Gasparino Deconstructs Buffett's Hypocrisy

Tyler Durden's picture

Today's rating agency hearing was a total farce: the only useful thing that could come out of it is if someone comes out with potentially perjurious information, as there were a few shaky answers provided by the Oracle of Omaha which could easily explain not only his reticence at testifying in Congress but doing so under oath. If that were to happen, the octogenarian would have to respond to both potential criminality and hypocrisy. As it stands, the only item to be covered is the latter, and Charlie Gasparino does a pretty good job at blowing apart Buffett's hypocrisy. "He believes [the rating agencies are] a sleazy business and he's gonna own it. Well that takes Warren Buffett down three notches in my book... If Moody's had a superior product, investors like Warren Buffett, who does not use the ratings, would be buying them one at a time. They do not have an effective product. They have a deformed product, a product that basically was at the forefront of the mess in 2008 and 2007. Warren Buffett who opines about politics all the time, constantly opines about right and wrong, defends wrong because it was a good investment. He is defending the indefensible. Rating agencies are not defensible at this. He is Mr. Do Good, yet he is defending the most corrupt business model in corporate America." At least one mainstream journalist out there is not afraid to call it like it is. Of course, we get the feeling that Becky Quick is no danger of losing her leathery wrinkled seat on the next NetJets trip to China.



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homersimpson's picture

I still think Buffett is a good dealmaker. Unfortunately, the past year is showing he's probably as corrupt as anyone on Wall Street.

Conrad Murray's picture

Warren Buffett is Moodys' business model personified.  Junk level slime spun into AAA steak, to be gulped down by eager-to-be-ignorant stooges.

RemixTrades's picture

I disagree with Charlie in regard to the "sleezy business" comment, where he implies that owning Moody's is a "bad thing."


If he's going to follow that logic, he better not be owning a lot of things.


Energy companies.... that pollute the environment (i.e. lots of oil and coal companies)


Finance companies... that intentionally sell you bad products? or say, use your information to front-run trades, and... (refer to the dozens of ZH articles for more examples)


Car companies....that suck and end up sucking (:p) tax payer money. Is that evil?


I can go on and on...

Cheeky Bastard's picture

There is no good and evil; only beneficial or non-beneficial acts. 

Hephasteus's picture

There is no holy and unholy. Only people striving to be viewed as so good and worthy of responsibility that it enables them to treat people with severe disrepect. Even denying them the right to live, the right to speak and hear the truth. The right to love and be loved. The right to support only what supports it and not force people to support something that harms them.

knukles's picture

Right or Wrong, Good or Evil but Becky loosing her seat on the Wrinkled Leather What? 

But let's not forget, whilst Grandpa talks the talk about Doing Good (Doing God's Work?) his stated investment philosophy makes no reference to such.  He invests in entities with strong, superior, leadership franchises, oft characterized by oligopolistic strangle-hold pricing power, proprietary technology, high barriers to entry, etc. advantages, not all of which are derived from purely competitive, free market forces. 

Don't sound too kindly, altruistic to me none.

Hephasteus's picture

Pillars of piety are impossible to build. So they just pile up some sticks and stones so at least they got something to throw while the people come to evict them from the building.

Bendromeda Strain's picture

Becky be nimble, Becky be quick...

strannick's picture

A marine oil volcano might be beneficial to BP shorts, but not to the Bubba Gump Shrimp Co.

breezer1's picture

last good read for me on the subject, ' without conscience'. highly recommended  

geopol's picture

Situation ethics!!


Let's listen to what America has to offer!! In music...How sad when all dissipates..

Let the whole thing play brother... Ignore the adds!!

Inspector Asset's picture

Could I suggest an idea to rid the corruption?  Lets take every security, commodity, bond, etc ever listed on an Exchange and put thopse items on Craigslist.  Maybe create a new section for finance investments.  No middle men or paper pushers! 


Next, but more difficult and rewarding would be to put the whole politial process on Craigslist.  Every law, every vote, every idea, onto Craigslist for the people to vote.  No more middle men or representatives. We be representen ourselves via Craigslists.  Craig for President 2012/

Ron Paul 2012

Mercury's picture

There is no good and evil; only beneficial or non-beneficial acts.

Maybe for machines but I don't think humans can escape or wish away good and evil. I doubt ZH would be so popular or get it's reader so worked up if everyone were opperating on your premise.

aldousd's picture

to whom? for whom? from whom? at whose expense? which is the benefit and which is the cost?

