Mann to Man

The American Condition Politically, Culturally, Economically

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Location: Williamsburg, VA, United States

Raised in rural Greenbrier Co. WV, BS Chemistry WVU, PhD Chemistry, GA Tech,Chemistry Faculty, GA Tech, 1965-1969, Dir R&D BASF Fibers 1969-1982,Sr.Exec. R&D, Burlington Industries, 1982-1986,Owner/CEO Mann Industries (formerly BASF fibers)1988-1995, CEO/Owner The Mann Group Consultants, 1987-2009, wife Carol, daughters Leigh, Susan

Friday, August 26, 2011

BUFFETT'S BANK OF AMERICA DEAL, THE “BAILOUTS” – and OBAMA?

Let's examine Warren Buffett's latest investment in B of A (BAC). As reported in the WSJ today, he virtually forced CEO Bryan Moynihan into an agreement for him to invest $5 Billion in the bank. To understand this deal, it is informative (even necessary) to look back at the bank “bailout” by taxpayers, although taxpayers had no voice in the matter. Conditions of the bailout required BAC to suspend dividends on common shares to near zero, a token amount. Many people, especially seniors who had all their lives depended upon the stability and safety of bank stocks, as well as utilities, took a hard financial hit. BAC shareholders lost both their capital and their income. I know some of these people. It has been devastating! BAC shares currently yield 0.6% dividends!

Now comes Buffett, the “consummate wise investor.” He cuts a deal for a special preferred stock that will pay him 6% dividends when MONEY IS DIRT CHEAP.

Yeah, this is “smart” investing, but does anyone doubt the rest of the story. Being a friend of Obama and an advocate for the president's tax increases undoubtedly makes it even easier to be smart. Oh, but maybe Buffett will use the extraordinary dividends to pay the extra taxes he “wants to pay.” Don't hold your breath and don't bet the bread money on it. I don't discount Buttett's investing acumen, but his hypocrisy and crony capitalism should be revealed along with the president's actions -- for what they really are.

That reminds me of the GM deal and “saving the auto” industry (for the UAW)...but that's another story.

Joe Mann

2 Comments:

Blogger Dr. Joe A. Mann said...

I WELCOME CRITIQUES. JAM

26 August, 2011  
Blogger Randy McC said...

No critiques Joe. You're doing ok.

Buffet's actions here sound criminal. But then the bailout conditions we see unfolding even as we speak were nothing short of criminal either.

Actually I'm hard pressed to understand how an individual can still be invested in BAC.

02 September, 2011  

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