Paul B. Farrell
May 11, 2010
Buffett defends Goldman, joins greed Conspiracy
Uncle Warren strums ukulele, in denial of Wall Street’s toxic business model
ARROYO GRANDE, Calif. (MarketWatch) — Warning: Bears taking over. Time to short Buffett’s new “Baby Berkshires,” short Goldman, short Moody’s and other favorites of Uncle Warren.
Why? Behind the façade, the lovable, good ol’ Uncle Warren strumming his cute little ukulele, ostensibly supporting reform, there’s a dark force that’s part of the toxic Goldman Conspiracy fighting to keep alive everything that’s wrong with Wall Street, everything that got us into this mess, everything that will trigger another meltdown that even Uncle Warren says: “I can guarantee it.”
Buffett belongs to the past while the news screams of a new world order … Riots in Greece, more coming when the other PIIGS demand EU bailouts … conservatives regain Britain … unregulated BP’s greed is spilling millions of gallons of oil destroying Gulf states, confirming Foreign Policy magazine warning of the “End of the Age of Oil” … the Dow’s techno-fear-driven irrational 1,000-point plunge as technicians turn bearish, ending the year-long bull rally … even Hank Paulson’s changing his tune, warning the Financial Crisis Commission that we need stronger reforms than Dobb’s Senate bill.
Meanwhile, out there, seemingly oblivious of the gathering storm is an aging Woodstock hippy, good Ol’ Uncle Warren strumming away on his ukulele, an over-the-hill rock star basking in the adulation of 40,000 adoring shareholders at their annual meeting in Omaha’s Qwest Center … a scene reminding us of Nero fiddling as Rome burns … of the string quartet playing on the deck of the sinking Titanic … of a Shakespearean tragedy with a raging, blind King Lear trapped, in denial of his role in America’s collapsing empire.
Yes, folks, Uncle Warren has a bad case of denial. Remember, not too long ago Buffett was calling derivatives “weapons of financial mass destruction.” And yet, there he was on stage at his love fest last week defending Wall Street’s most toxic companies, trapped in denial, defending the greedy culture that got America into its current mess:
- Praising Moody’s “business mode,” and by inference all rating agencies that blindly rubberstamped Wall Street’s toxic debt, setting up the last meltdown
- Defending Goldman Sachs bad behavior despite the fraud suit and a possible criminal indictment (while hiding his own conflicts of interest as a big investor in both Moody’s and Goldman)
- Praising Goldman’s CEO Lloyd Blankfein … by far Wall Street’s greediest fat-cat banker who paid himself $68 million of his stockholders profits last year
- Defending Goldman with a bizarre argument that Goldman is no more guilty than the other Wall Street banks, a tacit approval of the bad behavior of all Wall Street banks in the Goldman Conspiracy
- Worse, ol’ Uncle Warren also tried deflecting attention from Wall Street’s corrupt business model by blaming government regulators for the meltdown, another example of Uncle Warren’s blind denial, ignoring the fact that in the past year Wall Street spent over $400 million on lobbyists and campaign cash to make absolutely certain regulators, Congress and the Obama team all played along with Buffett’s songs that guarantee Wall Street controls Washington regulators
- Ironically, all this comes from a man who once lectured Congress on “Moral Integrity: I want employees to ask themselves whether they are willing to have any contemplated act appear on the front page of their local paper the next day, read by their spouses, children, and friends … Lose money for my firm and I will be understanding; lose a shred of reputation for the firm, and I will be ruthless”
Yes, Buffett’s in denial … just like his banker buddies … so short Buffett, short Baby Berkshire, short Goldman, short Moody’s. Why? They are all “shorting America,” piling on debt that’s pushed our debt-to-GDP ratio to 92%, past the IMF’s 90% danger zone.
Main Street’s also in denial … forget hedger John Paulson’s crooked subprime deals that made him and Goldman billions … forget the hedgers in Michael Lewis’ new “The Big Short” … it’s not the hedgers shorting America, it’s the bosses inside Wall Street banks, their greedy co-conspirators inside Washington and now Uncle Warren, a nice guy who once thought derivatives were evil “weapons of financial mass destruction,” but who’s now defending every weapon Wall Street will use to stay in “business as usual,” beating Main Street’s 95 million investors, a corrupt business model destroying from within.
Wall Street’s denial is blinding: Buffett and his merry band can no longer see how blind they are. They just keep strumming the same ol’ tunes. Well folks, until they stop shorting America, we’ll just keep reminding you of the debt their business model is creating.
