Buffett Befriends Bankers At Berkshire Soiree

In a published article from the Omaha World Herald, it appears that the major focus of the Berkshire Hathaway stockholders soiree concluded yesterday was a 30 minute keynote speech made by Warren Buffet speaking in defense of Wall Street bankers, Goldman Sachs.

Although Berkshire reportedly has several billion dollars invested in Goldman, Mr. Buffett was there to reassure his flock that he isn't "wasting away in Margaritaville" as that other Buffett over the Congressional hearings conducted this week in which several election vulnerable senators publicly chastized the Wall Street giant for its investment practices.

At issue, of course, was the nondisclosure of the parties to some of the contracts with investors which were based on "junk," to put it mildly, insofar as the degree of risk - and in which the issuing major client had also "hedged" their bets by investing in derivatives banking on the failure of the original investments.

Which, apparently, Mr. Buffett sees no ethical or conflict of interest complications in Goldman then "contracting" with other noninterested investor-clients without disclosure of the true degree of risk, and which essentially has so fundamentally affected this country's citizens trust in the banks, Wall Street, and even home "ownership," since it has been the American public holding the bag for Goldman's free and easy investment style and losses, using American's homes as the collateral.

I'm no gambler, but it does seem that in betting that these investments would "crap out," Goldman had knowledge that the issuing investor for those investments was using loaded dice.

Since apparently most of those which were directly affected and scammed were European banks which "should have known better," according to Mr. Buffett, Berkshire doesn't plan to make any changes in its close partnership with Goldman.

Which may be true for those investors, but there were others indirectly affected, many of them now homeless.

One top executive even seemed to take to task the outraged American public, indicating that there was a misconception that Goldman's actions cheated ordinary Americans, but in his opinion, they hadn't cheated anyone.

Left unsaid, however, were the number of American homeowners who were indirectly affected, and which is continuing especially in the West and Southwest, while most of those U.S. banks which were selling those "bad loans" seem to be more concerned also with their bottom lines and under pressure from Washington to satisfy those foreign investors by either renegotiating short term adjusted terms, or foreclosing - whichever is more beneficial to everyone but those homeowners.

In fact, Obama's focus has been since this mess began in pushing Americans to refinance their homes, into some of these creative loans which have not changed, it appears, since the same individuals which sold those loans have been given Washington's blessing to sort out the mess and "counsel" some of those scammed homeowners.

And left out in all of this is the fact that a great many of those loans were also underwritten by Fannie Mae and Freddie Mac - many of which also were not even based on the U.S. currency, but British LIBOR rate - a currency almost one and a half that of the U.S. when most of those loans were pushed.

I mean, how CAN U.S. banks be pushing and selling loans that are not even based on the U.S. currency, I ask?

So connecting the dots in the true fallout seems not to factor into Berkshire itself's bottom lines, so thus inconsequential.

Mr. Buffett is known in this country by the investment community as the "Oracle of Omaha," however, it seems to me this partnership with Goldman Sachs really is a no brainer insofar as profit for Berkshire, and profit for Goldman Sachs.

It's a win-win partnership no matter which way the dice roll, since Goldman has now been designated as one of those investment houses that was determined by Washington to be "too big to fail."

Although, according to reports also, Goldman actually is a major shareholder in our own Federal Reserve - in other words, how could Goldman fail when it is a major shareholder in the entity that prints and regulates the U.S. currency and interest rates for loans extended by their branch banks?

And Berkshire is, after all, heavily invested also in the insurance industry, and not purely Goldman Sachs preferred partner.

Although, if one of your investments is with a company that issues the money for an entire nation, with the U.S. government itself merely minor shareholders without any true "voting" authority over day to day operations, just how can you lose?

It appears that the scene in Omaha was a rather festive one, given the crumbling housing market, and over 10% unemployment in most areas of the country.

I wonder if Mr. Buffett has been to Phoenix, L.A. or Las Vegas lately?

I mean, outside the casinos.

http://www.omaha.com/article/20100501/MONEY/305019931#buffett-reassures-the-faithful