Hypothesis on Berkshire:
1. Derivatives lose value ---> ratings pressure ---->collateral calls ------>ratings pressure
Since this happened at AIG, I suppose it is the first thing on everyone's mind.
Facts regarding Berkshire:
2. Collateral Calls on derivatives -----> Not with these derivatives.
These contracts don't have collateral calls under any circumstances.*
How do you refute a rumor without raising more questions? BRK today announced that it has nominal exposure to collateral calls on derivatives. Less then 1% of capital, worst case.
*nominal doesn't mean $0, since it seems that if you do enough of anything, there will be exceptions. The equity puts very likely have NO collateral requirements. A few of the CDS's seem to contain contract language requiring them -- so it isn't zero. Let's just say it rounds to zero.
It is hard to drive a stake through a rumor without raising more questions.