A.J. DiCintio
The king of crony capitalism
By A.J. DiCintio
From his speeches, statements, and recent State of the Union address, it's clear that regarding his record and bid for reelection, Barack Obama plans to inoculate himself with the amnesia virus and preside over a campaign rife with the vile insults that accompany demagoguery based upon class, race, and ethnicity.
But since the past is always prologue for Democratic politicians who have mastered the curriculum taught by the Chicago Political Machine, we can be certain that on the crucially important economic front, Obama and Company will supplement the slime with props that provide the illusion of probity and intellectual weight, the most visible being investor Warren Buffett.
Since Buffett's pronouncements are sure to become the subject of important discussions within families, among friends, and around water coolers, it is essential open and fair-minded voters know a few facts about the "Oracle of Omaha," facts that certainly won't be forthcoming from Obama or his sycophantic defenders in the liberal media.
For me, the first of those facts is associated with a question whose first option will be chosen only by the insatiable few among America's 300 million who voraciously slop the people's power and money at the squalid trough specially built for them in a thoroughly corrupted Washington:
If you were a multi-billionaire and decided to bravely speak your mind regarding the nation's economic problems, would you align yourself intimately with a sitting president and his political cronies; or would you remain steadfastly independent, thereby freeing yourself to speak hard truths devoid of the rotten expediency and cherry picking superficiality that are the stock-in-trade of the political business?
The first truth to know about Buffett, then, is that he has willingly and thoroughly attached himself to the most liberal, most polarizing president in history, enthusiastically accepting a role in which he mires himself in the muck of partisan politics at its worst.
For proof, consider the following:
Buffett is famously known for his continual pronouncements that the rich ought to pay a higher rate of income tax than his secretary does.
Now, every honest person knows that argument centers almost exclusively on the tax rate for capital gains because high earners whose income comes from wages already fork over a large percentage of their earnings to the government.
But like a good political shill, Buffett doesn't find that important distinction worthy of his time and effort just as he doesn't think it his duty to educate the nation about the crucial reason for having an inducement for citizens to make capital investments.
Furthermore, the "oracle" has never summoned the intellectual honesty required to offer specific details about exactly who can be required to pay higher capital gains taxes without producing a negative effect upon the nation's economic engine, for instance hedge fund managers and super-rich investors such as himself.
Nor has he found the courage to argue precisely and passionately about his ideas for the most crucial issue regarding taxes: the need for a complete overhaul of the country's monstrously corrupt tax code.
Finally, unlike the brave members of the debt commission, whose ideas Obama summarily dismissed in one of the most cowardly insults an American president has delivered to the nation, he has been silent about vitally important issues that are inseparable from the tax question.
Specifically, Obama's old, wise, predictably faithful Oracle of Omaha has remained stone silent with respect to the dangers posed by the nation's $15 trillion national debt, the unsustainable promises made regarding entitlements, and the gigantic amount of duplication, waste, and fraud associated with a burgeoning federal government that will spend $3.7 trillion this year, at least $1.3 trillion of it borrowed money.
The truth is, therefore, that Buffett has used his position to speak to the nation as a political hack rather than its "economic laureate," because accepting the role of the latter means placing himself in direct opposition to his centralized government loving, debt embracing friend who sits in the Oval Office.
Actually, the most repulsive kind of political hack, as exposed by financial professionals Barry Ritholtz and Shah Gilani, independent thinkers who regularly condemn politicians and policies associated with both major political parties.
To begin chronologically, in November, 2010, Ritholtz posted a scathingly sarcastic response to the op-ed piece "Pretty Good for Government Work" (NYT), denouncing Buffett for heaping praise on Obama's economic policies while "[painting] an artificially rosy picture of the Bailout, [ignoring] the negatives, and [omitting] his own financial interests in government actions."
So appropriately harsh was the author of "Bailout Nation" that he constructed his post by imagining that having been "dosed with some sodium pentothal," Buffett ditched the actual draft to write a letter thanking "DEAR Uncle Sucker" for acts of commission and omission that helped cause the financial crisis, lavishly bailed out the banking system instead of fixing it, and, of course, greatly helped make nephew Warren a richer man.
(Read entire post at www.ritholtz.com/blog/2010/11/dear-uncle-sucker/)
Less than a month later, Gilani added details regarding the connection between Buffett and the government, opening with this shot:
"Good old Warren Buffett has been really making me sick for more than a few years now."
(Read entire post at www.wallstreetinsightsandindictments.com/tag/berkshire-hathaway/)
Following are some of the reason for Gilani's nausea.
