The Warren Buffett House of Cards
that the financial hype is celebrating a new all time high in the stocks, the time to exit the market may well be at hand.
So what will that Oracle of Omaha do with all the insider information available from his compadre network? The business press
swoons all over Warren Buffett with every report, while only a few intrepid journalists would dare write about the dark side
of Wall Street’s favorite equity cheerleader. The guru of sweet heart deals floats in the rarified air of a political
cronyism ongoing honeymoon. So what is likely for his Berkshire Hathaway flagship company now that the ticker is breathing
on pure oxygen? At the Berkshire Hathaway Shareholders
Meeting, the forecast projects that the market will continue to rise. Berkshire Cash Hits Record
$49.1 Billion as Profit Climbs, cites Bill Smead, portfolio manager of the Smead Value Fund, "Warren
has organized the company around the rebirth of the United States economy over the next 10 years and this is the beginning
of that rebirth."
Not everyone looks at the next
decade as a boom for the economy. The easy money out of the Federal Reserve ultimately fuels the hysteria that is pushing
the current rally. For the average consumer the markets smell of an elitist stench. The venerability of a top and a collapse
has many remnants of the former middle class scared. Should the expectation be that a House of Cards is on the horizon or
should the deal from the bottom of the deck continue as the insiders pump and dump their latest speculative fizz?Examine just how Buffett operates. His reputation as a stock picker largely ignores any
of the dirty laundry that follows in his wake. In the event you forget, the audacious reporting of Charles Gasparino, reminds
of the methods employed in the investment culture of his associates. Cited in Saint Warren’s dark
side, the working of the protecting racket that rewards the Buffett organization,
smacks of the very definition of "too big to fail".
"The SEC interviewed Buffett last year over one of the
most sordid corporate affairs I’ve seen in a long time: His longtime aide and one-time heir-apparent bought shares in
a company called Lubrizol just before Buffett purchased the outfit.
executive, David Sokol, made a hefty profit from the purchase, and even advised Buffett to buy the company in the first place.
Insider trading? I can’t say if it was outside the law. But the SEC is looking into
the matter. (SEC and Sokol spokesmen declined to comment on the probe’s status; Buffett didn’t return repeated
calls seeking comment.)
Yet I don’t recall any major media outfit
bringing up the sordid affair while Buffett was lecturing the nation on tax fairness. Nor did any jump on Buffett’s
bizarre initial reaction as Sokol was resigning from Berkshire last year: He defended Sokol’s actions — which,
even if they weren’t illegal, still smack of the kind of corporate favoritism that Obama and the rest of the left continually
Barrons report another sordid episode swept
under the rug in the article, A Buffett Bubble in BYD?
Finally, Forbes reflects on the big daddy of deals with that great vampire squid in the
analysis, Goldman Sachs Reworks $5B
In Warrants Held By Buffett's Berkshire.
"In September of 2008, just after Lehman
Brothers' collapse had taken the financial crisis to a new level, Warren Buffett's Berkshire Hathaway scooped up 9.9% of Chinese
battery and electric-car maker BYD for HK$8 (US$1.03) a share. Even a renowned long-term value investor had to be impressed
by the near-term sizzle: Within 18 months, BYD shares had rocketed to HK$88. Then the engine started to sputter.
BYD also may have been spoiled by the Buffett bubble built into the shares, which some analysts
estimate could be as big as a 30%. "People regard Buffett well as an investor and are happy to stick with the stock as
long as he is still holding it," says Lewis. His departure could have have a huge adverse effect, they say. "A big
Berkshire [BRK.A] premium is the only way you could justify where the stock is trading right now," says Lewis. "You've
got to ask yourself: Would Warren make the same decision today on BYD? I suspect not." At the least, he will see Berkshire's
stake diluted by the offering and local reports say Berkshire won't subscribe further. BYD trades at more than 50 times earnings."
"Essentially, Buffett had the right to purchase 43.5 million shares of Goldman at $115
apiece until October 1, 2013. Under the new terms, Buffett will receive "the number of shares of common stock equal in
value to the difference between the average closing price over the 10 trading days preceding October 1, 2013 and the exercise
price of $115 multiplied by the number of shares of common stock covered by the warrant (43,478,260)."
The short form: instead of paying Goldman $5 billion in cash for stock worth considerably
more, Buffett will simply take the amount of stock equivalent to the difference without paying the company."
Now are their examples of special circumstances just the sign of astute investing or is
this a pattern of synergetic regulatory favoritism and fusion with ruling governmental outlaws? Poor old uncle Warren, licking
his ice cream cone while playing the ukulele. When will the anti-trust laws apply to the game rigging plutocrats? Evidently,
the Buffett’s of the fixed exchanges have bought and paid for the best political protection available. Avoiding a speculative
melt down is impossible for the man on the street, but the privileged globalists are well entrenched in their protected palaces
built upon ill-gotten gain.
Run Buffett out of town on one of his rails,
for railroading free enterprise into a dark tunnel. The derailment of our economy benefits the market manipulators, as the
rest struggles to dig out of the collapsed slide of rubble that buries us alive. Elevating Buffett as an investment sage defies
James Hall – May 8, 2013
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