Warren Buffett: "The worst of the crisis in Wall Street is over"

[atreyu42]

http://www.bloomberg.com/apps/news?p...BU8&refer=home

Should we distrust Buffett as we distrust Bernanke? If so, can anybody explain to me why?

[j4f2h0]

Re: Warren Buffett: "The worst of the crisis in Wall Street is over"

Richard Russell of Dow theory letters has been saying this for 2 months now based on the performance of the market. Based the lows of Jan 22, the transports and DJA have not both broken below those lows together basically telling us that we are still in a primary bull market. This has just been a bull market correction with new highs still to come! Food for thought Cheers!

[jtabeb]

Re: Warren Buffett: "The worst of the crisis in Wall Street is over"

Richard Russell of Dow theory letters has been saying this for 2 months now based on the performance of the market. Based the lows of Jan 22, the transports and DJA have not both broken below those lows together basically telling us that we are still in a primary bull market. This has just been a bull market correction with new highs still to come! Food for thought Cheers!

Yeah, but T. Boone Pickens said he was going to short oil at $105 and that he had changed his mind on ethanol so that now he thinks it is a good idea.(and we all know how wise that sage advice turned out to be.)

I smell a rat(s).

[santafe2]

Re: Warren Buffett: "The worst of the crisis in Wall Street is over"

http://www.bloomberg.com/apps/news?p...BU8&refer=home

Should we distrust Buffett as we distrust Bernanke? If so, can anybody explain to me why?

It seems to me that Mr Buffett is making a somewhat narrow statement.

The worst of the crisis in Wall Street is over...

I agree with that sentiment. As he also notes, the problem will continue to move downstream. He mentions mortgage holders but there will also be many small to mid-sized banks that will suffer the ultimate business consequence resulting from bad investment decisions.

I won't pretend to read your mind or put words in your mouth but it appears you may have taken away from this statement that WB thinks the worst is over regarding the housing crisis in the US, the recession in the US and/or the over extended US consumer. I can assure you nothing is further from the truth. Not just WB but most keen observers of the US economic scene are waiting for the day the US consumer realizes they have an unsupportable debt burden.

The first time I understood this was sometime in the mid 1990s and I've been waiting for capitulation since then so I obviously have no worthwhile advice to offer regarding when it will occur, only that the American consumer, federal and trade debts will all have to be reconciled and when they are, one does not want to find themselves with debt they can't easily support or investments dependent on the value of the US$.

As others on iTulip have documented the American consumer has for 28 years put the US economy on their backs without any meaningful increase in wages. The only way this can happen is for consumers and other agencies to borrow that growth into existence. And that is exactly what we've done.

If you read farther down in the article you'll see that WB does not recommend one have all their eggs in the US basket.

As for Bernanke, I trust him. He's been very clear about the tools he'll use as Fed Chairman. I don't agree with his stance, but I don't think he's dishonest about who he is or the direction he'll take.

[friendly_jacek]

Re: Warren Buffett: "The worst of the crisis in Wall Street is over"

The crisis is slowly abating indeed and one can see that in credit spreads.
This, and lower energy costs can potentially provide for a short-lived rebound (that started in mid march), analogous to 1998-2000. Later, all bets are off.
Buffett predicts severe recession after all:
http://news.yahoo.com/s/nm/20080428/...t_recession_dc

[Olduvai]

Re: Warren Buffett: "The worst of the crisis in Wall Street is over"

Some think the crisis is far from over...
http://www.bloomberg.com/apps/news?p...Xlk&refer=home
Future currency problems expected.

[atreyu42]

Re: Warren Buffett: "The worst of the crisis in Wall Street is over"

I won't pretend to read your mind or put words in your mouth but it appears you may have taken away from this statement that WB thinks the worst is over regarding the housing crisis in the US, the recession in the US and/or the over extended US consumer. I can assure you nothing is further from the truth. Not just WB but most keen observers of the US economic scene are waiting for the day the US consumer realizes they have an unsupportable debt burden.

