he had already arranged to have all his wealth to go to Bill and Melinda Gates foundation after he dies.

If I were him (WARREN BUFFETT) put all his money to Goldman Sachs, Morgan Stanley, Citibank, Bank of America… This is his opportune time to make a difference for all the people in the world that he cares not only for the American people but the whole world. Especially for this generation and the generations to come because if the congress approved this bill and it will not fix the economic turmoil then that’s the end of all bettings. I hope all the billionaires will follow his lead.

Mr. Buffett is smart enough to know that Goldman Sachs is a good bet.

But his bet does not extend to other banks or financial firms.

First of all, the current request for bailout money from the FED and Treasury is just the FIRST such “TRANCHE” IMHO.

This is because the “Bail-out cost is impossible to estimate” as per article at http://www.ft.com/cms/s/0/78ecb166-8a46-11dd-a76a-0000779fd18c.html?nclick_check=1

Secondly, “The federal government is now committed to guaranteeing the difference between the real equilibrium values of all debt securities and their stated/nominal value, which was created during the greatest credit bubble in history.”

This BUBBLE was puffed up by the FED in the first place.

“That difference between nominal and equilibrium/real value must by definition be a massive number because of the extent of the credit bubble, on the order of $5 trillion dollars in the United States alone.”

Please see http://mises.org/story/3117

BH is showing confidence in neither banks nor Goldman. He bought preferreds (10% yield), not commons, and he got warrants tossed in for free. He threw a rescue buoy to a drowning Goldman, and I’m glad that he did. This is not a bailout; he got Goldman to sign the deal BEFORE he tossed the rescue buoy, driving a hard bargain.

THIS is the model for a Wall Street rescue. We should not be giving them a bailout of $700 billion or any $ billion; they will squander it, and we need this money for a lot of other things this year and next year.

The Treasury can borrow as much money as they want at 5% by selling treasuries and let the Fed lend it to Wall Street at 10% plus extra goodies and protection thrown in for free.

Lastly, we need to close some of the Wall Street banks; there is still way too much lending capacity.

Gee, what an impressive “bet”…

If I had access to “investments” with a guaranteed 10% annual yield and a guaranteed 10% premium when sold, I’d put my money in too.

When you look at the terms of this “investment”, it looks a lot more like a paid endorsement…

The common man can’t get a guaranteed return greater than 5%, but Buffett gets 10%. Here’s a suggestion to Goldman Sachs– offer a CD with a 10% return rate and I’ll bet you’ll find all the capital you’re looking for…

Re: the FBI

Most of America will be cheering the fact that the FBI is launching multiple investigations into the accounting practices of Freddie, Fannie, AIG and other high profile financial institutions. Well America, you are falling for a large-scale head fake. Sure the CEO’s of the various companies that have been recently bailed out on the backs of the taxpayers need to have some level of accountability, but they are not the only ones to be blamed for this current “crisis”.
The very people that created the environment and enabled the behavior are going to get away with it. If the FBI does a proper root cause analysis, they will find that our President, the Federal Reserve and the Treasury Department bear much of the blame for the volatility in the financial markets. The Fed set the rates artificially low after the 911 attacks and our President encouraged us all to “go shopping”. The CEOs obliged them and made it happen. Yet, the very men that are calling for action to address the crisis caused the crisis!
Are we to just sit here and let the people who created the crisis design and carry out the solution to it? It doesn’t make sense to me. The best solutions are the preventative ones. It is pretty clear that either Paulson, Bernanke or Bush either do not know what they are doing or are doing this on purpose to gain further power. Either way, none of them should be in charge of solving this mess.

If providing uninsured citizens with Health Care is deemed to be an undesirable form of socialism, then what is bailing out Fat Cats on Wall Street?

Nice legacy there W!

I watch these hearings with some amusement at how courteous, almost obsequious these folks are at patting each other on the butt!

Suppose you came home and discovered your spouse had run up debt to the limit making a personal financial melt-down a real possibility:

(Spouse):

Darling, I want to thank you for coming home and appearing here so we can talk about and explore ways to get a bail-out!

(2nd Spouse):

It’s my pleasure. We really need to get past the current deficit immediately and then we can explore ways that regulation can be implemented so I know which rules to apply so we don’t bring our family to the brink of melt-down in the future.

(Spouse):

I appreciate your service to our family. Are any of these items for which we incurred debt worth anything near what you paid for them?

(2nd Spouse):

The items which were bought are very complicated and difficult to value. I’m not sure.

