Doomsday Scenario: Could Warren Buffett be wrong?

Posted Mar 4th 2009 5:37PM by Alex Salkever
Filed under: Forecasts, Bad News, Management, Berkshire Hathaway (BRK.A), Short Stories, Economic Data, Recession, Comic Relief, Financial Crisis

Here's the latest PM dose of happy doom. Tyler over at ZeroHedge points out that CDS (credit default spreads) on Berkshire Hathaway are hitting all time highs, implying that the risks Berkshire's (NYS: BRK.B) robust cash machine could break down (and even default at some point) are rising fast. Piqqem Sentiment on Berkshire B-class shares is negative, natch, after Buffett's recent mea culpa for losing money last year. If Buffett has lost his mojo, then does anyone have any magic left?

Apparently, it doesn't even matter. MarketFolly bring the woeful tale of short-seller hedge fund manager Jim Chanos who has probably had a great year considering the markets. Alas, he is facing 20% redemptions on his fund as customers scramble to take cash out wherever they can to cover obligations (think pension funds and universities). And that giant sucking sound? It's cash flying out of the stock market as everyone tries to go to cash, pronto.

On the state bankruptcy front, we hear from Jr. Deputy Accountant that, according to a recent report by the Center on Policy and Budget Priorities, California is not the only state facing The Abyss of bankruptcy but, rather, 46 states could end up going belly up, as well.

So while its easy to pick on Arnold, he might not seem so silly once the shoes start dropping in other states.

Alex Salkever is the Director of Research at Piqqem.com, a stock prediction community that leverages the Wisdom of Crowds to beat the markets.

Tags: buffett, buffett stocks, BuffettStocks, hedge funds, HedgeFunds, recession