Bush yakin Program Bailout Disetujui

Perdebatan sengit di Kongres AS soal program penyelamatan dana krisis senilai US$ 700 miliar belum berakhir. Namun Presiden George W Bush yakin kongres akan memberikan persetujuan untuk program penting bagi perekonomian AS itu.

Seperti dilansir BBCNews, Sabtu (27/9/2008), Bush mengatakan belum disetujuinya proposal itu karena nilainya sangat besar, dan banyak alasan yang dipertanyakan karena permasalahannya juga sangat besar.

Pemerintah AS diperkirakan akan terus melanjutkan pembahasan program tersebut hingga akhir pekan ini. Bush sendiri mendesak kongres untuk memberikan persetujuan karena ekonomi AS dalam bahaya.

Pihak Republik sendiri khawatir pemerintah akan semakin terlibat pada permasalahan perusahaan-perusahaan yang ditanggung kredit macetnya.

Sedangkan pihak Demokrat mengatakan jika program ini disetujui maka perusahaan-perusahaan yang ditolong harus membatasi bayaran untuk para eksekutifnya dan memperhatikan masalah kredit macet perumahan oleh warga AS.

Namun baik Demokrat maupun Republik terlihat memberikan lampu hijau kepada program Buh tersebut meski masih akan menuntaskan beberapa hal lagi kepada pemerintah.

Sementara itu dua kandidat calon presiden Amerika Serikat, Barrack Obama dan John McCain dalam debat perdana hari ini di Oxford, Mississippi, Amerika Serikat, sepakat dengan rencana suntikan dana US$ 700 miliar sebagai langkah penyelamatan ekonomi AS. Meski keduanya menyadari bahwa siapa pun yang terpilih nanti akan menanggung beban keuangan yang cukup berat

dari : Detikfinance
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What is Petroleum?

Petroleum (L. petroleum, from Greek πετρέλαιον, lit. "rock oil", first used in the treatise De re metallica published in 1556 by the German mineralogist Georg Bauer, known as Georgius Agricola) or crude oil is a naturally occurring, flammable liquid found in rock formations in the Earth consisting of a complex mixture of hydrocarbons of various molecular weights, plus other organic compounds.

Composition
The proportion of hydrocarbons in the mixture is highly variable and ranges from as much as 97% by weight in the lighter oils to as little as 50% in the heavier oils and bitumens.

The hydrocarbons in crude oil are mostly alkanes, cycloalkanes and various aromatic hydrocarbons while the other organic compounds contain nitrogen, oxygen and sulfur, and trace amounts of metals such as iron, nickel, copper and vanadium. The exact molecular composition varies widely from formation to formation but the proportion of chemical elements vary over fairly narrow limits as follows:

Carbon 83-87%
Hydrogen 10-14%
Nitrogen 0.1-2%
Oxygen 0.1-1.5%
Sulfur 0.5-6%
Metals <1000 ppm

Crude oil varies greatly in appearance depending on its composition. It is usually black or dark brown (although it may be yellowish or even greenish). In the reservoir it is usually found in association with natural gas, which being lighter forms a gas cap over the petroleum, and saline water which being heavier generally floats underneath it. Crude oil may also be found in semi-solid form mixed with sand, as in the Athabasca oil sands in Canada, where it may be referred to as crude bitumen.

Petroleum is used mostly, by volume, for producing fuel oil and gasoline (petrol), both important "primary energy" sources.[3] 84% by volume of the hydrocarbons present in petroleum is converted into energy-rich fuels (petroleum-based fuels), including gasoline, diesel, jet, heating, and other fuel oils, and liquefied petroleum gas.

Due to its high energy density, easy transportability and relative abundance, it has become the world's most important source of energy since the mid-1950s. Petroleum is also the raw material for many chemical products, including pharmaceuticals, solvents, fertilizers, pesticides, and plastics; the 16% not used for energy production is converted into these other materials.

