Posted by guest, Nov 18, 2008 6:03PM

Oh the irony! I hope derivatives don't turn out to be old man's folly.

Posted by guest, Nov 18, 2008 6:04PM

I would sell protection for Berkshire debt in a heartbeat. Who's buying?

Posted by guest, Nov 18, 2008 6:07PM

Actually,

Giving the big 3 automakers money will create another G-MAC

Posted by guest, Nov 18, 2008 6:13PM

Um...yeah, that's pretty stupid. Even if a) those swaps are unhedged, b) there is no inflation for the next decade, and c) the market stays flat for the next 10 years, Buffet's successor could take that $33B in cash and dump it into S&P futures for the week before expiry and drive the market up a few hundred points.

Posted by guest, Nov 18, 2008 6:19PM

Not one for conspiracy theories, but the real question is who's buying them and is it really having an effect on the stock price? As the article says there's no reliable way to know.

Posted by guest, Nov 18, 2008 6:19PM

Write off Paulson and his mini-me Kash-n-karry, Helicopter Ben, Barney and his cast of players who pretend to be having hearings, which are really just the officialization of The Man's version of the truth:

http://tinyurl.com/6el4zc

And write off the 'free press' too - what a joke, all of the evidence of their lies is right there on line for all to see...

Posted by guest, Nov 18, 2008 6:21PM

Oh...it's even better...stealing from some commentary on Alphaville:

5-year CDS's are trading up on this fear, yet:

1) The index puts can't be exercised before expiry: 14-19 years from now.

2) BRK doesn't have to post collateral (though they take non-cash charges).

3) Buffett collected $4.5B in premium upfront, which he can invest for the next 20 years.

4) That $37B potential outlay is apparently based on the major indices at ZERO.

Seriously, people are really freaking insane. Who thinks paying 4.5% on 5-year BRK CDS's is a good idea? Who?

Posted by guest, Nov 18, 2008 6:29PM

Hello. I am a pirate ship captain. How do I invest in a hedge fund?

Posted by guest, Nov 18, 2008 6:29PM

ANOMOLY?

"A total of 2,450 credit-default swaps had been sold on Berkshire as of Nov. 14, protecting a net amount of $4.7 billion"

According to latest quarterly report,
BRK has 24.558 billion in notes and loans outstanding in Utilities, Finance and Insurance arms.
http://www.berkshirehathaway.com/qtrly/3rdqtr08.pdf

Is the insurance giant
woefully underinsured?

Posted by guest, Nov 18, 2008 6:30PM

The old man is long on everthing - his bets on the bailout he planted will pay off in the end, Warren just won't be around to pick the fruit in the end.

Screw the auto industry - they pushed the wrong products, so die already.

Americans will still have automotive jobs, just for Japnaese and European companies as long as we don't become a free trade whore...

Posted by guest, Nov 18, 2008 6:38PM

@11 - They also have $28B in cash, $29B in fixed income, and $76B in equities. Even if we haircut the financial instruments 50%, that's $80B.

And he's got GE and GS on the hook for hundreds of millions a year.

Where's the risk? More risk here than Travelers or Allstate??!

Posted by guest, Nov 18, 2008 7:30PM

@13 - good points. I agree, they're not going to let him go out of business in the near term...but consider if they have to liquidate.

a. $29B in fixed income securities only gives you 2.9 billion a year in actual cash on hand per year.

b. $76B in equities = 6 billion dollars in dividends coming in yearly.

c. BRK is paying out $56 billion a year in claims on the insurance unit last 2 years.

It strikes me as funny business that they report collecting $26 billion in insurance premiums and yet ANOTHER $50 billion in sales and service revenue per year on that business. Where's that figure from?

His investment income fell from $47 billion to $37 billion..more to go?

Posted by guest, Nov 18, 2008 7:52PM

More good news from Citi group:

Citigroup liquidates fund that fell 53% in a month
By Henny Sender and Francesco Guerrera in New York

Citigroup is liquidating its Corporate Special Opportunities hedge fund after it lost 53 per cent of its value last month, marking the ninth time in recent months that the bank has had to close or rescue a fund in its alternative investment unit.

The collapse represents the latest setback for Citi’s chief executive, Vikram Pandit, a former head of the alternative investment unit, who revealed plans on Monday to cut the bank’s headcount by 52,000. Citi shares fell 6 per cent on Tuesday to $8.36, giving it a market value of $45.5bn.

CSO, which managed almost $4.2bn at its peak, has a net asset value of about $58m and debt of about $880m, investors say. People familiar with the matter say investors in the fund are likely to receive no more than 10 cents on the dollar.

The fund faltered even though Citi supplied it with $450m in credit lines and equity infusions of about $320m. It also bought assets with a notional value of $1bn that it placed in the fund.

Investors in the fund – which invested mainly in debt backing European private equity deals – have not been allowed to withdraw their money for about a year as performance deteriorated. Losses for Citi could total hundreds of millions of dollars, people familiar with the matter said.

Citigroup said its hedge funds “are subject to comprehensive internal fiduciary and risk management oversight and senior level management supervision. As with many other credit-based investment products, investment returns have been hurt by one of the most volatile periods for fixed income in history”.

In an update to investors last month, CSO Partners said its performance was “impacted by the fund’s leverage” after a deterioration in market conditions that “has been unprecedented and overwhelming”.

Posted by guest, Nov 18, 2008 8:10PM

Wow! The Oracle is pissing on your pant legs, you so-called Masters of the Universe. Watch Him. See who it's done. Asswipes.

Posted by guest, Nov 18, 2008 8:48PM

@15 - nice. Citi just plain sucks. Is there a bank as bad as they are? Anywhere?

For the life of me I can't figure out what to do about C. Giving them a regional bank (like WB) would be an unmitigated disaster - they would just run that thing into the ground.

I think the only solution is to break it up into a million little pieces and sell them all off (and hope they don't metastasize and spread like cancer in the new firms).

Why not let some regionals or local banks bid on the branches 1 by 1? Maybe we could auction them on ebay?

Who in his right mind gives Citibank money to manage?

Posted by guest, Nov 18, 2008 9:30PM

Hmmm...#15, I especially like that it is the NINTH fund Shitty closed or rescued.

So...help me here: Pandi's previous accomplishments are Old Lame (now closed) and Shitty Alternative Investments (8 other funds closed or bailed out). And now he's running the whole firm?

Oh boy.

Posted by guest, Nov 18, 2008 9:57PM

OK, MS GWM HR here.

It has been a busy day yesterday , we didnot fire anyone yet but we have the lists ready.

I see lot of stupid posts here on why VP and above and why not Analysts.

This is a COST CUTTING exercise...the management wants to survive the next 2 months...the management doesnt think the long term business strategy nowadays.

So what we do is, for example, take the employee list by department in an XL, sort in descending MONTHLY SALARY. Highest has the most risk of being fucked out.

Simple !!!

Dont think we discuss a lot here...past performance etc is BS. We just cut the highest paid and get over with it. MAck will then say..."we are going to have $250 cost savings...our franchise is strong...my dick is strong etc ..."

I feel sorry for the folks who got fired and who are next in line. I feel sorryu for myself that I am doing this shit work. I just posted here to give some perspective.

Posted by guest, Nov 18, 2008 10:13PM

@ #19 - BS you are HR, if you were, you wouldn't be posting here. You need to use tweezers to take a piss.

Posted by guest, Nov 19, 2008 8:18AM

@19 -

Yea, salary numbers...not bonus right? derrrr

Posted by guest, Nov 19, 2008 9:57AM

Can BRK sell CDS on itself?