The money supply numbers (for the week ended Oct. 13) continue to show fear climbing throughout the system.
M1 money supply over the last three months has grown at an astounding 19.5% annualized rate. The week before, growth on a three month annualized basis was 7.6%. Thus the M1 growth rate has more than doubled in a week!
M1 measures currency and demand deposits (checking accounts). The huge growth is clearly a sign that many are moving money from other money holding vehicles, such as money market mutual funds. There will be no recovery until this growth in M1 slows significantly or stops. It is the measure of fear in the system.
The three month M2 money measure is also up, to 6.8% annualized from a revised 3.1% the week before. This is an indicator of Fed money pumping activities. The Fed is, obviously, acting aggressively here, and if this money pumping continues, the recession will be much, much milder than most expect, re-heated inflation will be the big problem.
Thursday, October 23, 2008
Greenspan Finds A 'Flaw' In Free Market Ideology, I Find A Flaw In Greenspan's Thinking
As I have pointed out many times before, former Fed Chairman Alan Greenspan has never understood business cycle theory, and now it appears he doesn't even understand basic free market theory.
"Yes, I found a flaw [in non-regulated banking markets]," Greenspan said today during testimony before the House Committee on Oversight and Government Reform. "That is precisely the reason I was shocked because I'd been going for 40 years or more with very considerable evidence that it was working exceptionally well."
I have found a flaw, also. It is Greenspan's thinking.
The entire free market system is based on the fact that there is not perfect knowledge. Some people will be better at making a profit than others. Those who make losses, will be pushed to the side by those who do not.
The fact that some bankers believed in faulty econometric equations is not a failure of the free market system, anymore so than the failure of the Edsel, Nehru jackets and laser discs for movies, were failures of the free market system. The beauty of the free market system is that any nut job, who can scrape up the money can try, any wacko thing he believes in. Since, it is impossible to know in advance who is a complete nut job, and who has superior vision, it is a good thing, indeed, an important thing that this freedom exists.The great turn downs for funding that then ultimately find some funding and then turn into the great success stories is how legends are built. Likewise, the great failures are studied so that they are not repeated again.
The financial institutions that bought voodoo econometric securitized mortgages should fail. No regulatory intervention needed at all.
For Greenspan to think otherwise is Greenspan's flaw in understanding the basics of the free market system. No regulation is needed, and as I have asked many times before, just what makes anyone think that regulators have a crystal ball that can never be flawed?
"Yes, I found a flaw [in non-regulated banking markets]," Greenspan said today during testimony before the House Committee on Oversight and Government Reform. "That is precisely the reason I was shocked because I'd been going for 40 years or more with very considerable evidence that it was working exceptionally well."
I have found a flaw, also. It is Greenspan's thinking.
The entire free market system is based on the fact that there is not perfect knowledge. Some people will be better at making a profit than others. Those who make losses, will be pushed to the side by those who do not.
The fact that some bankers believed in faulty econometric equations is not a failure of the free market system, anymore so than the failure of the Edsel, Nehru jackets and laser discs for movies, were failures of the free market system. The beauty of the free market system is that any nut job, who can scrape up the money can try, any wacko thing he believes in. Since, it is impossible to know in advance who is a complete nut job, and who has superior vision, it is a good thing, indeed, an important thing that this freedom exists.The great turn downs for funding that then ultimately find some funding and then turn into the great success stories is how legends are built. Likewise, the great failures are studied so that they are not repeated again.
The financial institutions that bought voodoo econometric securitized mortgages should fail. No regulatory intervention needed at all.
For Greenspan to think otherwise is Greenspan's flaw in understanding the basics of the free market system. No regulation is needed, and as I have asked many times before, just what makes anyone think that regulators have a crystal ball that can never be flawed?
With government regulators in charge, the entire economy will be directed in one direction. With free markets, many, many different possibilities will be tried.
The free market is all about options, flexibility and alternatives. Regulation is about straight jackets.
They Really, Really Want Me At The World Bank
Sometime back I met a fairly high ranking official from the World Bank that I will call Person A.
I told Person A that I was an economic consultant and I also mentioned this blog. Person A happened to be carrying a laptop and checked out EPJ. After reading the blog for a few minutes, Person A asked if I wanted to do some consulting for the World Bank.
The first thing I did after Person A said this was to make sure Person A was reading the correct blog. After that, I explained that I really believed in a private property society and that it was my belief that governments just muck things up.
Person A's reply, "Yes, yes. This is the kind of view we need at the World Bank."
