patrick.net

I also just noticed that you began this thread with an article that subtly mischaracterizes what I wrote for the Sacramento Bee about California raising taxes on the highest earners and still leading the nation in the rate of job growth.

My piece is here: http://www.sacbee.com/opinion/california-forum/article2604184.html

It should be pointed out that Hollywood has successfully eliminated State Tax for most of the high revenues generated. They get the best Tax Break of any group in CA:

http://www.boe.ca.gov/pdf/pub61.pdf

DavidCayJohnston says

For a serious factual look at crony capitalism, the abandonment of sound underwriting and the failure to re-institute effective banking regulations

Actually it goes deeper than that, this is the reference, by a Columbia Business School economist:

http://www.schiffradio.com/pg/jsp/verticals/archive.jsp?dispid=310&pid=66345

http://fragilebydesign.com/

DavidCayJohnston says

Your source errs. No jobs were created. From 2005 to 2013 NY State subsidies tripled to $1.7 billion annually. Total subsidies of $10 billion over that time produced a loss of 175,000 jobs, or 2 percent, for an average cost of $57,000 per job lost; subsidies cost on average $1,400 per household.

You appear to be looking at total numbers instead of the jobs created specifically in the movie industry?

DavidCayJohnston says

First, Ronald Reagan vowed if elected governor in 1966 to never allow income tax withholding and then quickly implemented it so he could get revenue to expand, among other things, the California Highway Patrol.

That sentence does not make sense to me, it appears to be non sequitur?

DavidCayJohnston says

Prop. 13 stripped local governments of responsibility for their budgets and shifted power to Sacramento, making it much easier for corporate interests to lobby since 58 counties and hundreds of cities were replaced with one place to seek influence, while the benefits over time go mostly to industrial and commercial real property owners.

Totally agree

DavidCayJohnston says

But on the federal level you are wrong. In FY14 about 12 percent, not a third, of federal spending was borrowed.

These graphs say otherwise:

DavidCayJohnston says

federal spending has come down faster under Obama

That conclusion is premature, the CBO projected in the mid 60s that medicare would be a fraction of what it really ended up being in 1990. Not to mention the impact of Frank Dodd a comparible might be Sarbanes Oxley and it's attendant costs I have heard estimated to be over a trillion dollars, because of accounting costs and business that do IPO's offshore.

DavidCayJohnston says

Our economy would be much stronger if we increased federal investments (not total spending) in the future – basic research, infrastructure and education.

Perhaps half of today’s economy is based on taxpayer funded-research from before WW2, primarily physics, chemistry, math and materials and post-war basic research that gave us the Internet, advanced materials and many other broadly enjoyed economic benefits. Today we starve research budgets, and reduce taxpayer funding of public higher education, to our long-term detriment while our competitors increase these investments to their long-term benefit.

I'm ambivalent to this as investment in people may equate to investment in capital goods OTOH we have a culture that is based on consumption and government handouts. I contend that the primary teacher is the culture.

DavidCayJohnston says

Our economy would also be stronger if we did not spend so much on our sick care system that the excess costs alone equaled the income taxes collected in 2010

Further crony capitalism...

DavidCayJohnston says

Empirical evidence to support this?

Record highs in the stock market, near record highs, again, in real estate, and once again high sales in luxury goods i.e. remodeling activity on Rodeo Dr, and stock buybacks.

DavidCayJohnston says

A deeper worry should be a deflation as in the late 1800s because of an imbalance and lack of liquidity for the 90%.

Why, deflation helps the common man. Of course it would be hard on banks that leverage their money, but so what. To conflate deflation with the great depression is specious.

DavidCayJohnston says

I’m a champion of competitive markets and balanced regulatory rules. We could have lower rates if we get rid of all the preferences for those at the very very top and stopped paying them to defer their taxes.

My bad I thought you were of the Krugman ilk. And I agree, Sowell says that if we cut out corporate subsidies we could balance the budget.

DavidCayJohnston says

Second, tax is the biggest economic activity in the world by far. To think a flawed tax system is not central to our economic problems, thus, is absurd.

