#2 BUFFETT (FINALLY) OPENS HIS WALLET
As the nation's subprime mortgage meltdown and resulting credit crunch got worse, Warren Buffett kept reminding us that bad times can bring good opportunities, without getting into specifics, of course.
Over the last few months we saw reports he might be interested in Countrywide, Bear Stearns, and Britain's Northern Rock. Nothing appeared to came of it. Buffett himself reminded us that "speculation is just speculation" and a few weeks ago told CNBC's Becky Quick that he sees "enormous divergence" ahead for the financials.
Finally, in December, he made some moves. First, it was the purchase of some TXU high-yield ("junk") bonds for $2.1 billion, although he made it clear he liked those particular bonds, not junk in general.
Then Buffett unleashed his Christmas Day surprise: a $4.5 billion bet on the "future of the American economy" as he bought 60% of the Marmon Group from Chicago's wealthy Pritzker family. After rejecting all kinds of offers to buy a chunk of one troubled financial or another, Buffett was given the opportunity to buy into a conglomerate packed with "very basic American industry" and run by "terrific management." "There's nothing not to like," he told us. It took just two weeks to close the deal.
A few days later, another shocker: Buffett's announcement that Berkshire is getting into the bond insurance business, to compete with the established but weakened players in that field, like Ambac and MBIA. He promised not to make the same mistake of taking on too much risk and charging too little to do so. For good measure, Berkshire also paid $440 million for ING's reinsurance business.
As the New York Times neatly summed up all the year-end activity, "Warren E. Buffett is in no mood to quit."