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.
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[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 overhang, and 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.