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Berkshire Takes Accounting Rules Into Its Own Hands, Tells SEC To Stuff It
A new just released stunner discloses the unprecedented level of hypocrisy attained by Warren Buffett, for whom apparently accounting rules are swell, except when he actually needs to follow them. Reuters has just announced that the U.S. Securities and Exchange Commission questioned Warren Buffett's Berkshire Hathaway in the second quarter on why it was not writing down large losses on shares in Kraft and US Bancorp, but the company insisted its accounting was right. The issue arises out of $1.86 billion in "unrealized" losses in Kraft and USB, which had a duration of more than 12 months, and should have thus been written down, as is required of most non-monopolistic companies which believe the world revolves around them. Berkshire's response: "We believe it is reasonably possible that the
market prices of Kraft Foods and U.S. Bancorp will recover to our cost
within the next one to two years assuming that there are no material
adverse events affecting these companies or the industries in which they
operate." In other words, let them eat cake - we will determine our own impairments, thank you very much, aka, SEC guidelines are for chumps, and Warren makes up his own accounting rules on the fly. This is especially true when it is a question of the ponzi reverting to its mean, which it most certainly will courtesy of the Oracle's millions in embedded political financial lobby interests, and the fact that just like with the rating agencies, all of Berkshire's computers ref out if one assumes a decline in prices. Perhaps Mr. Buffett will be so kind to tell a fawning and mouth wide agape Becky Quick next time they are deep in the bowels of a rapidly amortizing NetJets asset, just how often he thinks that mark-to-market, revenue recongition, or the whole credit/debit thing, is also a completely irrelevant piece of accounting folklore, to be used when useful, and discarded when, well, not.
More from Reuters:
Berkshire (BRKa.N)(BRKb.N) on Monday publicly filed copies of a letter it sent to the SEC in May, answering questions from the regulator about its accounting treatment for those and other stock investments.
In an April letter, the SEC asked Berkshire why it was not recording write-downs on shares with $1.86 billion in unrealized losses, all of which had been in that position for at least a year.
Given the duration of those losses, the SEC said they appeared to be more than temporary and as such should have been written down.
In a detailed response, Berkshire Chief Financial Officer Marc Hamburg said most of the losses with more than 12 months' duration as of December 31 were concentrated in Kraft and U.S. Bancorp, shares it had acquired in 2006 and 2007.
Hamburg said that as of December 31, Berkshire determined both companies had enough earnings potential that their share prices would eventually exceed the original cost of the stock. It also has the "ability and intent" to hold the shares until they recovered, he said.
The only thing that may surprise one anymore about Berkshire, is that the company has decided never to pay taxes again, until such time as it determines it can afford to give some money back to the taxpayers which saved tens of billions worth of BRK investments from 2008 and before.
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papa warren has lost it long time ago, i am surprised the heirs did not have him locked up somewhere yet
He has been a longtime dickhead...
http://www.financialsensearchive.com/editorials/collum/2009/0129.html
*In particular, read the Lewis article linked within.
Alternate Scenario
Or Warren is a Penis Brain...
That is another name for Dick Head...
This is just too rich. Does the same priciple work in reverse? Can he tell the IRS that his profits aren't really profits because there's a reasonable chance he'll lose the money again over the long term?
Mr Magoo, you are too funny.
Mark to Wishes. This story should underscore just how fiction all balance sheets are. On a long enough time line all assets will recover right Warren?
Good thing Ben and the congress took care of that little nuisance known as FASB.
Reminds me of the scene in Cinderella man where his trainer was feining prosperity during the Great Depression and still living in his beautiuful apartment on a prestigious block cept when we peek inside the apartment was empty aside from a dining table and bed.
If we can't print prosperity screw it..just fake it.
$ 1.8 billion AFTER the accountants have already minimized it.
What does it matter. There's no fixing this fraud.
When you're talking $5+ trillion of suspect derivitives, 1.8 Bil looks like peanuts.
Walkin around money for ho's and bitchez.
As Bill O'Reilly would say:
"Fuck it..we'll do it Live!"
like everything else. didn't the master race master this...
http://beforeitsnews.com/story/234/159/Faking_News:_CIA_Assets_in_the_Newsroom.html
I haven't watched TV news in years. I suspect that it this is becoming a trend. It has become like Soviet Russia and Communist China where people don't believe the mainstream media. Spin control has been severely disrupted by the internet. The truth is out there, you just have to think for yourself.
FASB has given auditors so-called significant judgment when valuing assets, especially those MBS. The approval from FASB was given after 800 bankers gathered in Washington to press lawmakers to change the rules.
This begs the question, what is accounting?
Answer: What do you want it to be?
