Please listen to Warren Buffett

All readers here should invest 54 minutes to hear Warren Buffett explain the economic crisis and the steps being taken to fix it. 

Here's the link.

Thanks to commenter Larry D'anna for alerting me to this.

Comments

[WhiskySlims]

Great link

[Steve C]

Yeah it was a great interview, here's the transcript:

http://www.clusterstock.com/2008/8/that-awesome-warren-buffett-cnbc-interview

One of the better exchanges:

Mr. BUFFETT: And they sat there, made reports to the Congress, you can get
them on the Internet, every year. And, in fact, they reported to Sarbanes and
Oxley every year. And they went—wrote 100 page reports, and they said,
`We’ve looked at these people and their standards are fine and their directors
are fine and everything was fine.’ And then all of a sudden you had two of the
greatest accounting misstatements in history. You had all kinds of management
malfeasance, and it all came out. And, of course, the classic thing was that
after it all came out, OFHEO wrote a 350—340 page report examining what went
wrong, and they blamed the management, they blamed the directors, they blamed
the audit committee. They didn’t have a word in there about themselves, and
they’re the ones that 200 people were going to work every day with just two
companies to think about. It just shows the problems of regulation.

QUICK: That sounds like an argument against regulation, though. Is that what
you’re saying?

Mr. BUFFETT: It’s an argument explaining—it’s an argument that managing
complex financial institutions where the management wants to deceive you can
be very, very difficult.

[goy]

Pretty amazing that Buffett can so clearly understand and talk about investment markets and business, and be so utterly clueless (or at least say such utterly clueless things) about payroll taxes vs. capital gains tax.

His statements (starting around 41:40) imply that people making $21k/yr are paying the bulk of the taxes in the country when such folks are paying no taxes at all and, in many cases, have a negative tax liability. This is the same lie implied in a lot of Obama's rhetoric. Comparing the 15% he's paying on capital gains to the 15% the woman who empties his garbage probably doesn't pay is intellectually dishonest at best. I've heard this stuff coming from Buffett before, and it simply makes me not trust his judgment completely.

The biggest thing he also misses around 44:40 with his glib statements about what people say about the "top 1%" is that about 1/3 of the country's population is footing the bill for the entire country in terms of the portion of federal expenditures derived from income tax. That's only going to get worse if we implement the sort of tax changes he's suggesting (on Obama's behalf) and Rose is cheerleading.

Buffett also glossed over FDR's "fine work" in stretching the Depression out - through his social engineering programs - longer than it otherwise might have lasted. Or has recent discussion on that issue missed some other point?

[goy]

BTW, Steve C, the transcript you linked to isn't the Rose interview linked in Steve's post, it's a different one.

[xich]

goy: The "payroll taxes" he is talking about is most likely the FICA taxes. When you combine the 7.65% taken out of pay with the matching amount paid by the employer, this amounts to ~15% in taxes that are unavoidable and undeductible (and rather non-transparent), which everyone pays if they get a paycheck.

Granted, I'm not sure how someone making $25k a year can pay more total tax than someone making $100k/yr (as Buffet supposedly pays himself), but maybe he just takes really good deductions and never realizes any of his capital gains. ;)

[goy]

thanks xich. that makes some kind of sense, although it seems that if that's what he meant then it might've helped to actually say that. Either way, it's still intellectually dishonest (in the extreme) to make statements implying that the burden of taxes falls on such folks. It doesn't.

Intent aside, while the portion of FICA paid by employers is 'lost' (right? or...? I'm not an employer, so don't know.), the portion paid by employees may be unavoidable and un-deductible, but it isn't exactly un-refundable if one's tax liability is low enough.

This would be how 50% of the "taxpaying" population is paying less than 3% of all income taxes paid. Guess who's (already) paying the other 97%. And that's based on old data at the end of a trend where that bottom 50% has been paying less, proportionally, each year.

http://www.ntu.org/main/page.php?PageID=6