Thanks. I guessed I was misunderstanding Buffett, but I needed a clarification.

[metalman]

Re: Warren Buffett: "The worst of the crisis in Wall Street is over"

Thanks. I guessed I was misunderstanding Buffett, but I needed a clarification.

jp morgan says...

JPMorgan says no near end to financial crisis: report
Sat May 3, 2008 11:53am EDT

FRANKFURT (Reuters) - JPMorgan Chase & Co (JPM.N: Quote, Profile, Research) does not expect the U.S. financial crisis to end soon and will remain very cautious, its top executive said in comments published by a German weekly on Saturday.

"We can only speculate how deep and how long the recession in the United States will really be and how that in turn will impact banks," James Dimon told "Welt am Sonntag".

"But we are not done with the crisis for a long time," Dimon said, adding that it was not the company's job to make bets on the future.

[rros]

Re: Warren Buffett: "The worst of the crisis in Wall Street is over"

And Nouriel Roubini says...

http://www.cnbc.com/id/15840232?video=727381653&play=1

[Jim Nickerson]

Re: Warren Buffett: "The worst of the crisis in Wall Street is over"

Tonto to Lone Ranger, "That white man Buffett, him speak with forked tongue."

USA Today: Warren Buffett – Economy in a recession, will be worse than feared


“Warren Buffett, the world’s richest person, said Monday that the US economy is in a recession that will be more severe than most people expect.

“‘This is not a field of specialty for me, but my general feeling is that the recession will be longer and deeper than most people think,’ Buffett said. ‘This will not be short and shallow.’

“‘I think consumers are feeling gas and food prices,’ he added, ‘and not feeling they’ve got a lot of money for other things.’

“‘In the retail businesses … if anything, they’ve gotten a little worse,’ Buffett said. ‘Of course, things connected with housing, whether it’s in brick or whether it’s in carpet, those businesses have shown no uptick at all. Jewelry had a bad Christmas … and it stayed that way.’

“Buffett sees no respite from the housing slump. ‘I think this is going to be fairly long and fairly deep, but who knows,’ he said.”

Source: USA Today, 29 April 2008.

[FRED]

Re: Warren Buffett: "The worst of the crisis in Wall Street is over"

Tonto to Lone Ranger, "That white man Buffett, him speak with forked tongue."

Warren Buffett, complicated man of contradictions?

Buffett warns on investment 'time bomb'
March 4, 2003 (Fortune)

Derivatives are financial weapons of mass destruction

The rapidly growing trade in derivatives poses a "mega-catastrophic risk" for the economy and most shares are still "too expensive", legendary investor Warren Buffett has warned.

The world's second-richest man made the comments in his famous and plain-spoken "annual letter to shareholders", excerpts of which have been published by Fortune magazine.

The derivatives market has exploded in recent years, with investment banks selling billions of dollars worth of these investments to clients as a way to off-load or manage market risk.

But Mr Buffett argues that such highly complex financial instruments are time bombs and "financial weapons of mass destruction" that could harm not only their buyers and sellers, but the whole economic system.

At the time he pronounced "most shares are still 'too expensive'" the DJIA was trading around 8500 and the S&P near 950. Five years later, when the DJIA is trading above 13,000:

Derivatives take a bite out of Berkshire
May 2, 2008 (Fortune)

The Oracle of Omaha is looking all too prescient in the wake of Berkshire Hathaway’s (BRKA) 64% first-quarter earnings drop. Billionaire investor Warren Buffett, Berkshire’s CEO, noted in this year’s annual report that changing market conditions can cause large quarter-to-quarter swings in the conglomerate’s reported earnings, because accounting rules dictate that the fair value of Berkshire’s derivatives holdings be reflected in its quarterly profit statements. And so it was with Berkshire’s numbers out Friday afternoon: Earnings fell to $940 million in the quarter ended March 31 from $2.6 billion a year ago, as the unrealized change in the market value of Berkshire’s derivatives portfolio swung to a $991 million loss from a year-ago $382 million gain. more...