I think Charlie Munger needs to "suck it in."
Andy Xie: "The same people who caused the last crisis are still in charge. They'll get us into another. Iceland is taking its ex-prime minister to court for causing the banking crisis. Worse fates await the people who are causing the next crisis. China used to chop off the heads of its failing ministers at the capital's vegetable market. Maybe we should bring back the practice and globalize it."
Ha.
http://dailybail.com/home/andy-xie-if-you-print-a-trillion-ill-print-a-t...
Maybe.
But I like vegetables.
They only taste good when dipped in the blood of banksters and politicians.
That's a snack anyone can love.
So sad to see Buffet turned into or revealed to be a crook.
I would think that everyone, except the ethically impaired could agree on two simple accounting rules:
1) Law of Assets: assets are marked to the *LOWER* of acquisition price or current market price
2) Law of Liabilities: liabilities are marked to the *HIGHER* of initial credit or current market price
Simple, conservative, clean, fair.
except the ethically impaired
ain't that all of 'em?
Historical Cost and Fair Value accounting.
Nuff said.
I don't know if this has been recently updated, but it's an interesting take:
http://scopelabs.net/broke.php
...even sadder to see the SEC sit there and take it like a bitch from Papa Warren.
Hey Charlie Munger!
I don't have the slightest interest in breaking accounting rules. I like understanding what works and what doesn't in human systems. To me that's not optional; that's a moral obligation. If you're capable of understanding the world, you have a moral obligation to become rational. And I don't see how you become rational breaking accounting rules. Even if it works, you're a jerk.
YOU sir, are the jerk, you elitist douchebag.
Uncle Charles also thinks youre a douchebag for owning gold.
These two dirty old scoundrels would rob their own grandmother if it meant an improvement come earnings season. Scumbags.
Mark-to-myth has made its way into equity pricing.
Didn't SEC get the memo ??
Exactly. It's okay for the Banks, why not WB?
If he were still alive, not sure Howard would be too proud.
Berkshire is a fraud cult with a following that dwarfs Madoffs. Just look at how Buffet operates. If he loses money on a trade he buys the company. He can't admit to a loss due to his ego. He throws big Buffet shindigs. He greases palms to maintain connections. He presents himself as a kindly old man as he fleeces you. I dont trust that arsehole.
When you realize:
It's like an epiphany... you just go "AHA, I can fuck you over and you won't figure it out until it's too late for you". Moral corruption at its finest.
I'm shocked I tell, shocked, to find $1.86 billion of losses here...
Clearly Uncle Warren has a "Tell the SEC to Go Fuck Themselves" Fascist card in hand (issued by the WH "intelligence czar") and doesn't care if it's public knowledge or not.
Why is this process completely ignored not only by the MSM, but also many here on ZH?
http://www.businessweek.com/bwdaily/dnflash/may2006/nf20060523_2210.htm?campaign_id=rss_daily
Intelligence Czar Can Waive SEC Rules
Now, the White House's top spymaster can cite national security to exempt businesses from reporting requirements.
President George W. Bush has bestowed on his intelligence czar, John Negroponte, broad authority, in the name of national security, to excuse publicly traded companies from their usual accounting and securities-disclosure obligations. Notice of the development came in a brief entry in the Federal Register, dated May 5, 2006, that was opaque to the untrained eye.
ARE YOU SHITTING ME!!! Jeebus fucking hell... where do I hang my mother fucking towel because I give up on this shit. Honestly.. how does anyone without a brazillion dollars get to not have his ass corn cobbed.
Go on and add my name to another list because the American people should be storming the castle already.
It's quite simple, really.
You see, laws are legal.
Who makes the laws?
That's right, the organized criminal class d.b.a. government.
-Jordan Maxwell
These actions suggest that uncle Warren has a lot of dirt on the SEC and therefore has lost respect for there authority. This now intitles WB to do what ever he pleases.. this is a "fuck the corrupt SEC" statement by WB who is also obviously corrupt
Nah, Uncle Warren is just part of the club that understands that corruption is all a part of the power play. If he ever had an independent bone in his body, he lost it the day TPTB took his silver.
The SEC is Warren's buddy and he knows it.
You're right that this is huge news that I had not heard a word of before. More evidence that neither government nor private industry, but the worst and most powerful elements of both are the cause of our problems (as if any more evidence was needed).
There is also a Fascist component to trains.
Why does Warren own Burlington Northern Santa Fe Corp?
“It’s an all-in wager on the economic future of the United States,” he said in a written statement. “I love these bets.”
What "economic future" is that? No oil? War? I don't believe it's a bet on a bright economic future.
http://dealbook.blogs.nytimes.com/2009/11/03/berkshire-to-buy-rest-of-bu...
