We are bhc investment. A libertarian. Against big governments and anti-war. A proponent of free market capitalism, honest money, and human rights.
The great financial crisis of 2007/2008 was the result of the reckless credit expansion by the Federal Reserve [3], in the sole interest of enriching Wall Street bankers and the mortgage industry. As the crisis began to unfold and financial markets worldwide came tumbling down, the crooks who were not quick enough to get the hell out -- the very best had long packed their bags of money and left the markets they toxicated so deeply before the turn -- drew up a cunning, simple plan. One that went in 3 simple steps:
- They sent their man at the Treasury, Hank Paulson [1, 2], former CEO of Goldman Sachs, to congress and held them hostage behind closed doors for $700 billion of bailout money -- Yes, Hank actually had the b**** to ask for that money while his very job at the Treasury was to predict and prevent systemic risk in the financial system. "Give me $700 billion or the entire financial system will crash, the whole nation will loose its jobs, and we politicians will be the ones to blame." The political party which was eager to gain power in the upcoming election voted for the bailout to make themselves look as if they cared about the people. The party in power voted for the bailout to save their asses.
- They needed a public figure in order to restore confidence in the financial system. A well-known, well-respected man who the people and investors worldwide knew and loved. Someone who's commonly regarded as the man who's always right in the investment world -- Warren Buffett. It was crucial to have Buffett on board, because he represented the very important vote of confidence. But how the hell can they convince Buffett to play ball? Well, it was easy. Buffett didn't see the Financial Pearl Harbour coming. He had got too much of his skin in it as well -- Buffett was heavily invested in financial and insurance businesses. A $700 billion bailout of Wall Street will effectively bailout Buffett himself [4]. To sweeten the deal further, Paulson ordered Bernanke to save Goldman and get rid of Goldman's main competitor Lehman Brothers, in the name of preserving the financial system! In the process of saving Goldman, they cut a stake in Goldman to Buffett. When the rest of the world saw Buffett investing in Goldman, you can pretty much guarantee a stabilisation of the financial system. Paulson can now leave his job. Get a new puppet, Timothy Geither, the tax cheat who had a history of making a mess in Thailand during the Asian financial crisis 10 years ago, to replace him.
- Now that the people's savings had been robbed. The few private bankers who left before the shit hit the fan came back to the table. This time, they made a bet with Buffett, an aggressive derivative bet: that major stock markets worldwide will not recover back to the equivalent of Dow 13,000 in the next 15 to 20 years [6]. Buffett who thought he had done his homework decided to bet against. Months later, Buffett restructured his derivative bet [7]. Weeks later, Buffett wrote an article warning the world of the enormous risk of Greenback Emission [8], AFTER he had been one of the few to benefit from the $700 billion of Greenback Emission earlier! Should stock markets worldwide face the next wave of tumbling down, the leveraged bet will surely make even the greatest investor of all time to sweat. His entire fortune is now on the line. Expect Buffet to say buy, buy at Dow 9,000 [5]!
A simple and radical view. You heard this first here, right here at bhc investment. We at bhc investment believe that the part Buffett had played during this crisis had already made a dent in his reputation. By supporting resoundingly the use of new money creation to bailout those who made the wrong decisions is literally stealing from the poor. The losses should have been absorbed by the capitalists who profited during the boom.
To be continued...
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References:
- Keiser: "Goldman Sachs are Scum"
- Paulson: Socialising the Losses
- Anatomy of the US Fed
- Buffett's Betrayal
- Boon vs Warren Buffett, Part I
- Buffett's huge derivatives bet proves costly
- Buffett's Secret Weapon: Derivatives
- The Greenback Effect
- Boon vs Warren Buffett, Part I
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