Who Is the Oracle?

Tuesday night's Presidential debate in Nashville featured a notable clash or two, but on one topic there was agreement: Warren Buffett. The so-called "Oracle of Omaha" is an Obama supporter but also received a nod from John McCain. When asked who would be a suitable Treasury Secretary both men invoked Buffett's name. So who is the Oracle everybody admires?

Warren Buffett is the 78-year old chairman of Berkshire Hathaway, a holding company based in Omaha, Nebraska. In 2007 Forbes ranked him the richest man in the world, worth $62 billion, now only $50 billion...but you get the idea.

How does somebody get that rich? By buying the stocks of companies that make good returns for their investors. Some of Buffett's picks over the years include: Coca-Cola and McDonalds as well as Dow Chemical, and of course WalMart. Trouble is, those that make the best returns for their shareholders don't generally treat their workers all that well -- or the environment. All that shareholder profit's got to come from somewhere. Buffett also owns Mid-Atlantic Energy, a utility that burns coal and runs nuclear power plants.

In terms of Buffett the bellwether-leader -- the Wall Street Journal recently reported that Buffett was shopping for businesses in Europe; he owns some in Israel, and last week announced an investment in a Chinese venture that makes batteries for electric cars. Not a very reassuring move for car makers here at home.

Buffett would change the tax system to make it fairer -- He's been public about the fact that in 2006, he paid just 19% of his income in total federal taxes. He gives lots of money to the Gates Foundation. So you can see why he's a man for all candidates.

But if the candidates like Buffett for Treasury Secretary so much, it's odd that they vote for Paulson plan. When Buffett kicked in $5 billion to Goldman Sachs he demanded 10% interest back. Paulson just gave it away.

Laura Flanders is the host of RadioNation and GRITtv. Watch GRITtv on Free Speech TV (Dish Network Ch. 9415) on cable (8 pm ET on Channel 67 in Manhattan) or online at GRITtv.org. Carl Ginsburg co-wrote "Who is the Oracle?"

Comments (23)

1. Paulson just gave it away ... well, almost. Gave it away to his cronies & other close interests. Talk about insider dealing ... whew.

   Buffet? Sec Treasury? Most unlikely. Too old. Far too rich. No political experience.

   More likely ... Jon Corzine. Paulson's CEO predecessor at GS. Former NJ senator, current NJ guv, health regained & he knows ALL the tricks.

   Posted by sloper at 10/08/2008 @ 4:35pm

2. "But if the candidates like Buffett for Treasury Secretary so much, it's odd that they vote for Paulson plan. When Buffett kicked in $5 billion to Goldman Sachs he demanded 10% interest back. Paulson just gave it away. "

   Yep.

   That's the difference when you're playin' with other people's money. We oughtta be marching on DC with shotguns and pitchforks.

   Posted by b_kool_66 at 10/08/2008 @ 4:35pm

3. Well, Ms Flanders, unfortunately if you're looking for somebody like Norman Thomas at Treasury....he's dead...

   and it's unlikely any viable candidate for President would have picked him.

   Posted by Maskdelta at 10/08/2008 @ 4:38pm

4. Love Buffet's populist message, "Against someone like me, the little guy doesn't have a chance". Just a regular guy.

   Posted by Sorelish at 10/08/2008 @ 4:43pm

5. Rich guys with a modicum of social conscience are a rarity, but that doesn't make them Treasury secretary material. Watching Paulson's speech today, I couldn't help but notice that he looks like he just walked through a field of land mines. Clearly, he has the toughest job in the world right now....cleaning up a mess created by politicians, lobbyists, and wall street. No tears for Henry....just an acknowledgment.

   Buffet like a good predator has been scooping up deals right and left (buy low and sell high) - but that doesn't qualify him to be Treasury secretary. Likely, Buffet hasn't really done alot of hands on management for sometime....He is old enough to know that what goes up must come down...and maybe that is his strongest qualification. Got to wonder if he would take the job if offered? I am sure that Buffet appreciates Obama's vote of confidence....no matter if it was made off the cuff.