Petroleum is found in porous rock formations in the upper strata of some areas of the Earth's crust. There is also petroleum in oil sands (tar sands). Known reserves of petroleum are typically estimated at around 190 km3 (1.2 trillion (short scale) barrels) without oil sands, or 595 km3 (3.74 trillion barrels) with oil sands. Consumption is currently around 84 million barrels (13.4×106 m3) per day, or 4.9 km3 per year. Because the energy return over energy invested (EROEI) ratio of oil is constantly falling (due to physical phenomena such as residual oil saturation, and the economic factor of rising marginal extraction costs), recoverable oil reserves are significantly less than total oil-in-place. At current consumption levels, and assuming that oil will be consumed only from reservoirs, known recoverable reserves would be gone around 2039, potentially leading to a global energy crisis. However, there are factors which may extend or reduce this estimate, including the rapidly increasing demand for petroleum in China, India, and other developing nations; new discoveries; energy conservation and use of alternative energy sources; and new economically viable exploitation of non-conventional oil sources.
Chemistry

Octane, a hydrocarbon found in petroleum, lines are single bonds, black spheres are carbon, white spheres are hydrogen
Petroleum is a mixture of a very large number of different hydrocarbons; the most commonly found molecules are alkanes (linear or branched), cycloalkanes, aromatic hydrocarbons, or more complicated chemicals like asphaltenes. Each petroleum variety has a unique mix of molecules, which define its physical and chemical properties, like color and viscosity.

The alkanes, also known as paraffins, are saturated hydrocarbons with straight or branched chains which contain only carbon and hydrogen and have the general formula CnH2n+2 They generally have from 5 to 40 carbon atoms per molecule, although trace amounts of shorter or longer molecules may be present in the mixture.
The alkanes from pentane (C5H12) to octane (C8H18) are refined into gasoline (petrol), the ones from nonane (C9H20) to hexadecane (C16H34) into diesel fuel and kerosene (primary component of many types of jet fuel), and the ones from hexadecane upwards into fuel oil and lubricating oil. At the heavier end of the range, paraffin wax is an alkane with approximately 25 carbon atoms, while asphalt has 35 and up, although these are usually cracked by modern refineries into more valuable products. Any shorter hydrocarbons are considered natural gas or natural gas liquids.
The cycloalkanes, also known as napthenes, are saturated hydrocarbons which have one or more carbon rings to which hydrogen atoms are attached according to the formula CnH2n. Cycloalkanes have similar properties to alkanes but have higher boiling points.

The aromatic hydrocarbons are unsaturated hydrocarbons which have one or more planar six-carbon rings called benzene rings, to which hydrogen atoms are attached with the formula CnHn. They tend to burn with a sooty flame, and many have a sweet aroma. Some are carcinogenic.

These different molecules are separated by fractional distillation at an oil refinery to produce gasoline, jet fuel, kerosene, and other hydrocarbons. For example 2,2,4-trimethylpentane (isooctane), widely used in gasoline, has a chemical formula of C8H18 and it reacts with oxygen exothermically.

The amount of various molecules in an oil sample can be determined in laboratory. The molecules are typically extracted in a solvent, then separated in a gas chromatograph, and finally determined with a suitable detector, such as a flame ionization detector or a mass spectrometer.
Incomplete combustion of petroleum or gasoline results in production of toxic byproducts. Too little oxygen results in carbon monoxide. Due to the high temperatures and high pressures involved, exhaust gases from gasoline combustion in car engines usually include nitrogen oxides which are responsible for creation of photochemical smog.

Formation
Geologists view crude oil and natural gas as the product of compression and heating of ancient organic materials (i.e. kerogen) over geological time. Formation of petroleum occurs from hydrocarbon pyrolysis, in a variety of mostly endothermic reactions at high temperature and/or pressure. Today's oil formed from the preserved remains of prehistoric zooplankton and algae, which had settled to a sea or lake bottom in large quantities under anoxic conditions (the remains of prehistoric terrestrial plants, on the other hand, tended to form coal). Over geological time the organic matter mixed with mud, and was buried under heavy layers of sediment resulting in high levels of heat and pressure (known as diagenesis). This caused the organic matter to chemically change, first into a waxy material known as kerogen which is found in various oil shales around the world, and then with more heat into liquid and gaseous hydrocarbons in a process known as catagenesis.

Geologists often refer to the temperature range in which oil forms as an "oil window"—below the minimum temperature oil remains trapped in the form of kerogen, and above the maximum temperature the oil is converted to natural gas through the process of thermal cracking. Although this temperature range is found at different depths below the surface throughout the world, a typical depth for the oil window is 4–6 km. Sometimes, oil which is formed at extreme depths may migrate and become trapped at much shallower depths than where it was formed. The Athabasca Oil Sands is one example of this.

from : wikipedia
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Permainan Harga Minyak

Siapa dalang di balik fluktuasi tajam harga minyak mentah dunia? Jika memilih spekulan sebagai jawaban, Anda tidak sendiri. Sebagian besar analis menyebut spekulan, kadang diperhalus jadi investor, sebagai biang keladi gejolak harga saat stok memadailah.

