Indeed. And these days there is no surer way to get rid of all your money and ruin your sex life forever than to associate with bankers. While the money aspect of that equation hasn't necessarily always been true, the sex part sure has. That is why so many of The Rich marry Trophy Wives, while bankers are forced to settle for Plaque Spouses and Certificate of Appreciation Girlfriends. It is true what they say, The Rich really are different from us. Money can't buy everything, but what it won't buy it can usually force into complicity with a few certified letters. Whoops. Here we are slipping into a dangerous digression on topics better left for last call.
 

The more I dig through the details of Buffett's Berkshire Hathaway (BRK)-Goldman Sachs (GS) "investment," the clearer it becomes that this isn't an investment at all. Not even close.

 
Buffett is getting paid 10% to hold what is essentially an option to buy $5 billion worth of Goldman with essentially little to no equity risk given the terms of the deal. That's not an "investment." That's just an endorsement deal. So while my initial read on the whole sex tryst thing was dangerously alarmist and wrong, a closer look shows Buffett has sadly transmogrified into Donald Trump. He's not actually investing anything in Goldman Sachs, he's just letting them use his name and getting paid for it. So what if it doesn't pan out? He can find someone else to make golf shirts with his name on the sleeve.

• STOCKS
• RELATED ARTICLES
• ALSO BY...

SEARCH:

Quote, Unquote: Biased Credit Rating Agencies?
Airlines: People Won't Fly, So We'll Raise Fees
Trading Radar: GDP Highlights a Thin Week
California Oversteps with HDTV Regulations
Goldman, Beaten But Unbowed

Five Things: The Ever-Sensational Looming Global Economic Collapse
Five Things: Social Mood Fuels the China Bull
Five Things: The Economic Crisis Takes a Virulent Turn
Five Things: Two Economies, One Deflation
Video: Q&A With Robert Prechter

 
Hell, given terms even vaguely similar to what Buffett is getting, I'd be willing to stumble around with a bad case of Jake Leg from sipping Uncle Slappy's Bathtub Gin while wearing a sandwich board endorsing the stuff. Who wouldn't?

 
And so that's where we find ourselves today. The experts are calling it a "show of confidence" designed to "bolster the market." But no, I'm no longer talking about Warren Buffett's deal with Goldman Sachs to "restore confidence." I'm talking about Morgan Bank, Chase National Bank and National City Bank's agreement to pitch in and buy shares of US Steel (X) at below market prices to try and thwart the panic on Wall Street on October 25, 1929.

 
Here's how that "vote of confidence" worked out for the Dow Jones Industrial Average:


Click to enlarge

I can hear the chorus coming in from Washington DC now.

"Come on, man, that's a bunch of old-timey  nonsense."

"We are financial engineering professionals."

"We are talking about Warren Freaking Buffett, man."

Only a fool argues with facts based on Washington D.C. theories... unless, like me, he has the force of history and the violence of logic on his side:

"Warren E. Buffett, known as a sharp investor with an eye for undervalued securities, has agreed to pay $700 million for a 12 percent stake in Salomon Inc., the parent company of Salomon Brothers Inc., Wall Street's largest investment banking house."
- September 28, 1987, New York Times

Yes, September 1987, almost 21 years to the day. This is one weird rabbit hole we've tumbled down, Alice.


For more color on the Oracle of Omaha, check out Hoofy and Boo's always astute report.