Buffett was active again today with the huge announcement of the GE deal. People want to take this as a huge endorsement of a bottom. Nothing could be further from the truth. These deals are steals and cannot be replicated by you or me. It is bet on 15 years from now not 2 years from now. He is essentially betting there will be an economy in 15 years.
Buffett was on Charlie Rose tonight. When I get the links to the videos I will post them here. In general the excerpts I am reading are anything but bullish.
http://www.bloomberg.com/apps/news?pid=20601087&sid=atMtOHVVYrko&refer=home
Billionaire Warren Buffett, the world's preeminent stock picker, said the U.S. economy is ``flat on the floor'' after a cardiac arrest as companies struggle to secure funding and unemployment increases.
``In my adult lifetime I don't think I've ever seen people as fearful, economically, as they are now,'' Buffett said today in an interview with Charlie Rose to be broadcast tonight on PBS. ``The economy is going to be getting worse for a while.''
He is definitely taking advantage of the current dislocations and receiving a pretty penny.
For both Goldman and GE, Buffett's endorsement comes with a cost. Both companies agreed to pay Berkshire a 10 percent dividend on his preferred shares, and each gave him warrants to buy their common stock at any point in the next five years at a price that's a discount to where it's currently trading.
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I wouldnt bet if there is an economy but if GE and GS are alive. GS was saved (through a facade as a commercial bank)because that disgrace named Paulson was a CEO there and he is as much responsible of this mess as his croonies. GE is bank disguised as a company funding its operations with commercial papers that now are scarce but the question mark is how much worth are its receivables?
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