Difficult times need wise men to tell difficult truths.
And, for many years, Warren Buffett, the "Sage of Omaha," has done just that. For example, he was one of the first to sound the alarm about the danger of derivatives, warning in 2003 that they were "financial weapons of mass destruction" that could lead to a "corporate meltdown."
So it was deeply distressing to watch his recent CNBC town hall meeting with a group of Columbia business students, followed the next night by an hour spent talking about the economy with Charlie Rose, and see Buffett joining in the economic victory lap the Obama administration -- and much of the media -- are taking.
"The financial panic is behind us," Buffett told the Columbia crowd. Sure, he conceded, the economy "still is sputtering some," but his tone was overwhelmingly upbeat.
The cheerleading continued with Rose: The economy "will come back, Charlie," said Buffett. "I want to emphasize that." And he did, again and again:
"The American economy will come back."
"Businesses will be formed. Businesses will expand."
"We're not out of the hospital yet. But we will come out of the hospital. . . . It happened in the 19th century, it happened in the 20th century at various times, and we've always come back stronger."
"There will be some lasting impacts of certain types, but in terms of coming out of it, I don't worry."
All this pompom shaking would have been OK if it had been accompanied by some ideas -- any ideas -- for what steps need to be taken for "the American economy to come back." The assumption being that it would, somehow, just happen. That the rising tide of unemployment, foreclosures and bankruptcies drowning so many Americans would, somehow, reverse itself. But the bout of truth-telling we so desperately need was absent.
Instead, Buffett assured Rose "we'll create new jobs" because . . . well, because we always have. As proof, he pointed to the early '80s recession when unemployment was at 10 percent and people were deeply concerned about America's economic future. "We've created millions and millions and millions of jobs since then," he said. "But, you know, who would have thought when Paul Allen and Bill Gates were in Albuquerque, you know, eating pizza and drinking Coke at 2 in the morning, you know, that they were a big part of our future."
This echoed his rah-rah salute to American can-do at Columbia: "The plants haven't gone away. The cornfields haven't gone away. The talent of the American people hasn't gone away."
But all those same things could have been said last October, when Wall Street was melting down. The plants hadn't gone away then, either. The cornfields hadn't gone away. The talent of the American people hadn't gone away. But since it was the banks in crisis, we didn't just offer pep talks and rosy predictions for the future, we convened all-night meetings and brought together big wigs over a weekend and told them not to leave without a solution. And, oh yeah, we ponied up trillions of our taxpayer dollars.
But even with unemployment at a 26-year high of 10.2 percent (which is actually 17.5 percent when you include workers no longer looking for work or only partly employed), we're not seeing anything remotely resembling the urgency and aggressive action we saw when it was the banks that needed saving.
Instead of Buffett raising his prophetic voice to sound the alarm as he'd done in the past, and as we desperately need him to do again, he's sounding a trumpet blast: "behold and rejoice."
And the best the White House can muster is a summit on joblessness -- to be held next month. What's the rush, right? The plants are still there -- and so are the cornfields.
Despite Buffett's acknowledgment that "we've got 60 million people living in households where the top income is $21,000 or less," it looks as if, at least for the moment, he's out of the truth-telling business.
Recently, an investment banker friend told me "Buffett is talking his book" -- Wall Street-speak for making an argument that, if accepted by the market, would also make you money. I actually think it's more likely that Buffett, who, after all, has already pledged his fortune to the Gates Foundation for charity, believes that by talking the economy up he can actually have a tangible impact.
But the real economy doesn't need upbeat rhetoric. It needs serious action.
For a snapshot of what kind of action, check out Nouriel Roubini's latest post. It's a dose of bracing truth-telling -- and the perfect counterweight to Buffett's cheerleading. Roubini puts forth more truth in less than 600 words than Buffett managed in a full hour on Charlie Rose and a full hour at the Columbia town hall.
And, for many years, Warren Buffett, the "Sage of Omaha," has done just that. For example, he was one of the first to sound the alarm about the danger of derivatives, warning in 2003 that they were "financial weapons of mass destruction" that could lead to a "corporate meltdown."
So it was deeply distressing to watch his recent CNBC town hall meeting with a group of Columbia business students, followed the next night by an hour spent talking about the economy with Charlie Rose, and see Buffett joining in the economic victory lap the Obama administration -- and much of the media -- are taking.
"The financial panic is behind us," Buffett told the Columbia crowd. Sure, he conceded, the economy "still is sputtering some," but his tone was overwhelmingly upbeat.
The cheerleading continued with Rose: The economy "will come back, Charlie," said Buffett. "I want to emphasize that." And he did, again and again:
"The American economy will come back."
"Businesses will be formed. Businesses will expand."
"We're not out of the hospital yet. But we will come out of the hospital. . . . It happened in the 19th century, it happened in the 20th century at various times, and we've always come back stronger."
"There will be some lasting impacts of certain types, but in terms of coming out of it, I don't worry."
All this pompom shaking would have been OK if it had been accompanied by some ideas -- any ideas -- for what steps need to be taken for "the American economy to come back." The assumption being that it would, somehow, just happen. That the rising tide of unemployment, foreclosures and bankruptcies drowning so many Americans would, somehow, reverse itself. But the bout of truth-telling we so desperately need was absent.
Instead, Buffett assured Rose "we'll create new jobs" because . . . well, because we always have. As proof, he pointed to the early '80s recession when unemployment was at 10 percent and people were deeply concerned about America's economic future. "We've created millions and millions and millions of jobs since then," he said. "But, you know, who would have thought when Paul Allen and Bill Gates were in Albuquerque, you know, eating pizza and drinking Coke at 2 in the morning, you know, that they were a big part of our future."
This echoed his rah-rah salute to American can-do at Columbia: "The plants haven't gone away. The cornfields haven't gone away. The talent of the American people hasn't gone away."
But all those same things could have been said last October, when Wall Street was melting down. The plants hadn't gone away then, either. The cornfields hadn't gone away. The talent of the American people hadn't gone away. But since it was the banks in crisis, we didn't just offer pep talks and rosy predictions for the future, we convened all-night meetings and brought together big wigs over a weekend and told them not to leave without a solution. And, oh yeah, we ponied up trillions of our taxpayer dollars.
But even with unemployment at a 26-year high of 10.2 percent (which is actually 17.5 percent when you include workers no longer looking for work or only partly employed), we're not seeing anything remotely resembling the urgency and aggressive action we saw when it was the banks that needed saving.
Instead of Buffett raising his prophetic voice to sound the alarm as he'd done in the past, and as we desperately need him to do again, he's sounding a trumpet blast: "behold and rejoice."
And the best the White House can muster is a summit on joblessness -- to be held next month. What's the rush, right? The plants are still there -- and so are the cornfields.
Despite Buffett's acknowledgment that "we've got 60 million people living in households where the top income is $21,000 or less," it looks as if, at least for the moment, he's out of the truth-telling business.
Recently, an investment banker friend told me "Buffett is talking his book" -- Wall Street-speak for making an argument that, if accepted by the market, would also make you money. I actually think it's more likely that Buffett, who, after all, has already pledged his fortune to the Gates Foundation for charity, believes that by talking the economy up he can actually have a tangible impact.
But the real economy doesn't need upbeat rhetoric. It needs serious action.
For a snapshot of what kind of action, check out Nouriel Roubini's latest post. It's a dose of bracing truth-telling -- and the perfect counterweight to Buffett's cheerleading. Roubini puts forth more truth in less than 600 words than Buffett managed in a full hour on Charlie Rose and a full hour at the Columbia town hall.
