By Steve Blankinship
Associate Editor

"What to buy, what to buy? So many bargains and just so many billions I can spend at one time. Oh, I know. I think I'll take these."

The above is not a brain meld transcript captured from Warren Buffett. But it might reflect the gist of what was actually going through the mind of America's shrewdest investor when he recently went on a buying spree not seen since Imelda Marcos last entered a shoe store.

Last week, Buffett's Omaha, Neb.-based Berkshire Hathaway – by way of its MidAmerican Energy subsidiary – spent $4.7 billion to buy Baltimore-based Constellation Energy. That adds 83 power plants to MidAmerican's fleet, including five nuclear units. The purchase also includes Baltimore Gas & Electric. It would be impossible to build a single new nuclear plant today for anything close to what Buffet paid for all of Constellation, which operates the largest fleet of non-regulated power generating assets in the United States.

While Electricite de France – with a 10 percent stake in Constellation – may still be lurking in the wings, it appears for now that Buffet's bargain basement deal is a fait accompli (as they say in Paris), or a done deal (as they say in Omaha). In fact, on the Monday morning following the agreement, $1 billion was wired from Omaha to Baltimore in the form of preferred stock yielding 8 percent to MidAmerican. Talk about cash and carry.

The acquisition is quite a bargain considering Constellation recently tried to sell to FPL Group for two-and-a-half times that amount. The fire sale was necessitated by Constellation's ties to investment banking firm Lehman Brothers, which a week earlier had filed for bankruptcy citing $613 billion in debts.

But Buffett was just getting started. Later in the week, Berkshire Hathaway bought Goldman Sachs, one of the last remaining investment banks in the U.S. at the time (a week later there were none) for $5 billion. Goldman Sachs Group will sell $5 billion of perpetual preferred stock to Berkshire Hathaway with a dividend of 10 percent callable at any time at a 10 percent premium. In conjunction with the offering, Berkshire Hathaway will also receive warrants to purchase $5 billion of common stock with a strike price of $115 per share, which are exercisable at any time for a five-year term.

But Buffett wasn't through. Later in the week he offered a proposal with some elements similar to the Goldman deal to General Electric. GE took it. It amounted to a $6 billion loan – with quite a few strings attached – to one of the world's most robust companies. Berkshire Hathaway will buy $3 billion of perpetual preferred stock from GE and also get warrants to purchase $3 billion of common stock with a strike price of $22.25 per share exercisable at any time for a five-year term. What makes the terms somewhat similar to the Goldman Sachs deal is that the perpetual preferred stock has a dividend of 10 percent and is callable after three years at a 10 percent premium.

There are, however, some differences. Berkshire is investing $5 billion in Goldman and only $3 billion in GE. And while Goldman can call the preferred shares at any time, GE has to wait at least three years before they can call the preferred shares they are issuing. Stated another way, Berkshire is lending less money to GE than it is to Goldman and attaching more strings to that smaller investment.

The market reacted to the investment as an endorsement of GE by Berkshire based on those differences. But the Buffett loan to GE points to how the drying up of conventional forms of credit is affecting vibrant industrial giants just as they are impacting individual citizens who need a new car.

General Electric said it intends to raise $12 billion through a common stock offering, in addition to allowing Berkshire Hathaway to buy up to $6 billion in stock. GE CEO Jeff Immelt said the transaction would enhance GE's flexibility and allow it to "play offense in the market, should conditions allow." Immelt also suggested that the company faces little impact from the ongoing credit crunch, saying it continued to meet its short-term financing needs.

GE Energy, which is just one division of the corporate giant, is one of the world's leading suppliers to the electric power sector, providing products and services to the natural gas, coal, nuclear, solar and wind industries. Half of the wind turbines deployed worldwide are 1.5 MW GE units.

The company also offers one of only a few utility-scale reference integrated gasification combined cycle coal plants and the world's widest selection of heavy-duty gas turbines – ranging from 26 to 480 MW. GE Energy has nuclear units deployed worldwide and offers a second-generation nuclear reactor system. In addition to new reactors, GE Energy provides nuclear fuel, reactor services and a full portfolio of performance enhancement services to the power industry.

It's impossible to predict what the combination of Buffett's acquisition of Constellation, Goldman Sachs and $6 billion of GE stock means to the power generation industry. Greg Abel, president and CEO of MidAmerican, said Constellation is an outstanding fit for Buffett's company, and emphasized how pleased MidAmerican was to be adding nuclear assets to its portfolio. The potential synergies among a rapidly growing power provider, one of the world's biggest suppliers of power equipment, and a once-mighty investment bank, could be potentially significant.

There can be little doubt that the power industry will be watching closely.