If the Buffett billionaires kept their money, we'd be better off

Forty billionaires have just pledged to give away at least half their wealth to charity, concerning which a few observations.

Scripture says it is easier for a camel to pass through the eye of a needle than for a rich man to enter the kingdom of Heaven (capitalized because, as Ralph de Toledano pointed out, it's a place -- you know, like Scarsdale). We could note in passing, but will not, that there is no suggestion that a rich woman would be similarly challenged.

Viewed from Scripture's vantage point, the forty billionaires may simply be taking the necessary steps to make the needle's eye larger or the camel, and their riches, smaller.

Is it fair -- is it accurate -- to say that these people who are giving away billions are being generous?

During the 1968 presidential campaign, William F. Buckley Jr. remarked that the Democratic candidate, Hubert Humphrey, had already promised the American people everything and that, since beyond everything there is only nothing, Humphrey was now promising the people exactly: nothing.

There's a bit of that here too. If we assume that even half a billion dollars is more than enough to live on, indeed more than enough to satisfy the dreams of avarice, then any additional wealth can mean to him that possesses it only nothing; in which case what these generous people are giving away is also: nothing.

At least nothing that means anything to them. Which again raises the question: What is generosity?

But perhaps that's just being churlish. How is a rich man supposed to be generous? What can he do? Is it possible for him to sacrifice? Perhaps it is best just to understand that that's his business.

There are other miscellaneous points. One of them is that the donors will get tax deductions for their gifts, the meaning of which is unclear since they have so much money that taxes have no impact on their lives -- which, not incidentally, tends to diminish their resistance to high taxes, which is not good for the rest of us.

Another point is that it is almost certain that the country would be better served if these billionaires kept their money and continued to invest it. Investing is an activity at which they have proved to be exceptionally skilled, and their investments would be far more likely to produce jobs and products -- real benefits -- than anything any charitable institution could possibly do with the funds.

A third point is the curious collectivity of the operation. Why did they get together to make a joint announcement? Why not just make their decisions in the privacy of their privy chambers? Were they looking for glory (which would suggest that having billions is not satisfying), or setting an example (for whom?)?

Warren Buffet: Scrap the health care overhaul, focus on cost

Buffet defends Goldman Sachs role in short-sale of subprime mortgage securities against lawsuit by SEC

OMAHA, Nebraska (Reuters) – Warren Buffett on Sunday intensified his feisty defense of a controversial mortgage transaction marketed by Goldman Sachs Group Inc (GS.N), saying the investment bank's behavior does not warrant public fury.

Buffett also said he is seeing real signs of improvement in the economy, especially in manufacturing, though it will take another year for a sustainable housing recovery to take hold.

The world's third-richest person spoke at a press conference, a day after his company Berkshire Hathaway Inc (BRKa.N) (BRKb.N) held its annual meeting for tens of thousands of shareholders.

Berkshire owns $5 billion of Goldman preferred shares with a hefty 10 percent dividend, and Buffett has become Goldman's most powerful defender since it became the target of a U.S. Securities and Exchange Commission's civil fraud lawsuit.

The April 16 complaint alleged that Goldman hid from clients that securities underlying the mortgage transaction, Abacus, were chosen by Paulson & Co, a hedge fund firm betting they would lose value.

Goldman rejected the allegations, and Paulson was not charged. Buffett on Saturday said he loved the $5 billion investment and defended Goldman's chief, Lloyd Blankfein.

"I don't have a problem with the Abacus transaction at all, and I think I understand it better than most," Buffett said.

Sitting beside Berkshire Vice Chairman Charlie Munger, Buffett said he saw nothing in Goldman's behavior to justify the intense criticism it faces.

"It's very strange to say, at the end of the transaction, that if the other guy is smarter than you, that you have been defrauded," Buffett said.

Buffett also said he had no reason to believe Goldman misled ACA, which helped create Abacus, about Paulson's involvement, and that it should not have mattered to ACA.

"Any bond insurer that is making a decision about what to insure and what to charge for it should not care a whit about who is on the other side of the transaction," he said.

Buffett said Berkshire itself is better off because it regularly enlists investment banks, such as Goldman, including when it was much smaller in the late 1960s and needed capital.

Bond buyers trust Buffett more than Uncle Sam

For many decades, U.S. government securities have been the epitome of safe, dull investments. If you wanted to be absolutely positive you'd get your money back and then some, Treasury bills were the way to go. Right now, lots of Americans who put their money into big mortgages or stocks a decade ago wish they had gone the more mundane route.

But it's mundane no more. With federal budget deficits running wild, investors are growing uneasy at the idea of lending money to an institution that seems unable to stop spending beyond its means. Last month, something extraordinary happened: Two-year bonds offered by Berkshire Hathaway Inc. commanded lower yields than those offered by the U.S. government. As Bloomberg.com put it, "The bond market is saying that it's safer to lend to Warren Buffett than Barack Obama."

That may sound common-sensical — Buffett has experience at meeting payrolls, while Obama does not — but it's actually a surprising perception. Berkshire Hathaway, after all, conceivably could make so many mistakes that it runs out of money and closes down. But the U.S. government is not about to run out of money, even if it keeps overspending.

Why not? First, it can appropriate more of its citizens' earnings through the tax system. Second, and more important, it can print money to pay its bills. Warren Buffett doesn't have those options.

So it's hard to see why investors would be leery. Well, actually, it's not so hard: The federal government is digging itself deeper into debt every month and intends to keep doing so indefinitely.

Warren Buffett profits from TARP funds

"Warren Buffett promoted the Troubled Assets Relief Program (TARP), and lambasted the greed on Wall Street, yet he is one of the main benefactors of the TARP largesse according to a Sacramento Bee story.

Buffett endorsed Barack Obama for President last year, and Obama tapped Buffett to be a member of the candidate's economic team. Obama requently referred to Buffett's endorsement during the campaign as proof that he had the capability to deal with the troubled US economy.

Buffett's holding company, Berkshire Hathaway, profited from TARP in several ways according the the Bee story:

Overall, Berkshire owns more than $13 billion of stock in the top recipients of TARP funds – including Goldman Sachs Group Inc., US Bancorp, American Express Co. and Bank of America Corp., all considered by analysts to be in deep trouble before the federal infusion. The more the bailout props up these financial companies, the more secure Berkshire's investments.

That total, The Bee found, ranks Berkshire fifth among all investors in TARP-assisted companies. Berkshire's TARP holdings constitute 30 percent of its publicly disclosed stock portfolio. That proportion reflects at least twice as much dependence on bailed-out banks as any other large investor.

Buffett increased his bank holdings in September, while openly pressing Congress to pass the bailout."

http://www.americanthinker.com/blog/2009/04/warren_buffett_profits_heavily.html