That is my point it should not be.

DavidCayJohnston says

All private wealth is built on a foundation of tax-funded commonwealth and civil laws that define property and protect liberty.

There is a difference between common law and statutory law the latter being the source of the problem. Protecting liberty or controlling the citizens often with overreach such as civil forfeiture, or more cronyism with the TSA?

DavidCayJohnston says

We need a tax system that rewards savings and investment, captures rents and supernormal incomes

Agreed on the first part, on the second though those supernormal incomes are as often as not fleeting, as there is no real monopoly, other than the government. Also notice how the wealthy end up spending in philanthropy and through much more efficient means than the government.

DavidCayJohnston says

Has any merchant or government refused to take your money? Are interest rates at their lowest levels in 700 years? The problem is not money per se, but rules that pile up money in a few hands, so much so that it cannot be profitably reinvested, just as if your venal blood flow exceeded your arterial.

Yes and look at how it has made Real Estate unaffordable, or how Yellin laughably say that middle class needs to invest more.

The mechanism that lands that money in a few hands is inflation plain and simple, even Yellin admits this.

The reason that the economy is stalled, is as you correctly indicate the money is not profitably reinvested, is that the money that should should have been available for such has instead been used for bailouts and purchases of MBSs and foreclosed houses.

What should have happened was that AIG, Golman Sachs and Morgan Stanley, GM went the way of Lehman. This would have allowed price discovery of assets. Which then creates real value or honest value.

My homemade empirical evidence is that there are 39 million people in Calif, they average, I'm guessing 10 transactions a day, this mean 390 million transactions per day.

The point is that the touchstone of the economy is price discovery NOT centralized powers.

DavidCayJohnston says

This shows you do not understand the structure of B-K, its diversified portfolio or its huge tax subsidies

Then Berkshire Hathaway as we know it, and Warren Buffet would no longer be the 2nd richest man in the world or even the top 10?

DavidCayJohnston says

And stop cowering behind a nom d’ Internet. Sign your writing with your real name.

Spare me your piety also this is an interest of mine not a profession.

This website is used to discuss financial matters, a pseudonym is conducive to a forthright discussion on these matters.

DCJ, YSSCKY.

Oh, and cover that scrote if I ever win the lottery.

dodgerfanjohn says

DCJ, YSSCKY.

Oh, and cover that scrote if I ever win the lottery.

But still no JB?

DavidCayJohnston says

“…honest money…”

BTW the dollar today would be .04 cents in 1912. Of course you will answer that wages have inflated since then as well. But the fact is that life is lived in the margins and that is where the cronys have profited.

DavidCayJohnston says

Our economy would be much stronger if we increased federal investments (not total spending) in the future – basic research, infrastructure and education.

There is no correlation between government investment and science being furthered. IMO because there is no incentive to discover. An example would be Samuel Pierpont Langley verses the Wright Brothers, Langley was given 70k (1.8 million today) to produce the first manned flight, the Wrights were given nothing. When the Wrights succeeded Langley quit as his motivation was money and the Wrights had the goal to create a flying machine.

In essence that is why government funding of science does not work.

And here is David Cay Johnston's response:

http://www.youtube.com/embed/K8E_zMLCRNg

Silly response alike that of "The Professor: who dares not sign his name evidently thinks at the level of an 8th grader.
Of course an individual can be untaxed and rich, as I have shown in naming many people with huge incomes whose tax returns show they paid nothing and others who literally turn a profit off their taxes under rules I have spent years digging out of the public record.
But there is no civilization without taxes to finance commonwealth goods and services, civil and criminal law enforcement, rules that define and protect property and person. Without taxes thugs can, have and would take your fortune and nothing would stop them except more vicious thugs.

DavidCayJohnston says

“Berkshire Hathaway would be gone if not for the unwitting taxpayer largess.”

Utter nonsense. This shows you do not understand the structure of B-K, its diversified portfolio or its huge tax subsidies (that $57 billion zero interest loan I cited before that keeps growing, its pipeline tax profits, its utilities, etc.).