(Spouse):

Again, thank you for coming and we’ll meet further to discuss these issues. I’m going to call the Chairman of the County Commission to see if we can possibly get a loan from the county to make a market for these items.

(2nd Spouse):

Thank-you darling. Do you have any cash for a pizza so I can feed the kids?

And the Bush administration succeeded in repelling efforts by Democrats to extend unemployment insurance, increase food stamp payments and help states deal with shortfalls in their Medicaid budgets.

Let’s see the pattern here no money for needed Americans straving to death homeless in our streets and 700 billion hand out with no strings attached to Wall Street bankers who have already stolen trillions from us.

Bin Laben must be proud of his son George Bush

I say no bail out money to any Wall Street banker and Buffet has lost his touch and is going to lose 5 billion dollars.

Given Berkshire Hathaway’s track record I am sure that Goldman Sacks is the best bet to turn around. But that is what Berkshire Hathaway is supposed to do, make “bets” on companies based on the best data and analysis they can produce.

The U.S. government on the other hand should not be in the business of gambling with tax payer dollars, loke Bernanke/Paulson are proposing with this bailout.

Wall Street and New York City
can sink into the ocean for all I care. I think we’ll all be better off when that happens.

Our economy would be fine if we could rid ourselves of the bloodsucking parasites that the financial sector represents.

What is Warren Buffet the next great oracle? Instead of Nostradums we should listen to him? So let me think…a less then 1%(.71) chance or stake is giving people confidence? I suppose he is .71% confident about the market

Buffett invests in Bank (Goldman)

Pepetual preferred shares with 10% interest. Warrants at $115 (today, one day later Goldman is at $130)

Buffett states today that if he was running the bail-out program, sellers would be required to sell 2-3 billion on the open market to see what the market value is and is willing to pay.

The Fed would then pay the same for the rest.

Paulsen “invests” in Banks

‘Paulsen says we will pay over the current marketprice for bad assets. We will not require warrants as it might scare away some sellers.”

Mr. Buffet looks after BH and takes a market approach to the problem, Mr. Paulsen looks after the taxpayer and takes a ???? approach to the problem.

Memo to Fed: Mr. Buffett has an implemtation plan, Fed get with the plan.

Spot the difference. ‘Nuff said.

Smart investors go bargain-hunting.

FINALLY!!! Some people here are beginning to come to their senses.

Well, I say thank heavens for The Oracle Of Omaha.

It looks like Buffet is not only going to be making even *more* money for Berkshire Hathaway, but making an example, and doing us all a great public service as well.

As could typically be expected, it seems only Buffet has had the erudition to be nowhere near this mess when it all came to fruition.
Buffet, in his great wisdom, has done what smart people do: stick to his guns from the sidelines, and then buy up companies who have solid valuation- but whom have been beat up, and therefore represent an excellent value.

…And finally, the FBI has come to their senses, and started to snoop about at the watercoolers of these financial firms…

…And finally, reporters at Time magazine are hounding SEC Chairman Cox about what on earth he’s been doing this whole time.

…And finally, our Government is giving serious consideration to vesting the taxpayers in any assets which are to be acquired with taxpayer money.
Apparently, two weeks ago, the Government’s sentiment was that they could just hand over a blank check, and it was just going to be cool with everybody.
…I’m so thankful our Government is finally listening.
After all, real Democracy will only ever come into being when people stop voting for representation in Congress, and start voting with their wallets. …Shame the current tax system doesn’t let us do that.

Yes- surprisingly, it looks like sensibility may be replacing sedition.

…But let’s not get overly excited here.
To put this all in perspective, if you took the combined total wealth of Warren Buffet, Bill Gates, Steve Jobs, Donald Trump, and Larry Ellison you would only scrape together enough “loose change” to help pay for about 13% of what the government is proposing to slap on your next tax bill.

So- if that check *does* get cut- me, you, and everybody else who paid for it squarely deserves a piece of the pie.

LOL Wall Street has lost me over 80,000 dollars since 1990. 45,000 during the 2001-2003 crash now 35,000 for this crash.

They have already stolen enough from me they need to use the money they have stolen from people to bail themselves out.

Wall Street bankers can now get their hands on our bank deposits which before they could not. Bernanke and Paulson are trying to steal another trillion from us before Bush leaves office they have already stolen at least 2 trillion.

Fundamentally, any bank that uses fiat money and reserve ratios are unsound (that would be all banks). What we are going through right now is a lack of confidence in our banks and our money system. Buffett’s move will lift confidence for a minute, but we will be back to wondering who will fail next.

Wall Street billionaires should put their own money up to save Wall Street.