“I don’t see any reason why they should be paying a special tax.” Supporters of the plan to tax the banks “are trying to punish people,” he said. “I don’t see the rationale for it.” “Look at the damage Fannie and Freddie caused, and they were run by the Congress,” said Buffett. “Should they have a special tax on congressmen because they let this thing happen to Freddie and Fannie? I don’t think so.”¹

Buffett held a fundraiser for Obama and advised the future president on economic issues during his campaign.

In addition to levying an additional tax on certain financial institutions, President Obama intends to impart new restrictions on banks. ² These are two factors that explain in part why the “Dow Turns Negative for ’10.”

1. http://www.bloomberg.com/apps/news?pid=20601087&sid=aPdhurDmpnhE&pos=1
2. http://online.wsj.com/article/SB10001424052748703699204575016983630045768.html

Last month, I got this e-mail from Mr. Vincent Cheng, the Chairmain of the Hong Kong and Shanghai Banking Corporation Limited.  He sent me a confidential brief, which I’ve included below:

I followed up with Mr. Cheng, and apparently I just needed to help with a legal bank transfer of 30.5 million dollars and would get to keep 60% of the funds!  I told him I was extremely interested in helping, and would do whatever he wanted.  I also told him that I didn’t need 60% of 30.5 million, I only wanted $30,000, and to be considered for an entry level postion at the Hong Kong and Shangahi Banking Corporation Limited.  But for some reason after I e-mailed him with that request, he never got back to me.  I can’t figure out why, I guess because I didn’t want 60% of the money and he was insulted?  I was disappointed at first, until I got another e-mail, and this one is even better!  A copy of it can be found below:

More than $1.7 billion is a lot more than 60% of 30.5 million!  I just need to apply before the 27th of October and I’ll be set.  I’m going to take whatever they offer me this time, because I learned from last time, that people who are going to give you millions of dollars don’t want you to work for them, or have you take less than they offer, they just want you to keep the money.  I’ll let you know how it goes, and if I have time, I’ll have the butler I’m going to hire take a picture of the yacht I’m going to buy!

*This is a satirical post.*

I don’t actually think that these offers will make me rich.  I did e-mail “Mr. Cheng” to see what would happen.

In contrast to months of doom, gloom, and fear-mongering in the news, there are positive signs. The Dow has risen for three weeks in a row, its longest streak of weekly gains since May, the Standard & Poor’s 500 index rose 6.2% on the week, while the Nasdaq composite rose 6%.¹

Despite the pullback, stock-market bulls see signs of a gradual turn that weren’t evident in other rallies over the last 17 months. Data suggest the economy is gradually making a turn, said Fred Dickson, market strategist at D.A. Davidson.²

While unemployment and foreclosure is a real and painful, issue–there is positive news to be found, and opportunities to be taken advantage of.

1. http://online.wsj.com/article/SB123815206405655957.html
2. http://online.wsj.com/article/SB123815206405655957.html

Stock prices down 40-50% represents a remarkable buying opportunity for the long-term value investor. There is of course risk, Lehman Brothers was a financial institution with over 150 years of history and success and it plummeted from a 52 week high of $49.88 to bankruptcy, in which investors lost everything.² However, for those with a long time-horizon, there are some amazing deals. For example, on March 5th, one share of Citigroup (ticker: C) cost less than a can of soda. A stark contrast to its 52 week high of $27.35. One could buy into an S&P 500 index at close to 50% discount pricing.

The same principles apply to the housing market. Although attaining a loan is much more difficult now, for those looking to buy their first home, houses are selling at fire-sale prices. Another nice bonus is that gasoline prices are much lower. This does have a negative effect of increasing complacency towards finding alternatives to OPEC supplied energy, however paying $20-$30 at the pump is much nicer than $50.

The Wall Street Journal has two recent articles covering additional opportunities: “It’s a Great Time to Start a Bank” and “How to Innovate in a Downturn.” So while the current situation is dire, and the losses of many cannot be downplayed, the economy will recover, as it always has, and there are many opportunities to be had for when it does.

1. http://www.dol.gov/
2. http://www.pinksheets.com/pink/quote/quote.jsp?symbol=LEHMQ

1. http://online.wsj.com/article/SB123599406229708501.html
2. http://online.wsj.com/article/SB123577708757697423.html?mod=relevancy