April 09, 2005

Warren Buffet Jammed Up?

Warren Buffet, Omaha's legendary rich cat and head of Berkshire Hathaway, Inc. is in the news more and more these days. And it isn't all good. It wasn't bad enough that Warren had to own up to less than spectacular results for his investors recently. Now the news coming out of the AIG scandal is taking a tone Buffet probably doesn't like.

Jon Markman's MSN Money Journal entry for Monday, April 4 had this improbabable looking suggestion:
"I have half a mind, by the way, to put my entire portfolio short Berkshire Hathaway (BRK.B), as it seems to me that Warren Buffet & Co. have gotten away too easily so far with its role in the AIG Inc. (AIG) scandal -- and that his luck may run out soon. But I will not take that position yet."
Even Buffet's liberal pals are distancing themselves, e.g this Slate article, Is Buffett in Trouble?
also from this Monday, where they felt a need to disclose:
'The folksy billionaire and investor par excellence is the self-appointed conscience of the American capitalist democrat. The spirit of the transactions, and Buffett's public reaction to them, stand in stark contrast to what has come to be known as the Warren Buffett way. (Disclosure: Buffett is a director of the Washington Post Company, which owns Slate.)'
Today I got around to reading my Friday Wall Street Journal and saw Warren's mug shot on page one. How Buffett Gave A Tip That Led To Greenberg's Fall by Susan Pulliam, quoted in Sucheta Dalal's column in the Sunday Indian Express (that's right, tomorrow Sunday)
Investment Guru Warren Buffet has been the biggest shocker. Wall Street Journal reports that Buffet, “in a bid to win leniency for Berkshire from prosecutors” directed his lawyers to hand over documents describing a suspect transaction between a Berkshire unit and AIG to the regulators. The scrutiny that followed led to the exit of Hank Greenberg, Chairman of AIG, one of the world’s biggest insurance companies. Some say that Buffet has erred badly in supporting his trusted lieutenant Ajit Jain who had written some controversial insurance policies that were substantively a loan used by borrowers to misstate their financial condition.
Now Buffet is getting awfully close to looking maybe guilty of something - doctoring the books. According to the New York Times quoted here: AIG papers doctored, "General Re, a unit of Berkshire Hathaway, altered records of a transaction with AIG" in the St. Petersburg Times.

I have to figure much of the problem stems from Buffet's effort to move away from his prosaic Nebraska Furniture Mart, Dairy Queen and Coca-Cola image. For some reason, this included going into the reinsurance business. That elite pool has only a deep end, and that's where Warren got in. Its a tough world for the 'folksy' sort of cat Warren plays. As the AIG scandal unfolds, I think it will be like peeling the bad onion; the more is uncovered, the worse it will stink.

Whatever Warren Buffet myth you choose to believe: brilliant capitalist success who enigmatically has socialist sympathies or, vice-versa, brilliant socialist thinker who, enigmatically, gets rich investing in the great success of capitalism, you gotta admire anyone with that much money at least a little.

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Warren Buffet never troubled me much at all until he stuck his nose into The Terminator's efforts to wring the last drops of wealth out of Californians. He had the nerve to say that we didn't pay enough taxes here in Nebraska. Tell you what, Warren, you pay more taxes forme, OK? I really hope you don't end up in jail. Even more, I hope you didn't get suckered. For the sake of Omaha's rapidly tarnishing reputation.

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