Catching on to Buffett

More of the so-called “mainstream press,” like the Sacramento Bee, are catching up to what we wrote here about Warren Buffett back on March 16. He supported the bailout because his investments benefited from the handouts.

It seems obvious that Washington takes policy advice from Buffett because he has lots of money. Newsweek reporter Mark Hirsch uncovered evidence, in fact, that Buffett may have been the one that came up with the original proposal for Treasury to buy the junk bonds off the banks’ balance sheets. Given the direction that Berkshire Hathaway’s own credit rating is going, Buffett may have even more reason to support this plan – his companies will be able to invest in the junk at discounted prices after they sell the junk to the government’s partnership funds at inflated prices!

Some of the comments at believe that the article is unfair to Buffett – after all, what company doesn’t support policies that will benefit them? But to the tune of $11.6 trillion, which is what the U.S. government has committed to this bailout? We bet even Karl Marx would find that excessive. We agree with the title of a book by William Black, an economist whose work we referred to in our own research on the Savings & Loan crisis – “The Best Way to Rob a Bank is to Own One.” Professor Black discussed the financial crisis with Bill Moyers on April 3, 2009.

Berkshire Hathaway has significant ownership stakes in more than one bank. This brings us to an article at the Mises Institute, the libertarian think-tank. The article contains a link to an article from 1948 written by Warren’s dad when he was the U.S. Congressman from Nebraska – “Human Freedom Rests on Gold Redeemable Money.” The younger Buffett has a preference for the freshly printed stuff that Treasury is doling out.