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Buffett Bailout 2.0? Berkshire Hathaway Misses Earnings By Most Since Lehman
It looks like it is time for Warren to get on the Obamaphone and make it clear this is unacceptable...
Berkshire Hathaway announced (a 10% decline) $2,367 (Adjusted) EPS, missing estimates of $3,038 by 22.09% - the biggest disappointment since Nov 2008...
Worst still, Net income for the Omaha, Nebraska-based insurance and investment company fell to $4.01 billion, or $2,442 per share, from $6.4 billion, or $3,889 per share, a year earlier - a stunning 37% plunge.
The driver of the weakness appears to be a fall in the paper value of its investments and its insurance companies reported an underwriting loss.
Berkshire's insurance underwriting business, which includes Geico, swung to a $38 million loss.
In the same period a year earlier the business had posted a $411 million after-tax profit.
* * *
Perhaps, as David Stockman previously noted, Warren's ride on the coat-tails of Fed exuberance is over...
During the 27 years after Alan Greenspan became Fed chairman in August 1987, the balance sheet of the Fed exploded from $200 billion to $4.5 trillion. Call it 23X.
Let’s see what else happened over that 27 year span. Well, according to Forbes, Warren Buffet’s net worth was $2.1 billion back in 1987 and it is now $73 billion. Call that 35X.
During those same years, the value of non-financial corporate equities rose from $2.6 trillion to $36.6 trillion. That’s on the hefty side, too—- about 14X.
Corporate Equities and GDP – Click to enlarge
When we move to the underlying economy that purportedly gave rise to these fabulous gains, the X-factor is not so generous. As shown above, nominal GDP rose from $5.0 trillion to $17.7 trillion during the same 27-year period. But that was only 3.5X
Next we have wage and salary compensation, which rose from $2.5 trillion to $7.5 trillion over the period. Make that 3.0X.
Then comes the median nominal income of US households. That measurement increased from $26K to $54K over the period. Call it 2.0X.
Digging deeper, we have the sum of aggregate labor hours supplied to the nonfarm economy. That metric of real work by real people rose from 185 billion to 235 billion during those same 27 years. Call it 1.27X.
Further down the Greenspan era rabbit hole, we have the average weekly wage of full-time workers in inflation adjusted dollars. That was $330 per week in 1987 and is currently $340 (1982=100). Call that 1.03X
Finally, we have real median family income. Call it a round trip to nowhere over nearly three decades!
OK, its not entirely fair to compare Warren Buffet’s 35.0X to the median household’s 0.0X. There is some “inflation” in the Oracle’s wealth tabulation, as reflected in the GDP deflator’s rise from 60 to 108 (2009 =100) during the period. So in today’s dollars, Buffet started with $3.8 billion in 1987. Call his inflation-adjusted gain 19X then, and be done with it.
And you can make the same adjustment to the market value of total non-financial equity. In 2014 dollars, today’s aggregate value of $36.7 trillion compares to $4.5 trillion back in 1987. Call it 8.0X.
Here’s the thing. Warren Buffet ain’t no 19X genius nor are investors as a whole 8X versions of the same. The real truth is that Alan Greenspan and his successors turned a whole generation of gamblers into the greatest lottery winners in recorded history.
That happened because the Fed grotesquely distorted and financialized the US economy in the name of Keynesian management of the purported “business cycle”. The most visible instrument of that misguided campaign, of course, was the Federal funds or money market rate, which has been pinned at the zero bound for the last 78 months.
* * *
With The Fed on the verge of raising rates, perhaps the days of the Warren Buffet economy are indeed numbered.
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Poor Uncle Warren. Time for a hot tub interview with Becky of the Orthodontia.
Financial Weapons of Mass Destruction and Gold Sewn into Hems of Clothes.
CNBC does not approve of these attacks on Warren Buffett. His great wisdom is not to be questioned.
SINCE LEHMAN!!!
Tyler needs to trademark "MSL"
Things are getting so bad at Geico, Flo is going to be required to start working street corners.
