In the week since I posted my paean to the burgeoning love affair between our socialist president and the capitalist investor, a series of developments seems to indicate that the unlikely lovebirds have taken their relationship to the next level. Perhaps the white collar crime felony level. Now I’ll admit, all I know about insider trading I learned from Oliver Stone, but one thing I do know: if it smells fishy and quacks like a duck, it’s a platypus.
So here’s the dealio. Barry’s out on Martha’s Vineyard, cramming like crazy (between rounds of golf) to come up with the economic plan he promised he’d reveal to us after he came back from vacation. (As a former teacher, this smells to high heaven of, “Yeah, Mr. Rush, my project’s done, it’s just that the art store was out of poster board.”) I also question the ability of a president to orchestrate an economic recovery, when he can’t even get his family of four onto a single private jet.
So Barry’s smiling and dialing everybody he can think of who might have some idea what he might do to stimulate the economy and still hold true to his Marxist principles. Talk about crossed purposes. You almost feel sorry for him, don’t you? (I said ALMOST!)
So as Barry’s on the island, the stock market continues to lurch downward, led by formerly profitable companies like Bank of America, which is trading at roughly half what it was six months ago. Barry wants to focus on stimulation, but first he needs to stop the skids, so he calls up the head of the Ford Motor Company, Alan Mulally. And maybe he asks, “Hey, you guys did pretty good without any government bailout. How’d you manage that?”
And probably Mulally says, “It’s easy, Barry. The public was so pissed that you took over GM, they started buying our cars out of spite.” Not exactly what Barry wanted to hear, so he calls Bank of America CEO Brian Moynihan directly, and goes, “Yo, Bry, why’s your stock tankin’, dude? You’re harshin’ my recovery.”
Now, Barry Obama doesn’t know much about economics, but he does know that having a bank called “THE Bank OF America” go bankrupt would be a bad thing. So he asks, “Bry, how much do you need?”
“At least 5B. But you’ll never get Congress to go for it.”
And Barry knows he’s right. He’s not going to get a Congressional bank bailout, but maybe he can finagle a private sector bank bailout. So he gets on his cell and he calls his buddy, Warren.
“Hey, Omaha, how’s it hangin’?”
“Kenya! How the hell are ya?”
“That’s not cool, Warren.”
“Hey, I’m kidding. Anyway, what can I do for you?”
So Barry goes into how he needs to stop the B of A skid so he can focus on getting his spanking new economic package together. And Warren wonders, “What’s in it for me?”
And therein lies the mystery. With all the distressed stocks out there, why is B of A, with the Countrywide albatross still securely fastened around its neck, an attractive investment to the wondrous Oracle of Omaha? Maybe because B of A still ranks as too big to fail, and maybe because he was given some kind of guarantee from a certain party vacationing on the Vineyard.
Let us remember that Buffett cleaned up in 2008, investing mightily in the heavily distressed Goldman Sachs, the company from which had come so many Obama supporters and administration flacks. According to William Alden, writing in Huffington Post, no Rightwing attack dog :
“The [B of A] investment had many drawing comparisons to September 2008, when Buffett invested $5 billion in Goldman Sachs during the height of the financial crisis and secured a lucrative deal for his company. That was right before the government passed a bailout package known as the Troubled Asset Relief Program, rescuing a range of financial firms and confirming the wisdom of Buffett’s bet.”
Is it possible that Buffett had gotten wind that TARP was a done deal before he plunked down his $5B on Goldman? Is it possible that Warren got another verbal guarantee from the president that if his investment in B of A proved bothersome to his otherwise robust portfolio, he could count on the president to deliver relief? Unlike Buffett, I’m not an oracle. I find that the only way to judge current circumstances is to look at similar past circumstances. And in the very recent past, Warren Buffett went in to rescue Goldman Sachs because he felt secure about government intervention to protect that investment. Again, according to Alden:
“The crisis-era investment in Goldman Sachs, Buffett said, “was a bet essentially on the fact that the government would not really shirk its responsibility at a time like that.” ”
As per Alden, B of A was not, objectively speaking, an investment worthy of an oracle:
“…as of Wednesday’s close, Bank of America stock was worth about half of its value at the beginning of the year. The share price implied investors thought the bank was worth less than a third of what its official financial statement said.
” “The company’s fundamentals are very risky. That is clear,” said Admati, the Stanford professor. “They have all kinds of things hanging that add uncertainty to their position. They’re not in great shape.” “
Yet, Buffett, a fan of TARP, went in for $5B. (He also invested about $3B in GE not too long ago when they were struggling. You may recall GE is run by Obama suck-up Jeffrey Immelt, who finds it convenient to take millions in taxpayer money for green initiatives, but inconvenient to pay any corporate tax. He also finds it inconvenient to hire American workers, but very convenient to give NASA tech secrets to the Chinese. Oh, these friends of Barry, they are a hoot! I could digress all day, but…)
Naturally, Buffett, ever the patriot, is spinning this as an investment in America. But it is not an America that any free market capitalist would recognize. Conversely, it may not be the “fundamentally changed” America of Obama’s Left-wing vision, but it is an incremental step, if not a broad jump, in that direction.
Now, folks on the Left will say, “How can you accuse Obama of being a socialist, when he’s palling around with Warren Buffett?” To which I say, while that’s better than palling around with the unrepentant terrorist William Ayres, it is no evidence that he is not a socialist. What he may have engaged in, if my suspicion holds and it’s proven he induced Warren Buffett to make this investment, is nothing less than crony capitalism.
Crony capitalism is a mainstay of the American Left, who still are unable to seize and nationalize American industry the way they would desire. (If you doubt their desire, see Maxine Waters on oil production.) Instead, they use regulation to control the companies without taking on the risk of ownership. This allows them to produce all the desired (and undesired) effects of socialism without having to take responsibility. If they burden the economy with regulation (as Obama has done) and it tanks (as the Obama economy has) they can blame capitalism, luck or the weather, and continue their Marxist machinations undeterred. In the short term, of course, they are picking winners and losers, propping up favored companies with earmarks and subsidies, all to the short-term gain of favored investors. For movie buffs, Obama is Rick Blaine, telling Warren Buffett bet on 22 and let it ride. So, in the short term, these cozy elites are happy, while the rest of us sleep, waking later to find that we’re living in a mainland Cuba.
It’s also useful to remember that Warren and Barry are not that different. Neither one has ever really produced anything. Each has risen because he was able to capitalize on the labor, invention or discontent of others. Buffett evaluates the work of others and places bets. Obama, as a community organizer, evaluated the misery of others and petitioned sources for other people’s money, ostensibly to salve that misery, but more crucially to line the pockets of his Chicago cronies.
Ultimately, the story of Warren and Barry is that of compatible, but star-crossed lovers. Each is cynically manipulating the other for his own gain: Buffett to make a quick profit, Obama to make incremental advances toward a socialist economy. Buffett must view Obama’s presidency as a blip on the radar, an aberration, which like a bubble or a sudden decline in the market, must face its inevitable correction. Obama must see Buffett as either a fellow traveler or a useful idiot. Only time will tell which lover is correct, and which is the ultimate loser.