Filed under: Bad news, Rants and raves, Berkshire Hathaway (BRK.A), Economic data, Headline news, Federal Reserve
Federal Reserve Board chairman Ben Bernanke inherited a real mess from Alan Greenspan and the Bush Administration who were all asleep during their watch when noteworthy financial minds Warren Buffett of Berkshire Hathaway (NYSE: BRK.A) and John Bogel, the founder of the Vanguard Group, and numerous other people of substantial financial knowledge and integrity were sounding the alarms.
‘My pal Warren’ went as far as to call derivatives toxic waste and the true weapons of mass destruction. In the design and construction industry we commonly hear the phrase, “There is never enough time to do it right but there’s always plenty of time do do it over!” Perhaps it is a common refrain in other professions too.
Well today, the Fed Chief urged preventive action. This is a crying shame. I do not doubt his wisdom on this matter, unfortunately the horses have long left the barn and now he wants to shut the doors simply to prevent the barn from collapsing. We will need the barn if we can ever round up those horses again. Mr. Bernanke was none too fast to react to the serious nature of our economic problems but he is plenty serious now.
The single biggest problem on Wall Street and in the government is that the scale of the business activity is so massive that both factions are totally disconnected from reality and from their respective constituencies. Wall Street financial houses were simply driving short term revenue and outrageous bonuses to a level they could retire on, with tiny long term perspective, concern for depositors or investors and understanding of downside risk.
I guess it is hard to see anything but the skys’s the limit when your nose is always in the air. We live in astonishing and unpredictable times. Today the market is in positive territory even though retailers posted sluggish sales in march and the trade deficit widened and still gas, diesel Prices were at record highs, so go figure. It will all be rationalized on the news shows and it will all be ridiculous.
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money.
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