I am going to be posting a few articles on Warren Buffett. This one really could have been written several months ago, but the idea struck me today, after Goldman Sachs recently redeemed the preferred shares from Warren Buffett. There are various ways of calculating how much Buffett made on the Goldman preferreds, but everyone agrees that it was several billion dollars.
Warren Buffet has been criticized for purchasing Goldman Sachs. It wasn’t so much that many individuals (a great deal of which are usually the uninformed and only believe what the media tells them) actually ended up disliking Goldman Sachs this time around, either. A lot of people seem to be upset that Warren Buffet purchased a company that has recently gotten a bailout from both the Federal Reserve and the U.S. Treasury. Their argument is why should a business receive aid just so that it can get back on its feet and then be gobbled up by a big show investor?
I think we would all be on soup lines if not for the actions of the Fed and Treasury in late 2008 and early 2009, but that is a topic for another time.
I think that most people are simply upset at the overlying idea that the bailout existed in the first place, yet they don’t really know of all of the companies out there that ended up receiving a bailout in the first place. In fact, Senator Bernie Sanders of Vermont has recently run an audit on the transactions of the Federal Reserve, and his findings will come out as surprising. While I will point out that Bernie Sanders has been affiliated with Ron Paul (although from complete opposite sides of the political spectrum), and both of them have been (more or less) attacking the Federal Reserve for years, it is still trustworthy information.
The Fed released a list of companies, which it provided emergency loans to during the financial crisis. Some very surprising names are on the list and not just the big banks or auto that many people think. Companies such as McDonalds, General Electric, Harley Davidson, and Caterpillar were all listed amongst the companies that received funding. Also listed in the category were the big names of both Toyota and Verizon. It isn’t just the major banking companies after all; at least that’s what you can assume if all of these companies did in fact receive a bailout as well.
In fact, while we could argue about the banks in general, it is far from fair to claim the Buffet and Goldman Sachs were the sole beneficiaries of some one-time, never-been-done-before and unheard-of service. In the information presented to us by Senator Sanders, Goldman received almost $600 billion in bailout funding. However, it is also important to compare that to some of the other companies that were listed in this report. Bear Stearns received close to $1 trillion, Merrill Lynch close to $1.5 trillion, Citigroup $1.8 trillion, and even Morgan Stanley received almost at $2 trillion dollars!
This is a significant amount of money that was more or less funded as free loans by taxpayers. However, the main point that I am trying to make right now is not who is the bad guy in all of this; it is simply to say that a great deal of companies received free government funds in the form of bailouts. So, please, with all of this in mind do not criticize Warren Buffet and Goldman Sachs for taking part in the bailout. For as you can see with some of the information brought forth by Senator Sanders recently, a lot more companies ended up taking the handouts than many people probably would have even imagined. In fact, a large sum of money as listed by the Senator’s information, even suggests that the Fed passed out bailout funds to two European Megabanks: Deutsche Bank and Credit Suisse.
While there is still more information yet to come, it is important to realize that whether or not the actions of one individual can be applauded or frowned upon (be my guest, take your own side on this one), please do not chastise one individual or one company when the real stories of many, many more are coming out all the time.
I would venture to say that many people who criticize Buffett for his Goldman deal own some of the companies that received a bailout courtesy of Ben Bernanke.
Disclosure: no position in any companies mentioned in the article
http://www.valuewalk.com/
Warren Buffet has been criticized for purchasing Goldman Sachs. It wasn’t so much that many individuals (a great deal of which are usually the uninformed and only believe what the media tells them) actually ended up disliking Goldman Sachs this time around, either. A lot of people seem to be upset that Warren Buffet purchased a company that has recently gotten a bailout from both the Federal Reserve and the U.S. Treasury. Their argument is why should a business receive aid just so that it can get back on its feet and then be gobbled up by a big show investor?
I think we would all be on soup lines if not for the actions of the Fed and Treasury in late 2008 and early 2009, but that is a topic for another time.
I think that most people are simply upset at the overlying idea that the bailout existed in the first place, yet they don’t really know of all of the companies out there that ended up receiving a bailout in the first place. In fact, Senator Bernie Sanders of Vermont has recently run an audit on the transactions of the Federal Reserve, and his findings will come out as surprising. While I will point out that Bernie Sanders has been affiliated with Ron Paul (although from complete opposite sides of the political spectrum), and both of them have been (more or less) attacking the Federal Reserve for years, it is still trustworthy information.
The Fed released a list of companies, which it provided emergency loans to during the financial crisis. Some very surprising names are on the list and not just the big banks or auto that many people think. Companies such as McDonalds, General Electric, Harley Davidson, and Caterpillar were all listed amongst the companies that received funding. Also listed in the category were the big names of both Toyota and Verizon. It isn’t just the major banking companies after all; at least that’s what you can assume if all of these companies did in fact receive a bailout as well.
In fact, while we could argue about the banks in general, it is far from fair to claim the Buffet and Goldman Sachs were the sole beneficiaries of some one-time, never-been-done-before and unheard-of service. In the information presented to us by Senator Sanders, Goldman received almost $600 billion in bailout funding. However, it is also important to compare that to some of the other companies that were listed in this report. Bear Stearns received close to $1 trillion, Merrill Lynch close to $1.5 trillion, Citigroup $1.8 trillion, and even Morgan Stanley received almost at $2 trillion dollars!
This is a significant amount of money that was more or less funded as free loans by taxpayers. However, the main point that I am trying to make right now is not who is the bad guy in all of this; it is simply to say that a great deal of companies received free government funds in the form of bailouts. So, please, with all of this in mind do not criticize Warren Buffet and Goldman Sachs for taking part in the bailout. For as you can see with some of the information brought forth by Senator Sanders recently, a lot more companies ended up taking the handouts than many people probably would have even imagined. In fact, a large sum of money as listed by the Senator’s information, even suggests that the Fed passed out bailout funds to two European Megabanks: Deutsche Bank and Credit Suisse.
While there is still more information yet to come, it is important to realize that whether or not the actions of one individual can be applauded or frowned upon (be my guest, take your own side on this one), please do not chastise one individual or one company when the real stories of many, many more are coming out all the time.
I would venture to say that many people who criticize Buffett for his Goldman deal own some of the companies that received a bailout courtesy of Ben Bernanke.
Disclosure: no position in any companies mentioned in the article
http://www.valuewalk.com/
