In Warren Buffett We Trust (GE)

By Henry Blodget, ClusterStock, Oct 1, 08 1:52 PM

It's not true that the US government is the only entity buying or lending to US companies these days. Warren Buffett is, too. And thank goodness for that.

Of course, Warren's not worth $40 billion because he's a moron, and he's getting a much better deal on his investments than Hank Paulson will soon be getting on his. Specifically, as with his investment in Goldman Sachs, Warren's getting $3 billion of GE preferred stock with a 10% dividend and a warrant to buy another $3 billion of common at a discount. That's an awesome deal, one that just about anyone would else would kill for.

Of course, GE will insist that it doesn't need the money--and, perhaps, in a technical sense, it doesn't. But Warren's money was expensive for GE, and Jeff Immelt's no dummy, either (if he hadn't needed the money, he wouldn't have sold the stock). And the $12 billion common stock offering that GE will now be able to do far more easily now that Warren has invested will also be expensive.

The biggest story here, though, is that the world's most respected investor is--in his own brilliant way--bailing out some of the best companies in the US economy. Now that Warren is wading into the GE waters, other investors will, too--even on far crappier terms.

Given that the folks in Washington have blown their credibility to smithereens, the full faith and credit of Warren Buffett are currently worth more in the public's eyes than the same attributes of the US government. Which means the Oracle, in his own charming way, is even more of a national treasure.

Related Posts :

1. Buffett Buys $3 Billion Of General Electric Preferred, Company Selling $12 Billion of Common (GE)
2. Warren Buffett: We Have "Terrible, Terrible Problems"
3. Buffett : Economy 'on Floor' After Cardiac Arrest (Update1)
4. Goldman and Buffett: Salvation or Desperation?

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