Why did Buffett buy $5 billion of Bank of America stock? Mish suggests that Buffett was just trying to energize financial stocks, in general, as he’s up to the gills in them and puffing them up would allow him to unload all other financials before they go “poof”. That could be it, but I think there was more going on.
Warren Buffett’s most prestigious investment these day is President Obama. If Bank of America had failed – and it is still “one foot in the grave, other on a banana peel” – then it would likely have served as the trigger for a general financial collapse…begin Great Depression II, end of any chance for Obama’s re-election. While this would have hit Buffett hard financially there is still the fact that if you’re worth $45 billion and lose $10 billion, you’ve still got $35 billion left. Buffett remains rich no matter what – ego is involved here.
Buffett has specially bought in to what Obama stands for…his image of himself stands or falls with the success of Big Government liberalism. Buffett told us that Obama was The One; Buffett tells us that if we’ll just tax and spend some more all will be made well; Buffett tells us that it is us knuckle-dragging conservatives who got it wrong. But if Obama fails, then Buffett got it massively wrong. Buffett is not about to be proved wrong by a bunch of bitter-clinger adherents of that worn out, has-been Constitution!
It won’t work – Buffett has seemed like a savvy businessman because he’s piled up huge amounts of cash by milking the Big Government, fiat-money, usury-based economy for all its worth. That economic model, though, has now gone on as long as it can. We’re bankrupt; there is simply no more money to borrow, any more printing will just touch off ruinous inflation…its all done gone up the spout, as it were. Buffett may think that if he throws around a few billion it will change the dynamic…all it will do is delay the inevitable, and not by nearly as much as all of Bernanke’s trillions in fake money. Not only is Buffett about to be proved wrong, he’s also going to be proved a bad businessman…someone who can only make it in a ponzeconomy, but has no relevance to one based on hard work, thrift and careful investment.
UPDATE: Buffett is also relentlessly avoiding taxes…this report shows that he’s arguing with the IRS over taxes unpaid since at least 2002. Yeah, he really wants to pay more…