
Warren Buffett Explains How The Bailout Is Crushing Healthy Companies - Flemlord
http://www.businessinsider.com/warren-buffett-explains-how-the-bailout-is-crushing-healthy-companies-2009-3
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tptacek
This is a big extrapolation of intent from a single paragraph of a very long,
carefully-crafted letter. Absent from this analysis are all the grafs where
Buffett explained why the bailout was the correct course of action.

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sqs
Right. I think Buffett talked about this _only_ because it explains why
Clayton Homes won't be able to lend as much in the near future. Buffett
obviously thinks the bailout was best for the country and for Berkshire in the
long run, but he had to explain these numbers to shareholders (from the table
on page 11/12 of the 2008 letter):

    
    
                                       Pre-Tax Earnings (millions)
                                         2008   2007
                                         ----   ---- 
        Manufactured-housing finance .... 206    526

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pj
I have lost a lot of respect for Buffett over the past few months or so. When
he invested in Sachs, then, essentially, lobbied congress for the bailout to
boost up his investment:
[http://dealbook.blogs.nytimes.com/2008/09/24/buffett-
calls-b...](http://dealbook.blogs.nytimes.com/2008/09/24/buffett-calls-
bailout-bill-the-right-thing/)

And then this article where he complains about how that very bailout is
hurting one of his businesses??

It sounds very hypocritical to me and very selfish in a time when the economy
is crumbling due to these /exact/ same kinds of selfish decisions on the part
of financial warlocks -- not wizards -- warlocks.

Don't tell congress the bailout is the right thing, then complain that it
hurts "good" businesses. If he believes what he said, he shouldn't have bought
sachs and he shouldn't have been saying it's the right thing to do.

I guess that's the point. Buffett's word has lost value. What does he believe?
Who is he trying to help? he bought oil at the top. His stock is at 2003
levels, half what it was at it's peak. BRK.A is worth less today than it was
in 1998.

Look, I used to love Buffett. Read the Warren Buffett way, read this old
yellow book he wrote in the 70's about value investing. Studied him. Modeled
him.

And now... now I don't even know what he believes. His behavior of late is
uncharacteristic of him and I'm disappointed in the legend.

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byrneseyeview
_Look, I used to love Buffett. Read the Warren Buffett way, read this old
yellow book he wrote in the 70's about value investing. Studied him. Modeled
him._

What 'old yellow book' is that? As far as I know, Buffett hasn't written a
book. You might be thinking of _The Intelligent Investor_ ; he's written the
introduction for an edition of that one.

Regarding your larger point: I don't think anyone claims that the entire
recession was due to the fact that loans were made or homes were bought. The
recession was due to the prices at which these activities took place. It's not
hypocritical to say that, for example, GE was overpriced at $30, but it's
cheap at $10.

And I would take issue with the idea that the current crisis is due to
anything 'selfish'. It's centered on a highly subsidized market, which was
designed to give people homes, not make the government rich. The fact that
this well-meaning behavior backfired so dramatically is only obvious in
hindsight, or to anybody who reads much history at all.

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pj
You're right, I apologize. It wasn't written by him. It's called "Value
Investing Made Easy" and is /about/ him, but not written by him. can't see
when it was written. I checked it out from the library years ago and it was
totally worn out, so my impression may not match the copyright.

here's a link: [http://www.amazon.com/Value-Investing-Made-Easy-
Investment/d...](http://www.amazon.com/Value-Investing-Made-Easy-
Investment/dp/0070388644/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1236093633&sr=8-1)

Google Book:
[http://books.google.com/books?id=pIbGHfeURUEC&printsec=f...](http://books.google.com/books?id=pIbGHfeURUEC&printsec=frontcover&dq=value+investing+made+easy#PPR13,M1)

I would disagree with your comments though. I would say this crisis is about
overvaluing assets, irrational exuberance fueled by greed, and improper
lending practices by individuals and businesses that can easily pass the buck
to someone in another country.

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kingkongrevenge
As of yesterday, Warren Buffett is below cost basis for his investing career.
Does that mean people will stop listening to Warren Buffett?