Having quoted Buffett as condemning derivatives as "weapons of mass financial destruction," Gilani asks why Berkshire Hathaway owned a stash of the deadly agents worth "approximately $63 billion."
(To which I would add, "Where has Omaha's very well-connected Wizard been in arguing for regulations that call for derivatives to be traded in the transparency of an exchange?")
Next, Gilani asserts that in April 2010, Buffett had Senator Ben Nelson, "his lapdog," pressure the Senate "to exempt existing derivatives holders from new collateral requirements," thereby saving Berkshire from having to dip into its investment account and pony up an additional "$8 billion in cash."
The nauseous list goes on as Gilani reveals how Buffett's insurance company (Gen Re, previously General Reinurance) settled an SEC complaint against it and AIG without admitting any wrongdoing.
How Buffett invested in Goldman Sachs "right after it became a bank holding company [eligible for] Federal Reserve rescue money, and right before the New York Fed gave Goldman Sachs $14 billion in cash."
(Ah, AIG and Goldman. Who can forget how Obama and Geithner bailed out AIG so that the insurer could pay billions in claims to Goldman and foreign banks at 100 cents on the dollar? Getting paid off in full from a company that should have gone bankrupt. Nice work. . . if you are special enough to get it!)
How Buffett owned 20% of Moody's, the ratings firm that "made billions" giving high ratings to derivatives and packages of mortgage-backed securities whose eventual implosion brought pain to all but the despicably hypocritical hogs and sows who slop at the trough previously mentioned.
How Buffett sold his shares in Moody's "at pretty darn good prices."
And how when asked if he received inside information from Moody's about the true condition of the mortgage-backed securities market, Buffett "denied it. . . even though there are emails that were submitted to the [Financial Crisis Inquiry Committee] by one of . . .Moody's executives to prove it."
Finally, Gilani reports that immediately after taking his oath as Treasury Secretary, Tim Geithner visited Buffett, an act he believes ought to have us wondering "what kind of oath to the Oracle he was taking under his breath" and thinking about the reality that "there's a lot more dirt on Buffett."
Gilani's "more dirt" comment is certainly correct. But what has been presented here provides plenty to say when, during the coming months, we hear anyone praise the king of crony capitalism as an economic voice we can trust.
© A.J. DiCintio
February 4, 2012
From his speeches, statements, and recent State of the Union address, it's clear that regarding his record and bid for reelection, Barack Obama plans to inoculate himself with the amnesia virus and preside over a campaign rife with the vile insults that accompany demagoguery based upon class, race, and ethnicity.
But since the past is always prologue for Democratic politicians who have mastered the curriculum taught by the Chicago Political Machine, we can be certain that on the crucially important economic front, Obama and Company will supplement the slime with props that provide the illusion of probity and intellectual weight, the most visible being investor Warren Buffett.
Since Buffett's pronouncements are sure to become the subject of important discussions within families, among friends, and around water coolers, it is essential open and fair-minded voters know a few facts about the "Oracle of Omaha," facts that certainly won't be forthcoming from Obama or his sycophantic defenders in the liberal media.
For me, the first of those facts is associated with a question whose first option will be chosen only by the insatiable few among America's 300 million who voraciously slop the people's power and money at the squalid trough specially built for them in a thoroughly corrupted Washington:
If you were a multi-billionaire and decided to bravely speak your mind regarding the nation's economic problems, would you align yourself intimately with a sitting president and his political cronies; or would you remain steadfastly independent, thereby freeing yourself to speak hard truths devoid of the rotten expediency and cherry picking superficiality that are the stock-in-trade of the political business?
The first truth to know about Buffett, then, is that he has willingly and thoroughly attached himself to the most liberal, most polarizing president in history, enthusiastically accepting a role in which he mires himself in the muck of partisan politics at its worst.
For proof, consider the following:
Buffett is famously known for his continual pronouncements that the rich ought to pay a higher rate of income tax than his secretary does.
Now, every honest person knows that argument centers almost exclusively on the tax rate for capital gains because high earners whose income comes from wages already fork over a large percentage of their earnings to the government.
But like a good political shill, Buffett doesn't find that important distinction worthy of his time and effort just as he doesn't think it his duty to educate the nation about the crucial reason for having an inducement for citizens to make capital investments.
Furthermore, the "oracle" has never summoned the intellectual honesty required to offer specific details about exactly who can be required to pay higher capital gains taxes without producing a negative effect upon the nation's economic engine, for instance hedge fund managers and super-rich investors such as himself.