Thinking, that my point must have been misunderstood, I tried to make it clearer. I said,"I really don't think there is much of a role for the World Bank. I think any loans you make are a mistake and the problem as I see it in most Third World countries is that there is a lack of respect for property rights and the rule of law---and a lack of understanding about entrepreneurship."
Person A's reply, "Yes, yes, this is what needs to be told to the leaders of these countries."
I told Person A that I was an economic consultant and I also mentioned this blog. Person A happened to be carrying a laptop and checked out EPJ. After reading the blog for a few minutes, Person A asked if I wanted to do some consulting for the World Bank.
The first thing I did after Person A said this was to make sure Person A was reading the correct blog. After that, I explained that I really believed in a private property society and that it was my belief that governments just muck things up.
Person A's reply, "Yes, yes. This is the kind of view we need at the World Bank."
Thinking, that my point must have been misunderstood, I tried to make it clearer. I said,"I really don't think there is much of a role for the World Bank. I think any loans you make are a mistake and the problem as I see it in most Third World countries is that there is a lack of respect for property rights and the rule of law---and a lack of understanding about entrepreneurship."
Person A's reply, "Yes, yes, this is what needs to be told to the leaders of these countries."
Thinking that somehow something was lost in translation, Person A was from a Third World country and English was a second language, we exchanged cards and I didn't really think too much about it after that, until I met Person B from the World Bank.
Without identifying Person A by name to Person B, I told Person B about my encounter pretty much the way I described it here. Person B appeared to want to reply to me, but stopped for a minute,and then said, "I can understand why Person A would want you. When I first got to World Bank, I didn't understand it myself. But nobody rocks the boat on anything at World Bank. For most of the employees from Third World countries they are never going to see a better gig. They can't afford to lose these jobs, or it is back to pretty much poverty. Even me as an American, this is a job that would be hard for me to find in the private sector. In addition to my salary, the World Bank pays my taxes. Every quarter, they estimate what my taxes should be and give me a check for that amount. If they give me a check for $10,000. and my taxes are only $8,000 because of other deductions I may have, I get to keep the extra $2,000. If my taxes somehow end up being more than the $10,000 I paid and, are say $12,000, all I have to do is fill out a form and they will give me the additional $2,000. Nobody is going to rock the boat, and with some of the Third World employees there's all kind of corruption to further boost the visible income.
"The World Bank has all kinds of bonus programs for employees, so what will happen is a Third World supervisor will call in a Third World employee and say, 'I am putting your name in for this $1,000 bonus, when you get it be back in my office with half of it, $500, in cash for me.'
"So no one is going to make waves, but some of them would love to have some one like you around who is not beholden to the system and not afraid to speak his mind."
Without identifying Person A by name to Person B, I told Person B about my encounter pretty much the way I described it here. Person B appeared to want to reply to me, but stopped for a minute,and then said, "I can understand why Person A would want you. When I first got to World Bank, I didn't understand it myself. But nobody rocks the boat on anything at World Bank. For most of the employees from Third World countries they are never going to see a better gig. They can't afford to lose these jobs, or it is back to pretty much poverty. Even me as an American, this is a job that would be hard for me to find in the private sector. In addition to my salary, the World Bank pays my taxes. Every quarter, they estimate what my taxes should be and give me a check for that amount. If they give me a check for $10,000. and my taxes are only $8,000 because of other deductions I may have, I get to keep the extra $2,000. If my taxes somehow end up being more than the $10,000 I paid and, are say $12,000, all I have to do is fill out a form and they will give me the additional $2,000. Nobody is going to rock the boat, and with some of the Third World employees there's all kind of corruption to further boost the visible income.
"The World Bank has all kinds of bonus programs for employees, so what will happen is a Third World supervisor will call in a Third World employee and say, 'I am putting your name in for this $1,000 bonus, when you get it be back in my office with half of it, $500, in cash for me.'
"So no one is going to make waves, but some of them would love to have some one like you around who is not beholden to the system and not afraid to speak his mind."
Noam Chomsky On The Oligarchy
“The United States has essentially a one-party system and the ruling party is the business party,” says Chomsky. On Europe and Obama: “The European reaction to Obama is a European delusion.” As for American intellectuals, he says, Orwell had it right: intellectuals “not only do not disapprove of the crimes of their own state, but have the remarkable capacity not even to see them.”
Via Tom Kunz
Via Tom Kunz
Board Up Your Windows In Chicago On Election Night?
That's Chicago private detective Paul Huebl's advice.
