Daily Archives: March 3, 2008

John Gapper

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Of what does the above picture remind you? Read more

John Gapper

Warren Buffett also has some harsh words in his annual letter (see below) about the creditworthiness of state governments in the US. Perhaps he is simply talking up his latest business venture in insuring municipal bonds, but he does not, as Floyd Norris notes, mention that.

Whatever his motives, the New York Times has a piece this morning on how state governments, including California, are starting to agitate for their bond ratings to be raised because they think they are not being given adequate credit, so to speak, by ratings agencies.

It is certainly a change to find an argument that ratings agencies have been too strict, rather than too lax, in their assessments of borrowers. Yves Smith, however, points out that there is a conflict of interest for agencies because they get paid twice when governments have to get insurance to fix their ratings.

(Correction: I am told by Standard & Poor’s that it only gets paid once and that it adjusts the rating without charge if an issuer gets its bonds insured.)

So who is right, California or Mr Buffett? Read more

John Gapper

Warren Buffett’s annual letter to shareholders of Berkshire Hathaway is, of course, always worth reading. This year’s does not contain too many surprises but there are plenty of valuable insights and good jokes.

I particularly like his comparison (at the top of page 9) of corporate acquisitions that go wrong to the line in a song by Bobby Bare (politically incorrect though it is): Read more

John Gapper

A friend once told me a story about a friend of his who was facing some tough decisions in his life. He was seeing an analyst and, at one of their sessions, he explained that he felt under pressure.

The analyst listened to the various choices he was facing and how hard it was to make up his mind. Then he paused and asked: “Well, have you considered doing nothing?”

I thought of that story, which always seemed to me to have relevance for a lot of us – including corporate executives – when I read in the New York Times on Saturday about a study of goalkeepers and how they react to penalty kicks. Read more