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Posts Tagged ‘Warren Buffett’

What Was David Sokol Thinking?

Posted by Larry Doyle on March 31st, 2011 10:53 AM |

When an executive is in a position of recommending takeovers to perhaps the most legendary business executive on the planet, what is he doing purchasing a sizable position in that stock a week before making that recommendation? Are Americans still supposed to believe the manner in which markets operate and corporate takeovers occur are fully on the up and up? Stop it.

David Sokol can attempt to explain away his personal trading of Lubrizol stock during the month of December but his purchase of close to 100,000 shares (a dollar commitment of more than $9 million) in early January and less than ten days before broaching the topic to Warren Buffet that Berkshire Hathaway purchase the company SMELLS. (more…)

What Else Was Happening at Goldman Sachs?

Posted by Larry Doyle on April 23rd, 2010 9:08 AM |

Living life on the edge may be exhilarating and at times highly profitable, but in the process the risks can be enormous and the impact longstanding. So is the world of Goldman Sachs circa 2010.

Goldman’s pursuit of a highly proprietary business model since the late 1990s has now placed the firm squarely in the crosshairs as the master villain on Wall Street. The executives at Goldman may deem this view to be unfair, but they have nobody but themselves to blame. This blame goes far beyond current Goldman chief Lloyd Blankfein. The blame can be directed at former chiefs Jon Corzine and Hank Paulson, as well. (more…)

Why Are Companies Hoarding Cash?

Posted by Larry Doyle on February 11th, 2010 8:20 AM |

In order for the economy to grow, for companies to hire, and for new employees to benefit, we need velocity in the money supply. The fact is, this velocity has slowed dramatically. Bloomberg highlights this stark reality on our economic landscape by writing, Jobless Suffer with Corporate Cash Climbing to $1.19 Trillion:

A majority of companies in the Standard & Poor’s 500 stock index increased cash to a combined $1.19 trillion while simultaneously reducing spending, keeping a jobs recovery on hold.

Caterpillar Inc., Eaton Corp., Walgreen Co. and General Electric Co. are among 260 companies that ended last quarter with $522 billion more than a year earlier after cutting capital spending by 42 percent. Economists say the dearth of investment is keeping the jobless rate at about 10 percent as the U.S. emerges from its worst recession since the 1930s. (more…)

Warren Buffett: “Wall Street Owes the American People”

Posted by Larry Doyle on July 9th, 2009 11:36 AM |

Oracle of Omaha, Warren Buffett

When the Oracle of Omaha speaks, people listen. What is Warren Buffett saying now? What does he see on our economic landscape? How do we prepare? We can let Warren be our guide, but let’s make sure we question him aggressively as we manage our own finances.

ABC News reports, Warren Buffett Backs Second Stimulus:

Buffett cautioned that a second stimulus package, like the first, won’t be “a panacea,” because stimulus packages take time to work. He criticized lawmakers’ work on the first stimulus package, which contained $787 billion in spending.

“Our first stimulus bill … was sort of like taking half a tablet of Viagra and having also a bunch of candy mixed in … as if everybody was putting in enough for their own constituents,” he said. “It doesn’t have really quite the wall that might have been anticipated there.”

Not for nothing, but where was Warren at the time the initial bill was rammed through Congress? Warren is a close economic adviser of Obama’s but he does us no favor by playing his political cards when our country is screaming for real economic leadership.

In regard to the PPIP? What does Warren think about this government program to help banks cleanse their books of toxic assets?

Buffett also criticized the government’s public-private investment plan, through which private investors are supposed to buy so-called toxic assets off the balance sheets of ailing banks that received billions in government aid.

“I do not like the idea of any kind of a plan involving the government where Wall Street makes a lot of money. My plan provided that they would make no money whatsoever, and the American public would make the money. I just think that Wall Street owes the American people one at this point,” he said.  (LD’s emphasis)

How about the economy? What does the Oracle see in his crystal ball? The grand swami believes that:

. . . despite the talk of recent economic “green shoots,” he couldn’t predict when the flagging economy would bounce back.

“We are not in a freefall, but we are not in a recovery either,” Buffett said. “We were in a freefall really in the last quarter of last year, starting in the financial markets and spreading to the economy, and we had this huge change in behavior. That change hasn’t changed.”

I concur. Warren is not totally clear, but in so many words he is saying the American economy is adjusting to the lack of a shadow banking system.

How about over the long haul? Does Warren think America will rebound? He is very optimistic, as ABC reports:

“I want to emphasize, we are going to come out of this better than ever,” he said. “I mean the best days of America, by far, lie ahead. But not next week or next month and then, I don’t know exactly when we will come out, but we will come out big time.”

That’s great. I am also eternally optimistic. That said, things do not just happen and we will not have better days without reinstilling strong discipline and values throughout our economy and our country. In my opinion, those disciplines and values need to encompass the following:

1. honesty on where we currently stand across all aspects of our economy and society. Publicize our successes and, more importantly, our failures so we can properly address them.

Do not allow urban education dropout rates of 50% to be swept under the rug. Promote the correlation between those figures, single parent birth rates, income levels, and criminal behaviors. BE HONEST ON THESE TOPICS!!!

2. Expose the lack of integrity and transparency in our financial and political institutions. Hold people accountable!!

That is a good start. Warren has the bully pulpit. Perhaps he could speak aggressively on these topics in the future.


Goldman Sachs Tells Uncle Sam Go Away!!

Posted by Larry Doyle on March 25th, 2009 9:46 AM |

Like it or not, Goldman Sachs is widely considered to be the preeminent risk manager in the world. I would never blanketly endorse Goldman Sachs nor every one of their transactions or employees. Anything but. I am sure Goldman, like every institution in every industry, has some bad apples who will and have made some bad, if not outright illegal, moves. If so, the proper regulatory authorities should address, investigate, and if need be prosecute. I am here to write on a different topic. Goldman Sachs does not want Uncle Sam as a business partner. Whether Goldman wanted government money last Fall via the TARP (Troubled Asset Recovery Program) or not, the firm very clearly wants to return those funds soon.

Goldman Sachs is currently working with government officials to return $10 billion in TARP funds by late April. The firm will look to make this return after the U.S. Treasury completes its first round of bank stress tests. Other smaller banking institutions are looking to do the same. (more…)

What’s Driving the Market Lower Today?

Posted by Larry Doyle on March 2nd, 2009 9:50 AM |

markets-down-arrowStock markets are expected to open lower by another 1.5% on the open this morning. What’s driving them lower….again?

1. News that AIG reported an actual 4th quarter 2008 loss of $61 billion. The government will inject ANOTHER $30 billion into this black hole. WHY? Very simply because AIG is the largest holder of CDS (credit default swaps) that serve as insurance for a number of banks and money managers. These CDS cover a wide array of assets but primarily the sub-prime mortgage space. Kevin Doyle of 12th Street Capital, and a guest here on my weekly No Quarter Radio program back in early January, shares that the index that tracks the sub-prime market is at its lows. No surprise there.

While the various media outlets are highlighting this story now, I wrote extensively about AIG and How Does One Lose $125 Billion? on February 24th. I not only wrote about the losses, but also delved into the culture that developed over the years at AIG under Hank Greenberg.  Not a pretty picture and seemingly not a lot of integrity in that company. Now we pay. (more…)

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