Buffet is betting that BNSF will benefit from government stimulus spending. They are already upgrading billions in rail infrastructure which directly benefits Berkshire. Remember how he went "all in" for FNM and FRE? He exited his position early too. The guy is a master at sucking money from the Federal Government's market distortions. Not that there's anything wrong with that...I mean afterall, it is the government that creates these opportunities.
Why wouldnt WB be able to marke to myth as well as half the companies he owns do as well - so the real BV to BH is probably overstated by 100%
Becky Quick....
Voted by "CNBC Sucks" as the Hottest Flat-Chested Chick of All Time..
LOL..
http://cnbcsucks.wordpress.com/2008/06/26/becky-quick-is-the-hottest-flat-chested-chick-of-all-time/
itty bitty tittie committee
robo great site thanks
Like many "gurus" he made some lucky calls in the roaring bull markets in the 80s and 90s but is now finding he is a mere mortal like the rest of us although many of his sycophantic followers have yet to catch up with the fact. What will the toothless regulator do? It will most likely feel like being savaged by a lamb...if they do anything at all.
The shear size of Berkshire as a conglomerate is limiting its opportunities. There is no way they will be able to match their previous success.
As Leona Helmsley famously revealed, "we don't pay taxes, only the little people do"
She not only spoke the truth, but was punished as the whistle blower. Today more than ever, only little people pay full bill. Everyone else (including 40% of those who file a return) DON'T pay any taxes. Zero. For the Big players there are more ways t avoid tax hiding in plain sight than ever.
Little guy might catch on 4.15.2011.
Only celebrities, small business owners and W2 chumps get prosecuted for tax evasion. The big boys skate.
Another clear definition of Fascism.
Don't hate the player(s), hate the game!
FASB
Fraudulant Accounting Suckers...BUY!
Nice.
Banks are getting lit up' again. Some bad news looming ?
I think they're just the weakest group in the market, which itself is getting weak.
-long JPM Puts
thank you warren.
is it 4pm est. yet? I need a beer...no scratch that I need a double shot of whiskey.
It is a matter of National Security that Warren must be profitable at all times. If Warren is not viewed as the national savior, sage and prophet, that condition would constitute a clear and present danger to the security of the United States.
The Office of the Treasury hereby authorizes all subsidiary branches to comply with Executive Order 1313: Operation Enduring Prosperity. The order stipulates that Warren must be permitted to do his own accounting and other actions as deemed appropriate.
The Chinese are convinced that he is one of the eight immortals, so ...
Buffett's billions of dollars SPX derivative contracts show everybody exactly where he stands on the money-printing issue.
Yeah! Warren has lost it a long time ago, see, you can only one time in investing history buy assets on the real cheap and wait until they split a few times and then claim to be the best investor of all times! Just like Paulson...pick your own shorting stuff, eh! As to the "rules", see these days National Security pretty much allows for every kind of rights breach, from taping your phone/cell to reading your emails or even film you while shaving your balls! This, of course can and should include, torture AND "changing" SEC/FASB "rules"! We all know what will happen, I hope most of ZH reader/posters will be far enough away because it will be biblical!
It should be ILLEGAL not to carry assets on your books at lower-of-cost-or-market. Too much fraud in accounting was certainly a contributing factor in the present crisis (easy credit being of course the prime mover)
I think that's a good idea, because the moment those assets are liquidated the market price will react - downward - especially in thin markets like at present.
Which makes me wonder, will the GM PO gets delayed yet again?
Snowballs uses only six sigma valuation and accounting methods. They are not for use by the small business man.
Otherwise known as alchemy.
http://www.youtube.com/watch?v=o89iKsKw19M
Well of course he can do this, since he is part of the Club. And the Club only makes money by rigging the game. If they couldn't rigged the game they would be in the same boat as every body else.They know it, we know it and they know we know that they know it. WTF. It still blows my mind that people invest with the likes of these people.
These are not the assets you are looking for. You can go about your business, move along.
You better be careful...
Buffet just might start to also support eugenic programs aimed at financial reporters and bloggers.
He can tell the SEC whatever he wants... this type of accounting change will be reflected in the stock price.
Good thing for that BRK-B split so I can afford to buy in.
Hey...
If we wait a couple of minutes, we'll get this #uckin ijit called Value Investor 2010 or whatever the #uck he's called, chiming in with his high brow and juvenille comments on why this is just grand.
Stay tuned for its arrival.
Just another reason to get out of the market. What a clueless clown....with US Bank especially ....they don't even know what's on the balance sheet........Berkshire becomes the second derivative of crappy balance sheets forgery. Sort of reminds you of a kelpto governement telling you everything is just fine.
