Super Buffet to the rescue
A few times we have spoken here of the "Oracle of Omaha" Warren Buffet. I admit that I admire him as a person (donating 99% of his fortune to charitable causes) and especially as a multimillionaire. Even from very small to 6 years, started the business by buying packs of Coca-Cola bottles and then sold loose with the consequent benefits. He bought his first shares at the tender age of 11 years (angel) and 26 and founded his own investment company. Their strategy is very simple "out with a wallet full of dollars in settlements season."
We must acknowledge that after the recent stock movements, the market is sales and that is how he sees Buffet. Yesterday it was a move with a plan to invest in "monoline", the main function of a "monoline" is back with a bond issue resources. In exchange for a premium, guarantees and interest payments associated with an issue of paper. The truth is that this definition is infumable, but basically come to be the foundation on which to sustain high-risk mortgages.
As we are talking about a fairly espabilado investor is clear that it is the most solvent in a business that is literally drowning and accept aid is a price that is. For now, what it has achieved is to lift the mood of investors by saying it has offered "reassure" 800 billion dollars tax-free bonds or municipal. I write in numbers, it seems: 800,000,000,000 dollars.
This is the first reading we have, Buffet spoke bags and go up, but if we look further, we are faced with the paradox that companies theoretically benefit from this investment on the stock market plunged yesterday, how can this be?. We try to count in this article (in English) entitled "The kiss of death Buffet" I've discovered through Cotizalia where we try to count the trick:
And the news is that holds three tricks.
One, do not produce any concrete inside until at least 30 days. Buy the Rumor.
Two, Buffet wants to relieve the monoline guarantees on their emissions of municipal bonds, which theoretically have the backing of a public purse which began to question their role. Leaves, by contrast, firms in the hands of existing coverage of products are more toxic than they really are doing their damage (CDOs backed by mortgages litter) tested yesterday as lower estimates of results that made AIG.
Three, the investor intends to pay a premium for the most miserable valid these companies, whose acceptance would lead them safely to a recapitalization in a short period of time. ¿Discuss your performance? No. It is the market and its opportunity.
The interesting thing here is to see the amount of financial instruments that are scattered in the market who had heard of the monoline? and quantity of opportunities that may have on markets.
Another interesting news is that yesterday we were able to read the plan to help the debtors to be launched in U.S..
The administration of President George W. Bush and six major mortgage lending institutions announced Tuesday the latest proposal to address the problems in the housing market, and offered "pause" the process of implementation of the troubled mortgages for property owners.
On this side of the pond, now it's talking to our friend Trichet, look at his speech as the markets begin to discount rate cuts after the bad macroeconomic data that have been published.
Locally, we see that banks and funds seeking new avenues for financing the liquidity crisis.
The latest discovery has been the mortgage bonds, which are debt securities issued by an entity that has a double guarantee of the issuer and the buildings themselves. These cards, which are considered as assets of the highest quality, have been an excellent means of funding until the crisis in August.
The article today was a bit thick but you should speak of "monoline" and "mortgage bonds" to better understand what is simmering in the market.
So to create a little controversy. What do you think the measure taken to help the U.S. mortgage? Do you see feasible in Spain?
Written by Carlos Lopez on February 13, 2008 with 186 comments
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