Nor has he found the courage to argue precisely and passionately about his ideas for the most crucial issue regarding taxes: the need for a complete overhaul of the country's monstrously corrupt tax code.
Finally, unlike the brave members of the debt commission, whose ideas Obama summarily dismissed in one of the most cowardly insults an American president has delivered to the nation, he has been silent about vitally important issues that are inseparable from the tax question.
Specifically, Obama's old, wise, predictably faithful Oracle of Omaha has remained stone silent with respect to the dangers posed by the nation's $15 trillion national debt, the unsustainable promises made regarding entitlements, and the gigantic amount of duplication, waste, and fraud associated with a burgeoning federal government that will spend $3.7 trillion this year, at least $1.3 trillion of it borrowed money.
The truth is, therefore, that Buffett has used his position to speak to the nation as a political hack rather than its "economic laureate," because accepting the role of the latter means placing himself in direct opposition to his centralized government loving, debt embracing friend who sits in the Oval Office.
Actually, the most repulsive kind of political hack, as exposed by financial professionals Barry Ritholtz and Shah Gilani, independent thinkers who regularly condemn politicians and policies associated with both major political parties.
To begin chronologically, in November, 2010, Ritholtz posted a scathingly sarcastic response to the op-ed piece "Pretty Good for Government Work" (NYT), denouncing Buffett for heaping praise on Obama's economic policies while "[painting] an artificially rosy picture of the Bailout, [ignoring] the negatives, and [omitting] his own financial interests in government actions."
So appropriately harsh was the author of "Bailout Nation" that he constructed his post by imagining that having been "dosed with some sodium pentothal," Buffett ditched the actual draft to write a letter thanking "DEAR Uncle Sucker" for acts of commission and omission that helped cause the financial crisis, lavishly bailed out the banking system instead of fixing it, and, of course, greatly helped make nephew Warren a richer man.
(Read entire post at www.ritholtz.com/blog/2010/11/dear-uncle-sucker/)
Less than a month later, Gilani added details regarding the connection between Buffett and the government, opening with this shot:
"Good old Warren Buffett has been really making me sick for more than a few years now."
(Read entire post at www.wallstreetinsightsandindictments.com/tag/berkshire-hathaway/)
Following are some of the reason for Gilani's nausea.
Having quoted Buffett as condemning derivatives as "weapons of mass financial destruction," Gilani asks why Berkshire Hathaway owned a stash of the deadly agents worth "approximately $63 billion."
(To which I would add, "Where has Omaha's very well-connected Wizard been in arguing for regulations that call for derivatives to be traded in the transparency of an exchange?")
Next, Gilani asserts that in April 2010, Buffett had Senator Ben Nelson, "his lapdog," pressure the Senate "to exempt existing derivatives holders from new collateral requirements," thereby saving Berkshire from having to dip into its investment account and pony up an additional "$8 billion in cash."
The nauseous list goes on as Gilani reveals how Buffett's insurance company (Gen Re, previously General Reinurance) settled an SEC complaint against it and AIG without admitting any wrongdoing.
How Buffett invested in Goldman Sachs "right after it became a bank holding company [eligible for] Federal Reserve rescue money, and right before the New York Fed gave Goldman Sachs $14 billion in cash."
(Ah, AIG and Goldman. Who can forget how Obama and Geithner bailed out AIG so that the insurer could pay billions in claims to Goldman and foreign banks at 100 cents on the dollar? Getting paid off in full from a company that should have gone bankrupt. Nice work. . . if you are special enough to get it!)
How Buffett owned 20% of Moody's, the ratings firm that "made billions" giving high ratings to derivatives and packages of mortgage-backed securities whose eventual implosion brought pain to all but the despicably hypocritical hogs and sows who slop at the trough previously mentioned.
How Buffett sold his shares in Moody's "at pretty darn good prices."
And how when asked if he received inside information from Moody's about the true condition of the mortgage-backed securities market, Buffett "denied it. . . even though there are emails that were submitted to the [Financial Crisis Inquiry Committee] by one of . . .Moody's executives to prove it."
Finally, Gilani reports that immediately after taking his oath as Treasury Secretary, Tim Geithner visited Buffett, an act he believes ought to have us wondering "what kind of oath to the Oracle he was taking under his breath" and thinking about the reality that "there's a lot more dirt on Buffett."
Gilani's "more dirt" comment is certainly correct. But what has been presented here provides plenty to say when, during the coming months, we hear anyone praise the king of crony capitalism as an economic voice we can trust.
© A.J. DiCintio
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