The speed with which Goldman Sachs, JPMorgan – even Citi and Morgan Stanley – raised equity capital at the end of last month, even as stocks sold off, banks failed and Congress voted down the Paulson bail-out plan, shows that markets still function but are open only to the strong.
In the week when Dick Fuld led Lehman Brothers into bankruptcy, John Thain sold Merrill Lynch to Bank of America, and AIG collapsed, Goldman Sachs’s shares had been beaten down to the point where they traded at just 80% of book value. Even though the firm had just $1.7 billion of sub-prime and $1.6...