We can argue some of the points, but that is utter nonsense. Diversified portfolios and hokey religions are no match for a good amount of CDS blowing up at your side (or in your face that is). Without TARP => W. Buffet = toast

DavidCayJohnston says

Of course an individual can be untaxed and rich, as I have shown in naming many people with huge incomes whose tax returns show they paid nothing and others who literally turn a profit off their taxes under rules I have spent years digging out of the public record.

The revered Warren Buffet for example...

DavidCayJohnston says

But there is no civilization without taxes to finance commonwealth goods and services, civil and criminal law enforcement, rules that define and protect property and person. Without taxes thugs can, have and would take your fortune and nothing would stop them except more vicious thugs.

The greatest tax of all is inflation, which most benefits the cronys.

You appear to have cause and affect confused. The sequence is a free market and then taxes, how can you tax someone who has no money?

You also seem to confuse cause and effect regarding free market 1st or civilization first. In countries ruled by an ancient monarchy or oligarchy there is no way the rulers can consume enough to support an economy. In a free market economy the rich invest in business to make more money which gives opportunity for the people to better themselves.

And this is the very problem with the current economy.

BTW Xeer law does a fine job without the taxes in a place everyone thought there was complete anarchy, yet whose economy continues to improve.

@mell you really have not read the record on this. Try studying the FCIC report -- http://fcic.law.stanford.edu -- which is very solid and which Congress tossed in the round file or the FCIC autopsy at UMKC in fall 2011.

B-K has stakes in banks that would have gone poof, but that would not sink B-K as they were but a part of its portfolio. Wild overstatements undermine credibility.

The disclosures on what share of B-K assets were in institutions with CDS paper are right there for you to read if you just make the effort. The facts do not support your claim.

mell says

We can argue some of the points, but that is utter nonsense. Diversified portfolios and hokey religions are no match for a good amount of CDS blowing up at your side (or in your face that is). Without TARP => W. Buffet = toast

Which set a precedent for what we have now, clearly declared by the Fed, income with no tail risk for all investors...

@ indigenous, your response (like that of some others here) lacks coherence and respect for facts. No one has made the silly assertion that "there is no way the rulers can consume enough to support an economy."

Again, without tax there is no civilization with its rules that define and protect property and liberty. In the jungle the tiger eats as he chooses, the thug takes what he wants. We have tax records going back many thousands of years to when money was only accounting devices (coinage is much newer; paper money even newer).

"Free market" is a misleading term as all markets have rules; to economists that term means free entry and exit, no an absence of rules. And who makes the rules? Governments, which can be states or other entities with rule-making powers from the FASB to MLB, which sets the rule son how many stitches a baseball has, what color yarn is used and the color of that yarn.

No principle in economic theory argues that "In a free market economy the rich invest in business to make more money which gives opportunity for the people to better themselves."

The rich can sit on their money. And many people who are not rich can combine their assets to invest - ever hear of a joint stock company? Indeed, governments can do the investing and they are - sometimes - much more efficient operators than private owners.

Being so wedded to inflation as an economic disease is like wearing eyeglasses that distort. You are not seeing clearly or broadly.

mell says

Without TARP => W. Buffet = toast

Show me the numbers.

DavidCayJohnston says

@ indigenous, your response (like that of some others here) lacks coherence and respect for facts. No one has made the silly assertion that "there is no way the rulers can consume enough to support an economy."

It is self evident, a priori i.e. common sense. Otherwise Saudi Arabia or North Korea would have a thriving economy.

DavidCayJohnston says

Again, without tax there is no civilization with its rules that define and protect property and liberty. In the jungle the tiger eats as he chooses, the thug takes what he wants. We have tax records going back many thousands of years to when money was only accounting devices (coinage is much newer; paper money even newer).

You suggest people are complete idiots. People can and do band together to defend against thugs without taxes or police. And before taxes there was a market.

DavidCayJohnston says

"Free market" is a misleading term as all markets have rules; to economists that term means free entry and exit, no an absence of rules. And who makes the rules? Governments, which can be states or other entities with rule-making powers from the FASB to MLB, which sets the rule son how many stitches a baseball has, what color yarn is used and the color of that yarn.

