New Bubble Identified

Now that Alan Greenspan's credit bubble gift to Wall St, which led to the not so small technology bubble and the monster housing bubble, has come to an end the search has been on for a new one. Ben Bernanke's attempts (lowering interest rates again to cure the problems caused by low interest rates - years of studying economics and that's all he can come up with) have only provided a small commodity bubble gift to Wall St, though managing to get as much money as possible out of everyone for oil, food etc, has, when added to all of the other misallocation of scare resources of the previous bubbles, finally managed to destroy wealth to such a degree that a recession is now unavoidable. In such a environment, unfortunately for Wall St, the commodity bubble has had to deflate or at least stop going up.
The only action left in town then for people operating in the market, now that they and all the assets they held were overpriced, was to sell themselves short and they've happily been making money out of that for quite some time. Unfortunately the long term prospect for making serious easy money for the Wall St financiers is not so good as eventually there'll be none one left to short except themselves and the investor who really wants assets to go up and not down might begin to not believe their slick snake oils sales pitches.
Something new was needed and it couldn't come from the fed any longer as Greenspan and Bernanke have really killed that golden goose. A new bigger fatter goose was needed this time and the obvious contender was the US government itself. So the new game in town is to identify the companies whose stock prices have rightly been hammered by the market (it is efficient in the medium term) which will be bailed out by the US governement and buy them. There's so much money in the pot this time and the good thing is, like the commodity bubble, it puts its hands in everyones pockets. The only flaw in the plan is if the US government won't come through but that is very unlikely. As long as the not doing the bailouts is made look so scary then the politicians came make a fuss but say they had to do it for the national interest. The wheels are in motion:

The billionaire investor said last Friday was "an economic Pearl Harbour" and that the USD700 billion-plus rescue package being negotiated is "absolutely necessary" after his Berkshire Hathaway group said it is taking a USD5 billion stake in troubled investment bankers, Goldman Sachs.
"I am betting on the Congress doing the right thing for the American public and passing this bill,'' Buffett said.

Buffett - a man of no sentiment buys into Goldman

When a child of six is wondering how to make profit out of selling chewing gum alarm bells must surely be going off. Having read an extract of Warren Buffett's official autobiography, where this story was presumably used to show the child genius, like Mozart writing a symphony, it finally came clear to me what has long been bugging me about this odd man. There's no doubt he is the greatest trader of them all rarely not turning one dollar into three but it's clear he's a man of completely no sentiment where the return to his shareholders is the only thing no matter what the external costs to society in general or even his own shareholders in the longer run.
I'm currently driving through the Southern States of Florida, Georgia and Alabama and there's hardly anything left in the South that is older than 20 yrs; the rest is just fast food outlets and mall clusters. You have to drive around for quite a long time, off the main highway of course, with your eyes peeled like a man on point in Vietnam, to find a diner that is not the Waffle house chain, BK, Wendy's or McDonalds. The lack of choice is striking when one considers how one of the great arguments for capitalism is the choice of consumer goods it offers (not that these oligarchic food franchises are pro competition – their main aim is to eradicate the competition). Mobile Alabama has quite a bit left in comparison to the rest (except Savannah which also has some really beautiful parts) so it really stands out - it's makes you wonder at what they must have destroyed over the years. But when the Buffett mentality is at work sentiment doesn't come into it in the slightest. The beautiful architecture and history of his country would never have crossed his mind when making a business decision for his company. It's simply what brings the biggest return over the long run to my shareholders. Everyone should drink Coke and buy it in Tesco with no other possibility and he’d be really happy.
Now they have finally realised that it may be good business to save some of the old stuff and it's kind of sad when you pass into an old town which has part of it labeled a historic district and there are about ten old 1950s and earlier style buildings that you'd remember from the movies left. They look pretty but of course are ringed by the generic outlet rubbish which makes this most beautiful country look virtually the same now coast to coast.
Today during America’s threat of financial disaster, according to ex Goldman Sachs CEO Hank Paulson, Buffet is exhibiting the same behavior or in other words he sees it simply as an opportunity. Everyone knows well that Goldman Sachs with their animal pit rank and yank policies (all be it in an environment made possible by Greenspan), which encouraged the massive deals to get the maximum price for every asset, were well at the center of the massive over production of financial assets to real assets (reckless trading which is a criminal offence in many countries). They were at the center of the financial threat to Buffet’s beloved America (and of the huge corporate payouts and bonuses he has long criticised). Yet when he could have intervened before and did not, he has just intervened by buying into Goldman Sachs. He saw Phil Gross at Pimco prosper by buying into Fannie and Freddie and then whine that a bail out was needed from the tax payer. Despite loving America Buffet knows that Government money is there to buy the rubbish debt and Goldman are one of the last investment firms standing to be bailed out and he wants a bit of the action.
With patriots like that what country need enemies!

Paulson rides to the rescue

Just when it looked like the end was coming for Goldman Sachs after their years of telling the world how to make money from the high temple of the free market, Hank Paulson comes to the rescue with a bag of tax payers’ money. Surely he must want to lock up the Chairman of Goldman Sachs who allowed this foolish and stupid, yes very, very stupid, leveraging happen during the credit bubble of 2001 to 2005? But how can I say Goldman Sachs are stupid? No I must say what everyone’s says when talking of Goldman Sachs - they are the cream of the crop, the cleverest off them all. Now that my conformist duty has been carried out I can return to Paulson's anger at the Chairman of Goldman who allowed all this to happen. Well that shouldn't really be pointed out as he was the Chairman up until 2005 and he's using the tax payers money to clean up the mess he created and save the bank he loves so much. Well they mightn't actually be that clever but they are cute enough and the American people are the stupid ones to allow him and the rest of his charlatan pals at the bank, who've been involved in this legalised heist that's been poisoning the moral fabric of the world, get away with it.