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8:00 AM EST, Wednesday, September 24, 2008: No one beats Warren Buffett for excellence in investing. No one. While you and I have floundered in recent weeks, Mr. Buffett has closed two absolutely brilliant deals.

Berkshire's subsidiary MidAmerican Energy Holdings is buying all the shares it doesn't own in Constellation Energy (CEG) at $26.50 a share. That's a huge bargain -- based on MidAmerican's assets and its recent trading. Its one-year high was $108. Constellation got into some recent financial difficulties with trading energy, but Buffett has given it enough money to solve that mistake.

In both transactions Buffett displays his fine touch for buying ultra-solid assets ultra-cheaply. Yes, I'm jealous.

What Paulson wants is a blank $700 billion check. Yesterday Paulson warned Congress that if Congress failed to pass the $700 billion plan, it risked causing a recession and increasing joblessness. Fact is we're getting the recession and the increasing joblessness whether Paulson's plan passes or not.

If the Paulson plan passes, it will go down in history as giving faith-based investing a whole new meaning. If it is passed, it will be the least-thought out, least discussed piece of legislation ever in the history of the United States. Tactics being used by the Administration to stampede Congress into it remind me of how we got railroaded into Iraq. Take an "emergency," blow it up, propose an action without discussion and bingo...

I am personally not against some form of "bailout." The devil is in the details. And the details in this one stink. The proposal is to give Paulson a blank $700 billion check and let him spend it wherever he feels. He can bail out his friends and screw his enemies, or vice versa. He can bail out WaMu and ignore Citigroup, or vice versa. You think I'm kidding? Here in its glorious entirety is Paulson's Plan. Skim through. I've bolded the more delicious parts.

September 21, 2008
Text of Draft Proposal for Bailout Plan

LEGISLATIVE PROPOSAL FOR TREASURY AUTHORITY TO PURCHASE MORTGAGE-RELATED ASSETS

Section 1. Short Title.

This Act may be cited as ____________________.

Sec. 2. Purchases of Mortgage-Related Assets.

(a) Authority to Purchase.--The Secretary is authorized to purchase, and to make and fund commitments to purchase, on such terms and conditions as determined by the Secretary, mortgage-related assets from any financial institution having its headquarters in the United States.

(b) Necessary Actions.--The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this Act, including, without limitation:

(1) appointing such employees as may be required to carry out the authorities in this Act and defining their duties;

(2) entering into contracts, including contracts for services authorized by section 3109 of title 5, United States Code, without regard to any other provision of law regarding public contracts;

(3) designating financial institutions as financial agents of the Government, and they shall perform all such reasonable duties related to this Act as financial agents of the Government as may be required of them;

(4) establishing vehicles that are authorized, subject to supervision by the Secretary, to purchase mortgage-related assets and issue obligations; and

(5) issuing such regulations and other guidance as may be necessary or appropriate to define terms or carry out the authorities of this Act.

Sec. 3. Considerations.

In exercising the authorities granted in this Act, the Secretary shall take into consideration means for--

(1) providing stability or preventing disruption to the financial markets or banking system; and

(2) protecting the taxpayer.

Sec. 4. Reports to Congress.

Within three months of the first exercise of the authority granted in section 2(a), and semiannually thereafter, the Secretary shall report to the Committees on the Budget, Financial Services, and Ways and Means of the House of Representatives and the Committees on the Budget, Finance, and Banking, Housing, and Urban Affairs of the Senate with respect to the authorities exercised under this Act and the considerations required by section 3.

Sec. 5. Rights; Management; Sale of Mortgage-Related Assets.

(a) Exercise of Rights.--The Secretary may, at any time, exercise any rights received in connection with mortgage-related assets purchased under this Act.

(b) Management of Mortgage-Related Assets.--The Secretary shall have authority to manage mortgage-related assets purchased under this Act, including revenues and portfolio risks therefrom.

(c) Sale of Mortgage-Related Assets.--The Secretary may, at any time, upon terms and conditions and at prices determined by the Secretary, sell, or enter into securities loans, repurchase transactions or other financial transactions in regard to, any mortgage-related asset purchased under this Act.

(d) Application of Sunset to Mortgage-Related Assets.--The authority of the Secretary to hold any mortgage-related asset purchased under this Act before the termination date in section 9, or to purchase or fund the purchase of a mortgage-related asset under a commitment entered into before the termination date in section 9, is not subject to the provisions of section 9.

Sec. 6. Maximum Amount of Authorized Purchases.

The Secretary’s authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time

Sec. 7. Funding.

