James Lewis

Will Obama Replace Geithner with Dimon?

Come on Mr Richman. We know you feel strongly about China's trade practices. But believe me putting Warren Buffet at the healm is not going to help bring trade deficit down. Can you imagine the conflicts of interest here!!

I figure Obama is going to replace Geithner because he has no real guaanxi to talk about and quite frankly knows f**k all about how to get the Chinese to play a little fairer. I also figure that Obama is more interested in opening up China's financial system as apposed to trade wars. Who better to do this, than a banker? One who has spent time in China.

If it was upto me I think I would put someone from Asian or African decent. White people antagonise the Chinese far too easily.
Especially Amercian white people.

Questioning Berkshire Hathaway's BYD Purchase: Long-Term Economics?

Ha Ha - BYD have good battery technology.

No they dont!
There claims are false. They do not even have an assembly line in their electric car manufacturing centre in Tianjin. Also local electric car companies are all looking at buying from Japan as domestically Lithium Battery production of this scale is years away.

There aim is to purchase the technology.

In terms of competitive advantage, in China BYD will be able to take very large market share simply because they will be protected by government protectionist policies. They will be the best of a bad bunch and will be able to produce the cheapest with all the back door subisidies, tax breaks. I think its highly unlikely they will be able to penetrate international markets because the foreign governments have finally woken up and will protect their markets with trade barriers. Also clearly BYD cars are still not upto international crash tests and have no chance of passing for a long time. This will allow the Nissan's, Mitsubishi's, fords and GM's to gain marketshare early on with agressive market penetration. But the chinese market should be quite large, especially due to the reform of petrol prices.

I believe that Warren has also invested in Mitsubishi Electric Cars as well. He is just hedging his bets buying into different markets. Makes sense as he believes in the electric car revolution.

My bet is the government will block the investment and BYD are now just using his purchase as a put option for the share sale they are preparing. The government never likes to give profits to foreign enitites so easily. In effect Warren is sitting on a $770 million profit if he is allowed to buy at the price he went in at.The only way he will get this through is if he allocates a lot of money to the right people.

My advice to Warren is go to silicon valley, Japan or Switzerland and find high technology battery manufacturer. But the company outright. Then go back to BYD and promise technology transfer in return for his original 25% stake offer. This is the only way you are going to getting a piece of the pie in China

Buffett's S&P 500 Puts: Big Blunder?

There are many ways of analysing this move.
We don't know all the information so its very hard to deduce why he has put this trade on. And if it is the blunder of his life, or if he's the smartest man in the room.

He has been a little bullish for the past 6 months.
'be greedy when others are exremely fearful'
So this could show that he has made a huge 'short term' (not long term) blunder.

But lets all be honest, we dont know all the facts.
Those puts could have saved the blance sheet of another company in many ways. Saving this other company may have been very beneficial to Buffets holdings, well worth the short term pain. There may be undisclosed terms to the trade, which could have Buffet hedged in different ways. THE TRADE COULD BE POLITICALLY MOTIVATED.
It would sure make sense for the Treasury to take on the risk using Buffet as a conduit to save a 'company too big to fail'

We should not pretend we have the faintest clue about the back workings of this trade. Remember the rules have changed because of this financial crisis and the US Government/Banking Spiders are using very shady and unconvetnional tactics to keep things a float.
And Buffet is very very connected.....Very Political.....

I think he is smarter than we are giving him credit for.
Play with this example...

He talks the market up by being bullish (when he's bearish)

Puts this huge trade on (ultimately from self interest benefiting him more in some way than the short-term pain).

And long-term if USA does not collaspe, the trade will be up.
Especially as the USA has to inflate itself out of the deficit it has.

No one loses.....