Review xeer law, no government, just individuals. People acting in their own self interest get along fine as the natural order of things is to get along through trade, only the insane prefer the risk of conflict.

DavidCayJohnston says

No principle in economic theory argues that "In a free market economy the rich invest in business to make more money which gives opportunity for the people to better themselves."

Yet that is what occurs, Except where government interferes, as is the case right now.

DavidCayJohnston says

Indeed, governments can do the investing and they are - sometimes - much more efficient operators than private owners.

OMG that is complete poppy cock. Clearly you have never owned a business...

DavidCayJohnston says

Being so wedded to inflation as an economic disease is like wearing eyeglasses that distort. You are not seeing clearly or broadly.

You are the one suffering from myopia...

DavidCayJohnston says

@mell you really have not read the record on this. Try studying the FCIC report -- http://fcic.law.stanford.edu -- which is very solid and which Congress tossed in the round file or the FCIC autopsy at UMKC in fall 2011.

B-K has stakes in banks that would have gone poof, but that would not sink B-K as they were but a part of its portfolio. Wild overstatements undermine credibility.

The disclosures on what share of B-K assets were in institutions with CDS paper are right there for you to read if you just make the effort. The facts do not support your claim.

bob2356 says

mell says

Without TARP => W. Buffet = toast

Show me the numbers.

I have neither time nor inclination to do so, I could as well ask for the reverse. Let me be brief, BRKs CDS exposure was roughly 20 billion gross and AIGs roughly 50 billion. Net it was far less of course, however with counterparty concentration risk and the absence of collateral (anybody who by now still thinks banks have significant collateral needs their head checked) the net numbers cannot be trusted. Further there was enormous credit pressure on BRK during that time, leading the stock to trade "irrationally" low (of course there wa nothing irrational about it)and the 5 year swap for BRK went nuts, obviously meaning a lot of people betting on a default within that time-frame. With the open risk with CDSs the market was definitely thinking default. We all don't know if it would have happened without TARP, but the likelyhood was significant.

mell says

We all don't know if it would have happened without TARP, but the likelyhood was significant.

That's a long way from BUFFET=TOAST. You are basing this on what information? Any article, research, link, anything at all or just I believe it's true? I haven't seen anything yet that documents how BK would have been taken under by AIG. I was assuming you could supply that since you are so definative it would have happened. I'll read the FCIC report and see what it says.

bob2356 says

mell says

We all don't know if it would have happened without TARP, but the likelyhood was significant.

That's a long way from BUFFET=TOAST. You are basing this on what information? Any article, research, link, anything at all or just I believe it's true? I haven't seen anything yet that documents how BK would have been taken under by AIG. I was assuming you could supply that since you are so definative it would have happened. I'll read the FCIC report and see what it says.

You cannot make a 100% sure claim without knowing the exact math, reading 8Ks or 10Ks gives you half the information at best. The FCIC report is not worth much since they are based of the 8Ks and 10Ks. That's where Cramer got his info from when he screamed "buy buy buy Bear Stearns, they are rock solid!" - just before they went belly up. I have given you numbers of CDS exposure that alone could have brought BRK down - why do you think the Fed backstopped them? It certainly is much much much much much more likely that BRK would have gone belly up then it is that the Fed has no influence on the markets.

The Professor says

Does anyone know how much of these "CDS", "MBS", and other non-treasury assets the Fed holds? Beside all of this debt, is their ANYTHING REAL backing the "Federal Reserve Note"s I have in my wallet?

That's exactly the problem. A net CDS number is not worth much. They are assuming a closed financial universe where the counterparties cancel each other out. However that assumes that each of them can pay and that assumption is based on their last financials. Not only are financial statements often heavily cooked (not much has changed here), the money can escape the closed universe in an instant, for example when a whale trader makes a huge losing bet where thew money ends up in a totally unrelated (and possibly foreign) party and the sudden loss makes them insolvent should they have to pay out insured risk, which then triggers the events we have seen in 2008.

mell says

The FCIC report is not worth much since they are based of the 8Ks and 10Ks. That's where Cramer got his info from when he screamed "buy buy buy Bear Stearns, they are rock solid!" - just before they went belly up. I have given you numbers of CDS exposure that alone could have brought BRK down - why do you think the Fed backstopped them?

