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Buffet: 'Well, Uncle Sam, you delivered.'

By Ezra Klein

M2X00116_92.JPGWarren Buffet pens a thank-you note to Uncle Sam for saving the financial sector -- and his company:

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.

Photo credit: Carlos Barria/Reuters.

By Ezra Klein  | November 17, 2010; 10:30 AM ET
Categories:  Economic Policy  
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Comments

Ezra,

I read this article too and I was struck by two things.

1-he's completely right.


2-20 years from now when the next panic happens will people see the US as " the only party with the resources to take the other side of the transaction"

Not as we currently are going. That's why we need a sensible deficit commission that doesn't drift too far left or right but takes a commonsense approach.

Posted by: visionbrkr | November 17, 2010 10:44 AM | Report abuse

visionbrkr, I agree, however, I don't think that commonsense is necessarily situated in some central zone between the Left and the Right.

Posted by: MosBen | November 17, 2010 11:12 AM | Report abuse

I would only thank Uncle Sam if he had kicked the butts of parasitic speculators like Mr Buffet...

Posted by: rarnold1953 | November 17, 2010 11:33 AM | Report abuse

You forgot to quote the part where he thanks Dubbya for being such a great "leader."

Posted by: Rockfish66 | November 17, 2010 1:03 PM | Report abuse

An outrageously rich guy loved the Wall St bail-out. Well it least somebody did!

Posted by: bdell555 | November 17, 2010 1:16 PM | Report abuse

rarnold wrote:

"I would only thank Uncle Sam if he had kicked the butts of parasitic speculators like Mr Buffet..."

Actually nothing you could have written betrays your lack of knowledge of the subject more than this.

Buffet is the LEAST speculative billionaire that you could find. He's had some of his holdings longer than Microsoft has been a company. Hate the guy because he's rich if you want to, but he an investor, the antithesis of the type of Wall Streeter who caused these problems.

Posted by: 54465446 | November 17, 2010 1:41 PM | Report abuse

I read this article too, but I don't understand why Ezra added "-- and his company" to his byline. It seems to suggest that Buffet's company was rescued as well; it just wasn't the case. Am I missing something?

Posted by: demian_slc | November 17, 2010 2:44 PM | Report abuse

@demian_slc "I read this article too, but I don't understand why Ezra added "-- and his company" to his byline. It seems to suggest that Buffet's company was rescued as well; it just wasn't the case. Am I missing something?"

Yes. Two points:

1. From Buffet's Op-Ed:

"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. "

2. As an investor in Goldman Sachs Buffet directly benefits from the Federal Government's decision to pay out AIG's claims at 100 cents on the dollar and from the decisions allowing Goldman Sachs to become a commercial bank and therefore receive emergency money from the Federal Reserve.

http://www.dailyfinance.com/story/investing/warren-buffett-looks-to-make-70-for-bailing-out-goldman-sachs/19683337/

http://www.huffingtonpost.com/2010/10/21/warren-buffett-goldman-sachs_n_771072.html

http://www.nytimes.com/2008/09/22/business/22bank.html

In a direct and personal way, Warren Buffet and Berkshire Hathaway are big time winners of the banking bailout of 2008-2009, without having been directly bailed out themselves.

Posted by: jnc4p | November 17, 2010 3:20 PM | Report abuse

jnc4p wrote:

"As an investor in Goldman Sachs Buffet directly benefits from the Federal Government's decision to pay out AIG's claims at 100 cents on the dollar and from the decisions allowing Goldman Sachs to become a commercial bank and therefore receive emergency money from the Federal Reserve."

Buffet made his investment AFTER the Fed gave money to AIG by about a week or so. If the AIG bailout had never occured, he might not have made the Goldman purchase.

Furthermore a little known clause of his deal prevents Goldman's chief executives from selling out before him. You could argue that he made sure that the government's money was well invested, as much as the other way around.

Posted by: 54465446 | November 17, 2010 4:03 PM | Report abuse

Did anyone notice the name that's conspicuous by its absence?

Buffett thanks Ben Bernanke, Hank Paulson, Tim Geithner, Sheila Bair and George W. Bush by name. And "Uncle Sam."

Wikipedia tells us: "Sheila Colleen Bair (born April 3, 1954) is the Chairman of the U.S. Federal Deposit Insurance Corporation (FDIC). She was appointed to the post for a five-year term on June 26, 2006 by George W. Bush. Bair will also serve as a member of the FDIC Board of Directors through July 2013. [...]

[Former] Research Director, Deputy Counsel and Counsel to Kansas Republican Senate Majority Leader Robert Dole (1981 to 1988).

Hmmm. Where's the sitting President in all of this? Could Buffett have possibly forgotten him in his frabjous joy?

I don't think so.

Posted by: HartWms | November 18, 2010 2:07 PM | Report abuse

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