   Posted by OneVote at 10/08/2008 @ 5:41pm

6. I wonder if Ebenezer Scrooge is available.

   Posted by chaoszen at 10/08/2008 @ 5:51pm

7. Buffett? Really? What has he even done since recording "Margaritaville"?

   Posted by ScottLyons at 10/08/2008 @ 6:25pm

8. Apparently Buffet lives a life even less opulent than a couple of our self professed "rico" trolls. What's the point?

   Posted by Sorelish at 10/08/2008 @ 6:46pm

9. It ain't happenin'....

   Posted by bleedingheart at 10/08/2008 @ 7:12pm

10. What stupidity, here we are talking about the richest country going bankcrupt, and warren buffet has no background or experience on how to recover USA lost economy, which has gone into non-terror non-WMD IRAQ war, reconstruction bills to Brown and roots (courtesy Dick cheney) and lots more in courruption. Ten billion dollars to pakistan for what when you have none for ourselves??

    Warren Buffet is good only on playing safe bets like buying stocks in safe reputed brands only, not playing with capital federal budget and its distribution.

    Posted by aleemsyed at 10/08/2008 @ 10:05pm

11. and the band played on......

    Posted by frosty zoom at 10/08/2008 @ 11:20pm

12. don't worry zero,

    the newscicle will soon have the lastest palin whizbang to keep your mind of such cerebral dealings....

    Posted by frosty zoom at 10/08/2008 @ 11:22pm

13. i think a pirate would make the best treasurer.

    bury it somewhere.

    leave a map with a big ⌧ on it.

    maybe a FUTURE GENERATION will find it.

    Posted by frosty zoom at 10/08/2008 @ 11:27pm

14. If I remember the debate correctly, Obama didn't "invoke" Buffett's name--McCain mentioned it first and then Brokaw asked Obama about it. Obama's response was something like, "Well Warren's a great guy, but there are some other folks I'd consider for Treasury..."

    Corzine? Please, the next administration isn't going to let anyone from GS anywhere near the Treasury. Look for Thornton to get something at State though.

    Posted by takemyveepplease at 10/08/2008 @ 11:30pm

15. "The problem is the uncertainty that people have about doing business with banks, and banks have about doing business with each other," said William Poole, a staunchly free-market Republican who stepped down as president of the Federal Reserve Bank of St. Louis on Aug. 31. "We need to eliminate that uncertainty as fast as we can, and one way to do that is by injecting capital directly into banks. I think it could be done very quickly."

    Posted by frosty zoom at 10/09/2008 @ 01:52am

16. It's a waste of time to begin a character assassination of Buffett because he's not socialist enough for the left. Obama couldn't persuade Buffett to join his cabinet no matter how well he talks.

    Look for Sheila Bair, Timothy Geithner, Eugene Ludwig, or Laura Tyson

    Buffett is to busy making money to waste the rest of his life away in Washington's morass.

    Posted by bleedingheart at 10/09/2008 @ 09:15am

17. Whats this I hear that the AIG bailout is gonna cost another $37 billion - on top of the $85 billion........

    Paulson yesterday....I am not going to speculate on what plans I am going to be taking....geez.....I hope not but your buddies sure will be. Pun intended.

    Lots of surprises.....hmmmm, I remember that Iraq was going to be cakewalk and cost a mere $40 billion.....Financial crisis is alot like war....you just never know whats coming....hahahahah

    Posted by OneVote at 10/09/2008 @ 09:27am

18. and the band played on......

    Posted by frosty zoom at 10/08/2008 @ 11:20pm | ignore this person | warn this person

    Nearer, my God, to Thee, nearer to Thee! E'en though it be a cross that raiseth me, Still all my song shall be, nearer, my God, to Thee.

    Refrain

    Nearer, my God, to Thee, Nearer to Thee!

    Though like the wanderer, the sun gone down, Darkness be over me, my rest a stone. Yet in my dreams I'd be nearer, my God to Thee.

    Refrain

    There let the way appear, steps unto Heav'n; All that Thou sendest me, in mercy given; Angels to beckon me nearer, my God, to Thee.

    Refrain

    Then, with my waking thoughts bright with Thy praise, Out of my stony griefs Bethel I'll raise; So by my woes to be nearer, my God, to Thee.

    Refrain

    Or, if on joyful wing cleaving the sky, Sun, moon, and stars forgot, upward I'll fly, Still all my song shall be, nearer, my God, to Thee.

    Refrain

    There in my Father's home, safe and at rest, There in my Savior's love, perfectly blest; Age after age to be, nearer my God to Thee.

