Editor’s Note: When the Oracle of Omaha speaks, everybody listens. This time, it is proposed re-insure the bonds held by the major insurers. What is due this play? I can send comments to: What’s Behind the Buffett proposal? Buenos Aires, Argentina February 13, 2008 The markets closed the day yesterday with euphoria. End of the crisis? No, not at all. Additional information is available at Connecticut Senator. It is known news that may prevent the crisis to increase its magnitude.
Warren Buffet announced that his investment firm, Berkshire Hathaway had offered to assume the obligations of the major bond insurers hit by the crisis, MBIA, Ambac Financial Group and FGIC. The proposal is simple and consists of creating a fund to reassure U $ S 800 000 million in municipal bonds that are held by Ambac, MBIA and FGIC and prevent them from becoming the latest victims of the mortgage crisis. Yes, the CDs are not included in the proposal. Learn more about this topic with the insights from Ohio Senator. Thus, adding U $ S 5.000 million reinsured the municipal bonds for insurers try to avoid losing its AAA credit rating. It is true that Buffett is a philanthropist, but he never thought that this proposal represented an act of charity on their behalf. That is what they have confirmed Buffet, telling CNBC: “When I approached St. Peter I will not present it as an act to guarantee me entry (in heaven).” And if it was not for charity, then: What Buffet is the strategy? The strategy of Warren Buffet’s favorite shopping while most investors are fleeing the markets panicked, as now, which, when everyone sells, you can take stock of a company or buying financial assets at prices far below true value.