For the purpose of the authorities granted in this Act, and for the costs of administering those authorities, the Secretary may use the proceeds of the sale of any securities issued under chapter 31 of title 31, United States Code, and the purposes for which securities may be issued under chapter 31 of title 31, United States Code, are extended to include actions authorized by this Act, including the payment of administrative expenses. Any funds expended for actions authorized by this Act, including the payment of administrative expenses, shall be deemed appropriated at the time of such expenditure.

Sec. 8. Review.

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

Sec. 9. Termination of Authority.

The authorities under this Act, with the exception of authorities granted in sections 2(b)(5), 5 and 7, shall terminate two years from the date of enactment of this Act.

Sec. 10. Increase in Statutory Limit on the Public Debt.

Subsection (b) of section 3101 of title 31, United States Code, is amended by striking out the dollar limitation contained in such subsection and inserting in lieu thereof $11,315,000,000,000.

Sec. 11. Credit Reform.

The costs of purchases of mortgage-related assets made under section 2(a) of this Act shall be determined as provided under the Federal Credit Reform Act of 1990, as applicable.

Sec. 12. Definitions.

For purposes of this section, the following definitions shall apply:

(1) Mortgage-Related Assets.--The term “mortgage-related assets” means residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before September 17, 2008.

(2) Secretary.--The term “Secretary” means the Secretary of the Treasury.

(3) United States.--The term “United States” means the States, territories, and possessions of the United States and the District of Columbia.

The guys at Reserve Management belong in jail for this stunt. Here's the story. It's mind-blowing. What I can't figure out is what Reserve management gained by this total idiocy. Here's the New York Times story

Suit Claims Fund Gave a Heads Up

By the time the Reserve Fund reported last Tuesday afternoon that its Primary Fund money market funds had “broken the buck” — that is, were no longer worth a dollar a share — investors had already withdrawn billions of dollars from the fund.

Some market analysts assumed they had reacted to the panic sweeping the market. But a lawsuit filed in Minneapolis late last week by Ameriprise Financial offers another explanation: The suit claims the Reserve Fund tipped some big customers about its crisis in advance so that they could get their cash out before its losses became public.

According to the complaint, two senior Reserve Fund executives acknowledged during a conference call last Thursday with Ameriprise that big investors had received an early warning.

The Reserve Fund executives “seemed surprised that Ameriprise had not also been tipped at the same time,” the complaint alleges.

Ameriprise certainly qualified as a big investor. The financial services company had entrusted $128 million of its own money and more than $3.2 billion of its customers’ to the Reserve Fund, through two of its brokerage subsidiaries.

The Reserve Fund Management Company, which managed $66 billion in assets as recently as last year, did not respond to messages to its office in New York City. Its lawyer in Minneapolis, Barbara P. Berens of Kelly & Berens, said her client had instructed her not to comment on the case.

The lawsuit is one of several facing the Reserve Fund company, whose founder invented the money market fund in the early 1970s and whose chairman, Bruce R. Bent, has been publicly critical over the last year about the improper risks he said other money market funds were taking in the stretch for higher and more competitive yields.

Mr. Bent’s words were handed back at him in another lawsuit filed on Friday, this time in federal court in Manhattan. That complaint, proposed as a class action, was filed by the San Francisco law firm of Girard Gibbs on behalf of George C. Dyer, an investor with several hundred thousand dollars frozen in the Reserve Fund’s fund series.

It quotes Mr. Bent’s repeated assurances to shareholders that he thinks of the one-dollar share price as an inviolate aspect of money fund management.

“The cash entrusted to a money fund is your reserve resource that you expect to be there no matter what,” he wrote in January. In July, the fund company boasted of its “superior capacity to maintain a $1.00 per share net asset value at all times.”

This lawsuit also contends that the way the Reserve Fund handled its 11th-hour redemptions last week violated the redemption procedures laid out in the prospectuses it filed with the Securities and Exchange Commission. And it asserts that the Reserve Fund more than doubled its stake in commercial paper issued by Lehman Brothers Holdings last spring, after the investment bank “was widely considered to be the next victim of the ongoing banking crisis.”

These lawsuits are complicating an already tangled redemption process for the Reserve Fund, which has posted only a few advisory statements for investors on its website, www.ReserveFund.com.

The S.E.C., which has staff members at the Reserve Fund’s offices in Manhattan to monitor its activity, has issued an order allowing the fund family to delay redemptions past the seven-day period set by federal law.

And the federal district judge handling the Ameriprise case in Minneapolis, Paul A. Magnuson, imposed a temporary restraining order on Friday evening that prevents the Reserve Fund from permitting any further withdrawals from several of its largest funds.