DaveyJones's picture

same goes with insects

(the garden kind, not the financial)

UpShotKnotHoleGrable's picture

"There is no good and evil; only beneficial or non-beneficial acts."

That kind of stunning profundity reminds me of maggie 'lady death' thatcher who once said some thing like "there is no such thing as society. There are individual men and women, and there are families"

 Scary. It's all numbers eh? Step-out of the neolib church, put down the nietzsche, bukowski etc I think you're still finding yourself bro. to help you out, I suggest maybe instead trying zygmut bauman, JC Scott, EP Thompson, Polanyi, Minsky et al. or actually just try Smith, I mean the list is too long and my patience too short to try to school you on how inane your posts are.

I'm so sick of shallow quant analyses by pompous pretend and extend assholes who think they can come up with an equation to model and predict with any high degree of certainty human behavior.

Put away your neo-classical books and the efficient market/rational actor theories, which by themselves, are at most workable with 4-5 variables tops only half the time and do not fit reality at all the rest of the time. yes even game theory.

So all the positivist mathematical gymnastics amount to a circle-jerk cluster fuck and a complete farce, so stop it already, you're embarrassing yourself.

The use of beneficial/non-beneficial utility language has by extension brought us the last 30 years of complete corruption precisely because of asinine statements like yours.

When you reduce humanity to utils, when you strip human behavior of its moral component and try to reduce all human action to "rational utility" you are essentially attempting in a hollow way to eliminate risk.

Do you even understand what I just said? Trying to eliminate risk is impossible and we do not have the math to try to quantify and measure all of the variables.

So the reality we cannot predict we define as "random" or "black swans" as if acausal events are possible. I suppose, only in the neo-classical supply-side world which you obviously subscribe to. Lack of information is not spontaneous, it is precisely that, a lack of information to us.  Get it? not a vacuum, but its absence to us.

A system that strips morality from the analysis is alienating its own humanity and misses a lot of the information willingly and arrogantly. By excluding, or attempting to exclude human morality, simply to make models work, such a structurally hollow system inevitably admits its own failure even prior to probability one!

guess what we are not separate from it.  duh. but you keep playing with that end-all-be-all bullshit.

We do not have the math to map out all the risks and possibilities, yet we pretend we do in our arrogance. I should not have to point out examples of neo-classical model and its incentive model failures but BP?  Does your beneficial/unbeneficial model fit what happened there with any degree of future predictability given the same initial assumptions?

Guess what pal, human existense is life, life is risk, life is zerohedge. uncertainty in economics is not only natural but rational. Holy shit can you believe that? i'm not saying we cannot manage risk in life, i.e. car insurance. however, it is in attempting to reduce all risk to 1-3 or 5 variables where we can come to understand what minksy understood via keynes, that economic uncertainty, read inherently risky human behavior, carries with it uninsurable risks that cannot be statistically correlated to for example, games of dice.  Guess why? because dice are not human and human's are not dice.

Human beings depend on a synthesis of apriori and aposteriori inputs but you apparently believe all human action can be positively reduced to "beneficial or non-beneficial".  That is, your outlook is apriori vis-a-vis human behavior.  How can you even call that scienctific? it's the complete anti-thesis! Your view is digital but you are analog. you are both but it seems like youre still on the fence.  I say on the fence because I know you can see this synthesis for example between your mathematical brain and your love of rachmaninoff's 'the isle of the dead'.  Its just that you still like to see the world via digits, or atleast that is how it seems going by your posts. this is logical but nakedly incomplete.

"As Davidson has stressed, classical expectations formation theory is applicable
only to “ergodic” stochastic processes: 'an ergodic stochastic process simply means that
averages calculated from past observations can not be persistently different from the time
average of future outcomes'. In ergodic processes, 'economic relationships
among variables are timeless (ahistoric) and immutable'. (are there immeasurable behaviors?)

The structure of ergodic stochastic games of chance is unaffected by any particular
pattern of observations it generates: a run of sevens will not change the odds at a dice table.
Similarly, an ergodic stochastic economic model cannot be affected by the particular
choices of the agents who inhabit it; it cannot exhibit hysteresis or path dependency: the
model and its outcomes -- the future states of the world -- must be independent of agent
choice (so that agent choice is not, in any meaningful sense, free).

