BxCapricorn

Berkshire Hathaway Credit Risk, Index Puts Are Overblown Worries

Here's the conspiracy....A small group of powerful Wall Street players (i.e. Goldman Sachs), get an agent in place, Secretary of the Treasury Hank Paulson, and realize that the impending sub-prime Ponzi scheme will eventually unwind all capital, taking down their competitors and providing them with an opportunity. It goes like this....the panic following an unwind will provide the "banking sector" (i.e. Goldman Sachs) the ability to secure federal funds (taxpayer money), in large supply, no questions asked. The bank (GS) hoards the cash, and even pays out dividends and bonuses (audacious) while doing little to stop the mechanism that is taking the stock market down foreclosures. The panic will also allow investment banks the excuse to initiate hedge fund loan calls and implode their portfolios. This allows companies like GS to drive down stock prices. The stock price panic allows those with money, especially borrowed money of huge amounts ($700B? but a portion will do) to buy these stocks for pennies on the dollar, with other people's money, recovering their portfolios for generations to come. Genius.

This explains why everything related to the stock market seems strange and unpredictable. The manipulation relies on contrarian market movements. The normal players like Kerkorian, Adelson, Sovereign Wealth Funds, Buffett, Pickens, Falcone, Gendell, etc. will lose money, not because their research is flawed, or their supply/demand models are wrong, but because they are acting as expected, and the expectation fuels the mechanism upon which the conspiracy is based. Interesting, eh?