Nate C

Is Warren Buffett Missing Something?

Peak oil is a scam thought up by Shell and the other oil companies to create artificial scarcity. It has worked perfectly as we now see $120 oil. The truth is that the world has trillions of barrels left. It is that the oil companies refuse to invest in new projects like the trillion+ barrels beneath Colorado and offshore Alaska. Forget ANWAR.

Berkshire Hathaway's Derivative Play

Buffett is hardly speculating on these derivative contracts. He only has to pay up if the indexes are lower than they currently are between 2019-2028 which is highly improbable considering the inflation factor. Unless you believe in financial Armageddon, Buffett will make a lot of money off these contracts. Unlike other counter parties Buffett does not have to put any of the premium money into an escrow account, but instead gets to invest the money freely for 11-17 years. No other institution could get this kind of sweetheart deal. I guess the counterparty feels that Berkshire's AAA rating is good enough.

On another topic, who would enter into such a puerile contract with Berkshire that the major stock indexes will be lower than they currently are 11 years from now? I have heard it was a few insurance companies who were hedging.