The Bizzarro World of Obamanomics
It's going to be one hell of an LSD trip.
One proposal clarified yesterday during a debate between McCain and Obama economic advisers is this, as reported by WSJ.:
One proposal clarified yesterday during a debate between McCain and Obama economic advisers is this, as reported by WSJ.:
Obama adviser Austan Goolsbee said at the debate that a proposed 10% deduction on mortgage interest for taxpayers who don't itemize would carry a "work requirement."Got that. At some point during unemployment you would lose the tax deduction. Just what America always needed, a tax increase for the unemployed.
In Defense of Warren Buffett (Sort of)
With defenders like me, Warren Buffett doesn't need enemies, but I feel that I must rise to his partial defense, given the most recent attack on Buffett by Karen De Coster.
De Coster today pens a mostly accurate portrait of the evil side of Warren Buffett.
She is especially strong in calling him a propagandist for government. Since his purchases of Goldman Sachs and General Electric have been coupled with his cheering on the Paulson Plan, what else can be expected? He is clearly among the new American Oligarchs.
She is trying to split hairs,though, and incorrectly at that, when she writes:
De Coster gets back on track when she calls Buffett a redistributionist:
De Coster today pens a mostly accurate portrait of the evil side of Warren Buffett.
She is especially strong in calling him a propagandist for government. Since his purchases of Goldman Sachs and General Electric have been coupled with his cheering on the Paulson Plan, what else can be expected? He is clearly among the new American Oligarchs.
She is trying to split hairs,though, and incorrectly at that, when she writes:
..he's telling us that the profits will be there in "5, 10, and 20 years." Is it 5 or is it 20? Or anything in between? Or more than 20 years?Notice how in her attack she uses the conjunction "or", while Buffett used the conjunction "and". Thus, if we assume that Buffett is attempting to properly use, and has successfully done so, English grammar, then he believes there will be profits 5 years out, and 10 years out and 20 years out.
De Coster gets back on track when she calls Buffett a redistributionist:
In retrospect, Warren Buffett’s posture on political issues shows us that in spite of being a remarkable value investor, he has sanctioned collectivist state hysteria and policies from climate change to taxes to fiscal policy. In fact, his nod of approval for some of government’s most destructive taxation tactics has clearly distinguished him as an unabashed redistributionist.But, Buffett is one of the most quirky characters to ever come on to the investment scene. While De Coster justifiably attacks the letter for its coming out to serve government interests, the letter also has some of the most sage advice I have seen during this period of financial crisis. Advice that De Coster fails to identify or discuss. Specifically, Buffett writes:
Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts.There is no other way to interpret this then that Buffett believes significant inflation is ahead and that cash will depreciate while it is in your hands. On this point, Buffett is 100% dead on. As I wrote earlier this week, no truer words have ever been written by an Oligarch.
Wednesday, October 22, 2008
It Just Got Worse: Checking Out TARP's New Chief Investment Officer
I'll let John Carney report the sorry news on this character:
John's brother Timothy Carney was sniffing out the Ex-Im scam a year ago:
The head of the Export-Import bank just got named as the chief investment officer for the Trash Asset Relief Program. Be afraid. Be very afraid. And not just because we've got another of Bald midwestern ex-Wall Streeter running our banking system.
James H. Lambright will serve as the interim Chief Investment Officer for the Tarp. He comes to us after three years of running the Ex-Im Bank, one of the greatest corporate welfare boondoggles running. His great accomplishment at Ex-Im was removing its Congressional oversight and running it as an off-balance sheet special purpose vehicle.
The government describes the Ex-Im bank’s huge liabilities and off-balance sheet chicanery as Lambright’s qualification for the job of being top investment officer for the Tarp.
John's brother Timothy Carney was sniffing out the Ex-Im scam a year ago:
Ex-Im is a posterboy for corporate welfare. Its mission is to transfer money from U.S. taxpayers, through foreign buyers, and ultimately into the pockets of American companies. While the agency touts its support for small business, a vast majority of its money goes to subsidize sales by the largest corporations in America.
The money from Ex-Im loans and loan guarantees — the agency’s biggest transactions, and the only kinds that are itemized in Ex-Im’s annual report — goes overwhelmingly to a handful of large corporations,including Halliburton, Bechtel, General Electric, Caterpillar and Westinghouse.But there’s a reason Ex-Im is known as “Boeing’s Bank.”
