Berkshire Takes Burlington Northern Private...

[sunskyfan]

Re: Berkshire Takes Burlington Northern Private...

I think this is a VERY bearish event. Buying a railroad is betting on things to look like 1890. The only thing more ominous is if Berkshire had bought a buggy-whip company.

[GRG55]

Re: Berkshire Takes Burlington Northern Private...

i'm keen on latching onto this, since warren buffet has boughtt he whole company, what's the best alternative? anyone researching on this care to share?

They all look a overpriced to me, especially after the pop on the Berkshire news. But you may want to have a look at Canada's CP Rail. I don't own it, and certainly this is not any sort of investment recommendation. However, CP Rail is quite heavily exposed to bulk commodity and coal movements from western Canada to the coast for export to Asia and the rest of the world. It moves such products as met coal from southern B.C., petroleum products from Alberta, and potash and grains from Saskatchewan.

[thunderdownunder]

Re: Berkshire Takes Burlington Northern Private...

No hard numbers but as a petroleum engineer I would say that Warren see long haul trucking as being too expensive in the near future. ;)

And don't forget that damn carbon tax credit thingy;) - such items will be gold some time after after Copenhagen.
Zoot suit futures trading for me

http://images.buycostumes.com/mgen/m...iser/17247.jpg

[touchring]

Re: Berkshire Takes Burlington Northern Private...

They all look a overpriced to me, especially after the pop on the Berkshire news. But you may want to have a look at Canada's CP Rail. I don't own it, and certainly this is not any sort of investment recommendation. However, CP Rail is quite heavily exposed to bulk commodity and coal movements from western Canada to the coast for export to Asia and the rest of the world. It moves such products as met coal from southern B.C., petroleum products from Alberta, and potash and grains from Saskatchewan.

Thanks. Everything looks expensive after buffet buys, i thought that for BYD as well late last year, but now! :eek:

[GRG55]

Re: Berkshire Takes Burlington Northern Private...

Mere mortals fascinated with railroading buy a train set and put it in their basement. Warren does it a bit differently...

Berkshire buying Burlington Northern railroad

Barry Ritholtz, who himself is a member in good standing of the FIRE economy press corps, rarely gets this worked up...having followed his blog for some time I must admit the tone of this post was a bit of a surprise:

Due to an unexpected outbreak of rationality (and perhaps embarrassment), the Treasury department has rejected requests of Goldman Sachs and Berkshire Hathaway to purchase Tax Credits from Fannie Mae.

This paper transaction would have provided precisely zero value to the taxpayers, and allowed these firms to add to the piles of bailout monies already received by avoiding billions of dollars in taxes otherwise legally owed. It would have been a license to steal.

The sheer arrogance, the colossal gall involved boggles the mind.

And while we expect this sort of behavior from the Vampire Squid — they take pride at Goldman in not just being whores, but in being the highest paid callgirls in town — it is stunning to see such behavior from the usually politically astute Oracle Tentacles of Omaha. For Warren Buffett’s Berkshire Hathaway to team up with Goldman Sachs (which he now owns a healthy chunk of) is a bit of a revelation: We have been spun by his genteel manner, his aw shucks down-home-isms, his off Wall Street, less bloodthirsty approach to investing, into somehow believing he was different.

We have been duped.

We should not have been. Buffett has been the biggest shareholder in Moody’s — a collection of filthy whores and pederasts who were one of the main contributors to the economic collapse — should have raised serious questions as to his judgment in our minds. That he sat by silently as they did their worst, sodomizing the nations credit system for fun and profit was a powerful indictment of Buffett as someone far different than his public persona. In retrospect, as Moody’s was helping to destroy America’s financial system, his merely spouting off aphorisms about about Financial WMDs now looks too cute by half.

Those of you who used to respect Warren Buffett might consider moving him off your increasingly short list of participants in the marketplace who behave ethically. This crude attempt to steal billions — coming on the heels of the bullshit about “Investing in America” by buying Railroads — is a shock to me; perhaps that is a testament to my naivete.

Perhaps the Oracle of Omaha has been infected by a new flu variant, the H1N1 GS mutation. It is usually non fatal to the host, but destroys its reputation . . .

[c1ue]

Re: Berkshire Takes Burlington Northern Private...

Barry Ritholtz, who himself is a member in good standing of the FIRE economy press corps, rarely gets this worked up...having followed his blog for some time I must admit the tone of this post was a bit of a surprise:

Just as the converted Muslim eats pork 3 times a day...

But seriously - Sir Warren has never been one to shy away from free money. Nor has he avoided dealings with Goldman - even before the events of the past 2 years.

Why should BRK turn down the opportunity to pay less taxes if it is there?

Even the Moody's thing is ridiculous: Sir Warren bought into a 1/3 part of a government mandated monopoly.

As a shareholder he was no more responsible for Moody's pump and dump of the MBS market than any other shareholder.

What makes Sir Warren respectable is that he is willing to say that a pig is a pig while still getting the ham, bacon, and ribs.

[Jim Nickerson]

Re: Berkshire Takes Burlington Northern Private...

Barry Ritholtz, who himself is a member in good standing of the FIRE economy press corps, rarely gets this worked up...having followed his blog for some time I must admit the tone of this post was a bit of a surprise:

Due to an unexpected outbreak of rationality (and perhaps embarrassment), the Treasury department has rejected requests of Goldman Sachs and Berkshire Hathaway to purchase Tax Credits from Fannie Mae.

