I think he saved them from a hostile takeover and got pulled into the looming implosion. This is where I read this not sure if it is correct as it was before my time. http://chinese-school.netfirms.com/Warren-Buffett-Salomon.html
Attics is right on the BSC tainted. I'm sure there are plenty more BSC's out there. Instead of trying to catch the "DEFUNKED" BSC, search for the next one. Read between the lines. There are 5 off the top of my head that may suffer the same fate. Get ready for a re-structuring of the "Financials".
Even with the Fed guaranteeing liquidity BSC is probably toast - nobody will risk the recriminations of keeping money with BSC when they can move it, nobody will do an OTC deal with BSC as the counterparty. As Dhyde said "the death spiral you are in becomes self-fulfilling" If a Bank loses access to credit lines/standing it can't function, it is toast. It took just minutes (minutes not days) for Banks to pull their quotes on Refco's Currenex. If BSC goes down then so do all the OTC contracts it wrote, which means now what you had hedged is no longer hedged - bad balance sheet implications throughout Wall St. This is why the "Federal" reserve is actually acting to save BSC. Strictly speaking if you chose a weak OTC counterparty it should be your problem. If it is big enough to be a systemic problem then maybe the Fed is justified in the short term - a collapse of the banking system is in nobody's interest, but I also suspect there is what the US called "crony capatilsm" in the Asian crisis at work here. A year ago $2b to anybody was nothing, now we have 40 banks to lend $2bn to a major IB, I mean 40 - that's $50m each - looks like they are spreading the risk as thin as they possibly can..........................................
you know what is interesting that I have not heard anyone mention is that with all the banks having to foreclose on mortgages the news is out there any many many many folks who I think would have otherwise did the extra something to keep from defaulting on their mortgages are now saying "hey what the hell, I might as well tell my bank I can't afford the payments too" or just stop paying altogether. What is the terminology for this? Monkey see monkey do? or something like that? I think the whole mortgage crisis is building upon itself and that if every single person who had these mortgages didn't think that they could some how get a better deal out of the mess they would try harder to stay in their place. Anyways, we are about 8-11 months off the bottom of this so hold on!
Okay, lets get to the point now and reality... @$2 open. What happens about 70 million shorts cover who nailed this pig. Are we looking at a run to $3-3.50. How many tickers most recent TMA will run 100% now. Or is this a situation where there is no range and its a stiff $2?
The problem is that its not going to open at $2, it will probably open at a premium, because JPM is willing to pay $2, so that's the floor. I would imagine it would open maybe at $2.50 or $3 or something like that pretty much taking away a lot of the potential run by daytraders during the day. It could run higher but you have to be nimble and of course, it will probably fade sometime and drop down for good. I usually avoid going long these type of daytrades because I hate to hold such crappy stocks.
Will it open? Will the NYSE open even? This is the Gummint that will not allow markets to function if it means banks losing more of what equity they have left.