In fiscal years 1998 through 2005, Ex-Im has issued $63.5 billion in loans and long-term guarantees. In those years, $33 billion of Ex-Im subsidies went to Boeing. That means that a majority — 52 percent — of Ex-Im’s money went to help just one company.
World Leaders Economic Summit To Be Held In Washington
World leaders will meet Nov. 15 in Washington to discuss the global financial crisis. It wll be the first in a planned series of summits.
At the first meeting, working groups will be established to develop recommendations to be considered by leaders in subsequent summits.
The summit will bring together leaders of Japan, the United Kingdom, France, Germany, Italy, Canada and the United States, the European Union, China, Brazil, India, Russia, South Korea and other major economies.
The summit will take place 11 days after the U.S. presidential election. The White House said it would seek input from the winner of the U.S. presidential election who will take office on Jan. 20.
At the first meeting, working groups will be established to develop recommendations to be considered by leaders in subsequent summits.
The summit will bring together leaders of Japan, the United Kingdom, France, Germany, Italy, Canada and the United States, the European Union, China, Brazil, India, Russia, South Korea and other major economies.
The summit will take place 11 days after the U.S. presidential election. The White House said it would seek input from the winner of the U.S. presidential election who will take office on Jan. 20.
Boone "Windmill" Pickens Destroys His Own Donation
Boone Pickens has taken heavy losses (over a billion dollars) in recent weeks in his hedge fund. He has been long oil when it has been crashing. This suggests that he has no clue regarding ABCT. If he did, he would have been out of oil this summer, given Bernanke's shut down of money supply growth.
Pickens, who would like US taxpayers to bailout in advance his money losing windmill operations and force consumers to buy natural gas he owns, even managed to lose a chunk of money he donated to his alma mater, Oklahoma State University.
NYT reports that building on Oklahoma State’s athletic village has been held up, and the athletic director, Mike Holder, said the project would have to wait until Pickens’s financial situation improved. Holder and a spokesman for BP Capital declined to disclose the current value of the university’s investment in Pickens’s hedge fund.
Pickens, who would like US taxpayers to bailout in advance his money losing windmill operations and force consumers to buy natural gas he owns, even managed to lose a chunk of money he donated to his alma mater, Oklahoma State University.
NYT reports that building on Oklahoma State’s athletic village has been held up, and the athletic director, Mike Holder, said the project would have to wait until Pickens’s financial situation improved. Holder and a spokesman for BP Capital declined to disclose the current value of the university’s investment in Pickens’s hedge fund.
Ed McMahon Raps Out A Fact of Life
In this world, there are givers, takers and traders. Ed gave checks to the takers and demonstrates that takers don't become givers.
HT2gc
HT2gc
Tuesday, October 21, 2008
Martin Feldstein On The Money Supply and Current Crisis
Martin Feldstein, chairman of the Council of Economic Advisers under President Reagan and the George F. Baker Professor of Economics at Harvard University, recently penned a WSJ Op-Ed calling for a program to stop a downward overshooting of house prices and the resulting mortgage defaults. A mortgage-replacement loan program may be the best way to achieve that, he wrote.
Since the latest leg of the downturn in the mortgage market, and now the overall economy, seems to be the result of the fact that the Federal Reserve crashed money supply growth over the summer, I have often wondered what Feldstein's take was on the Fed's activities this summer. I got the chance to ask him. Feldstein was a part of a panel that included Wilbur Ross Jr., Juan Williams and Ron Insana, before 4,000 at the AFP conference.
During the panel discussion, Feldstein stated that the Federal Reserve was doing an excellent job providing liquidity to the system but it wasn't working and that is why further measures, such as his "mortgage-replacement loan program" needed to be implemented.
During the Q & A, I asked him how he could say that the Fed was providing liquidity to the system since M2 growth crashed over the summer from a March peak of 12.5% annualized growth to growth of only 1.5% annualized in September. I further stated to him that, in addition, over the summer the Fed was sterilizing the cash infusions they were making by selling off Treasury securities, thus maintaining a net liquidity neutral stance as part of its various rescue operations.
Feldstein did not answer the question about where he saw liquidity coming from the system over the summer( How could he, since there wasn't any net liquidity added to the system?), but he did address the fact that money growth slowed over the summer. He said it likely occurred because of the problems in the economy (which in his view apparently took time for the Fed to adjust too.) He then said that money supply M2 was back growing at an annualized rate of 4.5%, which was correct. He said that this was about the correct growth rate given current GDP growth. This is a hoot, since money supply in September was at 1.5% annualized, and it then jumped to 2.3%, and now is at 4.5%, the Fed clearly has its foot on the monetary accelerator. I don't believe money supply at 4.5% is anything but a very brief transition point. Within weeks money supply growth could be at double digit rates. Indeed, the money supply numbers due out this Thursday could show M2 growth much higher than 4.5%. Feldstein clearly hasn't figured out that Ben Bernanke's Fed is clueless. When he does, I wonder what his prescription for the economy will be?
