Thursday, August 25, 2011
Think again. This sequence of events is not a coincidence, and it's going to utilize your tax dollars to turn it into a quick home run for guys like Buffet: Monday: Buffet "discusses" the economy with Obama; Tues/Wed: Bank of America looks ready to collapse; Thursday very early: Buffet announces a $5 billion preferred stock investment in Bank of America, thereby addressing BAC's immediate liquidity crisis; Thursday right after the Buffet announcement: the White House announces it is looking at a plan to bail out distressed residential mortgages. BAC just happens to be one of the largest holders of distressed residential mortgages. Think this is all a coincidence and Buffet is some kind of genius? If you do then I might be able interest you buying a really nice bridge that connects the upper east side of NYC to Long Island. Really, I have the title to it in my desk drawer...
The coup de grace of all of this will be if the rumors are true and JP Morgan eventually takes over BAC with the help of a $100 billion preferred investment by the Treasury/Taxpayer. Buffet ponies up $5 billion to keep BAC solvent, in the meantime he gets a 6% cumulative dividend and gets taken out at a 5% premium to face value if a deal like the JPM rumor actually occurs. Free money for all involved financed by the taxpaying middle class. Please note: a lot of Obama's support base do not pay taxes but do benefit from entitlement programs. Buffet's comment is that "BAC is plenty profitable." Anyone who knows basic accounting can look at BAC's financials and see that all the profits are generated by GAAP accounting manipulations are not based on cash economics. So no, Warren, BAC is not profitable and I think you know that. But it will be very profitable for you thanks to the generosity of the Taxpaying middle class and the straw-man President that you control...
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