Everything Warren Buffett: CNBC: Warren Buffett and J.P. Morgan: The Return of "Profitable Patriotism" After 101 Years

Tuesday, October 7, 2008

CNBC: Warren Buffett and J.P. Morgan: The Return of "Profitable Patriotism" After 101 Years

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J.P. Morgan and Warren Buffett: Echoes of 1907

Warren Buffett gets a favorable comparison to the legendary financier J. Pierpont Morgan in today's New York Times.

Steve Lohr writes: "In the midst of a financial crisis, a towering figure of American business steps foward with his reputation and financial resources for public good and personal gain."

He's describing both J.P. Morgan in 1907 and Warren Buffett in 2008. New York University economist Richard Sylla calls their crisis responses "profitable patriotism."

Morgan "stepped in and functioned as America's central bank." He gathered "his fellow financiers at his Manhattan mansion and hammered out a rescue plan."

Buffett's big investments in Goldman Sachs and General Electric have given those two business icons a boost with his "immense signaling power," because Buffett "brings the reputational capital that comes from being a peerless long-term investor, revered for his acumen and sound judgment." Those deals are also on very favorable terms for Buffett.

While there are similarities between 1907 and 2008, there are also several differences. The government plays a much bigger role now. Morgan "wielded his power over financial markets more directly" than Buffett.

The 1907 Crisis "subsided after a few rocky weeks." We can only hope the 2008 version is more similar than different to its 101-year-old cousin in that respect.

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