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Buffett Op-Ed in NY Times


Munger_Disciple
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Bernanke, along with Greenspan, led to the mess in the first place, so I'm not sure about the accolades Bernanke gets, but Paulson, Geithner and Bair all did a great job.  Taxpayers not only will get their money back from TARP, but it looks like eventually the money for the auto companies and AIG will also be repaid.  Steps taken to reform financial institutions, stabilize the banking system, enforce new SEC regulations, refinance the FDIC with injections from the banks...all are positive steps. 

 

Were there mistakes?  Of course.  But this isn't a perfect world and things were moving so damn fast at that time.  Buffett is right, and I think he's been 100% correct through this whole debacle.  He was dead on years ago when he wrote about derivatives.  He was right about Fannie Mae and Freddie Mac.  He was right about the credit markets seizing.  He was also correct on the effects of the trade deficit.  If his reputation is fading, I would hate to see whose reputation is rising!  Cheers! 

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While agreeing with what he said, I thought he could have made a more useful contribution by providing prescriptions for the future for policymakers. His typically well thought out comments would be a great counterbalance to the incessant rhetorical garbage spewed out by partisan commentators daily.

 

While policymakers deserve praise for their handling of the crisis, he should not have left unsaid the role that some of them played in causing the crisis in the first place. Watching interviews of Greenspan and Bernanke recently reminded me that they both seem to view their role of promoting financial stability as dealing with crises after they happen, not in preventing them to begin with. The Fed should defuse bombs before they explode, and not just be satisfied with doing a good job dealing with the aftermath.

 

http://abcnews.go.com/ThisWeek/video/greenspan-hedge-fund-mgr-michael-burry-10282143

 

Greenspan's continued denial that anyone could have seen the crisis coming is symptomatic of this attitude. Even if you accept his argument that no one could have foreseen the crisis, he could have taken actions that erred on the side of caution; taking the margin of safety approach, if you like. Central bankers are meant to be boring and conservative; they are not meant to push the envelope to see how close we can get to the limits of a bubble. With QE2 (and who knows how many more sequels there will be if QE2 fails), Bernanke seems to be following Greenspan's example - I guess he wants to see how close we can get the to the precipice without falling. Like many fund managers, they seem to have no understanding of the concept risk; of "what if we are wrong."

 

I don't get Buffett's rationale for the op-ed. The policymakers don't need more praise; they need more advice from a wise man.

 

 

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I have to admit Barry has a better more accurate letter.

 

I lolled here.

 

Sheila Bair grasped the gravity of the situation earliest, and put numerous failed banks through the insolvency process. If we were smart, we would have allowed her to work her way through the entire finance sector

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I don't get Buffett's rationale for the op-ed. The policymakers don't need more praise; they need more advice from a wise man.

 

I also agree with that.  Rather than him write these pieces or show up on CNBC every month, I would rather he take a more aggressive and poignant position where he forces government to listen to him before intervention is necessary.  It would have been nice if someone had actually listened to him on derivatives years ago, and created a central clearing house for them, as well as put the kibosh on the more intricate structural products that were subsequently created.  It would have been nice if regulators had listened to Munger years ago, and forced banks to focus solely on lending and deposits.  Cheers!

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A parody of Warren's letter by Barry Ritholtz:

 

http://www.ritholtz.com/blog/2010/11/dear-uncle-sucker/

 

 

 

This is great.

 

To me, the whole thing is like me setting your house on fire, then, calling the fire department and helping them put it out... After this, you would thank me for doing such a good job in keeping the fire from spreading to other houses, because I am an arsonist and don't have much experience in putting out fires. Bottom line, you still don't have a house and I should be in jail.

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Maybe I have different eye glasses - but I just not see how can I say the goverment did a good job.

If we consider that the more intervention the goverment has had in the economy has only debase the currency more and more... and that the new QE will mean that the currency will definitely continue to go down..... then I just not see where the good job is.

 

Through my eye glasses I have also see one of the biggest transfers of wealth in history - and that the people that were affected the most think that the actions of the goverment is something to aplaude and cheer, is beyond belief. But I have to admit that you must definitely be a "genius" to pull something like this, where we are being robbed and we still feel like a good thing.

 

On a different note - It seems Obama is granting Warren the medal of freedom - whatever that means.

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People can criticize tarp because the worst is over.  But it was a no brainer.

 

I am not a fan of the stimulus.

 

Interestingly, the original tarp was set to buy mortgages. Aren't we dong this now anyway?

 

No one talks about that.

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On a different note - It seems Obama is granting Warrent the medal of freedom - whatever that means.

 

Would anyone here deny that Buffett sets the standard against which all other executives should be judged...both economically and ethically?  He's donating the enormous pool of capital he's accumulated over his lifetime to charity.  He spends considerable personal time with business students.  He's encouraged other wealthy individuals to commit to donating their wealth.  Many of the millionaires and billionaires he's created, have given back enormously to their community.  He's inspired hundreds, if not thousands, of professional money managers who have accumulated wealth and given back.  I think he's a worthy recipient...not just from what he's done, but as a role model for any good citizen.  Cheers!    

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Do you remember where you were in the fall of 2008?! For those who had your money or job on the table and were watching...country after country

fall...not company...country!!!!! The world was hiding under their bed! Our hedge Fairfax (which saved us) had the "fear hanging over the their head

that the credit default swaps would not be paid!!"...This is exactly what happened in the case of AIG...

Because it is horrifying to even repeat what was happenning! This board may be as close to anywhere in the world who would have a grasp of what would have

become. I watched the congress vote down the bail out package! This will go down as the dumbest thing I have ever seen! Did these people not realize that the companies in the stock market pay their salary!!!

The american people are relying on a government elect who were NEVER worried about their job. Give me a break! Cut the shit. Who did not buy a house from 2002 to 2007? who did not live beyond their means in America? How are the states finanacial leaders not in jail for how they were handling finances and pulling massive GOVERNMENT salaries?

The entire country was in on it! To blame policy...you should blaming all government. Accept it and move on.

 

I believe Warren's message today was thank you for the courage to act when all of our dumb Congress were against you because they were not smart enough to know what was at stake! You made the biggest move and most successful

move in financial history and the world is still shitting on you! You were alone and somehow you showed leadership.

 

The point. Where have all the leaders gone? If he sees what i have seen in the last 2 weeks he is afraid of incompetant bunch of career hungry panzies. If you want to bash Bernanke do it. But show the nuts to do something to help instead of another law! I feel like I am watching the 30's play out again.

P.S Paul Volcker was almost hung for his leadership fight against inflation!!!Now he is a national hero!

The title should have been "Who is going to make the hard decisions this time? For the good of the country not themselves?

Where is Obama?

Dazel.

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