This paper transaction would have provided precisely zero value to the taxpayers, and allowed these firms to add to the piles of bailout monies already received by avoiding billions of dollars in taxes otherwise legally owed. It would have been a license to steal.

The sheer arrogance, the colossal gall involved boggles the mind.

And while we expect this sort of behavior from the Vampire Squid — they take pride at Goldman in not just being whores, but in being the highest paid callgirls in town — it is stunning to see such behavior from the usually politically astute Oracle Tentacles of Omaha. For Warren Buffett’s Berkshire Hathaway to team up with Goldman Sachs (which he now owns a healthy chunk of) is a bit of a revelation: We have been spun by his genteel manner, his aw shucks down-home-isms, his off Wall Street, less bloodthirsty approach to investing, into somehow believing he was different.

We have been duped.

We should not have been. Buffett has been the biggest shareholder in Moody’s — a collection of filthy whores and pederasts who were one of the main contributors to the economic collapse — should have raised serious questions as to his judgment in our minds. That he sat by silently as they did their worst, sodomizing the nations credit system for fun and profit was a powerful indictment of Buffett as someone far different than his public persona. In retrospect, as Moody’s was helping to destroy America’s financial system, his merely spouting off aphorisms about about Financial WMDs now looks too cute by half.

Those of you who used to respect Warren Buffett might consider moving him off your increasingly short list of participants in the marketplace who behave ethically. This crude attempt to steal billions — coming on the heels of the bullshit about “Investing in America” by buying Railroads — is a shock to me; perhaps that is a testament to my naivete.

Perhaps the Oracle of Omaha has been infected by a new flu variant, the H1N1 GS mutation. It is usually non fatal to the host, but destroys its reputation . . .

Here's a different opinion about why the deal didn't go through.

http://brucekrasting.blogspot.com/20...-deal-bad.html 11/07/09

Treasury’s basis for nixing the transaction was pretty clear. In their view it would have resulted in a net loss to the taxpayer, from the WSJ:

Treasury Department officials blocked the deal after concluding that it would have resulted in a loss of tax revenues greater than the savings to the federal government had it allowed the sale. "In short, withholding approval of the proposed sale affords more protection of the taxpayers than does providing approval".

That conclusion is at odds with Goldman Sachs. Mr. Michael DuVally a GS spokesman said of the deal:

"The only basis on which approval for any transaction would be given would be if it was clearly in the taxpayers' best interest."

So who is right, GS or Treasury? Just this one time I am going with Goldman. They would not have made the statement to Bloomberg unless they had the numbers to back it up.

This was not a simple matter of Buffett writing a check and getting a specified tax benefit. It involved an asset transfer, presumably funding would have been required. The tax benefits would have been realized over a period of time. At some point in the future the assets would have reverted back to Fannie. This was a rental of tax benefits.

Given the complexity, it is possible that the parties had different measuring matrix's when assessing the merits of the deal. But I doubt that. Clearly Fannie’s management and regulator were happy with the numbers. They must have considered the taxpayer side of this before signing the deal. Same for Goldman and Buffett. They understand the necessity of passing the “Smell Test” these days.

My guess is that this deal did not crater because of bad economics. It bombed because of bad optics. The Administration did not want to be seen as facilitating a transaction that would have been perceived as benefiting the ‘Fat Cats’.

This is a sign that D.C. is well aware of the fact that a significant percentage of the populations hates our public and private financial institutions. They understand that this issue is the “Mother of all Systemic Risks”. In that light, the Administration’ decision to nix the deal makes a great deal of sense.

I fear that net net; the taxpayer will pay a price for this choice. I, for one, would like to see the actual economics of the transaction. Possibly Treasury could provide the details. My guess is that over the next five years this will cost us a few billion. That would be a cheap price if it placated an angry population. I doubt it will.

Hey, clue, your continued use of "Sir Warren" is becoming a little tired, why not change it to something like "St. Warren." ["St." is not my idea, saw that somewhere.]

[c1ue]

Re: Berkshire Takes Burlington Northern Private...

Jim,

I like 'Sir Warren' because knights are those arms of the feudal government who've hacked, slashed, and otherwise oppressed the peasants in their respective fiefs or demesnes - doing their part for "King and Country". See: Norman conquest of England

In modern times this usage holds true: the Queen awards knightdoms based on 'contributions to the Crown' generally associated with great wealth, influence, or the occasional act of personal heroism.

That morons think it is a compliment is only a bonus. I am not referring to you personally but to most Americans' views on knightdoms.

Saint, on the other hand, implies a person who went so far beyond the call of their religious duty as to deserve special recognition - generally dying in the process. This doesn't describe Sir Warren in the least.

It does, however, describe Greenspan and Bernanke if extended to cover (lack of) integrity.

So I'll reserve sainthood for the government minions of the FIRE industry :p

As for Goldman's analysis: I guarantee you that it does not take into account rising tax rates in the coming years. Given that, the Treasury view is probably accurate.

Goldman doesn't do anything that doesn't make it money - nor does Sir Warren (professionally). Ritholz' critique still stands in my book.

[touchring]

Re: Berkshire Takes Burlington Northern Private...

http://www.cnbc.com/id/33803779

Warren Buffett's Berkshire Hathaway plans to sell its stakes in Union Pacific [UNP 62.42 0.04 (+0.06%) ] and Norfolk Southern [NSC 52.26 0.31 (+0.6%) ], now that it plans to buy their competitor, Burlington Northern.