So you are saying that no can get the information, but lacking the information you can predict that BK would have gone under? How is it your numbers lacking the details are better than anyone else's numbers lacking the details. That's an interesting position.

bob2356 says

So you are saying that no can get the information, but lacking the information you can predict that BK would have gone under? How is it your numbers lacking the details are better than anyone else's numbers lacking the details. That's an interesting position.

The CDS exposure numbers and the way their own swaps traded back then lead me to the conclusion that it was a likely event. Then Buffet himself said something along those lines. Even if not, he would have been severely decimated and certainly not the greatest billionaire investor of all times anymore, just a regular smart guy with ups and downs in the market. By the way, if you want to tag my toast expression as hyperbole, I have no problems with this. But then you should tag ramblings such as "The Fed has nothing to do with the markets/wealth inequality" as mega-hyperbole ramblings of lunatics ;)

mell says

I have given you numbers of CDS exposure that alone could have brought BRK down

For educational purposes, would you say the same re AIG?

mell says

Not only are financial statements often heavily cooked (not much has changed here), the money can escape the closed universe in an instant, for example when a whale trader makes a huge losing bet where thew money ends up in a totally unrelated (and possibly foreign) party and the sudden loss makes them insolvent should they have to pay out insured risk, which then triggers the events we have seen in 2008.

I read somewhere that this could be said of GE and Jeff Immelt in the repo market.

indigenous says

mell says

I have given you numbers of CDS exposure that alone could have brought BRK down

For educational purposes, would you say the same re AIG?

mell says

Not only are financial statements often heavily cooked (not much has changed here), the money can escape the closed universe in an instant, for example when a whale trader makes a huge losing bet where thew money ends up in a totally unrelated (and possibly foreign) party and the sudden loss makes them insolvent should they have to pay out insured risk, which then triggers the events we have seen in 2008.

I read somewhere that this could be said of GE and Jeff Immelt in the repo market.

CDS are difficult to predict, but I believe that AIG and GE would have ceased to exist before BRK. Just an opinion ;)

mell says

CDS are difficult to predict, but I believe that AIG and GE would have ceased to exist before BRK. Just an opinion ;)

Thanks, that gives me a perspective of the magnitude of this situation.

However it would be Much preferable, to let the market takes it's course, to what is on the horizon.

@mell obviously has not read (or utterly misread) the FCIC report as it is based on extensive testimony and documents and only in a minor way on SEC filings.

mell also appears not to understand legal or economic liability for stock investments. Liability is limited to the amount paid for a stake less dividends received.

And while Iagree that FASB and SEC rules enable misleading financial statements, a subject on which I have written extensively, mell ignores the relative size of B-K investments in companies with exposure to credit default swaps.

Out of $484 billion of assets, its Wells Fargo stake cost less than $12 billion; its USBancorp stake $3 billion; its Goldman Sachs stake $750 million. Add in smaller institutions like M&T Bank and you still do not get to 5% of B-K assets.

But what mell seems not to understand is that even if every bank whose shares B-K owned had been allowed to fail the only liability to B-K would be that its positions in those banks would be wiped out. Thus we could have let market forces, instead of crony rescues, proceed and B-K would still be there.

Buffett earns actual profits from numerous businesses (many benefitting from government rules that tilt the playing field) and also gathers up subsidies by the train load, none of which would have been reduced by the combined failures of Wells, US Bancorp, Goldman, M&T and other companies in which it is a minority shareholder.

Mell displays appalling ignorance of the facts when he writes "Without TARP => W. Buffet = toast." Utter nonsense.