Spekulan, dalam Kamus Besar Bahasa Indonesia, berarti orang yang mencari keuntungan a.l. di perniagaan dengan cara melakukan spekulasi. Sementara spekulasi merupakan pendapat atau dugaan yang tidak berdasarkan kenyataan, tindakan untung-untungan, atau menjual sesuatu yang mungkin mendatangkan untung besar.

Namun, sebagian analis tidak sepakat dengan pendapat umum itu, seperti Stefanus P. Susanto, pemerhati minyak sekaligus Direktur PT Reliance Securities Tbk. Dia menilai spekulan juga bagian yang normal dari sebuah pasar. Spekulan akan tetap hadir selama perekonomian mengandalkan pasar.

"Spekulan tidak bisa menentang arus, dia akan terjun mengikuti arus dengan memanfaatkan celah yang ada di market, misalnya short selling," katanya.

Meski demikian, ekonom dan VP Standard Chartered Indonesia Fauzi Ichsan mempunyai indikator sederhana untuk mengetahui apakah spekulan saat ini sedang bermain di pasar komoditas terutama kontrak minyak mentah.

"Kalau dalam kondisi normal, harga [minyak] sekitar US$90 per barel, tetapi jika harga di atas US$90 per barel, itu faktor speculated premium," tuturnya.

Padahal harga minyak di bawah US$90 per barel hanya terjadi pada 31 Januari-7 Februari. Harga terendah dalam lima bulan terakhir, terjadi pada tanggal 16 September US$91,15 per barel.

Kemarin, kontrak minyak untuk pengiriman November diperdagangkan pada level US$106,9 per barel di New York Mercantile Exchange pada pukul 14.56 waktu Singapura.

Pada perdagangan pada Selasa, minyak turun US$2,76 per barel atau 2,5% menjadi US$106,61 per barel. Harga minyak itu juga lebih rendah 27% dari rekor 11 Juli sebesar US$147,27 per barel.

Data stok dan kebutuhan minyak mentah dunia yang dikumpulkan Bloomberg bisa mematahkan mekanisme permintaan dan penawaran sebagai penyebab lonjakan harga.

Pada 31 Agustus, permintaan minyak global mencapai 86 juta barel, sekitar 48 juta barel di antaranya berasal dari negara maju. Pada saat yang sama, pasokan minyak mencapai 86,4 juta barel, dari jumlah itu sekitar 32,1 juta barel produksi OPEC.

Kondisi pasokan dan permintaan tidak berbeda saat harga minyak mendaki atau terjun bebas. Fluktuasi harga yang tajam lebih banyak dipicu kekhawatiran pemegang kontrak atau investor di pasar komoditas terhadap kondisi stok AS dan kelangsungan produksi pada saat badai menghampiri negeri adidaya itu.

Pengaruh badai a.l. Gustav dan Ike, kondisi stok dan prospek perekonomian AS pada harga minyak, terlihat lebih dominan dibandingkan dengan penurunan permintaan dari India dan China, atau bahkan situasi geopolitik.

Kenaikan harga minyak itu juga membangunkan pasar komoditas dari tidur panjangnya terutama komoditas yang berhubungan dengan bahan bakar alternatif seperti jagung, kedelai, dan minyak sawit (crude palm oil/CPO).

Faktor fundamental yang berhubungan dengan produksi minyak hampir tidak terdengar ketika harga minyak mengamuk.

Manipulasi kontrak

Perkembangan harga di pasar komoditas itu akhirnya membuat The Commodity Futures Trading Commission (CFTC) gerah. Badan pengawas perdagangan komoditas berjangka AS itu pada Juni melakukan penyelidikan.

Pekan ini, CFTC juga melakukan penyelidikan yang sama setelah harga minyak cenderung aneh. Hasilnya, praktik spekulasi dituduh sebagai salah satu penyebabnya.

Pada saat diperdagangkan awal pekan lalu, harga minyak mentah pengiriman Oktober yang sudah berakhir kontraknya melonjak hingga US$16,37 atau 15,7% ke level US$120,92 per barel.