Fraud: Change you can believe in!
No accountability so why worry, worst case he negotiates a fine and its done.
Use your brains. Isn't it strange that so called "self-made" billionares like Buffett, Soros, Bill Gates, and the rest of the gang give away their money to tax-exempt foundations and very little to their kids or families before or after they die?
The reason is very simple. This is not their money! None to them have any brains to earn their money. Just read their "books" or their interviews full of nonsenses, contradictions, and utmost garbage. They simply lack the intellect to get out of wet recycled paper bags even on their good days. All of them are soldiers for the international bankers.
All the tax exempt foundations are fully controlled by international bankers who use them to control the governments and YOU! Just google on TAX EXEMPT SUBVERSION, Hidden agenda of the Tax-exempt foundations, House Select Committee to Investigate Tax-Exempt Foundations
Do you actually believe that many of the "self-made" billionares worked so hard to make billions, in competition with millions of extremely smart people, and all their wealth came with so much ease that now they are so generous to give their "hard-earned" money to tax-exempt foundations just because they can save on taxes, and all this when their money could easily lobby the Congress to get enough tax breaks to avoid paying any inheritance or estate taxes, and their families are also so generous and loving for humanity and let them give away all their money?
If this is so simple then Easter Bunny or Santa Claus handle your investments for you
The Reese Commission (Norman Dodd) found some interesting info about these foundations and that was in 1954.
the investigations were in the 50's because this is when our "Congress" was still the Congress, the JFK assasination put an end to our government and our Constitution. Another thing is this "communism" crap, it is all about evil, sociopaths who take pleasure in enslaving and killing people, any label like communism or facism is fine with them as long as they do whatever they want
because this is when our "Congress" was still the Congress
It seems they were not much of a congress then either because they never did anything about it. The info that was discovered in The Carnegie Foundation's archives was treasonous according to the constitution. I agree with you about the labels and scare tactics used for their agenda.
the investigations were in the 50's because this is when our "Congress" was still the Congress, the JFK assasination put the end to our government and our Constitution. Another thing is this "communism" crap, it is all about evil, sociopaths who take pleasure in enslaving and killing people, any label like communism or facism is fine with them as long as they do whatever they want
I am sure Becky Quick will be right on top of and reporting this news.
"When the tide goes out, you can see who's been swimming naked."
Warren Buffet
Why Warren, what a tiny little wienie you have!
The real genius?
"Why don't we get drunk, and screw?" - Jimmy Buffet
i am having a hard time trying to find some truth to hang my hat on. as a younger man i religiously followed greenspan, buffett, munger in the financial world, and clemens, canseco, mcguire and armstong in the sports world. turns out they were all liars. nice. and the impetus for their deceptions? money. no wonder that was the most often talked about subject in the new testament. jesus wins again. praise jesus.
A concrete representation of an otherwise nebulous concept; Define the typical ZH reader. Arnold wins the prize.
and the impetus for their deceptions? money.
wrong, i think ego and fame. as for armstrong, ego.
a. contador now might get busted for doping during the TdF. found plastic in his blood. plastic from bags of his own blood transfers. these sporting heroes are just like the fraudsters and their accounting used in corporations and banks and buffet.
all egoed out with portfolio envy, minus any natural enlargement.
testicular cancer, bitchez. does that mean he doesn't have any balls or they are just empty. forget.
Face the fact ZH'ers, following the laws are only for 'little people'. The SEC, CFTC, etc will allow fraud to go on forever for the Too Big To Jail and those on the Inside.
Maybe uncle Warren knows something the rest of us don't? Perhaps he's counting on a bout of hyperinflation coming soon to raise the value of his investments?
Hyperinflation sounds so scary. Can we agree to call it Resultant Inflation?
Criminals deserving prison.
Consider the press treating Warren Buffet as the world's greatest investor? This is a man who has rolled sevens a thousand times in a row in the Wall Street craps game. Is it believable? No. Is it insider trading, Wall St. intrigue, armies of lawyers and accountants, paying of insiders to sell cheap, illegal PIPEs etc. You decide.
the press is owned by the same people who own Buffett and his money, if Buffett plays the game then he gets the good press
Them stocks aint worth shit. and Buffet knows it. I aint buy'n nuttin.
It takes a true pro to sell SPX vol at the low tick!
Andy Xie: "The same people who caused the last crisis are still in charge. They'll get us into another. Iceland is taking its ex-prime minister to court for causing the banking crisis. Worse fates await the people who are causing the next crisis. China used to chop off the heads of its failing ministers at the capital's vegetable market. Maybe we should bring back the practice and globalize it."
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