No. of Recommendations: 17
Fleck on the bailout, the coming economic crisis, and Buffet's investment:

[...] I continue to be against the bailout. [...] I especially haven't liked the tactics of the bailout proponents. They said that if this bill didn't pass, we would experience turmoil and chaos, the implication being that if the bill did pass, we wouldn't have much trouble.

That is an absurdity, brought to you by the folks who maintained that the problem was just subprime, contained, etc., and who still do not understand the environment. Turmoil and chaos were preordained once the credit and real-estate bubble was allowed to go on for so long.[...]

The current phase of the financial crisis is getting later in the day. Maybe we're two-thirds or more of the way through it. The next crisis will be in the economy.[...]

So this financial crisis is a global one, and the recession will be as well -- because the notion of U.S. problems being decoupled from everything else is fallacious. Nothing can easily be decoupled from the financial system.[...]

Also in the misconception department, folks have heralded Warren Buffett's investment in General Electric (GE, news, msgs), similar to the one he made in Goldman Sachs (GS, news, msgs), as something akin to a vote of confidence. It's actually quite the opposite.

What he's doing is making the most senior equity investment that he can via preferred stock, and getting paid quite a large coupon to do so, with call options thrown in. Buying the common stock would be a vote of confidence. This is an investment you make when you're still worried about lots of damage yet to play out.
Print the post  


When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.