The engine of the demise of Warren Buffett's leveraged legacy.

I have a long standing prediction on this blog that Buffett is going to be disgraced and universally reviled by the investing public before the coming crash bottoms.  In fact, going forward, until Buffett becomes the laughing stock on the financial news channels and perhaps even the brunt of an unkind skit on Saturday Night Live then we know the bottom is not in yet.

Yes, I know this sounds crazy but Buffett is really just a leveraged insider who is trading on insider info.  He knew that the fed was going to throw the kitchen sink at the economy back in 2008 in order to stop it from crashing because he had inside contacts.  So he could confidently take what appeared to be high risk, high reward deals but the risk at that time was imagined, not real, and Buffett knew it.  The fed still had a conservative balance sheet to use as a war chest (they fought the war on insolvency using debt!) back then.  But those days are over.  The fed is saddled with 4+ trillion of debt the the debtors will not be able to pay off once the collapse hits.  What cannot be repaid will not be repaid.

Buffett's problem is that the sweetheart deals he used to get access to will not come along this time.  Even Buffett will be denied credit and his cash will dry up because of his undisclosed derivative exposure.  Because of derivatives losses, the shares of Berkshire Hathaway (BRK-A) will collapse along with the price of KO, IBM, GE and other hollowed out companies that Berkshire holds.  The people will likely drag Buffett before congress in a public dog and pony show "investigation" designed to confuse Mark and Patsy into thinking some kind of fact finding activity (AKA smoke screen and cover up) is warranted into what is obvious today will be a preplanned Ponzi scheme collapse.

You can see how the Berkshire Hathaway shares peaked into wave red 5 in 2008 and then put in 5 waves down.  Well folks, the subsequent a-b-c to even higher highs is likely an expanded flat correction (where B can go higher than the 5th Elliott wave before turning down into C).  This expanded flat is now near the very end of the C wave.   

As a result, the shares are now headed almost straight up.  Folks, if ever there were a time to don the parachute and bail out, it's now.  Will it reverse downward tomorrow?  Who knows.  But soon enough it will peak and the next wave down will be a powerful, motive 5 wave down move that will collapse the paper value of what is essentially a leveraged holding company ETF.  As BRK-A goes down, the same people who are shouting praise at Buffett today will turn on him like wolves.  The government will turn on him too.  Buffett's real curse is that he is likely going to live long enough to see his reputation dragged through the mud.