Sunday, February 12, 2012

Obama Thanks Buffett, Again

Warren “Tax Me, Bro” Buffett got a big gift from Barack Obama and the Department of Justice last week. Crony socialist Attorney General Eric Holder announced that the government had reached a settlement with five major U.S. banks in regard to foreclosure abuse. The settlement: $25 billion. Buffett’s profit: $154 million. Since it’s growth in the value of his bank shares, it won’t be taxed as ordinary income, and his secretary will continue to pay at a higher rate.

Now if you happen to have a few billion dollars lying around unused, and want to make a big profit with the help of the President, here’s how the Sagebrush of Omaha did it. Back in 2011, Buffett invested $5 billion in Bank of America. He knew that it would eventually be a solid investment, since BofA was too big to fail and did very well with government bailouts. As part of his purchase, he also got warrants to buy 700 million shares at the depressed price of $7.14 per share.

A few months later, amid bonus and mortgage abuse scandals at BofA, those shares had dropped to $4.94. But never fear, the government is here. Not known for panicking at a mere downtick, Buffett held onto his shares and increased the number at the even-lower price. On Thursday, the DOJ announced the settlement, and BofA shares promptly rose to $8.13 per share. By Friday afternoon, the shares had risen to $8.35 per share.

Now I’m absolutely sure that this and other Buffett windfalls as a result of administration action are purely coincidental (sarcasm intentional). Just prior to this gift, Barack Obama announced that despite Congress’s urging, he would not allow the State Department to approve the Keystone XL pipeline from Canada to Texas. No direct largess there either. But nevertheless, by eliminating the pipeline, the Canadian oil has to be transported to the refineries in Texas somehow.

That would be railroads, folks. And the biggest beneficiary is Burlington Northern Santa Fe LLC, which is owned by, you guessed it, Buffett’s Berkshire Hathaway. At the time the pipeline was nixed, Kirata York-Wooley of Burlington Northern said simply: “If Keystone XL doesn’t happen, we’re here to haul.” I’ll bet they are.

Buffett’s “billionaires should be taxed at a much higher rate” statement is much beloved or much hated, depending on your political/economic stance. But this is the same man who also said: “Through the tax code, there has been class warfare waged, and my class has won.” This was before his love affair with Barack Obama, and he wasn’t saying it apologetically.

Given his ties to this corrupt administration, there is plenty of reason to believe that he may have what is called an informational advantage for investments in the not-so-free market. Proving that he is trading on insider information is of course an entirely different matter. It’s good to have knowledgeable friends in Congress, and even better to have them close to the White House.

That’s twice in a very short period of time that Buffett and Berkshire Hathaway have greatly benefited by administration action, the details of which the average investor couldn’t know in advance. Coincidence is not concurrence, but I’m still getting a faint odor of rat. Perhaps Buffett will donate a few billion dollars of these two big gains to the public treasury while giving his secretary a raise. The increase in value of Buffett’s shares in BofA and Burlington Northern is what our socialist friends call “windfall profits.” When they’re gained this way, I have another name for them—“convenient luck.”

18 comments:

Tehachapi Tom said...

Hawk
Isn't it amazing, no pipeline so no jobs but billions are still made.
The difference is all of the monies made are concentrated at a point not spread across the population. The economy would multiply those billions many times over with all those jobs and the flow of money that would result. This way it is all in one place where a portion of it can be directed to bo's reelection efforts.
Boy does this have a bad smell to it.

CrisD said...

Now that's what I call a Limousine Liberal!

AndrewPrice said...

Warren Buffett is a crony turd. This man defines influence peddling and getting rich off of connections.

rlaWTX said...

that is a mighty big stench...

Individualist said...

You know the old adage that what was good for the rich was good for everyone else has gotten lost. It used to be that the big business men made stuff. They drilled for oil, the made cars, they grew crops and made food. Business was about bringing the things needed to bear.

For some this is still true, even if they have a liberal bent to them. Bill Gates makes PC software, Steve Jobs (RIP) made iPhones and iPods, Zuckerberg made Facebook. The Ford family still retains shares in Ford and makes cars.

But there has become another type of wealth that seems to be based solely on the trade of shares of stock, commodities and bond investments. It seems to me that the majority of these people, Warren Buffet, George Soras make there money by manipulating governments. Isn't it funny that these are the financiers of the hard core left. They are the ones that benefit from the one world government scenario the Paulbots fear and they also benefits from stronger centralized governments that support monopolies.

Tennessee Jed said...

More crony capitalism. I guess it's hard to get too angry with Boehner for scoring on some insider information when this stuff goes on.

LawHawkRFD said...

Tehachapi Tom: And that's why I've picked up the expression "crony socialism."

LawHawkRFD said...

Cris: Yep--a limousine that stretches from the Canadian border to the Gulf of Mexico.

LawHawkRFD said...

Andrew: But think of all the billions he's going to write to the Treasury when he finally decides it's time for him to pay his "fair share."

LawHawkRFD said...

rlaTWX: Yep. I wonder if AirWick and Glade got government bailouts and subsidies. They both make "environmentally-friendly" sprays.

LawHawkRFD said...

Tennessee: I agree, but I did favor the new law prohibiting insider trading for Congress critters. If you take away the legal temptation, you leave only the illegal ones, and those are still punishable.

LawHawkRFD said...

Indi: And two names immediately rise to the top when you look at it that way--Warren Buffett and George Soros.

Joel Farnham said...

Interesting LawHawk. One of the most successful leftist business man is getting help from the most leftist president. In time, all agendas get revealed.. including Warren Buffetts. I had wondered why Buffett would side with Obama. Now I know. Scum-sucking bastard.

tryanmax said...

The Orc of Omaha is an embarrassment. You can probably imagine how regarded he is in my neck of the woods. *retch*

But don't take my word for it. LINK

LawHawkRFD said...

Joel: There are sad parallels to the national socialist regime. It pretended to be quasi-socialist, but in fact it was socialist with rewards for the biggest supporters of the leader. Think I. G. Farben and the Krupps. Hence, crony socialism. So far, this is a more benign version of that system, but who knows where an American institution-hating president like Obama wants to take the nation?

LawHawkRFD said...

tryanmax: At least our California billionaires don't try to play the ukelele and sing. But the song was appropriate (if you count "owning" as "working"). Each state has its own cross to bear.

StanH said...

Yeah, I had a bit of a go round with a infamous troll over on one of the Bigs, who was ballyhooing the wonderful economy. I brought up this Warren Buffett info to illustrate where, and who the economy is working for, to the sound of crickets. The phrase “Venture Vulture,” was created for the Warren Buffett’s of the world, and everything that emanates from Washington is for his ilk’s benefit, Barrycare, green energy, you name it. When I read things like this it brings my inner Huey (The Kingfish) Long out, and revise his harebrained depression era, 90% wealth tax out for say, anyone with $10 million or more, to be confiscated and redistributed to the poor, poor, pitiful poor aka OWS. Damn this crap pisses me off!

LawHawkRFD said...

Stan: California has some history with this sort of thing as well. Our Huey Long was Upton Sinclair. When he ran for governor in 1934, his program was called End Poverty in California (EPIC). The Republicans (and no small number of Democrats) renamed it "Every Punk in Clover." Current governor Jerry Brown is giving the program another chance.

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