Book Value

Frontrunning: April 24

  • The Inland Empire bubble is back: BMW to Amazon Space Demand Spurs Rush to Inland Empire (BBG)
  • Tamerlan Tsarnaev was on classified government watch lists (Reuters)
  • Brothers in Boston Bombing Case Said Drawn to Radicalism (BBG)
  • Germany Spurns Calls to Loosen Austerity Stance (WSJ)
  • Spain poised to ease austerity push (FT)
  • What ever happened to France's voice in Europe? (Reuters)
  • U.S., South Korea Reach Nuclear Deal (WSJ)
  • U.S. Sees No Hard Evidence of Syrian Chemical Weapons Use (BBG)
  • RBA Set to Invest Foreign Currency Reserves in China, Lowe Says (BBG)
  • FedEx Wins $10.5 Billion Postal Contract as UPS Shut Out (BBG)

This Time Is Different

The 2008 crash resulted from the bursting of the biggest bubble in financial history, a ‘credit super-cycle’ that spanned more than three decades. How did this happen? Some might draw comfort from the observation that bubbles are a long established aberration, arguing that the boom-and-bust cycle of recent years is nothing abnormal. Any such comfort would be misplaced, for two main reasons. First, the excesses of recent years have reached a scale which exceeds anything that has been experienced before. Second, and more disturbing still, the developments which led to the financial crisis of 2008 amounted to a process of sequential bubbles, a process in which the bursting of each bubble was followed by the immediate creation of another. Though the sequential nature of the pre-2008 process marks this as something that really is different, in order to put the 'credit cuper-cycle' in context, we must understand the vast folly of globalization, the undermining of official economic and fiscal data, and the fundamental misunderstanding of the dynamic which really drives the economy.

Berkshire Seeks To Avoid 2013 Tax Hike, Buys Back BRK Shares

Define irony: when the most vocal supporter of a dramatic change to the existing tax policy takes advantage of the last few days of the old one...

  • BERKSHIRE HAS PURCHASED 9,200 OF CLASS A SHRS AT $131,000-SHR
  • BERKSHIRE RAISED PRICE LIMIT FOR BUYBACKS TO 120% BOOK VALUE
  • BERKSHIRE MAY BUY ADDED SHRS AT NO MORE THAN 120% BOOK VALUE
  • BERKSHIRE BOOSTS BUYBACK PRICE LIMIT TO 120% BOOK VALUE VS 110%

A total $1.2 billion spent to avoid a few hundred million in new taxes. And now back to the hypocrticy of the "Buffett tax", and "Patriotic Millionaires for America." In other news, total donations to pay down the debt in Fiscal 2013 (starting October 1): $290,195.03.

The Spanish Bad Bank Emerges, Confirms Spanish Real Estate Absolute Disaster

The details of the Spanish bad bank are being released and it is ugly - far uglier than many had expected. And while the Spanish government expects priovate interest to take some of this massively discounted 'crap' off their hands, we have three words: 'deleveraging' and 'no bid!'.

  • *RESTOY SAYS BAD BANK AIMS TO BE PROFITABLE
  • *SPAIN BAD BANK TO DISCOUNT LOANS AVG 46%; FORECLOSED ASSETS 63%
  • *SPAIN AIMS FOR BAD BANK NOT TO COUNT TOWARDS PUBLIC ACCOUNTS
  • *SPAIN TO DISCUSS BAD BANK WITH INVESTORS IN COMING DAYS
  • *SPAIN BAD BANK TO INCLUDE FORECLOSED ASSETS, LOANS, STAKES

The Spanish government remain in a world of their own with this level of self-delusion. Discunt details below...