Padahal harga sepanjang pekan lalu hanya bergerak pada kisaran US$95-US$97 per barel selama empat hari dan bertahan pada level US$104,55 per barel akhir pekan. Pada proses penyelidikan itu, CFTC juga menggaet staf pelaksana Nymex guna memastikan tidak ada spekulan yang mengambil untung sesaat dari krisis keuangan yang tengah berkecamuk.

CFTC juga membuka data investor di bursa berjangka dan di indeks dana kelolaan komoditas untuk melihat besaran aksi spekulasi yang dilakukan pengelola dana.

Aksi otoritas bursa berjangka AS itu dilancarkan untuk mendapatkan penjelasan sejauh mana faktor manipulasi kontrak berjangka minyak dapat mendongkrak harga hingga dua kali lipat dalam setahun. Pada saat penyelidikan dilakukan, harga minyak naik menjadi US$124,93 per barel dari rata-rata harga bulan sebelumnya yang masih US$109 per barel.

Beberapa anggota Kongres AS bahkan lebih garang lagi. Pada saat harga minyak mencapai rekor tertingginya pada 11 Juli, sejumlah anggota Kongres AS itu mengajukan aturan perundangan yang intinya membatasi aksi spekulan di pasar energi.

Negara yang mengklaim paling demokratis dan pengusung utama sistem pasar itu pun mulai mencari jalan mengerem gerakan pasar komoditas. Belum sempat terdengar kelanjutan pembahasan, Washington sudah disibukkan dengan penyelamatan industri keuangannya.

Krisis di pasar keuangan AS akibat hantaman krisis subprime mortgage dan akhirnya berlanjut dengan jatuhnya Bear Stearns, Fannie Mae and Freddie Mac lalu bangkrutnya Lehman Brothers dan surutnya likuiditas American International Group (AIG).

Pelemahan nilai tukar dolar AS yang diperkirakan sudah memenuhi siklus lima hingga tujuh tahunan juga merugikan investor di pasar uang. Pasar komoditas, khususnya minyak, menjadi lahan menjanjikan bagi investor.

Namun, beberapa analis kini pesimistis pasar komoditas akan menarik minat karena penurunan harga minyak yang tajam ikut menyeret harga komoditas energi lain, seperti batu bara dan gas alam cair.

Minat investor itu bisa dilihat dari laporan EPFR Global, salah satu perusahaan periset yang memperkirakan aliran dana keluar bursa komoditas dan energi dalam satu pekan, dihitung sampai dengan 17 September, mencapai US$767 juta.

Dari jumlah itu, arus dana keluar dari pasar komoditas mencapai US$269 juta dan energi US$498 juta. Sejak pertengahan Juli, Bloomberg mencatat jumlah dana yang ditarik investor dari kedua pasar itu mencapai US$3,9 miliar.

"Ketika saham anjlok seketika investor beralih ke pasar komoditas dan memicu harga minyak melonjak US$120 per barel pada Senin pekan ini. Jika kedua pasar tersebut, baik saham maupun komoditas secara bersamaan tertekan maka pasar valas menjadi pilihan investor menyuntikkan dananya," kata Stefanus.

Seperti halnya analis yang lain, dia juga mengaku sulit memperkirakan arah investasi pada saat pasar komoditas, saham, dan keuangan tertekan. Pilihan hold dana dan menunggu perkembangan penghapusan aset tidak likuid di industri perbankan AS, katanya, menjadi pilihan yang paling wajar saat ini.

AS mempunyai kesempatan untuk memengaruhi spekulan di pasar komoditas, tetapi negara lain, termasuk Indonesia, tidak. Padahal, efek negatif yang mesti dihadapi negeri lain terutama negara berkembang lebih tinggi dari AS. Jadi, hold dulu, deh! (23)(nana.oktavia@bisnis.co.id/lutfi.zaenudin@bisnis.co.id)

Oleh Nana Oktavia Musliana & Lutfi Zaenudin
Wartawan Bisnis Indonesia
dari : bisnis indonesia
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Gates Sees Slump in `Rich-World' Generosity From Market Crisis

Microsoft Corp. founder Bill Gates said the U.S. financial crisis would likely reduce support of Western governments for programs to combat hunger, poverty and disease to which his foundation has contributed $17 billion.

``There are the rich-world economies and the developing- world economies and, while the degree to which they are linked is not well understood, when one suffers it can't be good for the other,'' Gates said in a Bloomberg News interview yesterday after speaking at a United Nations event in New York. ``Rich- world budgets may not have room for increased generosity.''

