Deja vu all over again?
Warren Buffett…will invest at least $5 billion in Goldman Sachs Group Inc., a huge vote of confidence for one of the survivors of the credit crisis that felled two of its investment banking peers. It may be just the shot in the arm that shares needed. Wall Street appeared headed for a higher opening Wednesday, though credit markets remained uncertain about the government’s $700 billion bailout plan for banks…The news, which broke late Tuesday, sent shares of Goldman Sachs and stock index futures higher in electronic trading, after the Dow Jones industrial average posted a triple-digit decline for the second day in a row.
Another day’s news:
on Friday, October 25, several leading Wall Street bankers met to find a solution to the panic and chaos on the trading floor. The meeting included Thomas W. Lamont, acting head of Morgan Bank; Albert Wiggin, head of the Chase National Bank; and Charles E. Mitchell, president of the National City Bank. They chose Richard Whitney, vice president of the Exchange, to act on their behalf. With the bankers’ financial resources behind him, Whitney placed a bid to purchase a large block of shares in U.S. Steel at a price well above the current market. As amazed traders watched, Whitney then placed similar bids on other “blue chip” stocks. This tactic was similar to a tactic that ended the Panic of 1907, and succeeded in halting the slide that day. In this case, however, the respite was only temporary.
Any resemblance of current “grave threats” to those of the past is purely coincidental…..at least we hope so.
September 24th, 2008 at 10:29 pm
While anything can happen though hopefully it won’t, the analogy is not compelling.
Richard Whitney was a reckless speculator and convicted embezzler.
Albert Wiggin shorted the stock of the bank he led. Charles E. Mitchell was acquitted of criminal tax evasion, but the government won a civil case.
In contrast, Warren Buffet might be a hardnosed tighwad, but he is not generally spoken of as unethical. His mentor was Ben Graham, whose investment methodology was forged by the Great Crash.
September 25th, 2008 at 11:53 am
I was thinking the same thing, Dinocrat. But it can’t happen again. This time we have wise men at The Fed and Treasury. Men who are smarter than the rest of us and know exactly what to do to save the economy and world as we know it. We just have to trust them.