The market was happy to see Barclays (BCS) raise nearly $8.9 billion. The stock traded up in London. No one seems to care that the need for capital meant the firm was running out of money. The bank did its best to apply lipstick to the pig. According to The Wall Street Journal, "Through our capital raising … we strengthen our capital base and give ourselves additional resources to pursue our strategy of growth through earnings diversification," Barclays Chief Executive John Varley said.

Well-spoken, but transparent.

The news may say something about the past. Banks took too many risks. They gambled on mortgage derivatives and LBO loans. It all came a cropper. Some financial company CEOs even lost their jobs and had to leave the firms they ran with nothing but tens of millions of dollars in severance.

But, the Barclays action actually speaks more about the future. By raising $8.9 billion, the huge British bank is saying that it does not believe that things are getting better in the credit market. No company dilutes its shareholders with sunny skies ahead.

It must have dawned on the Barclays board that the IMF, Paulson Capital, Blackrock (BLK), George Soros, Warren Buffett, and Oppenheimer’s bank analysts are all correct. The financial crisis is not in its late stages. It may hang in through the end of the year and well into 2009.

Barclays got money from Singapore and Qatar. That is particularly good news, or they are suckers who have not been wised up. The latter is probably true. Sovereign funds may be rich but not astute.

Companies in the financial system could have to raise another $200 or $300 billion dollars. Barclays is one of about two dozen global money center banks, large brokerages, and insurance giants. The multiplication is easy.

Predictions are cheap. They don’t come with money-back guarantees.

But, $8.9 billion is a lot of coin.

Douglas A. McIntyre

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