Wednesday, February 13, 2008

Ben Franklin Report: Looking For a Knight in Shining Armor


With the subprime crisis beginning to spread to other parts of the credit market, economists are bearish to the point of betting on a recession for 2008. Of course, those who enjoyed the party are very unwilling to pay the tab. Thankfully for them, Warren Buffet isn't willing to allow the entire municipal bond market to implode, out of the goodness of his heart and the potential metaphysical ramifications. Just kidding.

"When I go to St. Peter, I will not present this as some act that should entitle me to get in," [Warren Buffet] said. "We're doing this to make money."


Some feel as though this is a poison pill to the companies that have received the offer. Ambac and another undisclosed company, either MBIA Inc. or FGIC Corp. (any guesses on which one?), has already rejected Buffet's offer. Here is a look at some of the other ideas being sent around the financial industry aiming at rescuing a bond market which is faltering to the tune of $6 Billion as of yesterday, by the way. The market responded by retreating to the Treasury market, pushing the yield down half a percentage point. And the greenback fell against the Yen in Asia on credit worries.

Another reporter for Reuters, John Parry, suggests that the United States government might be forced to enter the market to stabilize it in the event of a depression. Of course, he admits that it would have to be financed in the form of new government debt based on more tax cuts, but he doesn't admit that it would serve as a kind of bailout for the corporate interests who have made so much money up to this point on strange new financial instruments, like CDOs. Investors should be more careful in considering how they allot their money. There is no reasthe government should protect those who wanted to make a quick buck

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