Billionaire Warren Buffett has an Op Ed in yesterday's New York Times that resets the bar for chutzpah.
Throughout Pretty Good for Government Work, Buffett lavishes praise on both the Obama and Bush administrations for the way they've handled the financial crisis.
The words "foreclosures", "fraud", "Moody's" and "unemployment" are conspicuously absent from the piece. In Buffett's analysis, the more than 6000 foreclosures still happening every day -- many of them via fraudulent foreclosure paperwork, on what were also originally fraudulent loans engineered by predatory lenders -- aren't worth mentioning, as long as the biggest banks survived the mysterious real estate bubble.
Finance genius Buffett just can't figure out what caused that bubble. But investigators who subpoenaed him to testify this summer wondered if it might have something to do with the triple-A ratings the leading credit rating company was giving to so many securities, funded by home loans made to people with no income, no deposit, and no collateral. Buffett's insightful Op Ed also forgets to mention that he owns 30 million shares of that company, Moody's Inc., worth over a billion dollars.
Why is Buffett so sure he'll get away with all this, and that blatant spin efforts like his Op Ed will work?
Well, he's a billionaire, and he held onto his billions in the crisis, so he's an expert on money. As the only person praising both Bush and Obama these days, he's above partisanship. He's had extra middle-class likability ever since he confessed that his secretary pays more taxes than he does, and he should probably be paying more. And, he and our President have been watching each others' backs from the 2008 campaign through secret meetings at the White House this summer.
In a nation where not even confessed torturers are prosecuted, does Buffett really have to worry that his friend President Obama's administration is going to prosecute or sanction Moody's -- even for its key role in fraud so massive it brought down the world economy?
So Buffett lays on the disingenuous fawning pretty thick in his Thank You note to Bush, Obama and America:
...I would like to commend a few of your troops. In the darkest of days, Ben Bernanke, Hank Paulson, Tim Geithner and Sheila Bair grasped the gravity of the situation and acted with courage and dispatch. And though I never voted for George W. Bush, I give him great credit for leading, even as Congress postured and squabbled.
You have been criticized, Uncle Sam, for some of the earlier decisions that got us in this mess — most prominently, for not battling the rot building up in the housing market. But then few of your critics saw matters clearly either. In truth, almost all of the country became possessed by the idea that home prices could never fall significantly.
That was a mass delusion, reinforced by rapidly rising prices that discredited the few skeptics who warned of trouble. Delusions, whether about tulips or Internet stocks, produce bubbles. And when bubbles pop, they can generate waves of trouble that hit shores far from their origin.
You may have heard the real story. The lenders originating the fraud -- including Countrywide's Mozilo (who just settled by paying part of his fraudulent 2006 earnings as a fine) and Goldman Sachs (which similarly paid a small fine to settle charges over one blatant fraud, and earned back the total fine and more in a stock rally the afternoon of the settlement) needed to massively launder these obviously worthless loans through derivatives and securities, the more complex the better. Following standard practice, all the top tier firms paid Moody's Inc to provide the AAA ratings. In testimony, Buffet suggests Moody's had no obligation to see if the money was really there since the whole securities rating business they were the leaders of had become a scam: “In this particular case I would say they made a mistake that virtually everybody in the country made.”
By Buffett's logic, firms that were paid and continue to be paid millions specifically to judge whether securities are valuable or worthless were just as easy to fool as the average consumer. The trusted experts in complex instruments -- who misled pension funds, worldwide bankers, and millions of consumers to cause the collapse -- should be pitied like their many victims, rather than held accountable.
Oops - I mean:
Warren Buffett is President Obama's most trusted financial advisor, and he's above partisanship. The housing bubble wasn't fraud -- it was Mass Delusion, like Europe's nutty tulip fad in the 1600s. The economy is basically repaired -- no jobs and a billion dollars in real estate value lost each day in foreclosures can continue without long term effects, as long as the Dow is up and the biggest banks have been made whole. In fact, they're even bigger now! And trusted advisors say the Dow passing 11,000 for the first time since 2008 isn't the sign of another bubble. Since the people and firms responsible for the previous one have been held accountable, it won't happen again.
Got it?
UPDATE:
Actually Buffett’s role in the bailout gets even uglier.
His idea of a good deal for America is for the US to pay 8 times the price Buffett did for Goldman Sachs warrants during the October 2008 bailouts. Something else he forgot to mention in his Pretty Good Work praises. Hey, the important thing is he says he didn't vote for Bush.
http://www.huffingtonpost.com/...
http://www.bloomberg.com/...