You have not addressed the CDS at all, so what's new? I am all for letting it play out in 2008 and maybe he would have survived, but you cannot seriously disregard the - not only indirect, but also direct - CDS exposure. I am happy though that you have so much faith in the market and advocate for letting it play out instead of using crony bailout policies.

mell says

I am happy though that you have so much faith in the market and advocate for letting it play out instead of using crony bailout policies.

I will give him that. As to the government influence that is where the blinders come in.

@mell continues to ignore that his CDS statements regarding B-K have exactly zero factual basis. mell is not off by a little, but is completely wrong.

WHAT direct exposure, as mell now claims?

Neither Geico nor Buffett's smaller reinsurance companies were TARP beneficiaries. No B-K subsidiary is on the TARP list.

(Buffett did turn a fat profit from a side deal, as I revealed on Dec, 22, 2008. That, however, cuts against what mell posted. A reprint of my column is here: http://taxprof.typepad.com/files/121tn1427.pdf

B-K's exposure was limited to the value of its shares in Goldman, USBancorp, Wells, AmEx and some smaller institutions. And that means less than 5% of B-K assets could have been wiped out.

So, again, even if every single bank B-K was a minority investor in had failed -- and but for friends in high places most of them would have -- not only would B-K still be in business, it would still have more than 95% of its assets.

mell's "Without TARP => W. Buffet = toast" has not a scintilla of truth to it. Oh, and you misspelled his name, too.

Be honest. Acknowledge you got it completely wrong, not just in writing that B-K would have failed but for TARP, but also in asserting the basis for the very solid FCIC report. Facts matter. When people make up facts, or fail to correct mistakes, they pollute.

mell says

if you want to tag my toast expression as hyperbole, I have no problems with this. But then you should tag ramblings such as "The Fed has nothing to do with the markets/wealth inequality" as mega-hyperbole ramblings of lunatics ;)

I have many times.

@mell - what you wrote its not hyperbole; it is false. World of difference, especially after you doubled down. Facts matter.

Raising the issue of the Fed role in inequality is a red herring even though, of course, Fed policies have a great deal to do with inequality and markets, not to mention the quality of banking regulation.

I'm trying understand something,

A while back Bob indicated that David Stockman's characterization that AIG would not have gone under, because the corporate veil. But Bob contended that AIG corporate would have been pierced because IIRC laws are in the UK are different and because AIG agreed to put it's collateral in the US at risk. Despite the fact the insurance companies are rigidly held to rigorous standards.

If BK was highly leveraged through the CDSs, is that where the danger came from?

DavidCayJohnston says

Raising the issue of the Fed role in inequality is a red herring even though

More like the very cause of the whole thing which was continued through the bailouts.

indigenous says

mell says

I have given you numbers of CDS exposure that alone could have brought BRK down

For educational purposes, would you say the same re AIG?

You seem to be confused about AIG which originated the CDS and BRK/ge which would have been a holder. Actually as DC points out, BRK held positions in conpanies that were holders of CDS. Most of those were banks. You seem to willfully misunderstand the CDS market. Most banks were hedged on cds. They wrote cds policies and took out cds on bonds. For the most part only the big investment banks and hedge funds were really exposed to AIG cds problems since they tended to take a lot more polices and than they issued if they issued them at all. Without AIG the vast majority of cds was a wash. The problem is AIG wrote one sided. They issued CDS only. So AIG had tremendous exposure to the investment banks and hedge funds, but not nearly as much exposure to commercial banks. No surprise at all, the treasury guys screaming bailout were all ex investment bankers.

mell says

but you cannot seriously disregard the - not only indirect, but also direct - CDS

What exactly was BRK's direct cds exposure? I am under the same impression as David, the exposure was limited to the position in the banks that were subsidiaries. Shareholders can't lose any more than the cost of the shares. What knowledge do you have that there was additional exposure? An article, blog, statement, anything at all that documents this?

@indigenous - B-K was NOT highly leveraged with CDSs.

AIG is NOT a Warren Buffett company -- it was Maurice Greenberg's shop.