For if future states of the economy were dependent on the pattern of current and
future agent choice, if, in Shackle’s words, choice was “originative,” then every agent
would have to know the present and future choices of every other agent
(including the process used by each agent to adjust expectations in the light of realized results)
in order to know the future. But there is no way, even in principle, that agents could
gain knowledge of this kind. Indeed, the impossibility of gaining such knowledge is the
foundation of the neoclassical rejection of central planning. Thus, the neoclassical
theory of agent choice is restricted to a world in which agents’ decisions do not “create” the future.
The axioms of New Classical and neoclassical expected utility theory hold if and only if
the future equilibrium path of the economy and the prices associated with it are pre-given,
if they are independent of agent choice, agent forecasting error, and out-of-equilibrium dynamics.
That is, these classical and methodologically individualistic theories must assume
what they are supposed to prove, by positing a stable market-clearing equilibrium path
prior to constructing a theory of agent choice. Failure to do so would leave agents with
nothing solid to anchor their expectations.

The future is unknowable; we exist in an environment of true uncertainty. In such
an environment, neoclassical theory fundamentally misspecifies agent choice. Fortunately,
the price of recognition of the existence and centrality of fundamental uncertainty is not
theoretical chaos as neoclassicists would have us believe. The concept of the socially
constructed human agent and conventional decision making in concert with an
understanding of the institutional foundations of conditional stability create a world with nondeterminist or contingent laws and tendencies, a world that can indeed be appropriated
through theory. However, a theory adequate to its task must be institutionally contingent
and never lose sight of the dialectical relation between uncertainty and the structures and
practices we have created to try to remove its sting.

There is a related problem with subjectivist theory. If subjective probability distributions are not anchored
in a pregiven objective equilibrium state, then what can possibly give them stability across time? Conversely,
if the subjective probability distributions of orthodox theory were dynamically unstable, then the neoclassical
investment function would be unstable as well. In this case, the economy's future time path would itself be
unstable because it would depend on unstable subjective probability distributions. Since there is no
neoclassical theory of the "laws" governing unstable subjective probabilities, the future would be
unknowable. Thus, the core assumption that there exists a predetermined equilibrium path that is independent
of agent ignorance and therefore of agent choice is the sine qua non of neoclassical and New Classical
investment theory. As Katzner noted, 'without the opportunity of at least hypothetical replication, the notion of probability
simply does not make sense.'"

And listen, stop trying so hard, we see you ok? please, stop with the music bullshit. nobody cares what the fuck you like to listen to.
don't brag here, you want to talk music and educate the masses on your trivial tastes go ahead and post on youtube dude.

Davidson, P. (1987), “Sensible Expectations and the Long-Run Non-Neutrality of
Money,” Journal of Post Keynesian Economics, vol. 10, pp. 146-153.
Davidson, P. (1991), “Is Probability Theory Relevant for Uncertainty? A Post
Keynes- ian Perspective,” Journal of Economic Perspectives, vol. 5, pp. 129-144.,%20Uncertanty%20and%20Macro-th...


AnAnonymous's picture

I'm so sick of shallow quant analyses by pompous pretend and extend assholes who think they can come up with an equation to model and predict with any high degree of certainty human behavior.


Wrong. By experience, people dont think they come up with an equation to model and predict with any high degree of certainty human behaviour.

They hope they developp a model they can claim to model etc...

Fraud works. Especially when you are able to convince the other that it is not fraud.

UpShotKnotHoleGrable's picture

They pretend and act as if their models work.  Some really believe it, some do not and use them in a fraudulent manner.  The fact that control fraud does not even enter into quant models or the general theory speaks for itself.

Escapeclaws's picture

This website is slowly losing its edge. It seems to have lost its focus and there are too many articles that have only a tangential relation to finance and economics. Some of the articles seem to be designed expressly to generate hundreds of comments by those who have nothing to say. I'm getting tired of slogging through hundreds of comments to find little nuggets of gold here and there. Most of the comments, probably including this one, are just venting. But I find I'm spending more time on other blogs such as as I become more aware that time is precious.

Also, frankly, I get tired of the hate speech and vulgarity--calling a poster a moron or worse--internet road-rage. Also tired of incessant rock-lyrics. Gold bugs are tedious, Ayn Rand is an intellectual Mary Baker Eddy, and libertarians are selfish.

I'm sure I'm not alone in these sentiments.



giddy's picture're not...alone... intellectuals are a dime a doz... MBE is singular...

