MOODY’S SOVEREIGN DOWNGRADE OF FRANCE: WHY WARREN BUFFET’S MOODY HOLDING REPRESENTS A MASSIVE CONFLICT OF INTEREST

buffettblueWarren Buffett

If you’ve often wondered who regulates those who give credit ratings – and who owns them – then read on. The Slog investigates the Moody’s downgrading of France’s rating….and concludes that both Berkshire Hathaway and the Unites States have everything to gain from it.

Yesterday evening CET, Moody’s Investors Service downgraded the sovereign credit rating of France by one rung. Chief among Moody’s concerns was somewhat vague – ‘the nation’s medium-term growth outlook’ – although it’s a view I share. Moody’s changed its outlook for France to stable from negative, and the cut was one rung from Aa1 to Aa2. That still leaves French debt, given the Moody’s terminology, as ‘prime, low-risk investment’. But it will, of course, make it more expensive for the French government to borrow money. Hold that thought.

These are the biggest shareholders in Moody’s:

moodysharesBerkshire Hathaway’s CEO is the celebrity investor of all time, Warren Buffett. In turn, these are Berkshire Hathaway’s income sources by sector:

BuffetinsuranceBH’s biggest source of income and profits is insurance. Insurance sector commentators AM Best rank BH sixth among global reinsurers as measured by gross premiums written – behind Munich Re, Swiss Re, Hannover Re, Lloyd’s of London and Scor.

In recent months, Warren Buffet has been steadily withdrawing from French positions. Hold that thought too.

Buffet has been in the (re)insurance sector for a long time; talk to those who are knowledgeable about it, and they will tell you without exception that the bloke is a genius whose grasp of risk is without equal. But with the wacky world of financialised capitalism about to go sky-facing mammories, it’s going to be a bumpy ride for everyone: and Buffett’s Berkshire Hathaway is no exception. BH crosses thresholds that should ensure its designation – with more than $50bn in assets and more than $3.5bn of derivatives liabilities – too big to fail.

But spookily, that hasn’t happened. Indeed – as the FT noted earlier this year – ‘British regulators have challenged their US peers over their apparent reluctance to subject Warren Buffett’s Berkshire Hathaway to tougher scrutiny as part of a worldwide push to make the financial system safer….The Bank of England has written to the US Treasury asking why Berkshire’s reinsurance operation — among the world’s most powerful — was left off a provisional list of “too big to fail” institutions drawn up by the Financial Stability Board…’

Being an All-American Boy, our Warren is clearly patriotic and on-message enough to get all the protection he needs from US regulators. That’s one more thought to hold onto.

And talking of his patriotism, take a quick peek at where the solid basis of Mr Buffett’s longer-term investments lies – those incredibly far-sighted and patient long-holds that deliver massive payback to BH:BuffetUSonly19915

Hold it up to the light, not a foreign company in sight. Whichever way you cut it, Warren Buffett’s Berkshire Holdings is a 24-carat loyalty investor in American global business imperialism.

He is a stalwart for Walmart. A copious Coca Cola drinker. A gem for IBM. The man who backs Goldman Sachs. And of course – for the last fifteen years – doing his duty for Messrs Moody.

Put simply, Buffett has everything and more to gain from yet more foreign nations joining the list of those poor suckers who cannot fart without American permission. Don’t worry too much about your holdings in myriad thoughts: I’ll be repeating them anon.

Moving on: we saw how Wolfgang Schäuble went beyond tumescence once Syriza caved in and let his eurogroupie agents complete an illegal takeover bid for Greece, while helping themselves to vast profits from the privatisation rush now unfolding there. But Wolfie doesn’t care much for money: he’s a geopolitical sort of chap who wants his (ie, Germany’s) armlock control over Fiskalunion eurozone members to be total and unyielding. And he has on several occasions made it clear in private that Greece was merely a dry run for his lifetime target: the punishment of France for its wayward fiscal economics. In the Elysée Palace, nobody in the Hollande administration has the slightest doubt that this is Wolfstrangelove’s goal.

Former Fed Treasurer Tim Geithner admitted to intimates that the Obama Administration and the US State Department has “bet the farm on Germany when it comes to sorting Europe out”. In that context, Brussels-am-Berlin has been an obedient servant of the United States in terms of giving aid to Ukraine, pressuring Poland to accept the euro, and demonising Hungary’s Viktor Orban. George Soros (who has much to gain from a neoliberally run Eastern Europe) has been up to his eyes in this strategy. But in terms of his commitment to US multinational domination of the planet through megabrands, nobody has been a more loyal agent of State, the CIA, and Wall Street than Warren Buffett. That’s the final thought to hold…now for some of the dot-joining thing.

