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Yeah, it was a pretty idiotic response, right? And yet a day doesn't go by that conservatives don't lob that piece of turd at liberals.
One of the better tactics against hypocrites is to turn their turd hose back on them so they can see how turd-filled it really is.
Yeah, it was a pretty idiotic response, right? And yet a day doesn't go by that conservatives don't lob that piece of turd at liberals.
I've rejected the tribalism of left vs. right.
The article I posted, and the facts I highlighted regarding Buffet's political profit motive was not idiotic. Would you care to respond to this?
Sorry, but I didn't see any article, and claiming that he has a profit motive in raising his own taxes is idiotic.
Sorry, but I didn't see any article, and claiming that he has a profit motive in raising his own taxes is idiotic.
In the summer of 2008, when several investment houses and the government-sponsored mortgage companies Fannie Mae and Freddie Mac teetered on the brink of financial collapse, Buffett was “uncharacteristically quiet,” as the London Guardian observed. It was only on September 23 that he became a highly visible player in the drama, investing $5 billion in Goldman Sachs, which was overleveraged and short on cash. Buffett’s play gave the investment bank a much-needed cash infusion, making a heck of a deal for himself in return: Berkshire Hathaway received preferred stock with a 10 percent dividend yield and an attractive option to buy another $5 billion in stock at $115 a share.
Several senators and congressmen were shareholders in Berkshire Hathaway and therefore in a position to earn big returns by passing the bailout bill. Sen. Ben Nelson (D-Neb.), for example, held between $1 million and $6 million in Berkshire stock, by far the largest asset in his portfolio. Initially resistant to the bailout bill, Nelson ended up voting in favor of it. Buffett’s support was hardly the deciding factor in passing the bill. But his Baptist-bootlegger position was strong in both directions: Many people heeded his advice, then he (and they) made a lot of money after the bailout.
Throughout the financial crisis and the debate over the stimulus in early 2009, several members of Congress were buying and trading Berkshire stock. Sen. Dick Durbin (D-Ill.) bought Berkshire shares four times over a three-week period in September and October 2008, up to $130,000 worth. He bought shares during the debate over the bailout, during the vote, and after the vote. Sen. Orrin Hatch (R-Utah) bought the stock, as did Sen. Claire McCaskill (D-Mo.), who bought up to $500,000 worth just days after the bailout bill was signed. Some legislators also followed Buffett’s example by buying shares in Goldman Sachs after the bailout. Among them were Rep. John Boehner (R-Ohio), Sen. Jeff Bingaman (D-N.M.), and Rep. Vern Buchanan (R-Fla.).
The stakes were high for Buffett as well. If the bailout went through, it would be a windfall for Goldman. If it failed, it would be disastrous for Berkshire Hathaway.
The first vote failed, as Congress faced enormous heat from voters angry about the prospect of aiding Wall Street. On the eve of the second TARP vote in the House, Buffett moved toward the fire again, buying a $3 billion stake in corporate giant General Electric (GE). As with Goldman, he was able to negotiate advantageous terms, receiving a 10 percent dividend on his shares. He also purchased the option to buy $3 billion in stock at discounted terms. GE was in even worse financial shape than Goldman, thanks to its financial arm, GE Capital. Eventually it would receive $140 billion in taxpayer capital to stay afloat.
Well, that has nothing to do with raising taxes on the wealthy.
Aside from that, as the article states, Buffett was taking a considerable risk in backing Goldman ... while helping to stabilize the financial markets at a crucial juncture. I notice that his $5 billion option to by GS at $115 isn't looking so amazing ... with Goldman closing today at $116.
Sure, when your average investor does it, it is considered illegal insider training. When politically connected investors like Buffet get into it, it's perfectly legal and even heroic.
AFAIK there was no prohibition against anyone putting billions of dollars on the line to back investment banks that were teetering on the edge of collapse. He bet that the Fed wouldn't let GS fail, which was not unreasonable given the Lehman experiment. That's why he's the greatest investor in the world.
With the passage of the Emergency Economic Stabilization Act, the Treasury Department was authorized to loan financial institutions a total of $700 billion, which gave it unprecedented authority to pick winners and losers. Access to TARP money was not guaranteed, and the terms of the loans were unclear. The process was opaque. As American Prospect Editor Robert Kuttner put it, the TARP proceedings were conducted “largely behind closed doors, and the design is by, for and in the interest of large banks, hedge funds, and private equity companies. Because there are no explicit criteria, it’s very hard to know” if anyone got special treatment. The entire process, he said, “reeks of favoritism and special treatment.”