WaterWings's picture

libertarians are selfish

And we see how shallow your thought process is. WE the PEOPLE get to decide who can benefit from our individual resources and sweat on an individual basis - not busy-body fuckups. It is pretty damn clear now, down to the Americans who have been paying the least amount of attention, that fuckups are running the show. The Constitution is a Libertarian document. FREEDOM to exchange, to travel, to love, to live. If you fuck up you pay the consequences - not pay the consequences regardless. The loser kid doesn't get to ruin it for everyone - but that's public policy.

ZH doesn't control the growing number of individuals that are trying to figure out what the hell is going on. Let them be heard. Let them feel real.

I'm sure I'm not alone in these sentiments.

Sure, we get to be abused by JB et al and it's pissing me off (especially the disjointed threads that result from unexplained comment scrubbing) so in that regard I agree about edge - but status quo fucks piss me off.

Next time we of Project Mayhem would appreciate it if you would acutally pass on a nugget of gold to us - do you even get the concept of Fight Club? If you don't like the free coffee then find your own self-help group.

Let's evolve:


PhattyBuoy's picture

You are welcome to allocate your precious time where ever you desire ... so shut the fuck up & post your dribble on another site!!

hound dog vigilante's picture

No.  Charlie is correct. 

Owning equity in polluters/front-running financiers/GM is not necessarily "evil" but it is hypocritical if you are also Sierra Club/SEC/US citizen, respectively.


The old excuse that good "investors" must ignore such conflicts is absolute bunk... it's EXACTLY the mentality that has brought the entire system to it's knees. 

Do as I say, not as I do... what a cop-out.  Buffet is a hack... his reputation has been shot to pieces over the past 4 years, and rightfully so.


nmewn's picture

There is a difference between ethics (manmade) and the spiritual realm of good & evil.

An agnostic cannot be convinced of what they cannot see, touch, prove, disprove, taste, etc. Most have made a valid attempt at discovery because they are analytical in nature.

An atheist flatly denies any higher being than themselves at all.

IMHO, soon to be challenged no agnostic must have "faith" that there is not requires "faith" and I might add, a "belief" that there are NO unknowns to be discovered...for if there are no unknowns to them, they could, in fact, be defined as a god...which is against their "belief".

Atheist's assert...flatly...that there is no God. One is naturally led can they know??? Are they proclaiming themselves to know everything there is to know and therefore godlike themselves??? Seems rather contradictory to me also.

If one believes there is evil in the world, then there must also be good in the world, for evil to be even defined.




knukles's picture

Of the Temporal and Spiritual, Thoughtfully Considered and Nicely Stated.  More Contemplation of Such Horribly Lacks these Days. h/t

nmewn's picture

Thank you knukles.

My opinion of Buffet is, he is just another promoter of situational ethics, of which we see so much these days, who just happens to have a Senator or two his pocket.

Men like Buffet could not be as they are without support.

pan-the-ist's picture

Good and evil are just words, and they are not particularly useful words at that.  It is more useful to understand that actions have consequences and those consequences effect your life and the lives of others.

Even helpful or "good" (seeming) actions can have bad results (socialism for example.)

It is best to avoid asserting your will (volition) when possible, but to be aware and ready to act, but act only when necessary.

Mactheknife's picture

The last time "Uncle Warren" sat in front of a committee on the hill, he was strongly in favor of keeping the estate tax intact. He forgot to mention during his "testimony" the fact that most of the sixty some odd companies that Berkshire has bought over the years were private, family owned and were sold to good ole Uncle Warren because the surviving families couldn't pay (wait for it)..... ..the ESTATE TAXES. Go figure.



Cheeky Bastard's picture

Dis guy eh !! Dis fuckin guy !! He aint no Nono. Hey, oh !!

-The Chazonator Goombah, Jersey Shore NJ

Privatus's picture

The Anacle of Omaha.

Monkey Craig's picture

Ratings Agencies = another great example of our flawed corporatocracy

bada boom's picture

Exactly.  Warren said this in another article, “They succumbed to the same mania that prevailed throughout the investment world”

Well, if that statement is true they have no purpose existing at all.  They should only exist to be prudent and to be independent, regardless of what the masses do.  If they only echo what people foolishly believe, they do more harm then good.


Rick64's picture

At worst he is a hypocrite. He invests and makes money, what do you expect. Our own politicians lie, cheat, steal, take bribes, ect... and we pay them. We found out that he is like all the rest, so what. How in the hell are you going to hold him accountable for what Moodys does? He is an investor.

Bay of Pigs's picture

Sad to see someone who is/was very respected look so completely out of touch. His testimony was laughable. 