Gates addressed the financial market meltdown after announcing that the Seattle-based Bill & Melinda Gates Foundation will commit $66 million to a UN initiative to help 350,000 poor farmers in 21 African and Asian nations increase productivity. The program will provide farmers with equipment and irrigation techniques and show them how to improve processing and storage of crops.

The worst financial upheaval since the Great Depression is dominating speeches and meetings of the more than 100 world leaders gathered for the opening of the UN General Assembly. The U.S. has come under attack from friends and foes alike for creating an economic crisis that threatens UN goals for reducing poverty, hunger and disease.

Generosity is one aspect of the so-called Millennium Development Goals, ``along with scientific advances and good governance,'' Gates said.

Hunger Goal

UN Secretary-General Ban Ki-moon said this week that no country is on course to achieve all of the goals, which include halving chronic hunger by 2015.

Rising food prices in the past year have added 75 million hungry people in the world, bringing the total to 923 million, according to Josette Sheeran, executive director of the UN's World Food Program. Another 100 million may have to be added next year, she said.

The Rome-based agency plans to feed 90 million people this year, in part by using $1 billion in food purchased from farmers in 80 poor nations. Almost 90 percent of WFP recipients are farmers who can't grow enough to feed themselves or their families, or to sell, she said.

The ``Purchase for Progress'' program is also getting $9.1 million from the Howard G. Buffett Foundation and $750,000 from the government of Belgium. Howard Buffett is the son of Warren Buffett, the billionaire chairman and chief executive officer of Berkshire Hathaway Inc.

Sheeran said the WFP will sign three-year contracts with farmers, giving them the security to invest in new equipment and storage facilities and to form cooperatives.

``The goal is to have these markets self-sustaining,'' Gates said.

The Gates Foundation has given priority to research on a group of infectious diseases, including HIV, tuberculosis and malaria. The foundation announced plans in April to increase spending on farm projects by 50 percent this year, to about $240 million.

from : bloomberg.com
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Akhirnya Malaysia Menurunkan Harga BBM

Malaysia kembali menurunkan harga BBM, seiring turunnya harga minyak beberapa waktu terakhir. Harga bensin di Malaysia turun hingga 3,9% terhitung mulai Kamis, 25 September.

Perdana Menteri Malaysia, Abdullah Ahmad Badawi mengatakan, harga bensin akan diturunkan 10 sen menjadi 2,45 ringgit atau sekitar Rp 6.700. Sementara minyak diesel diturunkan menjadi 2,40 ringgit.

Ini adalah kedua kalinya Malaysia menurunkan harga BBM, setelah kenaikan hingga 41% yang diberlakukan pada Juni, setelah harga minyak mentah dunia mengamuk dan sempat menembus US$ 147 per barel.

"Pada bulan terkakhir, harga minyak dunia telah berfluktuasi, namun secara rata-rata masih lebih rendah dari harga sebelumnya (pada Agustus)," kata Badawi dalam pernyataannya seperti dikutip dari AFP, Rabu (24/9/2008).

Penurunan harga ini diberlakukan hanya sepekan menjelang hari raya Idul Fitri, di negara yang mayoritas penduduknya beragama Muslim itu.

"Pemerintah sadar bahwa banyak orang yang akan pulang kampung untuk memperingati hari raya pada minggu ini. Kami berharap penurunan harga ini akan mengurangi beban masyarakat, terutama yang merayakan Idul Fitri," tambahnya.

Kenaikan harga BBM hingga 41% pada Juni lalu telah menyebabkan inflasi di Malaysia meroket hingga level tertingginya selama 26 tahun yakni sebesar 8,5%. Selain karena kenaikan harga BBM, inflasi juga dipicu oleh kenaikan harga pangan. Kenaikan harga BBM itu sebelumnya juga telah memicu aksi protes besar-besaran di Malaysia.

dari : detik.finance
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Bailout AS Hanya Efektif di Jangka Pendek

Rencana penyelamatan sektor keuangan di AS (bailout) yang akan dilakukan oleh pemerintah AS dengan menyediakan dana sebesar US$ 700 miliar kepada sektor keuangan hanya efektif dalam jangka pendek saja.

Hal tersebut disampaikan Menteri Keuangan/Menko Perekonomian Sri Mulyani di Gedung DPR, Senayan, Jakarta, Rabu (24/9/2008).

Menurut Sri Mulyani tujuan dari rencana penyelamatan sektor keuangan di AS ini adalah untuk mengembalikan kepercayaan pasar dan menghilangkan kepanikan yang terjadi.

