Update: Is the Sky Really Falling?

Warren Buffett’s support for the $700 billion bailout has perplexed me. He has in the past argued for regulation of financial markets, but he seems too independent a thinker to accept the first proposal to come out of the Treasury department. And he seems too decent to publicly put his (or even Berkshire Hathaway’s) financial interests ahead of US taxpayers’. (The government bailout would rescue or otherwise benefit the financial services companies Berkshire is invested in.) However, according to this Fortune article Buffett validated my fear that the government will “buy the liabilities at inflated prices, to cover the banks’ rear ends”:

Buffett also noted that the presence of the government in the transactions would raise the price of assets above the absolute firesale levels for which they could now be sold. That would benefit the banks trying to unload them.

Tags: Economics, Politics

Updated at: 7 October 2008 12:10 AM