prevalou

I don't know if neo-classics are right but japan is a counter-example: lot of money creation, stagnation and low inflation!

how have the railroads economics changed since the 1990s ? What are the differentiation points between rail and road ? I see three points: 1) energy consumption 2) pollution 3) speed of delivery 1) I don't see any difference between the 1990s and today. If energy is expensive, it's more interesting to deliver your goods by train for long distance; The competitive advantage of railroad is proportional to the price of oil. For me Greenwald has a point on this one. 2) pollution: I was puzzled by a recent graphic from Newsweek that shows that train is a big polluter. To release 1.25 tons of CO2 by person, it takes 2564 miles by airliner, 4359 miles by train, 11538 by bus and car, 21821 miles by hybrid car! (sources: Native Energy, American Airlines, Amtrak, Greyhound, US dept of Energy) 3) speed of delivery: maybe the investments made by railroads in the 2000s improved speed of delivery for trains. Has someone information about this?

what about their japan life reinsurance business? It was bleeding, they tried to get rid of it (it's in run off) but could'nt.It seems nobody is interested in this business.

another reason why it's cheap: WTM made a mistake at the beginning of 2008, buying back a lot of their own shares. 10 months later they had to sell a lot of their stock portfolio at the bottom of the market (anti Fairfax strategy).

about the idea that it takes much energy to create substitutes. True for ethanol but for solar cells? Once the technology improves, will it take a lot of energy? About new discoveries: it seems to be a consensus that cheap oil has already being discovered, because we don't find much cheap oil (except maybe in Brazil). But maybe it is the black swan syndrom. The fact that we always see white swans doesn't mean there is no black swan.

what moat if oil prices go down to 10 $ (substitutes, new discoveries, etc.) ?

the real bubble is us domestic debt financial secor: +10% pa since 1990!

for us global debt non financial secor the growth rate is 6% per year since 1990, too.

for us residential mortgage debt the growth rate is 7.3% per year since 1990.

concerning CRE, I read the following figures in a PNC presentation: -CRE US debt in 1990: 1.1 trillion$ -CRE US debt 3 Q 2009: 3.5 trillion$ the growth rate is 6% per year, while GDP growth including inflation is about 4.5%

Jack is gone but he is a shareholder, trust Barrette and gives him his voting rights.

I will not sell my wedding ring because gold is at a top!

and jewelry?

These are interesting pessimistic views. It's like what I read in the paper this week. Newsweek cover: " Warning: we are in the next financial bubble"

two questions 1) why did Buffett wait so long to buy BNI (he had the cash and he buy the stock at its highest level) ? 2) if it's a hedge on energy prices, why not buy oil barrels instead ?

5$ increase =6.83$ per gallon or oil price at 287$ per barrel! devastating for the economy!

thanks a lot, for this explanation

I agree with that but 1.5 billion per quarter is 6 billions per year so I dont understand why this amount is reccurent and would be compensated if not by an increase in origination fees. thanks if someone can explain the mecanism.

ok for the critisism of Rick Bove and the praise of Buffett . more interesting is to explain why he is wrong on the MSR. is the gain on the depreciation /hedge due to the yield curve, is this gain automatic when origination is low and vice versa, but why?

sorry, I don't understand your point on the MSR. I am not specially anti Wells Fargo but try to understand. each quart Wells earns about 1/1,5 billions with Msr hedges covering more than dEpreciation of the Msr. this gain is not reccurent. Could you explain if you think the contrary? thanks

don't forget: 1) there are 2 billions$ annually and after tax of preferred dividends 2) MSR make about 4 billions$ annually at the present time due to favorable carry 3) there are minority interests

i am not Nostradamus and try to find good bargains, being agnostic on the market

One of the great strength of Warren Buffett is not to be impressed by the recent past. For instance the fact a stock was at 4$ a couple of months ago does'nt mean necessarely that it is not a bargain at 10$ or 15$ (See Singleton too). In 1950, Even his mentor was pessimist but Buffett bought because he looked forward and not in the rearview mirror

The investment world has gone from underpricing risk to overpricing it. This change has not been minor; the pendulum has covered an extraordinary arc. A few years ago, it would have seemed unthinkable that yields like today’s could have been obtained on good-grade municipal or corporate bonds even while risk-free governments offered near-zero returns on short-term bonds and no better than a pittance on long-terms. When the financial history of this decade is written, it will surely speak of the Internet bubble of the late 1990s and the housing bubble of the early 2000s. But the U.S. Treasury bond bubble of late 2008 may be regarded as almost equally extraordinary. Clinging to cash equivalents or long-term government bonds at present yields is almost certainly a terrible policy if continued for long. Holders of these instruments, of course, have felt increasingly comfortable – in fact, almost smug – in following this policy as financial turmoil has mounted. They regard their judgment confirmed when they hear commentators proclaim “cash is king,” even though that wonderful cash is earning close to nothing and will surely find its purchasing power eroded over time. Berkshire Hathaway annual letter 2008

actually the first graph shows that in 1933 (bottom of the market), debt was at its highest point (299.8% of GDP). At the time I imagine lot of people were frigthened by the level of debt! Another point the 373.4% ratio includes the financial debt. Is there double counting here?