An April 2011 working paper by researchers at the University of Michigan School of Business found that “firms with political connections” were much more likely to get TARP funds than firms that were not well connected. The study looked at how much money companies contributed to election campaigns through PAC contributions and donations by executives as well as how much companies spent on lobbyists. Finance professors Ran Duchin and Denis Sosyura found that politically connected firms, despite the infusion of federal funds, were outperformed by unconnected firms. In other words, poorly run but well-connected companies got the loot.
Buffett needed the TARP bailout more than most. In all, Berkshire Hathaway firms received $95 billion in TARP money. Berkshire held stock in Wells Fargo, Bank of America, American Express, and Goldman Sachs, which received not only TARP money but also Federal Deposit Insurance Corporation (FDIC) backing for their debt, worth a total of $130 billion. All told, TARP-assisted companies constituted a whopping 30 percent of Buffett’s publicly disclosed stock portfolio. The folksy outsider with his home-spun investment wisdom, the Houston Chronicle concluded in an April 2009 investigative piece, was “one of the top beneficiaries of the banking bailout.”
Buffett received better terms for his Goldman investment than the government got for its bailout. His dividend was set at 10 percent, while the government’s was 5 percent. Had the bailout not gone through, and had Goldman not been given such generous terms under TARP, things would have been very different for Buffett. As it stood, the arrangement with Goldman Sachs earned Berkshire about $500 million a year in dividends. “We love the investment!” he exclaimed to Berkshire investors. The General Electric deal also was profitable. As Reuters business columnist Rolfe Winkler noted on his blog in August 2009: “Were it not for government bailouts, for which Buffett lobbied hard, many of his company’s stock holdings would have been wiped out.”
What did Buffett do in the six months between writing the letter and watching the adapted policy get approved? He bought more bank stock. According to Berkshire’s quarterly reports, Buffett’s firm bought 12.4 million shares of Wells Fargo during this period and another 1.5 million shares in U.S. Bancorp. When Geithner announced the Public-Private Investment Program, bank stocks rallied and Buffett’s holdings did very well. We don’t know the exact price that Buffett paid for these millions of shares because he is not legally required to list the dates he bought them. But we do know those bank stocks all jumped after Geithner unveiled his program. Wells Fargo, which was trading around $20 per share early in 2009, jumped to $30 a share in the weeks following Geithner’s announcement. U.S. Bancorp did even better: It had hit a low of $8 a share in February 2009 but vaulted to more than $20 a share by May. And of course Buffett already owned tens of millions of shares in a host of financial companies, such as American Express and M&T Bank, which also benefited.
Again, to be clear, even though Buffett was the one who proposed the public-private partnership, there is absolutely nothing illegal about lobbying for a policy while investing in the companies that stand to gain most if that policy is adopted. But consider this: Had Buffett instead pushed a private investment house to make an acquisition that would benefit certain stocks while quietly buying shares in those same stocks, he would have been vulnerable to charges of insider trading.
The term social compact sounds benign. But when did American voters agree to turn one of the richest men in America into one of the biggest recipients of taxpayer subsidies?
Read the article...there's more to the story:
Yep. And again ... what does that have to do with his position on taxes? He was making the same argument long before the bailouts.
So, let me get this straight. He profits from millions of tax-dollar subsidies and then precedes to demand higher taxes on the wealthy- all the while refusing to donate to the national treasury. There's no moral inconsistency here?
He isn't refusing to donate to the treasury. He is lobbying to raise taxes on the wealthy, which would increase his taxes. In other words, he is calling for systemic change. By definition his own actions won't serve that goal.
He doesn't have the power to change the tax code unilaterally. All he can DO is advocate for his position ... which is what he's doing.
He has not donated a dollar to the Treasury Direct while yearning to pay more taxes. You would think if he truly wanted to pay more taxes, he would not allow the law to prevent him from doing what is possible through TD. Second, why does he continue to claim deductions and therefore pay less each year in taxes? Third, how would you respond to the millions of dollars in back taxes owed by his company?
And finally, with those warning of a higher concentration of wealth in this country, why support millions in subsidies that will line the pockets of yet just another individual wall street investment banker?
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