Mr Buffett is a patriot, US brands investor and major player in the insurance business. He is also the biggest institutional investor in Moody’s. Lest we forget, I am far from being the first commentator to doubt the squeaky-clean image ratings agencies like to garner for themselves: the US Justice Department sued Standard & Poor’s and its parent McGraw Hill in February 2013, charging that the largest credit rater, S&P, bent its criteria to win business from banks. Although Moody’s has not been charged by the U.S. government, Greenlight Capital boss David Einhorn called credit rating brands “ruined” in 2011 for their role in “helping precipitate the worst recession since the 1930s with faulty credit ratings”. And in using the word ‘faulty’, Einhorn was being both kind and careful.

Now let me enumerate my doubts. They may not be factual in any single case: but they cast doubt on the wisdom of allowing those with commercial and geopolitical agendas to have any control whatsoever over what conclusions ratings agencies do or don’t publish.

  1. Berkshire Holdings earlier this year pulled out of its one major lingerie investment in France. It holds very few insurance positions for French companies. Buffett is a patriot who would rather see Germany in control of the EU, and France converted to a more American model of society. So when it comes to the French sovereign credit rating, he has two conflicts of interest: lost confidence in France would damage his insurance sector competitors, and provide support for German hegemony in Europe.
  2. Making it more expensive for France to borrow money is an ideal catalyst towards the achievement of that goal.
  3. Buffett’s obvious self-protection power within US regulatory circles raises the possibility that he enjoys a quid pro quo with Washington: they go easy on his TBTF risk, while he uses his contacts to ensure that EU nations are weakened in the run-up to US commercial colonialism.
  4. Last but by no means least, so total is his Berkshire Holdings’ dependence on US global brand revenue for existence, Warren Buffett’s entire fortune would be at risk if he didn’t follow a general policy of ensuring, to the maximum degree possible, the continuation of US brand domination of consumer choice.

None of this makes Buffett ‘guilty’. But in any system claiming to offer a level playing field, his large stake in Moody’s ought to be completely unacceptable, and forbidden by law.

I am not postulating a conspiracy; rather, I am saying that we cannot have the complete objectivity of regulators being in any doubt whatsoever.

Yesterday at The Slog: Yellen is in a corner created for her by the greed of corporate America

23 thoughts on “MOODY’S SOVEREIGN DOWNGRADE OF FRANCE: WHY WARREN BUFFET’S MOODY HOLDING REPRESENTS A MASSIVE CONFLICT OF INTEREST

  1. @JW
    Whilst the WB position is something that anyone with at least one connected synapse should already have twigged by now, I congratulate you once again in your ability to expose the bollocks that are hanging downwards.
    IABATO
    WAD

    Like

  2. Masterly John. Beneath that avuncular surface lies another grasping, hypocritical, crony capitalist MF! You know it, I know it but the great unwashed doesn’t give a rodent’s rectum! The system is rigged and will remain so even after the great unwinding, I’m afraid.

    Like

  3. It’s all a rigged game, why do you think Corbyn u-turned on the EU? He had his fortune told no doubt..Remember, ‘You are either with us, or against us’ and right now for anybody who goes up against Washington it’s game over.

    Like

  4. Its a safer bet now for Corbyn to appear to U-Turn on EU having joined up with the EU Alliance against EU fascism ;)) – Varoufakis, Oskar Lafontaine, Melenchon, Fassini etc. Lots more will join soon…let’s watch this space.

    Like

  5. Here’s the quote, from page 20 of his most recent annual letter to Berkshire shareholders, dated Feb. 28. After all of his Berkshire shares are distributed to charity, take the cash, Buffett says, and just buy index funds:

    My advice to the trustee couldn’t be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard’s.) I believe the trust’s long-term results from this policy will be superior to those attained by most investors — whether pension funds, institutions or individuals — who employ high-fee managers.

    Like

  6. That was unexpected. After the rape of the Sabine Greeks, it looked like the next target for speculative attack would be Portugal, Italy, or Spain. Instead they’re going for the anti-Schauble jugular : La Belle France. Be interesting to see how the Franco-German axis copes with this one.

    Like

  7. With a name like Buffet it’s hardly surprising that Warren helps himself whenever he can. Self service is all these people care about and you can be sure that he’s got plenty of side bets in the sideboard.