    Refrain

    Posted by OneVote at 10/09/2008 @ 09:34am

19. American International Group Inc. surged 6.6 percent as the Federal Reserve Bank of New York said the insurer may access $37.8 billion in additional cash.

    Source: Bloomberg.com 10/09/08

    Hope everyone placed their premarket opening buy orders on AIG this morning!

    Posted by OneVote at 10/09/2008 @ 09:52am

20. NYC National Debt Clock runs out of digits 10/8/2008, 9:34 p.m. EDT The Associated Press

    NEW YORK (AP) -- In a sign of the times, the National Debt Clock in New York City has run out of digits to record the growing figure. As a short-term fix, the digital dollar sign on the billboard-style clock near Times Square has been switched to a figure -- the "1" in $10 trillion. It's marking the federal government's current debt at about $10.2 trillion.

    The Durst Organization says it plans to update the sign next year by adding two digits. That will make it capable of tracking debt up to a quadrillion dollars.

    The late Manhattan real estate developer Seymour Durst put the sign up in 1989 to call attention to what was then a $2.7 trillion debt.

    Posted by OneVote at 10/09/2008 @ 10:04am

21. I think Buffett would do a great job in this position, but I doubt he would take it if it were offered to him. He's not used to being employed/working for someone else..and I don't think he's masochistic enough to go from being completely independent and self-directing to being one part of a huge bureaucracy, where even ideas that don't meet with opposition are very, very slow to be adopted and implemented.

    Dr. Tantillo, who has a marketing blog ( blog.marketingdoctor.tv ) did a post a little over a week ago on Buffett (in a winner/loser post that contrasted him with WaMu).

    Dr. Tantillo blogs from a branding perspective, and posits that any company must stay true to its brand's 'core features' to succeed.

    Full post: blog.marketingdoctor.tv/2008/09/26/brand-advisory-buffett-and-wamu.aspx

    I think that working for someone else is not part of Buffett's brand....

    Posted by sloanee at 10/09/2008 @ 12:08pm

22. "Warren Buffett famously described derivatives bought speculatively as "financial weapons of mass destruction." In Berkshire Hathaway's annual report to shareholders in 2002, he said, "Unless derivatives contracts are collateralized or guaranteed, their ultimate value also depends on the creditworthiness of the counterparties to them. In the meantime, though, before a contract is settled, the counterparties record profits and losses--often huge in amount--in their current earnings statements without so much as a penny changing hands. The range of derivatives contracts is limited only by the imagination of man (or sometimes, so it seems, madmen)." The same report, however, also states that he uses derivatives to hedge, and that some of Berkshire Hathaway's subsidiaries have sold and currently sell derivatives with notional amounts in the tens of billions of dollars.[20] Berkshire Hathaway, with a market capitalization of $196 billion[21], certainly does have enough equity to collateralize or guarantee these contracts.

    The market for credit derivatives is now so large, in many instances the amount of credit derivatives outstanding for an individual name is vastly greater than the bonds outstanding. For instance, company X may have $1 billion of outstanding debt and there may be $10 billion of CDS contracts outstanding. If such a company were to default, and recovery is 40 cents on the dollar, then the loss to investors holding the bonds would be $600 million. However the loss to credit default swap sellers would be $6 billion. When the CDS have been made for purely speculative purposes, in addition to spreading risk, credit derivatives can also amplify those risks' Source: Wikipedia

    Posted by OneVote at 10/09/2008 @ 3:04pm

23. Well...maybe Warren Buffet isn't a real good choice for Treasury secretary.

    My question is that if there is an "implicit" guarantee by US government to make good on collaterialized mortgage obligations, why would you need a credit default swap? Answer: You wouldn't.

    The treasury's buying up of commercial paper, which is not a CMO, is not something that was mentioned as a selling point of the bailout as I recall. Commercial paper of corporations, which is unsecured debt, is where credit default swaps for insurance purposes theoretically would have a purposeful value. However, remember the derivatives market was unregulated, so you could sell swaps that you didn't have the capital to back up. Credit default swaps were also apparently peddled as speculative investments, wherein swaps go up and down in value based on movements in such variables as LIBOR. Swaps apparently never had to retain privity of contract between original buyer and seller. Trully, an inside market that little to do with insurance defined under conventional thinking.

    The lack of transparency and vested authority of the Treasury secretary is something we should all be very worried about.

    Posted by OneVote at 10/09/2008 @ 3:23pm