On inequality -- which mell raised as a red herring to the issue of his flat out errors -- while the Fed's failure to regulate (see the 40 plus hours of Carmen Segara tapes,surreptitiously made, telling her to not challenge Goldman's books) was a major factor in the 2008 collapse, it was less important than other factors.

The largest factor was plain old fashioned fraud, aided by the abandonment of underwriting. Bill Black, Michael Hudson, ProPublica, Matt Taibbi and others including me have laid this story out quite fully -- including the failure of the Obama administration to prosecute and Eric Holder's lies, as I report din several Newsweek pieces inn the past year. The fraud and lack of underwriting is thoroughly documented in the FCIC report.

DavidCayJohnston says

On inequality -- which mell raised as a red herring to the issue of his flat out errors -- while the Fed's failure to regulate

But the overarching point on this is that the Fed increased the money supply starting after the .com bust courtesy of Greenspan. Yea there was liar loans etc but the cause was too much money was made available.

That and the link I gave above regarding how the banking has been centralized since the 80s and egregiously prone to cronyism.

DavidCayJohnston says

B-K was NOT highly leveraged with CDSs.

If not than where was the danger of them going belly up?

mell --yet again -- indicates mell does not understand what mell reads. The link mell offers at 2:08 provides no support for his baseless assertions.

What Buffett wrote,and the secondary source comments on, concerned the concentrated risks taken by his re-insurance company. This has zero to do with the issue at hand -- TARP bailouts.

Nowhere does Buffett assert or even hint that all of Berkshire-Hathaway was at risk, only its General Re subsidiary.

Gen Re's amounts to less than 8 percent of B-K's total assets. I haven't read the legal documents, but I am sure B-K is insulated from claims against Gen Re that exceed the assets of Gen Re and that B-K has insurance to protect itself from Gen Re disasters.

again mell demonstrates a failure to grasp facts --a catastrophic failure in this case -- that appears to explain mell's jumping to wildly wrong conclusions. Andmell still has not acknowledged he was flat out wrong earlier.

mell says

http://brontecapital.blogspot.com/2008/11/berkshire-credit-default-swaps.html

I don't understand this post at all. The blog was about the cost of buying cds on BRK bonds. What does that have anything to do with cds owned by BRK. Go read the comments. You and indeginous both seem to randomly shift between writers of cds, holders of cds, and the objects of cds.

I think you are confusing berkshire hathaway with berkshire hathaway finance. There was some exposure to finance but it wasn't anything like the numbers you are putting up. Here is a pretty good aritcle about that very subject. You will have to register to read page 2 and 3.It's from 2009 and has some very sold numbers in it. http://seekingalpha.com/article/124623-berkshire-hathaway-proof-that-the-cds-market-is-irrational

bob2356 says

I don't understand this post at all. The blog was about the cost of buying cds on BRK bonds. What does that have anything to do with cds owned by BRK. Go read the comments. You and indeginous both seem to randomly shift between writers of cds, holders of cds, and the objects of cds.

It was about both, cds owned and their own cds spread. It was a discussion of traders at that time referring to the fact that the market was betting against BRK (as witnessed by the spreads). Regarding the numbers, they are fairly accurate as reported by Buffett himself as net cds exposure in billions (~5 vs ~20 gross). Sure you can say they were irrationally priced, but they are priced as what they are, the market doesn't care whether you think it's rational or irrational and companies have blown up simply from the credit pressure on them and the sell-off of their stock (as debt was called in by concerned parties). It was not meant to prove any financials, which didn't help Bear Stearns as mentioned earlier.

DavidCayJohnston says

mell --yet again -- indicates mell does not understand what mell reads. The link mell offers at 2:08 provides no support for his baseless assertions.

Read the above, you haven't provided any numbers at all, and you are making a lot of assertions yourself ("haven't read xyz...", "I am pretty sure..."). I have to put you on ignore, which I haven't done since that binary guy, good luck riding that FCIC report ;)

mell -- noun: a person who cowers behind a nom d'Internet, cannot accurately describe what he or she reads, tosses around terms in ways that indicate ignorance of accounting, finance and legal concepts and who flees from from verifiable fact rather than be forthright when errors are exposed.