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Old 09-14-2008, 07:29 AM
 
Location: Jonquil City (aka Smyrna) Georgia- by Atlanta
16,248 posts, read 22,895,389 times
Reputation: 3587

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Up until now I have not been overly concerned about the future of the economy in the USA. Yes it is slow right now and yes we have our problems with the banks and mortgages but nothing that the government cannot contain. And the government until now has done a good job - more than I would like to see- of containing the problem.
But this little seen news item really got me worried. Berkshire Hathaway- which is owned by Warren Buffet- has quietly exited the bank insurance business. They will not write new policies nor renew old ones.
This type of insurance is held by most banks to attract deposits in excess of $100,000. Tha bank pays for it and, should the bank fail, the private insurance company pays all deposits over the $100,000 limit that the FDIC insures. It is a very lucrative business for the companies that sell it.
The fact that Berkshire dropped it tells me that Buffet must know something we do not know. Why else would he have Berkshire drop a very profitable line of service? True he is the only one so far to get out of the business but I am disturbed to say the least. When the rich start doing things like this, it usually means something bad is on the horizon.
Excess deposit insurance provider exits the business
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Old 09-14-2008, 07:38 AM
 
Location: in a house
124 posts, read 478,074 times
Reputation: 86
Quote:
Originally Posted by KevK View Post
Up until now I have not been overly concerned about the future of the economy in the USA. Yes it is slow right now and yes we have our problems with the banks and mortgages but nothing that the government cannot contain. And the government until now has done a good job - more than I would like to see- of containing the problem.
But this little seen news item really got me worried. Berkshire Hathaway- which is owned by Warren Buffet- has quietly exited the bank insurance business. They will not write new policies nor renew old ones.
This type of insurance is held by most banks to attract deposits in excess of $100,000. Tha bank pays for it and, should the bank fail, the private insurance company pays all deposits over the $100,000 limit that the FDIC insures. It is a very lucrative business for the companies that sell it.
The fact that Berkshire dropped it tells me that Buffet must know something we do not know. Why else would he have Berkshire drop a very profitable line of service? True he is the only one so far to get out of the business but I am disturbed to say the least. When the rich start doing things like this, it usually means something bad is on the horizon.
Excess deposit insurance provider exits the business
Well obviously he must he's one of the richest men in the world.
I wonder who will be the first trillionaire?
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Old 09-14-2008, 05:12 PM
Rei
 
Location: Los Angeles
494 posts, read 1,689,872 times
Reputation: 233
Maybe he is predicting that lots of banks are going to fail...
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Old 09-14-2008, 05:53 PM
 
Location: Great State of Texas
86,067 posts, read 78,535,917 times
Reputation: 27662
Warren Buffet, in retrospect, is 2-3 steps ahead of the game IMO.
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Old 09-14-2008, 06:13 PM
 
Location: Hope, AR
1,505 posts, read 2,934,601 times
Reputation: 254
Warren Buffet owns GEICO, which lied to me about many things.

Last edited by Waterlily; 09-14-2008 at 06:38 PM.. Reason: not nice
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Old 09-14-2008, 06:33 PM
 
Location: In my playhouse.
1,047 posts, read 2,624,708 times
Reputation: 1730
I know he knows and understands all of this financial mess more than I do. It does seem like more banks are in trouble every month.
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Old 09-14-2008, 07:22 PM
 
Location: Some place very cold
5,500 posts, read 21,303,445 times
Reputation: 4270
I'm sure he knows something I don't, if he's rich, and I'm a poor slob one step away from living out of my car in a parking lot.

Woofers
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Old 09-14-2008, 08:59 PM
 
Location: Boise, ID
1,356 posts, read 5,774,185 times
Reputation: 927
Warren Buffet is interesting. On one hand no one can argue that he is the most successful investor ever.On the other hand he has some economic views that are perplexing. He thinks the federal tax rate should be higher which is not generally a business-friendly position. So IMO he has more credibility on his investment advice than when he starts talking about economic policies. (However, I readily admit that this opinion is based on my own views and he is more financially successful than me so consider the source! )

He is very conservative with his investments so my guess is that he is erring on the side of caution. But, when it comes to investments he doesn't err very often so I would say his withdrawal from the bank insurance business should be cause for concern.

However, anyone who is not concerned about the state of the banking industry right now hasn't been paying attention and probably would miss this bit of news too!
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