Leland C. Brendsel is accused of presiding over accounting manipulations and running Freddie Mac in a reckless manner. Buffett, one of the most successful and revered investors, sold a huge stake in the mortgage funding company before the manipulations came to light, and the government wanted him to explain why.
You see, Buffett sniffed out Freddie Mac’s problems as its CEO predicted an earnings growth pattern that was foolish and unattainable.
Buffet said he became troubled when Freddie Mac made an investment unrelated to its mission. He wasn’t clear on the specifics but said he “didn’t think that made any sense at all” and “was concerned about what they might be doing . . . that I didn’t know about.”
Achieving “mid-teens” earnings growth “seemed to become more and more a mantra of the organization,” giving him greater cause for concern, Buffett said.
So now the government is using Buffett to testify in its case against Brendsel.
Downey suggested that Freddie Mac properly tempered its projections, pointing to warnings in an annual report that its earnings could be affected by various adverse developments. Buffett said the cautionary words were merely legal boilerplate.
“I would not be particularly impressed by them,” he said.
Buffett, seeing a cockroach in the kitchen, started liquidating his shares, sensing that cockroaches don’t tend to hang out alone.
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When the market process is relatively free there will always be entrepreneurs who are alert to the true signals. They will be the ones who sweep away the smoke screens created by the interventionists (who use the smoke to divert resources surreptitiously into their coffers). Warren Buffett is one of the most well known entrepreneurs because he has been very successful at finding the underlying ‘truth’ that is being conveyed in the market.
Not all market entrepreneurs are also entrepreneurs of the social aspect of an ever-advancing civilization. Does Warren Buffett have the same keeness when it comes to recognizing the difference between a statesman and a politician? Does Warren Buffett understand the historical consequences of missing the opportunity to use his influence to educate others about the significance of electing a principled statesman versus an ego-driven interventionist (in other words, all the other politicians)? If so then he will say: ‘Ron Paul is unquestionably the best candidate for President.’ Not only will that be a true statement about our current period in history but it will be a true statement for the entire history of our nation.
It’s rather surprising that Buffet doesn’t have a more positive view of the market (generally speaking.)
This is just one more example of why Buffet is a genius. He is incredible at picking winners and dumping losers.
The government wants to know why he was smart enough to dump Freddie Mac? Those who believe in Government are too dumb to ever figure anything out. They use force to get their way and accuse everyone because “a thief thinks all men steal.”
Antony,
why are you surprised that Buffet is not more optimistic about the market? He has been sitting on about $40billion cash, buying silver, shorting the dollar, and calling America “Squandersville” since about 2002.
Hah, I just find it odd that he hasn’t dug any deeper to discover why the system is so problematic.
Anthony said:
I just find it odd that he hasn’t dug any deeper to discover why the system is so problematic.
He thinks the system is so problematic because “the other” team of thugs instead of his favorite team of thugs occupies the White House.
Having just completed viewing the entire website that is offered at http://www.Ronpaul2008.com I am a believer in a new way of looking at my country’s future. The “fresh” look into the politics of our country, although it is apparently the same views that help to formulate our constitution, are wonderful. It is time for the “r evol ution”
Thank God.
Eric Lansing,
“He has been sitting on about $40billion cash, buying silver, shorting the dollar…”
I’m interested in finance and want to understand better what it means to hold $40B cash whilst also shorting the dollar. Is this cash denominated in something other than the dollars being shorted?
Thanks.
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