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September 17, 2008

The Buffett Spotlight Shines, But No Sign of Warren

It's predictable. Every time there is a financial crisis Warren Buffett's name gets pulled out like he's going to start buying things and save the day. This time around it's been no different, with his naming coming up during the AIG wildness, as well as various banks' names get tossed around. As this amusing Bloomberg chart shows, Berkshire stock has even become (loosely) correlated with the Ted spread, a measure of financial market risk.

It's silly, of course. Buffett is just one guy, and when faced with a systemic market unwinding he can no more sashay in and save things than you or I can. He's well-capitalized and he's liquid, but he's not that well-capitalized and liquid.

So next time you hear Buffett's name trotted out as a savior imagine Commissioner Gordon on the roof of a Gotham City building shining the Batman spotlight. Same thing, except Buffett, unlike Batman, is a real person with real limits -- and he doesn't come on command.

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