    Like

  8. It will indeed be interesting, after all Schauble is uncompromising and unforgiving and f*cking brutal. It won’t be a nil-nil draw, but somehow I think he will triumph because, if for no other reason he will have Washington’s support. France could be well and truly screwed.

    Like

  9. I always wondered why the Forbes Rich List never included the really rich The world’s Royal families for instance. The Rothschilds and the Rockefellers who have an unimaginable amount of wealth that surpasses the trillion mark- these are the only trillionaires in the world, and yet they are missing from Forbes’s list every single year,

    Here’s the other list including the most wealthy and powerful in the world:
    Lord Jacob de Rothschild
    Nathanial Rothschild
    Baron John de Rothschild
    Sie Evelyn de Rothschild
    David Rockerfeller
    Nathan Warburg
    Henry Kissinger
    George Soros
    Paul Volcker
    Larry Summers
    Lloyd Blankfein
    Ben Shalom Bernanke

    http://www.trueactivist.com/secrets-of-the-elite-why-forbess-rich-list-doesnt-include-the-wealthiest-families-on-the-planet/?utm_source=fb&utm_medium=fb&utm_campaign=antimedia

    Like

  10. Hiero
    But then, little old Buffett sat on his tuffet Eating his curds and whey/ along came a kelim and sat he upon him/ and soon Warren lost all his hay

    Like

  11. How true your words.

    I’m drawn to the Libyan story…. we see a Col, who was implicated in hundreds, nay thousands of terrorist acts, including the destruction of PanAm 103 and yet, he always lived another day, Until, he threatened to sell Libyan oil in a different currency other than the USD. And he was deposed and murdered quicker than a bolt from a Usaine persons ärse.

    I’ve often wondered why the USA continues to give almost total support to the Gulf States, when the USA is no longer dependent on deliveries of middle eastern oil. And then it hit me. The USA may no longer require physical delivery of middle eastern oil, but it does require that the middle east and the rest of the world continue to price their oil in USD, or the dollar and the USA might find themselves up shïts-creek. Dollar hegemony and the world’s reserve currency would find itself backed only by trillion dollar debts and no exits…

    Goes a long way explaining why Islam is given a Free ride in the media, our courtrooms and it’s ever advancing threat to our western Christian, democratic existence.

    Maybe, that’s just part of the price the whole world pays so the Emperor’s taylor doesn’t make a new deal with an Emperor who isn’t backed by David Copperfield.

    Like

  12. @Trulydis
    I also wondered about our continuing ignominious and hypocritical ‘friendly relations’ with the Saudis and Qataris, both known to be exporting fundamentalism to the West. I used to think (naively) this was the most important reason for the West to develop a viable alternative to oil, which would in theory end our dependence on these régimes. …. wishful thinking!

    Like

  13. Does anyone seriously believe that France is a viable long term *investment* or even a place to do business short term?
    Before we get all carried away with possible ulterior motives, perhaps we should eliminate “He’s just telling the truth”

    Like

  14. JW , credit ratings for Euro-zone sovereigns have been irrelevant since the advent of QE . Th edowngrade merely highlights what we all know , the French economy is still being torpedoed by thr Euro . It isn’t going to get better anytime soon , rather it will get worse . Rating agencies , like Central Banks , should ideally be run by the State to ensure impartiality . Personally its not the owenership that bothers me rather their level ( lack) of competence .

    Like

  15. Warren Buffet is one of few investors whom I respect . He has consistently mad long term plays based on sound analysis , and shunned ‘ speculative ‘ trades that everyone on here seems to scorn . His deal in 2009 when Goldman came to him ( literally begging) is a classic of its kind . He is a brilliant defensive investor who occasionally goes for a risky trade .
    His fortune would be less without QE , but I’d wager that without QE he’d be better placed than 98 pct of the investment commmunity . Pretty sure Buffet doesn’t give a damn who controls Europe , and pretty sure he had sound reasons for selling French equity stake .
    To suggest Buffet in any way influenced Moodys to downgrade France is far-fetched .

    Like

  16. How would a French downgrade positively affect these 4 stocks ??
    “As we have seen in many announcements, over half of Buffett’s total equity holdings are heavily concentrated in just four top holdings, as follows: Wells Fargo & Co. (NYSE: WFC), International Business Machines Corp. (NYSE: IBM), Coca-Cola Co. (NYSE: KO) and American Express Co. (NYSE: AXP). Approximately 58% of the aggregate fair value of equity investments was still concentrated in just four public companies “

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s