Warren Buffet Watch: Woodstock for Capitalists (The Berkshire Hathaway Annual Meeting) and everything else on the Buffet!!

• CNBCs Live Blog of the Berkshire Hathaway Annual meeting 2008 May 2-4
• Publicly-traded U.S. stocks owned by Warren Buffett's holding company - BerkshireHathaway Portfolio Tracker
• FORTUNE Article by Warren Buffet about The US Trade Deficit and how American Assets are being increasingly owned by foreign wealth
• The Tax System is Unfair - Warren Buffet issues a Public Challenge to Fellow-Billionares and gets deathly silence in reponse Nov 9 2007 from CNBC
• Justin Wolfer Asst. Professor of Business & Public Policy at Wharton Univ and Blogger at Freakonomics tries the Warren Buffet tax challenge! - May 1, 2008 NY Times Blogs
• Charles Munger VP of BH "Stupid Things caused Financial Crisis" from San Jose Business Journal

Harpers Magazine: BUBBLES - Understanding Speculation and Hyper Price Inflation

Harpers Magazine The Next Bubble by Erik Janszen - Recommended Reading for All Especially Uncle Ben "The Fed" Bernanke!!
CallMeASeeker : "They Know Nothing" (CNBC clip via Google/Youtube) was Jim Cramer's now immortal take on the Fed and I could not agree with him more. The Fed is clearly clueless and needs a major update in what I will call Tactical Economics and Technology to actually meet its charter. In this absolutely brilliant article by Erik Janszen of Harper's magazine the yawning gap between the Fed's Theories vs Market Realities and its effect on "asset price hyperinflation" are clearly explained. Bubbles have become the Norm rather than the exception and The Fed does not yet understand how to really handle this. This is what Buffett was alluding to as well in the 2002 BerkshireHathaway Annual Report where he termed mortgage backed derivatives as Financial WMDs(See Report Page 14 ). These financial instruments need to be regulated to an extent where they do not wreak the kind of havoc we see today. The days of using interest rates as leverage to control inflation and the money supply are over. The policy and regulatory controls of the Fed should be reviewed and overhauled. The Fed should look to state-of the art Hardware and Economic Model-based Business Intelligence to monitor and pre-empt dangerous fluctuations in the money supply, the credit/asset and securitization markets that can derail the global economy. The Technology is out there but this is not your boiler plate IT implementation and thats putting it mildly, this needs a Google like approach backed 100% by every branch of government concerned.
The Googles and Apples of the world have delivered gadgets, toys, search engines and Orkut but nothing that has come out of Silicon Valley has solved any of our real problems in the 2 most critical areas - energy and the economy. The IT industry needs to rise to the occasion and work with the economists of our time to deliver innovation that allows the Fed to monitor the economy.
For that to happen the IT industry's techno-whiz kids need to understand economics - period. As dry a subject as it is , it forms the very fabric on which American and global prosperity and peace depend. Mis-informed economic and monetary policy have caused much pain to the poorest amongst us. The food price bubbles in 2008 have already triggered a civil war in Haiti and rioting in Egypt. Economics and Monetary policy is the 10,000 pound gorilla in the room that we have chosen to ignore - and when we ignore something you can be sure our politicians and leaders will do the same. So start right here, Educate yourself ...Change comes from the ground up!! Vote Barack Obama 08 '

Harper's Magazine Feb 2008 Erik Janszen : The next bubble:Priming the markets for tomorrow's big crash - Absolutely Brilliant Article - A must Read!
"The dot-com crash of the early 2000s should have been followed by decades of soul-searching; instead, even before the old bubble had fully deflated, a new mania began to take hold on the foundation of our long-standing American faith that the wide expansion of home ownership can produce social harmony and national economic well-being. Spurred by the actions of the Federal Reserve, financed by exotic credit derivatives and debt securitization, an already massive real estate sales-and-marketing program expanded to include the desperate issuance of mortgages to the poor and feckless, compounding their troubles and ours.
"The crash, the Great Depression, and World War II were a brutal education for government, academia, corporate America, Wall Street, and the press. For the next sixty years, that chastened generation managed to keep the fog of false hopes and bad credit at bay. Economist John Maynard Keynes emerged as the pied piper of a new school of economics that promised continuous economic growth without end. Keynes’s doctrine: When a business cycle peaks and starts its downward slide, one must increase federal spending, cut taxes, and lower short-term interest rates to increase the money supply and expand credit. The demand stimulated by deficit spending and cheap money will thereby prevent a recession. In 1932 this set of economic gambits was dubbed “reflation.”
CallmeASeeker adds on May 03, 2008 :And you dont have to wait for long for the next bubble. Here's the kick-off :The Dallas Morning News - Rockefellers call for Exxon to invest in alternative energy

Uncle Ben Does the Two-Step! Annouces Quarter Point cut , Indicates Pause in Future

Fed cuts rates as economy slumps, hoping to stop recession CNBC April 30, 2008
" Chairman Ben Bernanke led a divided Fed, in an 8-2 vote, in slicing its key rate by one-quarter percentage point to 2 percent.
"The substantial easing of monetary policy to date ... should help to promote moderate growth over time and to mitigate risks to economic activity," the Fed said, strongly hinting that more cuts may not be needed.
Although the Fed didn't take another reduction off the table, a growing number of economists believe the central bank is winding down its rate-cutting campaign. Barring another hit to economic growth, they believe rates probably will stay where they are -- perhaps through the rest of this year -- in part because the Federal Reserve is concerned that further cuts could join with galloping energy and food prices and spread inflation dangerously higher.

