If he is, then a careful reading of the Panic of '07 that leads MHA's post just below is in order. Mauldin calls for Buffet to step in and restore confidence by buying Moody's
Second, the rating agencies need to restore their credibility. Warren Buffett's Berkshire Hathaway owns about 19% of Moody's. I would suggest that Mr. Buffett step in take over the company (much as he did with Salomon years ago) and put his not inconsiderable credibility on the line for all future ratings and the inevitable re-ratings that are going to be done.Countrywide isn't Moody's but Buffet would still be sending a very strong signal. Maybe even stronger than if he did buy the rest of Moody's. Remember the S & L Crisis? I recall estimates that it was a $500 billion dollar problem (it actually came to about $150 billion). That was in 1988 and the equivalent today would be $870 billion. According to Mauldin's charts (but my calculations) a 100% loss on all the Liar's mortgages would come to around $324 billion - and I think that's overstated. A 50% loss would be chump change in a $14 trillion dollar economy.
The Panic of 1907 was solved by the credibility of one man, J. P. Morgan, who stepped in to provide liquidity. The Panic of 2007 is not a problem caused by lack of liquidity. It is a problem caused by lack of credibility. Morgan could (and did) provide liquidity. Buffett can (and should) provide credibility.
Builders already cut back to 2002 levels in '06 and are headed for 1996 levels. The total "overbuild" in SFR's looks like 500K units so we could see a building turnaround by next May. If the hysteria doesn't drive buyers into a huddle.
If Buffet actually has come in then the "bottom" has been called. We'll know in a few days.