Since the latest leg of the downturn in the mortgage market, and now the overall economy, seems to be the result of the fact that the Federal Reserve crashed money supply growth over the summer, I have often wondered what Feldstein's take was on the Fed's activities this summer. I got the chance to ask him. Feldstein was a part of a panel that included Wilbur Ross Jr., Juan Williams and Ron Insana, before 4,000 at the AFP conference.
During the panel discussion, Feldstein stated that the Federal Reserve was doing an excellent job providing liquidity to the system but it wasn't working and that is why further measures, such as his "mortgage-replacement loan program" needed to be implemented.
During the Q & A, I asked him how he could say that the Fed was providing liquidity to the system since M2 growth crashed over the summer from a March peak of 12.5% annualized growth to growth of only 1.5% annualized in September. I further stated to him that, in addition, over the summer the Fed was sterilizing the cash infusions they were making by selling off Treasury securities, thus maintaining a net liquidity neutral stance as part of its various rescue operations.
Feldstein did not answer the question about where he saw liquidity coming from the system over the summer( How could he, since there wasn't any net liquidity added to the system?), but he did address the fact that money growth slowed over the summer. He said it likely occurred because of the problems in the economy (which in his view apparently took time for the Fed to adjust too.) He then said that money supply M2 was back growing at an annualized rate of 4.5%, which was correct. He said that this was about the correct growth rate given current GDP growth. This is a hoot, since money supply in September was at 1.5% annualized, and it then jumped to 2.3%, and now is at 4.5%, the Fed clearly has its foot on the monetary accelerator. I don't believe money supply at 4.5% is anything but a very brief transition point. Within weeks money supply growth could be at double digit rates. Indeed, the money supply numbers due out this Thursday could show M2 growth much higher than 4.5%. Feldstein clearly hasn't figured out that Ben Bernanke's Fed is clueless. When he does, I wonder what his prescription for the economy will be?
Barack Obama, Paul Volcker and Warren Buffett
It appears that Paul Volcker will be a major influence in a Barack Obama Administration.
WSJ this morning has a front page article by WSJ reporter Monica Langley describing the development of their relationship. The Volcker connection should calm markets a bit if there is an Obama Administration, since he seems to be taking advice from Volcker and Warren Buffett. Volcker is even more respected on the Street than Buffett.
Volcker, however, as I pointed out recently, despite his image as an inflation slayer, is an inflationist and interventionist. Buffett is pretty much out of the same mold. He has supported the recent moves by Treasury Secretary Paulson and Fed Chairman Bernanke. Curiously, while supporting Treasury and Fed moves, Buffett in his recent WSJ piece even pointed out the inflationary ramifications of the policy:
WSJ this morning has a front page article by WSJ reporter Monica Langley describing the development of their relationship. The Volcker connection should calm markets a bit if there is an Obama Administration, since he seems to be taking advice from Volcker and Warren Buffett. Volcker is even more respected on the Street than Buffett.
Volcker, however, as I pointed out recently, despite his image as an inflation slayer, is an inflationist and interventionist. Buffett is pretty much out of the same mold. He has supported the recent moves by Treasury Secretary Paulson and Fed Chairman Bernanke. Curiously, while supporting Treasury and Fed moves, Buffett in his recent WSJ piece even pointed out the inflationary ramifications of the policy:
Today people who hold cash equivalents feel comfortable. They shouldn’t. They
have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts.
Hamilton's Curse: The Current Crisis Is Alexander Hamilton's Fault
The current economic problems are the result of America living under Hamiltonian mercantilistic conditions where essentially the economic and political system that Americans have lived under for several generations now is a king-like president who rules through "executive orders" and disregards any and all constitutional constraints on his powers; state governments that are mere puppets of the central government; corporate welfare run amok, especially in light of the most recent outrage, the Wall Street Plutocrat Bailout Bill; a $10 trillion national debt ($70 trillion if one counts the government's unfunded liabilities); a perpetual boom-and-bust cycle caused by the Wizard of Oz–like central planners at the Fed; constant military aggression around the world that only seems to benefit defense contractors and other beneficiaries of the warfare state; and more than half of the population bribed with subsidies of every kind imaginable to support the never-ending growth of the state. This is Hamilton's curse on America wrires Thomas DiLorenzo.
