Archive for Friday, September 26, 2008

Rescue effort

Warren Buffett is in the forefront of people who deserve to get more attention in talks about the nation’s finances.

September 26, 2008


The financial world's Warren Buffett is not one to sit back and simply observe events. He has been issuing warnings about the nation's financial situation for a long time, and too many people with the ability to alter things paid no attention.

One would think that with his record of achievement in economic circles, Buffett's notions would have been given more notice. He and many other able, responsible, intelligent and knowledgeable people warned that the ship was on fire and that remedial action was vital.

But leave it to Buffett to take some extra steps to help a country he loves so much. He has provided a $5 billion investment and a common stock offering for another $5 billion to bail out the Goldman Sachs Group Inc., whose balance sheet was badly in need of help.

A week ago, Goldman's stock price plunged in response to fears it could not survive as an independent investment bank. In stepped Buffett.

Goldman decided to move ahead with the capital-raising efforts using Buffett's astounding investment "as an anchor" for a common stock offering. The move was pleasing to Wall Street, and there is hope that new disasters can be averted.

The Oracle of Omaha has a wide range of talents and achievements, and he is not going blindly into this morass. He has ventured into Wall Street in troubled times before. In the late 1980s, Buffett's Berkshire Hathaway invested in Salomon Brothers Inc. When the investment firm admitted wrongdoing in bidding for U.S. Treasury bonds in 1991, Buffett became interim chairman and helped Salomon reach a settlement with the government before stepping down in 1992. Salomon was later sold to what is now Citigroup.

A businessman to the core, Buffett is not doing this out of mere goodness of his heart. He, of course, hopes his investment eventually will make money for his company, but his investment this week also provided a dramatic illustration in his faith that the U.S. economy can recover and prosper again.

Buffett is the classic example of a financial patriot who is willing to "put his money where his mouth is." His sound advice in the past was ignored by too many. Perhaps now he'll get the attention he deserves.


bondmen 7 years, 2 months ago

Before Buffet decided to give his billion$ to the Bill and Melinda Gates Foundation it was reported he desired to leave his vast wealth to reduce the world population by two thirds. Goodness - that's 2 out of 3 of US. Talk about shooting ducks in a barrell. I guess he could afford the bullets!And to think Warren's father was a good conservative. Just goes to show how too much money can spoil and pervert a man!

Richard Heckler 7 years, 2 months ago

If Bush had invested $3 triillion in the USA NOT war!Bank monopolies are in the making. BUSHCO Iraq war broke the banks and China has cut off lending for awhile.Invasion war is a money hole with zero payback. Hitler taught us that.Just think if polticians had spent $3 trillion on healthcare for all,alternative energy and the the green industry the USA would be making money off the new jobs the money created thus new wealth for the USA not bankruptcy.Add a stiff excise tax on all USA named imports made in China then the USA would be rolling in the dough!When Castro nationalized the Cuban sugar industry, American shareholders (the owners) had their equity wiped out as well. Socialism is tough on capitalists. Perhaps the quick-buck boys on Wall St. should have thought about this before now.It happened to the oil boys and girls as well. So we send our expensive military in to tell other governments,Iran and Iraq, they cannot do business as they see fit.Fact is that is a risk corporate america must assume. Stockholders must ALSO assume that risk when investing in corporations that invest abroad. The military SHOULD NOT be used as the Wall Street Protection Service.The mideast war needs to come to an end ASAP if not tomorrow. It is breaking the USA economic system. Germany declared Thursday the USA is no longer considered a world economic power. I'd say China and corporate america played the USA economy for a sucker as they calmly stole our ability to create new wealth.

slowleak 7 years, 2 months ago

All pit and no peach!When other governments nationalize successful businesses in order to redistribute their profits to the citizens of those countries, we become morally outraged and label it undemocratic socialism. However, our own government seems willing to rush forward to "rescue" or "bailout" Wall Street businesses guilty of gross mismanagement and criminally negligent behavior. It seems that our free market theory has been replaced with a philosophy of privatizing wealth and socializing losses! We are told that the public should pay for Wall Street boondoggles without sharing in the windfall profits of successful corporations ( Exxon , for example ) . Down on the farm, they call this "all pit and no peach". To make matters worse, our elected officials are pressured to act immediately without examining the long-term implications of the so-called remedy or putting in place concrete safeguards against repeat offenses. What Wall Street needs right now are fewer CPAs and more CPHs (Chrome Plated Handcuffs). When did bank fraud stop being a crime? To add insult to injury, the plan includes bailing out foreign banks with your tax money! We are asked to trust the government with 700 billion more dollars to deal with this self-inflicted crisis by the same administration that has in the past suggested that government programs are incapable of efficiently running anything more complicated than a bake sale. Stop this insanity now. Insist that your elected representatives slow down or stop this process! Your children, grandchildren and great-grandchildren are counting on you.

jmadison 7 years, 2 months ago

Goldman Sachs has applied for commercial bank status to be placed under the umbrella of the FDIC.

humblecommentator 7 years, 2 months ago

How can anyone take Barney Frank seriously?

Richard Heckler 7 years, 2 months ago

Warren Buffet is an exception. People are awed by some who have made a lot of money however too often these types know nothing about managing a local economy or how to keep feeding the local cookie jars without constantly raising fees and taxes. They fail to see the value of a slow methodical process that involves impact studies. They fail to understand the need to keep residential and retail in line with available dollars in a community. Reagan-Bush-Bush supply side economics is a failure that local economics should never embrace.

Chris Ogle 7 years, 2 months ago

Warren Buffett is not the problem, his actions are, in fact exactly what the markets need. Yes, he believes in free markets, the ones that invest in profitable companies should make money from that decision. I am not a personal friend with Buffet. However, I have been to his home in Omaha, which is not a mansion. . He is not what you may think. He is humble, conservative, and most importantly, he is honest!

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