Buffett is still a value investor... in a way
I bet what Buffet heard from Goldman and didn’t mentioned is that Paulson secured for Goldman to be hired to run the bailout… this would generate fees and guarantee a juicy 10% coupon for him… elimination of LB and AIG as key competitors for the government contract and conversion to a bank holding company are just parts of the scheme…
"This is the time to do something that gets this country back on the right
track. What you have, Joe, you have all the major institutions in the world
trying to deleverage. And we want them to deleverage, but they're trying to
deleverage at the same time. Well, if huge institutions are trying to
deleverage, you need someone in the world that's willing to leverage up.
And there's no one that can leverage up except the United States government.
And what they're talking about is leveraging up to the tune of 700 billion,
to in effect, offset the deleveraging that's going on through all the
financial institutions. And I might add, if they do it right, and I think
they will do it reasonably right, they won't do it perfectly right, I think
they'll make a lot of money. Because if they don't -- they shouldn't buy
these debt instruments at what the institutions paid. They shouldn't buy
them at what they're carrying, what the carrying value is, necessarily.
They should buy them at the kind of prices that are available in the market.
People who are buying these instruments in the market are expecting to make
15 to 20 percent on those instruments. If the government makes anything
over its cost of borrowing, this deal will come out with a profit. And I
would bet it will come out with a profit, actually."
http://www.cnbc.com/id/26867866/site/14081545/page/2/
through this sort of "save the world" trust the U.S. once again set its leadership and locks in the hefty profits in the long term... the previous RTC ran for about 10 years and made profits... this one would run on the global scale...
"This is the time to do something that gets this country back on the right
track. What you have, Joe, you have all the major institutions in the world
trying to deleverage. And we want them to deleverage, but they're trying to
deleverage at the same time. Well, if huge institutions are trying to
deleverage, you need someone in the world that's willing to leverage up.
And there's no one that can leverage up except the United States government.
And what they're talking about is leveraging up to the tune of 700 billion,
to in effect, offset the deleveraging that's going on through all the
financial institutions. And I might add, if they do it right, and I think
they will do it reasonably right, they won't do it perfectly right, I think
they'll make a lot of money. Because if they don't -- they shouldn't buy
these debt instruments at what the institutions paid. They shouldn't buy
them at what they're carrying, what the carrying value is, necessarily.
They should buy them at the kind of prices that are available in the market.
People who are buying these instruments in the market are expecting to make
15 to 20 percent on those instruments. If the government makes anything
over its cost of borrowing, this deal will come out with a profit. And I
would bet it will come out with a profit, actually."
http://www.cnbc.com/id/26867866/site/14081545/page/2/
through this sort of "save the world" trust the U.S. once again set its leadership and locks in the hefty profits in the long term... the previous RTC ran for about 10 years and made profits... this one would run on the global scale...