Categorized | Commentary/Editorial

Warren Buffet, Crony Capitalist

The financial/investment website Zero Hedge  never hedges its strong opinions. Recently:

Warren Buffett is one of America’s biggest bailout beneficiaries, having profited hugely from buying into firms whose assets were subsequently bailed out. Shortly after the crisis began in 2008, Warren Buffett loaned money to, and bought options from, Goldman Sachs, seemingly with the knowledge the bailout of AIG — a counterparty to which Goldman had massive, massive exposure — would take place.

[Jamies] Dimon as Treasury Secretary would intend more of the same. Dimon and Buffett and others like them believe in having their cake and eating it. They seem to believe that the U.S. taxpayer should provide a liquidity lifeline to their fragile and risky too-big-to-fail businesses, but without at the same time demanding any regulatory oversight to prevent too-big-to-fail banks from acting irresponsibly.

. . . .

[Big banks] lack . . .  skin in the game. Big banks can gamble and speculate without remorse and without risk — if they win they keep the proceeds, and if they lose the taxpayer will pick up the pieces. This destroys the market mechanism, and any hope of self-regulation. Were lessons learned from 2008? If the antics of Corzine, Kweku Adoboli and the London Whale — just three big financial blowups in the last year — are any guide, big finance is acting just as irresponsibly and self-destructively as before the crisis.

Buffett and Dimon surely have in mind more cronyism, bailouts and free lunches, but the reality of the next four years and beyond may be very different indeed.

While it is impossible to predict exactly when the next crisis will emerge, the current slump in capital goods orders, the intractable debt overhangand the general trend of ditching the dollar as a reserve currency do not look good. As one of the architects (both practically and ideologically) of the current mess, Dimon as Treasury Secretary would at least get all the blowback and blame when the bubblecovery finally implodes into a currency or supply chain crisis that cannot be bailed out through liquidity injections.

I think one reason the Republicans are losing the tax debate is that when they say "don’t tax the rich" the public hears "don’t tax the cronies and financial predators." The connection between taxes and small business is not made effectively, nor is any distinction drawn between those who make their money by creating economic value and those who make money by reallocating the value created by others. Of course, the cronies and predators are mostly Democrats, so we are dealing with the politics of fun-house mirrors.

And when Buffet talks about how tax rates on the rich should be raised, he does not tell you that he most of his increases in wealth come in the form of unrealized capital gains, which are not taxed, and that he has arranged his affairs so that when he dies all of his wealth will remain untaxed as it passes to various charitable organizations, which will then use the money to pay princely salaries to administrators, as long as they hew to the Progressive line. Of course, charities LIKE high tax rates, because these encourage contributions. High tax rates are the life-blood of the foundations that form one of the cornerstones of the Special Interest State.

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  • Steve_Flesher

    There should be a crony-capitalist tax.

    • Exgunman

      If they taxed them, then they would no longer be a crony…………………………….:>)

    • AyePatriot

      We used to have one. It’s called "prison".

    • unseen1

      there is  its   called a revolt it is  the  end  game of  crony  capitalism.   Some  move  onto  revolutions   socialist  in nature,  some  are snuffed out,  a  few   a  very  few  turn  into  something like  the American experiment  but  all gets  their  start  from the  cronynism.   As  the  very  few elites horde  the resources and the serfs  get tired of  eating bark. 


  • $8196935

    Buffet, typical Obama Democrat

  • Lennart Bilén

    Warren Buffet: working on the railroad.
    He does not mind higher taxes, since it limits competition and preserves the state-industrial complex

    I’ve been workin’ on Obama,
    All the live long day.
    And I told him without drama
    Ship the oil my way.
    Don’t you hear the hot air blowing?
    Rise from the pundits every morn.
    Don’t you hear the people shouting
    “Sarah, won’t you run?”
    Sarah, won’t you run,
    Sarah, won’t you run,
    Sarah, won’t you run the race for us?
    Sarah, won’t you run,
    Sarah, won’t you run,
    Sarah, won’t you run the race?
    Something big is cooking with Sarah.
    Something is cooking up, I know.
    Something big is cooking with Sarah
    Strumming on the old banjo.
    Fee, fie, fiddle-e-lies
    Fee, fie, fiddle-my-Obama.
    Fee, fie, fiddle-e-lies
    Strumming on the old banjo.

  • RedDaveR

      It’s funny that whenever loopholes and deductions come up the politicians always want to talk about the popular deductions, like for mortgage interest and charitable contributions.  They never want to discuss the kind of breaks that go to the Buffets, the GE’s, the Goldman Sachses, and the like. Maybe because they’re afraid of their money trail from these crony capitalists going away?

  • Freempg

    Buffett did his part, he shilled for higher taxes on the likes of you and me.

  • conservativemama

    King Crony has a lot of nerve.  I think that Obama should be redistributing the microphone and take it from Buffet.  Perhaps I’d rather hear from some hard working Americans just trying to start a business or keep a farm in the family.

    Buffet has used more than his fair share of time on the national stage.

  • BrianusBerkleianus


  • BrianusBerkleianus


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