Warren Buffett the Good the Bad and the Moody's

http://www.patriotinternet.com Updated from 2:37 p.m. EDT

Even when he's not on TV or writing op-eds, Warren Buffett can't stay out of the news. The past week has seen attention focused on Buffett and Berkshire Hathaway on (at least) three fronts: * The Good: Shares of Goldman Sachs hit $115 intraday Tuesday, putting Buffett's investment in the firm back in the black, at least temporarily. The focus on the strike price for Buffett's warrants to buy $5 billion of Goldman shares tends to overlook the very salient point he's getting paid a 10% dividend to wait to exercise the option, and is under no pressure to do so anytime soon. (The warrants expire in 2013.) * The Bad: Nearly two weeks after an outright downgrade by smaller rival Fitch, Standard & Poor's placed Berkshire Hathaway's triple-A debt rating under review for possible downgrade - in typically mealy-mouthed fashion. "If continued substantial deterioration in the equity markets hurts capital further, or if it appears that the insurance group will not be able to restore capital back to the 'AAA' level through earnings or through capital contributions from Berkshire's noninsurance operations or external sources, then we might lower the ratings," S&P analyst John Iten wrote, Reuters reports. * The Moody's: It's ironic Berkshire's business is now under pressure from the rating agencies considering Buffett's firm owns about 20% of S&P's main rival, Moody's. Buffett "is known for piquant and unsparing criticism of his own performance, as well as the institutional flaws of Wall Street," David Segal recently observed in The New York Times. "But on the subject of the conflict of interest built into the rating agencies' business model, Mr. Buffett has been uncharacteristically silent - even though that conflict is especially glaring in his case because one of the companies that Moody's rates [Aaa] is Berkshire."

Buffett is almost certain to make money on the Goldman deal (and a similar investment in GE) and his track record remains the envy of just about everyone else on Wall Street (and beyond). But the stigma of his Moody's association and other recent missteps suggest no one's reputation is totally immune from the worst bear market in a generation - not even the "Oracle of Omaha."

Update:On Sept. 15, 2008, AIG's credit ratings were downgraded to A- from AA- by S&P and by Moody's to A2 from Aa3 -- not from triple-A levels as Aaron Task said in the accompanying video. Tech Ticker regrets the error, corrected March 25 at 5:25 p.m. EDT.

http://www.obamadeception.net

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News & Politics

Tags:

• warren
• buffett
• berkshire
• hathaway
• credit
• rating
• moodys
• downgrade
• warning
• wall
• street
• derivatives
• bailout

[HomesteadExpert]

Aaron, you should weigh your ego with your bank account when talking about Buffet

[bwheeler83]

Call it whatever you want however, the idea the Fed and US Gov't has a AAA rating and Berkshire doesn't . . . you have got to be kidding me!

[freetaxdebtreliefy]

for the amateur, but I liked it, interesting

[freetaxdebtreliefy]

a lot of emotions!