Debt – like water – flows downhill

S&P is busy today announcing downgrades of businesses that either have heavy Treasury exposure or guarantees. Not a pretty day for a lot of munis and financials. Bank of America is plunging. Presumably the weakling of the big money center banks – and the guarantee of “too big too fail” is weaker now. But I wanted to focus on the negative credit watch that S&P placed on Berkshire Hathaway. Of course Moody’s won’t do the same — because Berkshire is the largest shareholder of Moodys.

I’ve read all of Warren Buffett’s shareholder letters over the years. And up to two years ago, I’ve had an enormous respect for him as one of the few CEO’s who wasn’t out to rob shareholders and who was candid (and rich) enough to be honest about a lot of things and damn the consequences. That all changed with his behavior in 2008 which was appallingly piggish and self-serving and dishonest and hypocritical. And his business partner – Charlie Munger – was repugnant (and honest) enough late last year to tell a crowd of future sharks that the bailout of billionaires (of which he/Buffett personally received benefits in the billions of dollars) was completely necessary – but that everyone who lost their jobs/savings/income because of that bailout should just “Suck it up”.

Well Charlie — Suck this. I hope you lose everything.

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