Read DiLorenzo's scholarly take on Hamilton here.
Read DiLorenzo's scholarly take on Hamilton here.
Another Billionaire Bit By The Economic Squeeze
We recently reported on the possible liquidation by 85 year old billionaire Sumner Redstone of parts of his huge portfolio as a result of current financial conditions.
Although not in as tight a position, 91 year old billionaire Kirk Kerkorian has sold part of his stake in the Ford Motor Company and may divest his remaining shares
The Tracinda Corporation, Kerkorian’s investment company, said this morning that it sold 7.3 million shares of Ford on Monday at a huge loss and intended to further reduce its remaining 6.09 percent stake.
In a statement, Tracinda said that “current economic and market conditions” and other investment opportunities — in gambling and energy — led to its decision on Ford.
“Tracinda also stated that it intends to further reduce its holdings in Ford common stock,” the company said. “Including the possible sale of all of its remaining 133.5 million shares, depending on market conditions and available sales prices.”
When you get the likes of Redstone and Kerkorian taking huge hits, you know this is a serious downturn. These guys have seen a lot, but they obviously aren't up to date on business cycle theory, or they would have been protecting themselves in July at much higher prices.
Although not in as tight a position, 91 year old billionaire Kirk Kerkorian has sold part of his stake in the Ford Motor Company and may divest his remaining shares
The Tracinda Corporation, Kerkorian’s investment company, said this morning that it sold 7.3 million shares of Ford on Monday at a huge loss and intended to further reduce its remaining 6.09 percent stake.
In a statement, Tracinda said that “current economic and market conditions” and other investment opportunities — in gambling and energy — led to its decision on Ford.
“Tracinda also stated that it intends to further reduce its holdings in Ford common stock,” the company said. “Including the possible sale of all of its remaining 133.5 million shares, depending on market conditions and available sales prices.”
When you get the likes of Redstone and Kerkorian taking huge hits, you know this is a serious downturn. These guys have seen a lot, but they obviously aren't up to date on business cycle theory, or they would have been protecting themselves in July at much higher prices.
Warren Buffett Contradictions
I have always suspected that Warren Buffett often has an agenda when he speaks to the public. But the man is tough to nail down on anything, given his Golly Gee public persona. He's sharp and rarely slips up. He slipped last week.
In his NYT article last week urging Americans to buy stocks, he wrote:
I have long suspected Buffett is operating with cards he isn't showing. He just dropped one on the floor. In my book, he is just smooth operator in the oligarchy.
In his NYT article last week urging Americans to buy stocks, he wrote:
I’ve been buying American stocks. This is my personal account I’m talking about, in which I previously owned nothing but United States government bonds.He even got a little technical about it:
(This description leaves aside my Berkshire Hathaway holdings, which are all committed to philanthropy.)Which appears to be a problem in the fact department, since in November, 2000 the LA Times reported this:
Warren Buffett, the billionaire investor who caused a stir last year when he bought a big stake in tiny Bell Industries Inc., sparked a rally in Bell’s stock and then quickly sold out for a handsome profit, has once again bought a sizable position in the El Segundo company–again sending its stock sharply higher.The Times article goes on to say:
Buffett bought 442,200 shares, or 5.1%, of Bell’s common stock outstanding, according to a filing with the Securities and Exchange Commission. In response Wednesday, Bell’s thinly traded stock jumped $1.06 a share to close at $3.13 on the American Stock Exchange.
Buffett–who controls Berkshire Hathaway Inc., an Omaha, Neb.-based holding company for his investments and operating companies–once again bought the Bell stock with his own money, not Hathaway’s. And as investors learned the last time, that’s an important distinction for anyone evaluating Buffett’s interest in Bell.
Despite Berkshire Hathaway’s record of patiently holding stocks, Buffett himself often makes small, quick purchases of stocks with his own money to generate income, according to people familiar with his investment habits. That’s especially true if he’s confident of generating a low-risk, sizable return in short order, they said.This seems consistent with reports in one or more biographies (I don't recall which) and is probably accurate. His trading in Bell Industries is a fact backed up by SEC filings.
I have long suspected Buffett is operating with cards he isn't showing. He just dropped one on the floor. In my book, he is just smooth operator in the oligarchy.
Subscribe to:
Posts (Atom)