Just what the world needs...
Another muni wrapper started by Berkshire. The marketing for the company should be "How do you want your AAA served?". Do you want Fort Knox, bullet proof AAA supplied by WEB in Omaha? Or do you want CCC like AAA supplied by Ambac and MBIA?
Berkshire overnight just became a monopoly hazard in this industry. Trust busters should be all over it. Thank god Berkshire is one of my largest positions. Who said financials have not performed this year.
Berkshire overnight just became a monopoly hazard in this industry. Trust busters should be all over it. Thank god Berkshire is one of my largest positions. Who said financials have not performed this year.
posted by MattKelly54 at
6:07 AM
6 Comments:
It looks like BRKA is just getting in on the muni side. I would be very surprised to see it venture into structure finance insurance. The muni side is the biggest scam anyways. Ex. Orange County are cities/counties are not going bankrupt or defaulting, they can simply issue other bonds etc. Plus, even if they do they won't file for insurance proceeds as that would result in their credit rating getting cut. So BRKA will insure on the muni side at what I believe is done at little risk. For what ever that is worth
I totally agree.
This comment has been removed by the author.
But I still think that the issue is where would you buy your insurance? Muni insurance is pretty profitable. And by default Berkshire would be the insurance of choice.
In my mind it goes like this:
This revenue backed muni is for a jail and is insured by Berkshire. (Cue the 50 cent music - I'm about my paper)
This revenue backed muni is for a jail, is AAA and is insured by MBIA. (MBIA must have insured it because Berkshire would not have which means higher borrowing costs for the revenue bonds).
Is all AAA the same? I would claim the CDS spread for MBIA is saying the answer to that is no.
Marty Whitman in my opinion should be shitting his Depends. But it is probably not smart to bet against Third Avenue. Unless you are in the year 2007.
Im glad I closed out that trade...
Rich-
Is gold testing a quadruple top? This could be bad.
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