"Kalau seluruh dunia, nanti masih akan melihat dan memperhatikan perkembangan yang terjadi di sana. Jadi detail dari bailout ini kan akan di work out, sedang dibahas antara US treasury, Federal Reserves, dan Kongres AS. Kalau tujuannya mereka ingin mengembalikan confidence dan menghilangkan kepanikan jadi dalam jangka pendek itu akan lebih bagus, dalam artian supaya tidak terjadi sentimen yang volatile," tuturnya.

Menurut Sri Mulyani yang diwaspadai adalah justru dampak dari bailout dalam jangka menengah dan panjang. Dengan bailout itu pemerintah AS akan makin banyak menerbitkan utang sehingga harga obligasi AS akan menurun.

"Karena eksposure utangnya Amerika akan tinggi sehingga pasti harga treasury bonds akan turun, berarti global interest rate akan naik," ujarnya.

Sementara itu mengenai tingginya yield (imbal hasil) dari SUN (Surat Utang Negara) pemerintah di pasar yang tinggi akibat kondisi ekonomi global yang labil, Sri Mulyani mengatakan pemerintah dengan situasi ini akan melihat terus menerus kondisi pasar untuk penerbitan obligasi negara berikutnya.

"Pokoknya target atau suasana penyerapan APBN akan kita monitor dengan sangat detail. Kalau untuk 2009 kan belum diputuskan," imbuhnya.

dari : detik.finance
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Warren Buffett, Goldman's White Knight

The Oracle of Omaha's $5 billion cash infusion may save Goldman Sachs, but the tottering bank's health and prospects have lost their shine.
Warren Buffett has powerful coattails. Within 14 hours of Buffett's ride to the rescue of Goldman Sachs (GS), with a $5 billion cash infusion and warm praise for the struggling investment banking titan, Goldman on Sept. 24 found other investors to snap up $5 billion worth of its stock. The outfit's rapid-fire stock offering, for 40.65 million shares at $123 each, raised twice what Goldman managers originally expected.

But the deal is hardly a glowing statement about Goldman's health and upbeat prospects. Some analysts say both the Buffett investment and the offering are highly costly to the firm, which is likely to be facing years of trouble, retrenchment, and subpar returns as it struggles through the financial crisis. Looking at the stock offering, Oppenheimer (OPY) analyst Meredith Whitney told clients in a note, "For GS, the blue chip of financials, the terms of this deal seem exorbitantly expensive and provide insight into how truly challenging current market conditions are."

Goldman did the offering at less than half the price per share that the firm was worth only a year ago. It will sharply dilute the value of its outstanding shares, some 16%, as a result of the offering and the Buffett investment, Whitney calculates. The initial enthusiasm for the deal among investors has been cooling as they've sorted out the implications: The shares climbed past 133 in after-hours trading on Sept. 23, on the Buffett news, but they slipped slightly after terms of the public offering were announced. In afternoon trading Sept. 24, the stock was up 6%, to 132.
Investors Left Stunned

Goldman and Morgan Stanley (MS), the other big investment bank left standing after the financial typhoon that has swept up Merrill Lynch (MER), Bear Stearns (JPM), and Lehman Brothers, stunned investors over the weekend when they announced plans to convert themselves into commercial banks. The move, done in conjunction with the Federal Reserve, will put them under more severe regulation and is expected to force them to scale back on risky businesses, many of which—such as the underwriting of mortgage-backed securities—have already shriveled away. They are not expected to operate with anywhere near the high debt levels they have in the past.

Both banks now can count on hefty cash infusions. While Goldman collected $10 billion from public investors and Buffett, Morgan has garnered more than $8 billion from Japanese megabank Mitsubishi UFJ (MTU) in exchange for a stake of up to 20%. Yet they are hardly out of the woods. "They're going to have to retrench and lay off a lot of people, and it's not due to the bank holding company charters," says Ladenburg Thalmann analyst Richard Bove. "It's due to the fact that the business has changed. In my view, it's going to take three to four years to work out the financial crisis."

Buffett, Bove says, got an outstanding deal in his investment in Goldman. He is taking $5 billion worth of perpetual preferred stock and getting a 10% dividend and warrants to buy $5 billion of common stock with a strike price of 115 a share. He'll be able to exercise the warrants at any time over five years.