“Although financial markets should be left as free as possible from judicial intervention, temporary injunctive relief is warranted here,” he said. “Such serious allegations, if proven, give plaintiffs a very strong position for winning later on the merits.”

He added that Ameriprise and its customers would be irreparably harmed “if defendants were allowed to honor redemption requests of investors who were made privy to the bad news before the public was.”

At a hearing scheduled for Tuesday morning in Minneapolis, the lead attorney for Ameriprise, Harvey J. Wolkoff of Ropes & Gray in Boston, will ask the judge to speed up the pace of discovery in the case “so we can figure out who the tippees were.” Mr. Wolkoff said.

For the full text of Ameriprise's press release and for the full text of Ameriprise's legal complaint.

Circulating around trading desks today . . .

SUBJECT: REQUEST FOR URGENT BUSINESS RELATIONSHIP

DEAR AMERICAN:

I NEED TO ASK YOU TO SUPPORT AN URGENT SECRET BUSINESS RELATIONSHIP WITH A TRANSFER OF FUNDS OF GREAT MAGNITUDE.

I AM MINISTRY OF THE TREASURY OF THE REPUBLIC OF AMERICA. MY COUNTRY HAS HAD CRISIS THAT HAS CAUSED THE NEED FOR LARGE TRANSFER OF FUNDS OF 700 BILLION DOLLARS US. IF YOU WOULD ASSIST ME IN THIS TRANSFER, IT WOULD BE MOST PROFITABLE TO YOU.

I AM WORKING WITH MR. PHIL GRAM, LOBBYIST FOR UBS, WHO WILL BE MY REPLACEMENT AS MINISTRY OF THE TREASURY IN JANUARY. AS A SENATOR, YOU MAY KNOW HIM AS THE LEADER OF THE AMERICAN BANKING DEREGULATION MOVEMENT IN THE 1990S. THIS TRANSACTOIN IS 100% SAFE.

THIS IS A MATTER OF GREAT URGENCY. WE NEED A BLANK CHECK. WE NEED THE FUNDS AS QUICKLY AS POSSIBLE. WE CANNOT DIRECTLY TRANSFER THESE FUNDS IN THE NAMES OF OUR CLOSE FRIENDS BECAUSE WE ARE CONSTANTLY UNDER SURVEILLANCE. MY FAMILY LAWYER ADVISED ME THAT I SHOULD LOOK FOR A RELIABLE AND TRUSTWORTHY PERSON WHO WILL ACT AS A NEXT OF KIN SO THE FUNDS CAN BE TRANSFERRED.

PLEASE REPLY WITH YOUR BANK ACCOUNT, IRA AND COLLEGE FUND ACCOUNT NUMBERS AND THOSE OF YOUR CHILDREN AND GRANDCHILDREN TO WALLSTREETBAILOUT@TREASURY.GOV SO THAT WE MAY TRANSFER YOUR COMMISSION FOR THIS TRANSACTION. AFTER I RECEIVE THAT INFORMATION, I WILL RESPOND WITH DETAILED INFORMATION ABOUT SAFEGUARDS THAT WILL BE USED TO PROTECT THE FUNDS AND DETAILS ON THE TRANSFER OF YOUR 31% COMMISSION.

YOURS FAITHFULLY MINISTER OF TREASURY PAULSON

Totally tasteless Indian humor.
For centuries, Hindu women have worn a dot on their foreheads. Most of us have naively thought this was connected with religion or, marriage.

The Indian Embassy in Washington, D.C. has recently revealed the true story.

When a Hindu woman gets married, she brings a dowry into the union. On her wedding night, the husband scratches off the dot to see whether he has won a convenience store, a gas station, a donut shop or a motel.

If nothing is there, he must take a job at a call center in India giving technical advice to hapless Dell customers with busted computers.

This column is about my personal search for the perfect investment. I don't give investment advice. For that you have to be registered with regulatory authorities, which I am not. I am a reporter and an investor. I make my daily column -- Monday through Friday -- freely available for three reasons: Writing is good for sorting things out in my brain. Second, the column is research for a book I'm writing called "In Search of the Perfect Investment." Third, I encourage my readers to send me their ideas, concerns and experiences. That way we can all learn together. My email address is . You can't click on my email address. You have to re-type it . This protects me from software scanning the Internet for email addresses to spam. I have no role in choosing the Google ads on this site. Thus I cannot endorse, though some look interesting. If you click on a link, Google may send me money. Please note I'm not suggesting you do. That money, if there is any, may help pay Michael's business school tuition. Read more about Google AdSense, click here and here.