Yes, markets bounced in the US on rumours of a “Government intervention fund” to support ailing banks and dodgy assets and the world’s major central banks, but the most interesting move was made by legendary investor Warren Buffett.

He swooped on a troubled US energy company and bought it for around 66% less than it was valued two months ago.

It’s his Berkshire Hathaway group’s first outright buy in the crunch, although it has helped support huge mergers involving Wrigley and Mars, and Dow and Rohm and Haas. But it’s the background to this deal that tells us a lot about the disease that has various economies.

As a friend told me yesterday, there have been no ambulances on Wall Street, as far as she knows. There was in 1987, and there was in 1932. Those are literal ambulances, a bit of mopping up; a figurative ambulance is the likes of the well funded investor who comes to save the day, ala the Lone Ranger.

Buffett has long been sceptical of the game on Wall Street and hasn’t been afraid to sit it out and to delivery cheerful homilies, some of which anticipated the current situation.

He had been called on all the dogs: Bear Stearns, Lehman, AIG (Berkshire is a huge insurer in its own right) and no doubt others, and each time said no from all reports.

In a telling move revealed 10 days ago, he directed a small Kansas insurer Berkshire owns which insured bank deposits above $100,000 (which is more than the Federal Government insurance level) to stop writing policies because too many banks (11 up till then) were going broke.

Now he’s made his move and its not an insurer or bank. It’s a $US4.7 billion plan to acquire Constellation Energy a US energy wholesaler and utility operator whose shares plunged this week as the company ran out of cash.

That’s right. A energy company and utility (full of cash) was crippled by a shortage of cash as credit markets tanked. That’s not a normal state of affairs and its shades of Enron, because that’s what the CEO, a former investment banker, had built off the back of a boring electricity distributor and generator.

You know the spiel: outperform, higher returns, higher returns on capital, leverage, borrowings, trading income, and so on. It was like building an investment bank on the stable cash flows of the power company, a bit like grafting Lehman Bros to an ATM.

A financial engineer, a Master of the Universe, just like David Coe at Allco and Phil Green Babcock and Brown.

It’s a business model not unknown here: think ports and rail operator, Asciano as a local manifestation, while the failed MFS tourism group was also similar, but in a less regulated sector. Centro Properties and Centro Retail were similar with funding based on short term wholesale markets and the interest and other costs coming out of relatively stable earnings from retail malls here and in the US.

The Berkshire deal should see Constellation – which runs the Baltimore Gas & Electric utility and operates 83 electric generators around the country – absorbed by Berkshire’s growing MidAmerican Energy company.

Berkshire is offering $US26.50 a share for Constellation — a third of what the shares were worth at the end of July.

According to US media reports this morning Constellation’s CEO is Mayo Shattuck who in late July declared the company “under appreciated” in the marketplace. And who is Mayo Shattuck?

According to Fortune magazine he’s “a former investment banker at Alex. Brown & Sons whose wife was until recently a cheerleader for the NFL’s Baltimore Ravens.” Shades of Dallas or Dynasty or Enron.

But why did this deal happen?

Well, Mayo was more an investment banker (Rhymes with….?) than manager. He ignored the safe, boring utility business and instead saw the stable cash flows and though ‘leverage and gearing’ and off he went borrowing heavily to trade in wholesale energy markets. great when cash was cheap and respect for financial engineers just as high.

But then the credit crunch hit and hit, and hit again, and it seems Mayo kept ignoring the warning alarms from the markets until last week when the money fried up ( Similar in fact to how Northern Rock Bank in the UK was crippled by the liquidity drought, and the same factor that brought AIG to its knees)

It was an Enron-like house of cards, just waiting to fail.