With the stock trading above the strike price, he's already "in the money" for millions of dollars. "It was a great deal, not for Goldman Sachs, but for Warren Buffett," the analyst says. "Goldman basically had to do it. It had no choice." Indeed, Bove argues that Goldman was heading toward bankruptcy without these moves. Lehman Brothers slipped into bankruptcy, while Bear Stearns collapsed and was sold at a fire-sale price to JPMorgan Chase. Merrill Lynch narrowly escaped disaster by selling itself to Bank of America (BAC).

Goldman officials argue they were nowhere near the troubled shape of their investment banking brethren. Lucas van Praag, a spokesman for the firm, says Bove's view that a bankruptcy filing was likely without the bank charter is "ridiculous." The other firms either had excessive concentrations in mortgages or depended too heavily on short-term funding sources, he says. Such businesses as mortgage securities, including subprime mortgages, were among the smallest operations at Goldman. Still, van Praag says the switch to a highly regulated commercial bank structure was needed because "you ignore market sentiment at your peril. It became clear in the increasingly turbulent market that sentiment clearly was moving toward safety and security associated with being regulated by the Federal Reserve."
Leery of Investment Banks

Buffett, nonetheless, could prove just the balm that Goldman needs over time. He has long used the services of the firm, even while disdaining investment bankers generally. When the Oracle of Omaha cut a deal with the Pritzker family last year to buy a $7 billion crazy-quilt of businesses called Marmon Holdings, for instance, he proudly said he and the wealthy Chicago family arrived at a price without the help of advisers, a style that let them avoid "nit-picking." Buffett agreed to shell out an initial $4.5 billion purchase for a 60% stake that is expected to grow over time. But Berkshire Hathaway (BRKA), Buffett's investment company, did have to use Goldman to do some of the heavy lifting to finalize the deal. And the outfit did such a good job of it that in his annual letter to shareholders last year Buffett singled out a banker there, Byron Trott, as "the rare investment banker who puts himself in his client's shoes." Buffett added that he and his partner at Berkshire, Charlie Munger, "trust him completely."

It's not clear whether Trott, who is still associated with Goldman, had anything to do with the deal Buffett just struck to take a big chunk of Goldman. But there's no doubt that Buffett thinks highly of the outfit and partners there return the favor. Lloyd Blankfein, the chief executive of Goldman Sachs Group, was effusive in announcing the deal: "We are pleased that given our longstanding relationship, Warren Buffett, arguably the world's most admired and successful investor, has decided to make such a significant investment in Goldman Sachs."

Calling the move by Buffett "a strong validation of our client franchise and future prospects," Blankfein added that the investment "will further bolster our strong capitalization and liquidity position." For his part, Buffett called Goldman an "exceptional institution." He added: "It has an unrivaled global franchise, a proven and deep management team, and the intellectual and financial capital to continue its track record of outperformance."
Profitability May Shrink

Certainly, the operations of both Goldman and Morgan will change as a result of the marketplace shifts and their moves into commercial banking status, but just how much they will be hampered is arguable. Analysts have said their profitability is bound to shrink as they have to move away from some of the risk-taking proprietary trading they have done in the past, which has goosed their results. The banks will be overseen by a coterie of regulators—including the Federal Reserve, the Treasury Dept., and the FDIC—that is sure to rein in some of their more aggressive activities. Some analysts have said their returns on equity, which averaged 22.1% at Goldman and 19.5% at Morgan since 1999, could drop to as little as 13%, closer to those of conventional bank holding companies.

Still, the banks could wind up keeping some of the business operations they have had that are outside of conventional banking and that gin up returns. Both Goldman and Morgan won exemptions that allow them to take possession of oil as part of their commodities trading operations, for instance, and they are likely to try to make those exemptions permanent. Normally, commercial banks don't buy and keep oil or other physical assets. Other outfits, such as Citigroup (C), have won such exemptions.

No doubt Buffett expects Goldman to continue making top-drawer returns—though his backhanded compliments could well continue. In his 2003 letter to Berkshire shareholders, the über-investor saluted Goldman banker Trott for helping arrange a deal with Wal-Mart for Berkshire to buy a subsidiary. While arguing that he and Berkshire officials did no "due-diligence" review of the deal, instead trusting in Wal-Mart's representations after a two-hour meeting, Buffett did say that Trott was instrumental in the deal and in two other Berkshire purchases. "He understands Berkshire far better than any investment banker with whom we have talked and—it hurts me to say this—earns his fee."

from : finance.google.com

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