So here are my best estimates, mostly from reported resources, of the huge debts Wall Street is dumping on America, the big bubble they’re already blowing, driving the global economy headlong into another meltdown that will trigger the Great Depression II. And likely, with all this debt, soon you can bet taxpayers will stage a revolution making Main Street American streets far worse than Athens:
1. Federal government debt … $14.3 trillion
Federal debt limit doubled since 2005 to $14.3 trillion limit. Bush/Cheney wars pushed U.S. deep into a debt hole. Military kills 54% of budget. Expect 4% deficits through 2020.
2. Treasury and Fed cheap-money policies … $23.7 trillion
The Fed’s shadowy printing presses have created an estimated but unaudited $23.7 trillion in credits, grants, loans and guarantees, backed by taxpayers. Pure profit.
3. Social Security’s rising debt … $40 trillion
Soon we must either cut benefits or raise taxes 40%. Delays worsen solutions. By 2035 Social Security and Medicare will eat up the entire federal budget, other than defense.
4. Medicare’s unfunded debt … $60 trillion
Going broke faster than Social Security. Prescription-drug benefit added an unfunded $8.1 trillion. In 5 years estimates rose from about $35 trillion to over $60 trillion now.
5. Annual health-care costs … $2.5 trillion
Costs rising faster than inflation. Burden increasingly shifted to employees. Recent Obamacare plan would have cost $90 billion annually, paid to Big Pharma and insurers.
6. Secretive global derivatives trading … $604 trillion [Yes, that’s nearly a QUADRILLION dollars. Tony]
Wall Street resists all regulation of their gambling casino that leverages the combined $50 trillion GDP of all nations by a 12:1 ratio. Warning: Less than 2% of Wall Street’s derivative bets triggered the last meltdown. Buffett “guarantees” it will happen again.
7. Population growth of 50% vs. Peak Oil demands … $30 trillion
United Nations says global population is increasing from 6 billion to 9 billion by 2050. China and India need 500 new cities each. Billions more humans want autos, using up limited resources, shifting more costs to America, as commodity price increases and new resource wars.
8. U.S. dollar losing as reserve currency … $20 trillion
As China’s economy rockets past America’s, the dollar will be replaced as the chief foreign reserves. The shift will devalue the relative worth of all America’s assets.
9. Global real estate losses … $15 trillion
Commercial real estate is bloating 25% of U.S. bank balance sheets. Dubai Tower, world’s tallest, is empty. China collapse will upstage, further depress America’s market.
10. Foreign trade and ownership … $5 trillion
Foreigners own more than $2.5 trillion of America. China holds over $1 trillion Treasury debt. $40 billion new deficits added monthly. Total climbing at $400 billion annually.
11. State and local budget and pension shortfalls … $3.5 trillion
Shortfalls of $110 billion in 2010, $178 billion in 2011. On top of more than $450 billion in annual shortfalls in local government employee pension funds. L.A.’s near bankruptcy.
12. Corporate pensions plus 401(k) plans … $3.2 trillion
Only 30% of Americans have enough to retire. There’s $2.7 trillion in 401(k) plans. And 92% of corporate pension plans are underfunded, with defaults guaranteed by taxpayers.
13. Consumer card debt … $2.5 trillion
Americans are still living beyond their means. Even with a downturn, consumer debt rose from about $2.3 trillion to $2.5 trillion. Fat Cat Bankers love it, yes, love making matters worse by gouging cardholders and mortgagees, blocking help in foreclosures and bankruptcies.
14. Lobbyists annual costs … $1.4 trillion
Wall Street bankers, Corporate CEOs and Forbes 400 Richest spend billions to influence elected officials, regulators and bureaucrats with lobbyists and campaign donations to exercise power over government. Voters are easily manipulated, but it takes lots of cash.
The total of all 14 categories of debt is a mind-blowing $825 trillion that includes “apples and oranges,” jet fighters, derivatives and insurance fees, credit cards, autos and mortgages. There are more, and of course these are just estimates. Given the lack of transparency on Wall Street and in Washington, our debt is likely over $1,000 trillion.
What must you do? Wake up, drop your denial, get active, demand guys like Uncle Warren, his fat-cat buddies and Obama’s team snap out of their denial, fight a return to the old greedy, toxic, destructive culture … demand that your elected reps in Washington pass 1930’s-style financial reforms … or America will soon trigger a bigger meltdown, a new Great Depression II and no longer be the world’s leading superpower.
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