The Fed's Bender - Commentary on the Uncle Ben's Inflation Bender 2 days before the rate cut from the Wall Street Journal Opinion Forum April 28, 2008
"Eight months into the Fed's most recent rate-cutting spree, the evidence is overwhelming that it has been a major policy mistake. Aggressive rate cutting – taking the fed funds rate to 2.25% from 5.25% last September – has had little effect on the banking crisis it was supposed to ease.

...the Fed's decision to open the general monetary spigots has inspired a global commodity boom unlike any since the 1970s. Oil has climbed to nearly $119 a barrel today from $70 in late August, a 70% increase. Farm and other commodities have seen a similar surge, with corresponding increases in food prices leading to shortages and riots in Egypt and other places, and to rice hoarding even in Southern California.
The popular media explanation is that this price surge is a result of rising global demand, greedy speculators and human profligacy. All of a sudden, without warning, the world is said to be running out of food. After 30 years in intellectual hibernation, Thomas Malthus and the Age of Scarcity are back in style."

Fed Up! Has the Fed had enough?

Treasury eyes stronger powers for Fed - FinancialTimes (By Gillian Tett in London and Krishna Guha in Washington) April 29, 2008:

The Federal Reserve could use proposed new regulatory powers to try to stop credit and asset market excesses from reaching the point where they threaten economic stability, the US Treasury said on Tuesday. David Nason, assistant secretary for financial institutions, said the Fed could even use its proposed “macro-prudential” authority to order banks, hedge funds and other entities to curtail strategies that put financial stability at risk. By “leaning against the wind” in this way, the US central bank could “attempt to prevent broad economic dislocations caused by potential excesses”, he said. His comments come amid debate inside the Fed as to whether it should try to do more to contain asset price bubbles, following the housing and dotcom busts. Some see enhanced regulatory powers as a better tool for this than interest rates."

Also See from CNN Money -Fed could burst oil's bubble :

"Central bank rate cuts have devalued the dollar, fueling the rise in crude prices; but if rate slashing stops, oil's rise may ease.One factor that has sent the dollar down and oil up recently has been the Federal Reserve's months-long round of rate cuts. In an attempt to stimulate the ailing U.S. economy, the central bank has cut rates by three percentage points since September. But the rate cuts are also inflationary, weakening the dollar and sending oil prices higher. The weak dollar is a major detriment to the price of oil," said Stephen Schork, publisher of the energy industry newsletter The Schork Report. "It's keeping prices artificially high."

OPEC President Says Oil Could Hit 200$ - Cites Weak Dollar and Global Insecurity

Excerpt from Financial Times April 28, 2008 by Carola Hoyos in London:

"Opec’s president on Monday warned oil prices could hit $200 a barrel and there would be little the cartel could do to help.The comments made by Chakib Khelil, Algeria’s energy minister, came as oil prices hit a historic peak close to $120 a barrel, putting further pressure on global economies. His remarks suggest Algeria wants Opec to continue to resist calls by US and European leaders for the cartel to pump more oil to help ease prices. But Mr Khelil blamed record oil prices on the weak dollar and global political insecurity. " "He added: "The prices are high due to the recession in the United States and the economic crisis, which has touched several countries, a situation that has an effect on the value of the dollar. Each time the dollar falls 1 per cent, the price of the barrel rises by $4 and of course vice versa.”
Also See the BBC Article on the same news: Opec warns oil could reach $200
CallmeASeeker notes :The BBC article chooses to mention the dollar only in passing and focusses mostly on the oil supply side!! Whats the Fed Thinking about this :
From CNN- Fed Expected to Cut Fed Funds Rate this Week to 2%

The Oracle of Omaha - Warren Buffett in 2002"Derivatives are Financial WMDs..." Amen! Sir Amen!!

Via myprops.org From Berkshire Hathaway's Inc. 2002 Annual Report:
Direct Link to Report at BerkShire's site - see page 14
"Derivatives:Charlie and I are of one mind in how we feel about derivatives and the trading activities that go with them: We view them as time bombs, both for the parties that deal in them and the economic system. Having delivered that thought, which I’ll get back to, let me retreat to explaining derivatives, though the explanation must be general because the word covers an extraordinarily wide range of financial contracts. Essentially, these instruments call for money to change hands at some future date, with the amount to be determined by one or more reference items, such as interest rates, stock prices or currency values.
The range of derivatives contracts is limited only by the imagination of man (or sometimes, so it seems, madmen). At Enron, for example, newsprint and broadband derivatives, due to be settled many years in the future, were put on the books. Or say you want to write a contract speculating on the number of twins to be born in Nebraska in 2020. No problem – at a price, you will easily find an obliging counterparty.
Errors will usually be honest, reflecting only the human tendency to take an optimistic view of one’s commitments. But the parties to derivatives also have enormous incentives to cheat in accounting for them. Those who trade derivatives are usually paid (in whole or part) on “earnings” calculated by mark-to-market accounting. But often there is no real market (think about our contract involving twins) and “mark-to-model” is utilized. This substitution can bring on large-scale mischief. As a general rule, contracts involving multiple reference items and distant settlement dates increase the opportunities for counterparties to use fanciful assumptions. In the twins scenario, for example, the two parties to the contract might well use differing models allowing both to show substantial profits for many years. In extreme cases, mark-to-model degenerates into what I would call mark-to-myth.