If you missed last night’s discussion on the "vote of confidence" deal from Warren Buffett, you are missing the big picture. Go read: Berkshire to GS: "I Got $5 Billion, but Its Gonna Cost Ya."
The headline writers of both the NYT and the WSJ missed the numbers involved:
Doug Kass goes last night’s analysis one better, and notes that using a Black Scholes produces a valuation of $2.8 billion dollars for the warrants. That makes the effective yield over 20% on the preferred purchase.
As we noted last night, this is terrific for Buffett, who smelled blood in the water. Its a tough deal for Goldman, who were a) obviously in a bind for capital; and 2) smart enough to learn from Lehman Brothers mistakes.