Warren Buffett is portrayed as a democrat who advocates for the rights of the working and middle classes when in reality, his actions are in stark contrast to the public’s perception.
It’s official, Buffett disgusts me more than Bernie Madoff.
Buffett was a very successful money manager last century and made billions and billion of dollars the old fashion way, he “earned it.”
Then we entered the 21st century and in hindsight Warren would have been wise to retire and shut up, in 2000.
After the 9/11 attacks, he quickly came out and warned investors of WMD’s (weapons of mass destruction) but they were not in Iraq or anywhere in the Middle East. Buffett was referencing the derivative exposure that most large financial institutions had on their books. These were the bets that ultimately lead to the entire economy becoming unglued in 2007 and 2008.
Warren Buffett was the first household name to come out and say that large financials have taken on too much risk and said risk could ruin the world. However, after that warning Buffett and his think tank proceeded to buy more and not sell their financial positions, which just seems counter intuitive because he was not taking his own advice. So what happened to that book?
Well, by 2008 Buffett’s book was quickly working its way into bankruptcy. As the markets tanked, Lehman and AIG failed and Berkshire Hathaway’s stock (Buffet’s book) got absolutely crushed. When TARP first surfaced as an idea to stem this cascade into the abyss of a depression, Buffett was by far the loudest voice pro TARP, especially after his buddy, President Barack Obama was elected.
While TARP came from Bush and Paulson, it was not implemented until after Obama was sworn in. We now know that Buffett pushed Obama for even bigger dollars for the TARP bailout package than was signed into law.
So there is it.
Warren Buffett and TARP
It is fairly obvious that last century’s greatest investor was done by 2008 and needed a bailout. The fact he blew up on the stuff he warned everyone about in 2002 is almost comical. While Berkshire Hathaway did not receive direct TARP funds, the positions held by Berkshire did get a lot of TARP. Berkshire, arguably had unlimited counter party risk to the financials caught up in the storm. So instead of those stocks going to zero and crushing Berkshire, those stocks have rallied 100 percent or a lot more, in most cases, making him billions of dollars instead of losing billions. All of these losses were avoided and gains were obtained through government intervention and bailouts.
Now we can fast forward five years and look at what this not-so-righteous investor is up to now.
Forbes released the list of the top 400 richest Americans this week and second on the list is billionaire Buffett, chairman of Berkshire Hathaway Inc., with a net worth of $58.5 billion, an increase from his previous net worth of $46 billion.
He spends as much time as he can on CNBC saying stuff like Ben Bernanke is batting 400 and President Obama should retain Bernanke for another term.
I do agree Bernanke is batting 400, if your net worth is well in excess of a million dollars. However, if you have under a million dollars, Warren Buffett has become your biggest enemy. He still acts as if without TARP and QE his company would still be in business. I can say assuredly it would have gone bankrupt in 2008, if the markets were allowed to go where they were headed without government intervention.
CNBC still acts like Buffett is someone to listen to. But CNBC is run by those at the epicenter of destroying the middle class. At the same time, CNBC did have another billionaire on last week, Stanley Druckenmiller, and he is saying the exact opposite of Buffett.
Druckenmiller, who was semi-retired when the NASDAQ hit 5000 back in 2000, has come out of retirement to preach the insanity of our legislators, on both the monetary and fiscal front. His interview was perhaps the best interview CNBC has done. Druckenmiller is 100 percent spot on when he suggested in the last 12 years we have seen the largest redistribution of wealth from the working classes to the rich, the world has ever seen.
Warren Buffett, Alan Greenspan and Ben Bernanke are the poster children for this shift. They have lost all credibility and frankly the working classes should get more upset over the actions of these reckless billionaire money managers who think when they lose, the middle class owes them a bailout.