Well we finally got Warren to buy a distressed financial... what piece of old gum stuck to the bottom of our shoes did he buy? AIG (AIG) in the $4s? Washington Mutual (WM) in the $3s? Perhaps Wachovia (WB)??
Oh... *that* distressed financial. So now he not only gets a 'special' share with 10% Warren Buffet dividend (must be nice) - he also now owns the government via Goldman Sachs (GS). He's good. He's really good (but darn he gets some seriously great terms on his deals). The stock is up strongly in afterhours and within seconds this becomes a "winning position" for Buffet. Morgan Stanley (MS) up even more.
So effectively Goldman has created a near monopoly, wiping out nearly all competitors while keeping a few weakened ones around so as not to feel any anti-trust pressure (Intel model), has their men running Merrill, Wachovia, and the new most powerful position in the world - Secretary of US Treasury, have the credit lines of the Federal Reserve behind them, has the SEC protecting them, has the US government looking to buy their toxic assets, and now has Buffet backing them. They even fooled us with the "hey our stock is falling too, we're no different than anyone else" scenario last week.
They love it when a plan comes together. Mad respect to the Masters of the Universe.
- Goldman Sachs Group Inc (NYSE:GS - News) on Tuesday said it will receive a $5 billion investment from Warren Buffett's Berkshire Hathaway Inc (NYSE:BRK-A - News; NYSE:BRK-B - News).
- Berkshire will buy $5 billion of perpetual preferred stock that carries a 10 percent dividend. It also will receive warrants to buy $5 billion of common stock at $115 per share, exercisable within five years.
- Goldman also said it plans to sell at least $2.5 billion of common stock.
- Shares of Goldman rose $12.17, or 9.7 percent, to $137.22 in after-hours trading following the announcement.
3 comments:
Finerman from Fast Money stated that she was going to jump on the bandwagon as well... I can see a quick bump up based just on Buffet, and suspect the new issue won't dilute the value of the stock when the **Bailout** makes it through congress.. So, I'll probably dip my toe as well..
jegan
Also came across this which could mean that whatever we do won't stop the global problems and might negate our own efforts:
(http://www.finfacts.ie/irishfinancenews/article_1014796.shtml)
Europe's biggest banks face greater capital shortages than US counterparts; Deutsche Bank has liabilities of €2 trillion - over 80% of the German economy.
Europe's biggest banks face greater capital shortages than their US counterparts, but have become too big for any one European country to save, according to a commentary by European economists Daniel Gros and Stefano Micossi of the Brussels-based Centre for European Policy Studies.
The “overall leverage ratio” - a measure of total assets to shareholder equity - of the average European bank is 35, compared with less than 20 for the largest US banks, the economists say, and relatively small writedowns on their assets could have a devastating impact on a bank's capital.
“If ever they were forced into a firesale, they could go very quickly into insolvency,” said Gros, who is director of the Centre for European Policy Studies.
Nice chart there too.. jegan
interesting that Buffett stated he wouldn't have bought into GS without being confident thatt he govt will approve the Rescue Plan. Maybe hes getting news just from CNBC, but I'd guess he also has the inside advantage of direct contacts with politicians. Also wonder how much influence his statements will have on congress.
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