This financial market crisis is the kind of emergency that evokes the need for a National Guard-type response. In this case, call in the federal government — and Warren E. Buffett’s money and reputation — said Alice Schroeder, erstwhile insurance industry analyst and now known for her recently published biography of the world’s richest investor.
Generally supportive of the financial market rescue package, Ms. Schroeder is, however, concerned about new mark-to-market accounting standards and stock market volatility.
The bailout was necessary because the market was in “a situation of picking off one company a day,” she said in an interview. “You can’t have an economy function where every day around the world several major financial institutions are taken over by the government or forced into a merger.”
The financial crisis “is of a magnitude that could cause widespread economic hardship to millions of people,” said Ms. Schroeder, author of “The Snowball: Warren Buffet and the Business of Life,” published by Bantam, a division of Random House, a unit of Bertelsmann AG.
“This is a national emergency. We can’t call out the National Guard to fix the financial market.”
If the government hadn’t stepped in and done something along the lines of the $700 billion bailout package, “business (would) be gridlocked and the economy (would) grind to a halt,” she said. A rescue package is necessary to “restore faith with institutions' ability to do business with each other.”
“There are people who are saying it isn’t the most optimal solution. But there is a fuse burning and in the time allowed it is only the viable solution. … It has a reasonable chance of stopping the vortex from spiraling down further,” Ms. Schroeder said.