AccreditedEYE's picture

He's desperately trying to save his empire. When your entire life's work revolves around the market you'll say anything. BRKA/B will suffer greatly from what is to come. Let's see what his derivatives holdings do to him on the next violent wave down.

huntergvl's picture

"He's desperately trying to save his empire. When your entire life's work revolves around the market you'll say anything."


That is it, in a nutshell. Just talking his game while wearing the world's worst cologne. Buffett knows what the alternative is to QE. His entire life of investing and his model is swirling down the toilet. He has just become a market cheerleader, just one of many. And, no telling how much derivative (counterparty) risk he is carrying now that he has drank the Kool-Aid. Every investor makes mistakes. Every investor takes that big hit that makes him/her re-evaluate their strategies. Buffett is much too long in the tooth to recover from what is ahead and he knows it. He will join Bill Miller of Legg Mason, soon in the completely forgotten investment Hall of Fame.

I have been investing for over 15 years now...I am still here and so are all of you. I know many who have given up, or lost it all. It's not what happens to your portfolio in the good years that counts nearly as much as what happens in the bad years. One single bad year can wipe your ass out. I know that sounds simplistic, but the self discipline required to avoid catastrophe while taking minimal investment risk, is very complex.

Buffett is 'out' of position. He knows this, too. It will be up to his successor to right Berkshire's ship. Buffett is out of time.

Rusty_Shackleford's picture

Couldn't agree more.  The whole "corn-pone home spun wisdom" thing has worn a little thin.  

At one point he was singing the merits of monopolies. 

It was completely absurd.  Just about as bad as Obama's speech today. 

Hephasteus's picture

Oh my god. I just listened to obama's speech. He is going to go head long into carbon credits. This thing is falling apart rapidly. You'd think getting pissed on at your memorial day speech would be enough of a message.

They worked and worked and built for this and they are going to sure as hell go on whether people are willing or not. And they are going to lose everybody they try to rape.

Pondmaster's picture

BP : So the plan is to burn the "Horizon ", and sink the evidence?  Carboneers : Yes , that is the very disaster the Adminsitration needs to push through carbon credits legislation over a Holiday weekend . BP: And you we have a promise of taxpayer funded spew cleanup , just like the TBTF got? Carboneers : You bet pal ... now lets go have a beer  


Hephasteus's picture

Knew it.

Oil will skyrocket. Gold will not sell off. The game will end.

John McCloy's picture

The actions of the past year make me furious. Furious because you are called insane for speaking the truth..,Furious because our politicians before our eyes prove their incompetence and indiffernence. Maybe I am most furious because most Americans do not notice that when the bankers of the world have stolen their families and future families lives that when they finally decipher who has stolen their liberty it has the name of an LLC and everyone is complicity and nobody is compicit and such is the goal only the names change.
People need to just say no. They need to trade for products only in gold or metals. They need to repudiate all debts( I have only student loans),,, they need to say I WONT WATCH YOUR MEDIA.
I know it's hard to learn we gave cancer..but we need to just say I have cancer because of the following buy I want my Childen not to have it so I shalll suffer. They are children and they will have children and they only know greed if we teach it an hatred if they learn it. How can we pass this on to them?
We are dealing with a 21st century Indenture of the middle class. Just because they cloud it with technology and slower extraction of liberty does not make it non existent. We have modern modern it is stealth.this diatrabe comes from
someone reliant upon Wall Street for a living but it is not worth a living aYurokur expense.
" Altough the Lord Keepeth the watchmen waketh in Vain"

Diogenes's picture

It's true that he is not the first fund manager to talk his book, or to invest in businesses he finds personally repugnant.


The thing that makes him a hypocrite is that he is so outspoken on issues he can't do anything about, but  in this case he was in a position to influence Moody's business model and he didn't do it.


That alone is enough to take the shine off his halo.


If there was anyone in the world who was capable of analysing investments, and seeing that Moody's ratings were bogus, it was Buffet. Yet he never did a damn thing about it.

hound dog vigilante's picture

Good post.  You nailed it.


If regulators/authorities will not bring these sorts of businesses to heel, then the market MUST do it.  Like the 'move your money' campaign against TBTF banks, a well-informed market can and will enforce discipline where otherwise corruption reigns...

Individuals and investors MUST demonstrate moral and ethical outrage. In the end, it is not a choice, it is a responsibility.

Of course, plenty of assholes ignore their responsibilities every day. That's why they're assholes.


masterinchancery's picture

If Buffet didn't spend so much time opining about business and political morality, he would just be a greedy sleaze, not a massive hypocrite.