Many progressives have had good reason to be glad for the solid presence of Warren Buffett through the years. He was one of the few prominent businessmen who prophetically lobbied against the Bush tax cuts in 2001, realizing how devastating they would be to the nation. He supported President Obama in the 2008 election. He has spoken eloquently of the importance of the implicit contract, the social compact between the business person and the consumer - for example, the idea that financial institutions are supposed to be fiduciaries - to operate in the interest of their clients.
Even through the financial crisis, from 2006 to 2009, he was a rock of stability much of the time, providing reassuring words and actions, for example, buying when others were selling, trying to keep the financial system from collapsing. He was one of the few prominent men of good will and good sense who helped pull us through.
But his actions in recent months have been puzzling and disconcerting, to put it mildly. Whatever has happened to him?
We know that, not long ago, he came out in strong support of Mr. Blankfein of Goldman Sachs, arguing that Goldman Sachs hadn't done anything profoundly wrong, when it was obvious to almost everyone (including our dear Senator Carl Levin) that Blankfein's Goldman Sachs had violated the trust of thousands of investors by operating deceptively, against their interests.
More recently, in the past week, he has claimed that Moody's rating corporation had committed no grave errors, simply making the same mistake that 300 million Americans had made, in not seeing the financial crisis that was coming.
Buffet happens to have major investments in both Goldman and Moody's. Conflict of interest, anyone?
Why would Buffet stoop so low, suddenly, trashing his reputation and acting like just another complicit business crony, sullying what it took decades of goodwill to build? Whatever happened to his solid corn-fed Midwestern values, his idea that we ought to all be on the same fair playing field?
Oddly, in the past week, Buffet publicly stated that equities were underpriced, and he argued that investors ought to be buying stocks. Next thing you know, the market lost several hundred points. At nearly the same time, he came out with the astonishing prediction that municipal bonds were facing a crisis of great proportions in the next next 5 years, because municipalities were going to be facing a gigantic cash crunch due to falling tax revenues and the temptation to default on insured muni bond loans. Essentially, he said that he regretted getting into the muni bond insurance business because he's worried that he might be taken to the cleaners when municipalities start defaulting in droves. Fortunately for muni bond investors, Gov Rendell of Pennsylvania came out the next day to contradict Buffet, reassuring the muni bond markets to some extent.
So what's up? What happened to Mr. Buffett?
There seem to be several possibilities:
- He definitely lost a lot of money during the financial crisis, and at one point he threw in his lot with Goldman Sachs, operating in every possible way to save Berkshire Hathaway from further losses, while also trying to keep the financial system afloat. Perhaps he was a hero of unknown proportions, and perhaps his recent statements are all part of his innocent effort to keep the financial system from crashing again - i.e., perhaps the possibility of collapse is not yet behind us.
- He somehow sold his soul in the midst of trying to save Berkshire and the global financial system. He may have been blackmailed (compromising photographs or worse), or might have engaged in some dirty dealing.
- The darker forces behind the true powers in this world (whomever these nefarious forces may be) may have him in an unimaginable vice grip.
- He may simply be losing his grip - he might have made some shaky decisions and be trying to cover them up - or he may not know what the hell he is saying or doing any more.
- Temporary insanity, demonic possession, or alien brainwashing.
- Some unimaginable alternative scenario - perhaps as simple as religious conversion, falling in love with a diabolical tea partying dominatrix, or addiction to contaminated moonshine
Whatever reason, there is much reason to hope he comes back to his senses and starts to act like the Warren Buffet we all knew and admired. At the very least, he ought to explain his complete 180 degree turnaround, rather than pretending he's been saying these kinds of things all along. We know it isn't so.