Let’s Hold Benedict Arnold Billionaire Warren Buffett Accountable

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Originally published at AlterNet. Written by Les Leopold

The derivatives genie is now well out of the bottle, and these instruments will almost certainly multiply in variety and number until some event makes their toxicity clear. Central banks and governments have so far found no effective way to control, or even monitor, the risks posed by these contracts. In my view, derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal. (Berkshire Hathaway annual report, 2002)

Those were some wise words from Warren Buffett, the Will Rogers of the financial world. He used to say such things at his stockholder meetings, where tens of thousands come to savor his homilies and celebrate their own good fortune–a kind of Woodstock for people who dig money more than sex, drugs and rock n roll. His fans love to party with the iconic multi-billionaire from Omaha with the sparkle in his eyes. The guy makes people feel proud to be Americans and capitalists, big and small.

Buffett’s reputation is as a straight shooter. For years he had only contempt for fantasy finance securities that contain nothing but air and risk. He was among the first to see that if we let toxic securities like synthetic collateralized debt obligations run wild, we’d soon be engulfed in a financial crisis. (For an easy to read account of these “financial weapons of mass destruction” please see The Looting of America.)

But times have changed. Today, Buffett is all about the bottom line. He’s taken to defending the biggest shysters in the country–and argues that his own questionable derivatives should be shielded from government regulators.
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Teachable Moments — But Where’s the Teacher-in-Chief?

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Written by Robert Kuttner. Originally posted on The Huffington Post (purchase books by Robert Kuttner)

This has been a providential month for teachable moments. They have included the details of the government’s civil fraud case against Goldman Sachs; the gruesome and needless corporate murder of miners in West Virginia; the BP oil blowout in the Gulf of Mexico; and then to complete the circle, the stock market going berserk because a technical error caused a domino effect of computerized automatic selling.

What do these events have in common? Every one of them demonstrates why the private profit motive cannot be relied upon without some steering or harnessing mechanism by government. A president committed to rallying public opinion to the cause of a more balanced economy would be all over these teachable moments, connecting the dots, rebuilding the ideology of managed capitalism, making the case for tougher government action in the public interest, and rallying the citizenry to his cause.

Let’s review how President Obama has actually done. He gave a pretty good speech in New York April 22, on the Wall Street origins of the crisis. Reform efforts in the Senate are moving in a constructive direction, mostly thanks not to the White House but to the leadership of a couple of dozen progressive senators and the fact that Wall Street is so unpopular that even some Republicans have voted for strengthening amendments.
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