Sorting through the financial mess

Subprime just got the ball rolling. The resulting credit crunch, and recent commercial paper (which is where money markets invest) interruption hasn’t helped. If Warren Buffet believes that Paulson’s TARP will prevent a meltdown and subsequent bank run, I say go for it. After all, anyone who has turned a 15 fold profit over the last 18 years must know more than other folks. If only I had a $135,000 to buy a share.

Granted, scrapping the entire banking system and replacing it would be a better solution, but I’ll take what I can get for now. Plus, if the Treasury values the toxic CDOs appropriately, taxpayers may eventually actually profit from the deal, similar to how the RTC did after the S&L crisis in the 80’s.

Yes, I like Wikipedia links.

2 Comments

  1. I’m not so convinced. Warren Buffet is doing what’s best for his own personal income and growth strategy. Many economists don’t think this is a good idea, nor even necessary. I also get extremely nervous with 11th-hour agreements, because those seem to tend to be the worst (that’s when Congress makes announcements that they don’t want heard – like voting themselves pay increases). A couple alternative references:
    http://www.marginalrevolution.com/marginalrevolution/2008/09/substitute-brid.html
    http://www.marginalrevolution.com/marginalrevolution/2008/09/is-a-potential.html

  2. And you don’t think someone which benefits him benefits the rest of us? I’m not talking tax dollars here, I’m talking about financial solvency.

    Self-evident.org has some interesting thoughts on the matter, and the Financial Times also has some pretty dire predictions.