At the time he talked about the dangers of derivatives he didn't mean BH's derivatives but the other guys'.

Similarly, he doesn't mean that the financial crisis is over for the other guy's financial stocks but for BH's.

[Rantly McTirade]

Re: Warren Buffett: "The worst of the crisis in Wall Street is over"

Re: Berkshire's derivatives loss, isn't this a result of non-cash charges due to changes in 'fair-market value' of very long-lived equity puts Berk-
shire sold(discussed in another thread)?

Regarding Buffett generally, I've been in the investment management
business now for just over 25 years and for the first 15 or so years
Buffett was the 'secretive Oracle 'o Omaha' who operated privately
and very low key. Now, the guy is everywhere and won't shut up
about ANYTHING-markets, taxes, oil, elections, yadda, yadda; he
has an opinion on most anything and insists on sharing it-just this
a.m. I saw him yapping to one of the Babbling Bimbos of Bubblevision
about interest rates. It's interesting that Bubblevision seems willing
to drop everything and either take a call from him(could you imagine
him doing that in 1985, on the old FNN?) or slingshot some hack talking head to wherever on the globe he happens to be planted to catch whatever pearls of genius he happens to drop.I'm thinking he's become
just another Establishmentarian shill/propagandist, albeit on the rarified
level with Jack Welch and the Bills Gross & Gates-probably because he has too much to lose,and not just in financial terms, if a real, uncontrollable systemic crisis gets rolling.

[c1ue]

Re: Warren Buffett: "The worst of the crisis in Wall Street is over"

You've got to be careful when listening to 2nd hand quotes of Sir Warren.

When he says the worst of the crisis - it does not mean for stocks. It might in fact mean that he thinks the solvency issues are largely addressed.

I'd prefer to hear the full transcript before passing judgement.

He did point out specifically that home values are still very much at risk - which in turn would seem to contradict the solvency thing...unless he knows about the implicit government/Fed guarantee deal.

[metalman]

Re: Warren Buffett: "The worst of the crisis in Wall Street is over"

Re: Berkshire's derivatives loss, isn't this a result of non-cash charges due to changes in 'fair-market value' of very long-lived equity puts Berk-
shire sold(discussed in another thread)?

Regarding Buffett generally, I've been in the investment management
business now for just over 25 years and for the first 15 or so years
Buffett was the 'secretive Oracle 'o Omaha' who operated privately
and very low key. Now, the guy is everywhere and won't shut up
about ANYTHING-markets, taxes, oil, elections, yadda, yadda; he
has an opinion on most anything and insists on sharing it-just this
a.m. I saw him yapping to one of the Babbling Bimbos of Bubblevision
about interest rates. It's interesting that Bubblevision seems willing
to drop everything and either take a call from him(could you imagine
him doing that in 1985, on the old FNN?) or slingshot some hack talking head to wherever on the globe he happens to be planted to catch whatever pearls of genius he happens to drop.I'm thinking he's become
just another Establishmentarian shill/propagandist, albeit on the rarified
level with Jack Welch and the Bills Gross & Gates-probably because he has too much to lose,and not just in financial terms, if a real, uncontrollable systemic crisis gets rolling.

welcome, ranter dude. 25 yrs of expertise is prized here.

gross: selling bonds

jack: selling gov't bailouts of industry.

buffett: selling "it's all cool! no worries!" no systemic meltdown here, folks!

what do you as a financial guy what do you think of this...
More regulation, less central planning

[Guest]

Re: Warren Buffett: "The worst of the crisis in Wall Street is over"

Maybe he doesn't mean it the way it seems. They've just established the precedent of the fed and the federal government stepping in to bail out any financial institution that's going under. So if you're a wall street firm, wouldn't that mean you've now got a nice fat safety net underneath? Hence the "worst of the crisis on wall street" is over.

He didn't say "the worst of the crisis for holders of US dollars". They're the ones who have to worry.