Once upon a time, the merest suggestion that certain entities known as “bond insurers” or “monolines” might be stripped off their triple-A ratings was enough to send markets into a right panic.
Once upon a time, General Electric was considered the bluest of blue chip companies, with the top-rated designation to prove it.
And once upon a time, the Sage of Omaha could do no wrong.
Those days are quite definitively over.
Bond insurers – largely junk(ed). GE – on the defensive. And Warren Buffett? Looking a bit shaky:SINGAPORE (Reuters) – Warren Buffett’s Berkshire Hathaway was stripped of its ‘AAA’ credit rating by Fitch, barely hours after S&P cut General Electric Co’s top-tier rating, as the global financial crisis pummels America’s corporate titans.
Citing concerns about Berkshire’s equity and derivatives investments, as well as Buffett’s tight grip on the company, ratings agency Fitch cut the insurance and investment company’s issuer default rating by one notch to ‘AA+’.
The downgrade is another setback to Buffett, 78, coming a day after the billionaire lost his position as the world’s richest man to Microsoft Inc founder Bill Gates, according to Forbes’ annual list. Buffett’s net worth plunged to $37 billion from $62 billion last year, the list said.
It really is different this time.
Related links:
General Electrocuted – FT Alphaville
Derivatives and the wisdom of the Sage – FT Alphaville
MBIA gets junked (almost) – FT Alphaville