On Friday, Buffett stunned Wall Street by announcing that he would enter the troubled bond insurance business. He also spent about $440 million for a unit of ING Groep, the Dutch financial giant.
Three days earlier, on Christmas, he agreed to buy a $4.5 billion stake in the industrial conglomerate owned by the Pritzker family. And a few weeks before that, he waded into the junk bond market, buying $2.1 billion of debt issued by TXU, the electric utility.
DEALMAKER OF THE YEAR To Rupert Murdoch, who did the impossible, again. You bought virtually the only asset in the world that wasn’t for sale. And you did it without having to raise your bid. Granted, the price might never make financial sense, and you were negotiating with the gang-that-can’t-shoot-straight. But for you, the asset is priceless. Now please don’t mess it up.
FROM PAWN TO KING AWARD To Nelson Peltz of the Triarc Companies. Nelson had a huge year. Once considered the Rodney Dangerfield of Wall Street, not getting any respect — he was described in “Predators’ Ball” as Michael Milken’s “pawn” — he has reinvented himself as an activist investor in recent years. But he’s no hold-up artist. Managements at Heinz, Wendy’s and Cadbury Schweppes have begun listening to him, perhaps under duress, but listening nonetheless. All shareholders seem likely to reap the benefits.
- Washington Post: An Inconvenient Year
. . . other than that, 2007 was a disaster. American consumers came to fear products manufactured in China, which covers pretty much everything in the typical American home, except the dirt. Global warming continued to worsen, despite the efforts of leading climate experts such as Madonna and Leonardo DiCaprio, who emerged briefly from private jets to give the rest of us helpful tips on reducing our carbon footprints.
On the economic front, the dollar continued to lose value against all major foreign currencies and most brands of bathroom tissue. There was a major collapse in the credit market, caused by the fact that for most of this decade, every other radio commercial has been some guy selling mortgages to people who clearly should not have mortgages. (“No credit? No job? On death row? No problem!”) It got so bad that you couldn’t let your dog run loose because it would come home with a mortgage. The subprime mortgage fiasco resulted in huge stock market losses, and the executives responsible, under the harsh rules of Wall Street justice, were forced to accept lucrative retirement packages.