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Thursday, February 7, 2008

The Toxic Kool-Aid

Items of interest:

Warren Buffet: U.S. woes 'poetic justice' for some banks --

The problems being experienced by the U.S. financial sector are in fact "poetic justice" for some of the financial institutions involved, Warren Buffett said on Wednesday.

"It's sort of a little poetic justice, in that the people that brewed this toxic Kool-Aid found themselves drinking a lot of it in the end," he said in reference to some of the large investment banks that were involved in designing and marketing complex investments that have soured in recent months and have generated billions in losses.

National Post (Canada): Buffett loves that Loonie, Buffett: No economic bailout necessary (Interview with FP), Wit and wisdom of Omaha's sage

Globe and Mail (Toronto): Buffett sitting on his wallet

Canadian Press: Oracle of Omaha Warren Buffett says U.S. dollar likely to continue to decline

CBC: Warren Buffett says recession wouldn't change way he operates

Telegraph (UK): Warren Buffett blames banks for meltdown

Bloomberg: Buffett Sees No Credit Crunch, Forecasts Lower Dollar

Business Wire: audio of Buffett remarks. video: YouTube

The EconomyCNBC:
Pending Home Sales Skid More Than Expected -- Pending sales of previously owned homes fell a steeper-than-expected 1.5 percent in December, pointing to more dreary conditions for the beleaguered housing market, a real estate trade group report showed.

The National Association of Realtors Pending Home Sales Index, based on contracts signed in December, dropped to 85.9 from 87.2. Economists were expecting pending home sales--which are a key gauge of future home sales activity-- to fall 1.0 percent. [...]
Subprime Woes Just Beginning, PwC Chief Warns
-- Nonfinancial companies will be hit next, says DiPiazza. And some, like Bristol-Myers, Ciena, and Lawson, are proving his point.

The next wave from the subprime mortgage crisis will flow past lenders and homebuilders and strike nonfinancial U.S. companies with forced write-downs, the chief executive of PricewaterhouseCoopers warned.

Samuel DiPiazza, chief executive of the Big Four accounting firm, pointed out that many nonfinancial companies were exposed through securities in their own investment portfolios, according to a Reuters report.

"It's not just in banks," DiPiazza said. "These securities sit in cash equivalent accounts of industrials; they sit in investment portfolios of pensions. We are having to deal with this with thousands of companies, not just a handful of big banks." [...]
Paulson sees alliance fixing more subprime loans -- Treasury Secretary Henry Paulson said on Wednesday that he believes data due later this week will show that "a good number" of subprime borrowers are being helped by a mortgage industry alliance to modify their home loans. [...]

Calculated Risk

MishTalk - Mike Shedlock

Paul Krugman - NY Times

The Big Picture - Barry Ritholtz

naked capitalism - Yves Smith

Pragmatic Capitalism

Washington's Blog

Safe Haven

Paper Economy

The Daily Reckoning - Australia