>> Week-end reading - Buffet & Derivatives and GE

Oracle of Omaha and Derivatives:

There has been much talk about Warren Buffet and Berishire's potential exposure. Someone has made good money while selling credit default swap protection on Berkshire which now costs more than Allstate! : Read here

Clearly, what is being overlooked is :
- Buffet's track record
- Berkshire has gotten $4.85 billion upfront, which he will use for dealmaking. Sweet.
- Not a cent is required to be paid-out by Berkshire till 2019, and the max exposure then is $35.5 billion. This is if the value of the each index on which Berkshire has bet goes to zero.
- However, Berkshire may need to put-up some collateral, iff its AAA rating takes a hit.

Berkshire will, however, will reveal in next year's annual report how it accounts for these losses. Read here

Another article here

More GE: The mother of all bailouts? Read Here