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Mr. Buffett's New York Times' Op-Ed. Thank You We Feel Better Now

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The Financial Crisis is replete with ironies. Today the readers of the New York Times were regaled with Warren Buffett's Op-ed ("Pretty Good For Government Work") expressing his admiration and appreciation for the great good work performed by our government (or Mr. Buffett's more down home sobriquet, our "Uncle Sam") in rallying to Wall Street's rescue. Woe to the nation, infers Mr. Buffett, had these gallant warriors, the likes of Ben Bernanke, Hank Paulson, Tim Geithner not acted decisively to bail out the nation. And had they not acted, "300 million Americans were in the domino line as well."

What Mr. Buffett conveniently overlooks is the many millions of Americans who continued in the domino line losing jobs, homes and nest eggs, while the likes of his favorite investment bank, Goldman Sachs, in which he had invested billions, were making themselves and Mr. Buffett richer, setting up $23 billion bonus pools. Then to gild the golden Lilly, the Wall Street firemen, Bernanke, Geithner, and Paulson pumped billions via A.I.G. who, to quote Mr. Buffett, "was at deaths door." And yet the Wall Street fire brigade was able to shake this near cadaver for tens of billions directly and indirectly lining the pockets of the favorite apple of Buffett's investment eye, Goldman Sachs.

Buffett goes on to talk about the "rot building up in the housing market." That there was "mass delusion": "In truth almost all of the country became possessed by the idea that home prices could never fall significantly." Really?

No mention here of those wonderful "Abacus" deals cobbled together by the folks at Goldman and their equivalents elsewhere, packaging what Senator Levin termed during Congressional hearings as "sh*t." Packages of mortgages and notes destined to fail, foisted on the less sophisticated wrapped in another of Mr. Buffett's important investments, Moody's Corporation, conveying its triple A rating and then blessed with the imprimatur of what was once the uncontested blue ribbon of Wall Street certification, the stamp of a once vaunted Goldman Sachs. Altogether very insalubrious and highly questionable business practice, occasioning Mr. Buffett to raise high the banner of 'caveat emptor,' defending Goldman's actions far and wide to any microphone or interview that would hear him out, that buyers should have been more careful. Thereby inferring that the debacle of the "Abacus" deals were as much the fault of those who were taken down the garden path, a curious moral judgment for such a vaunted sage (please see
"The New York Times' Timely Whitewash of Goldman Sachs" 06.18.10).

Was the bail out necessary? Very likely yes. But only fellow club members would have seen to it that it was done at everyone else's expense. And if advantages accrued to card holding club members such as fat bonuses and no significant haircuts for equity and bond holders, so much the better. This is America!