Here is Warren Buffett's remarks on the US SEC-Goldman Sachs row at the "woodstock for capitalist" at the Berkshire Hathaway annual meeting...
From the New York Times Deal Book,
``According to DealBook’s Andrew Ross Sorkin, who’s one of three panelists asking questions at the meeting, Mr. Buffett essentially took Goldman’s defense that everyone involved in the deal under scrutiny, Abacus, was a sophisticated investor fully capable of evaluating the risks in the subprime mortgage investment. Instead of needing to be told that a hedge fund manager who suggested which bonds should form the underpinnings of the Abacus collateralized debt obligation was also short the bonds, the investors should have relied on their own due diligence, Mr. Buffett said.
“If I have to care who is on the other side of the trade, I shouldn’t be insuring bonds,” he said.
``Mr. Buffett added an implicit rebuke of a line of questioning raised by several senators during this week’s Goldman hearings. An investment bank could very well be short the securities Berkshire is buying, and a buyer like Berkshire should be perfectly aware of that in any case."
One may argue that Mr. Buffett's defense of Goldman arises from his company's stake in the company.
But as we long said, the counterparties involved were not individual patsies but institutions ran by an army of supposed experts, who likewise engaged in similar activities as Goldman.
In short, the counterparties knew of the risks that they took but that were entranced by the siren song of a perpetual boom as well as having to over-confidently outsource risk appraisal to the rating agencies. Mr. Buffett, thus, shares our view.
The fundamental problem with politics is the inherent scapegoating of market forces for political goals. And the intuitive reaction- institute "controls" by penalizing "profiteers".
What the mainstream left don't realize or keeps as secret is that the intent to impose more regulations signify as stealth efforts to maintain a stranglehold of the banking cartel on the political-economic ecology.
From the New York Times Deal Book,
``According to DealBook’s Andrew Ross Sorkin, who’s one of three panelists asking questions at the meeting, Mr. Buffett essentially took Goldman’s defense that everyone involved in the deal under scrutiny, Abacus, was a sophisticated investor fully capable of evaluating the risks in the subprime mortgage investment. Instead of needing to be told that a hedge fund manager who suggested which bonds should form the underpinnings of the Abacus collateralized debt obligation was also short the bonds, the investors should have relied on their own due diligence, Mr. Buffett said.
“If I have to care who is on the other side of the trade, I shouldn’t be insuring bonds,” he said.
``Mr. Buffett added an implicit rebuke of a line of questioning raised by several senators during this week’s Goldman hearings. An investment bank could very well be short the securities Berkshire is buying, and a buyer like Berkshire should be perfectly aware of that in any case."
One may argue that Mr. Buffett's defense of Goldman arises from his company's stake in the company.
But as we long said, the counterparties involved were not individual patsies but institutions ran by an army of supposed experts, who likewise engaged in similar activities as Goldman.
In short, the counterparties knew of the risks that they took but that were entranced by the siren song of a perpetual boom as well as having to over-confidently outsource risk appraisal to the rating agencies. Mr. Buffett, thus, shares our view.
The fundamental problem with politics is the inherent scapegoating of market forces for political goals. And the intuitive reaction- institute "controls" by penalizing "profiteers".
What the mainstream left don't realize or keeps as secret is that the intent to impose more regulations signify as stealth efforts to maintain a stranglehold of the banking cartel on the political-economic ecology.
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