BUFFETT TO UNCLE SAM: THANK YOU!
If for some reason you don’t see the New York Times (really?), here was Warren Buffett’s op-ed yesterday, a letter to his uncle:
Dear Uncle Sam,
My mother told me to send thank-you notes promptly. I’ve been remiss.
Let me remind you why I’m writing. Just over two years ago, in September 2008, our country faced an economic meltdown. Fannie Mae and Freddie Mac, the pillars that supported our mortgage system, had been forced into conservatorship. Several of our largest commercial banks were teetering. One of Wall Street’s giant investment banks had gone bankrupt, and the remaining three were poised to follow. A.I.G., the world’s most famous insurer, was at death’s door.
Many of our largest industrial companies, dependent on commercial paper financing that had disappeared, were weeks away from exhausting their cash resources. Indeed, all of corporate America’s dominoes were lined up, ready to topple at lightning speed. My own company, Berkshire Hathaway, might have been the last to fall, but that distinction provided little solace.
Nor was it just business that was in peril: 300 million Americans were in the domino line as well. Just days before, the jobs, income, 401(k)’s and money-market funds of these citizens had seemed secure. Then, virtually overnight, everything began to turn into pumpkins and mice. There was no hiding place. A destructive economic force unlike any seen for generations had been unleashed.
Only one counterforce was available, and that was you, Uncle Sam. Yes, you are often clumsy, even inept. But when businesses and people worldwide race to get liquid, you are the only party with the resources to take the other side of the transaction. And when our citizens are losing trust by the hour in institutions they once revered, only you can restore calm.
When the crisis struck, I felt you would understand the role you had to play. But you’ve never been known for speed, and in a meltdown minutes matter. I worried whether the barrage of shattering surprises would disorient you. You would have to improvise solutions on the run, stretch legal boundaries and avoid slowdowns, like Congressional hearings and studies. You would also need to get turf-conscious departments to work together in mounting your counterattack. The challenge was huge, and many people thought you were not up to it.
Well, Uncle Sam, you delivered. People will second-guess your specific decisions; you can always count on that. But just as there is a fog of war, there is a fog of panic — and, overall, your actions were remarkably effective.
I don’t know precisely how you orchestrated these. But I did have a pretty good seat as events unfolded, and 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. This bubble was a doozy and its pop was felt around the world.
So, again, Uncle Sam, thanks to you and your aides. Often you are wasteful, and sometimes you are bullying. On occasion, you are downright maddening. But in this extraordinary emergency, you came through — and the world would look far different now if you had not.
Your grateful nephew,
☞ You may be able to think of a wiser, more thoughtful and successful capitalist – but I can’t. And yet he sees a role for government, for enlightened regulation, for progressive taxation and the estate tax.
Part of the economic rescue package was the rescue of GM, which the Republicans opposed.
“The GOP sees President Barack Obama’s decision to help the unpopular carmaker as an easy opportunity to paint him as a bailout-happy, deficit-drunk spendthrift eager to impose a heavy government hand on a swath of industries,” reported Politico at the time, continuing . . .
Republicans see in GM a chance for their party to come out with a unified message – a confidence grounded in the conservative belief that government involvement in private industry always spells disaster. And GM’s long history of financial problems – even in more prosperous times – also makes Republicans see the company as a big albatross around Obama’s neck. . . .
. . . While concerns over offending moderates, women and Hispanics has some Republicans treading lightly on the Supreme Court nomination of Sonia Sotomayor, Detroit is a less sympathetic character in the political drama. Polling shows that a majority of voters oppose the federal loans and other types of government assistance given to General Motors and Chrysler over the past six months.
. . . Republicans are more than happy to stoke the outrage. In news conference after news conference this week, they slammed the administration for taking a roughly 60 percent stake in GM as part of the bankruptcy proceedings. That decision, they argue, will result in lawmakers getting intimately involved with the daily workings of the troubled company.
“I know that I don’t want Speaker Pelosi and Harry Reid designing the car that I drive, and I don’t think any New Yorker — or any American — does, either,” House Minority Whip Eric Cantor (R-Va.) said in a New York radio interview Thursday. “Washington, the president, Congress, none … has any business running that car company. They’ll run it into the ground.” . . .
☞ Yet it looks as though the bail-out and government-guided restructuring was a success. Today, a renewed GM will have the largest IPO in history, its offering oversubscribed. The government will make a meaningful start at getting its investment back. To my knowledge, neither Nancy Pelosi nor Harry Reid attempted to design any of GM’s new models. (I have my eye on a new Chevy Cruze.)
UN: OK TO EXECUTE GAY PEOPLE AGAIN
By a fairly narrow margin – 79 to 70 with 17 abstentions and 26 absences – the nations of the world Tuesday voted to remove “sexual orientation” from a resolution condemning murders.
“For the past 10 years, the resolution has included sexual orientation in the list of discriminatory grounds on which killings are often based,” reports IGLHRC.
“This decision in the General Assembly flies in the face of the overwhelming evidence that people are routinely killed around the world because of their actual or perceived sexual orientation, and renders these killings invisible or unimportant,” said IGLHRC.
Among the 79 nations favoring this change were Haiti (would they also like to return all those LGBT dollars?); Jamaica (already notoriously unfriendly to gay tourists); Cuba, China, Russia and their enlightened ally, North Korea; Iraq and Iran (finally, common ground!); Rwanda (which knows a thing or two about senseless killing); and – shockingly – South Africa (even though its Constitution was the first in the world to outlaw discrimination based on sexual orientation).
Homophobia runs deep. Even here, it took a new Administration finally to join 66 other nations in signing on to a (separate) statement that condemns human rights violations based on sexual orientation. The prior Administration would have no part of it. And our incoming House Speaker, John Boehner, last year explained his opposition to expanding the hate crime statue to include gays because, he said, hate crimes statutes should only protect “immutable” characteristics, like race and religion. In Boehner’s view, you can choose your sexual orientation but not your religion.
Isn’t it great to live in a world with so much room for improvement?
Quote of the Day
That I'm their competition.~Famed hedge fund manager Michael Steinhardt, when asked the most important thing an investor could learn from him.
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