Monday, March 10, 2003 :::
When Buffett says that he doesn't see many opportunities, noting that it's often best to sit on your hands, even when money market returns are less than 1%, it's a bit odd to see him then extol the growing float he's got at a cost of 1%. Presumably he thinks that can hold up as opportunities return more easily than trying to generate it all then.
As for derivatives, a fair amount of his problem with them is true of any kind of debt exposure, though the opaqueness — that the extent of debt exposure from derivatives is unclear — is more specific to derivatives. If A lends to B lends to C lends to A, each the same quantity of money with some kind of covenant in the case of a credit downgrade, a credit downgrade for any of the three can create a problem that, looking at the situation as a whole, shouldn't exist, and that's true if the "loans" are derivative obligations as well. If somebody can work out a slick way of unwinding situations like this, I think they'd be doing the financial world a huge favor.
::: posted by dWj at 9:49 AM