Government Employees Insurance Company uses an animated gecko. Progressive uses Flo.
Oh, sorry, you got me. On the plus side, I guess not owning a television for the last five years has got me out of the loop...
Buffet has little exceptional insight or talent. A chimp with assets who had the Fed and government ear for decades..plus the amount of clout via capital available. Any chimp would have had to really struggle to lose.
Said it before. Buffet ain't so gifted. Crooked and lucky.
Let's see how the Oracle does over the next decade. I see no crony law yet that allows bailing out oracles.
The tide went out for Uncle Warren.
If a crony capitalist of his caliber is seeing falling profits,watch out below.
For sure.
Buffet's signature funds benefited by having huge capital (read influence) and thus all the crony insider info and deals for decades. Take that away? and you have losses.
I am cringing to see how omnibus bills are slipped through to provide "bail outs" for these investments. Geico. Buffet has huge control of many staple stocks..Pepsi. Coke, banks etc.
When are these guys going to point the gun at taxpayers and say "you are on the hook for every loss we ever had?".
When does Berkshire become TBTF? (coming to a simple bill....slip in that clause boyz. If you don't know how just ask a corrupt banker sitting next to you.)
Like the Citibank derivatives clause.
Better to take big losses now, and avoid the rush.
" Mr. Yellen. This is Warren. GET TO WORK ! "
Uncle Buffy .... say it isn't so!.
When is enough, enough? Seriously? Maybe he should change his name to Warren 'Shylock' the Buffetier. With apologies to Shylock >>>
https://biblicisminstitute.wordpress.com/2014/09/02/was-shylock-a-jew/
Awesome. Fuck Buffett.
The kids don't do half the job of the old man.
Don't you be worrying, the old man will be ok.
The kids, not so much.
I wonder if Larry Fink and Uncle Warren have matching smoking jackets?
Those two destroyers probably already have the list of banks they're going to bail out for pennies on the dollar, and have phone sex with each other nightly.
That's disturbing.
The system is about to implode and many know that.
'Next we have wage and salary compensation, which rose from $2.5 trillion to $7.5 trillion over the period. Make that 3.0X'....BULLSHIT...! the average workers pay didnt move or went down. the 'increase' in pay didnt go to the workers, it went to the coe and major shareholders as additionprofit.
He is washed up, send him to the glue factory!
No porridge for Uncle Warren this week.
I fell off the chair in hysterical laughter!
They said "earnings!"
BTW, is that lizard in the GEICO ads an indica of his Illuminati linkages to the Reptilians?
"With The Fed on the verge of raising rates, perhaps the days of the Warren Buffet economy are indeed numbered."
I don't know about that. But, I fervently hope that Warren Buffet's and the Richie Rich's, and their POSEDs* and POSERs** and all of the other elites, mortal days are numbered.
*POSEDs—Piece Of S*** Elitist Democrats
**POSERs—Piece Of S*** Elitist Republicans
Berkshire didn't miss estimates, analysts missed their actuals.
When the weatherman forecasts the weather wrong you don't say "The weather missed estimates". No, you blame the weatherman for getting it wrong. Finance is the only industry where people blame their poor forecasting skills on reality.
Art-o-life ... Excellent. very well stated. spot on. hacks ANALysts touts.
flashed on incident from law school --- professor grew tired of a fool student, said "son you will never be a lawyer, you should be a journalist; they know a little about a lot of things, but not much about anything"
The welfare queen Buffett will have to get in line
don't cry into your gruel warren
lol. Nice one buzz. ;-)
Time for a new oracle?
boofit needs to be hung in the public square.
Since Berkshire Hathaway !
Argentina declares victory against vulture hedge funds:
https://www.facebook.com/photo.php?fbid=10207646526468168&set=gm.4088233...
Net Income of "only" $4.1 billion.
It's not a bad problem to have though is it?
When investors loose a third of their gold plated value, lots of people have problems.