Warren Buffett's attack on Bernie Sanders shows how out of touch the Berkshire Hathawy boss is with the realities of the U.S. economy.
Warren Buffett’s financial life is flashing before his eyes as Wall Street executioner Bernie Sanders surges toward a victory at the Democratic National Convention in Milwaukee.
The Berkshire Hathaway boss is pleading capitalism’s case and asking for more time. But years of artificial central bank stimulus have created the precise social divisions that experts always said they would.
Sanders’ enduring popularity was both predictable and inevitable. Given Warren Buffett’s reputation as an investor, it’s stunning that he lacked the foresight to see this democratic socialist revolution coming.
It has not been a good few years for Warren Buffett. His investment vehicle Berkshire Hathaway often struggled to beat the S&P 500. A change in how investors choose stocks left some of Berkshire’s monopolistic old giants looking tired, as growth has far outstripped value.
Tesla is a perfect example of this trend. The company’s high-cash burn and debt have kept Buffett’s capital in steadier investments, even as TSLA stock enjoyed a historic rally.
But things could get even worse for Buffett as anti-billionaire Bernie Sanders leads a youthquake against the financial establishment.
No candidate has ever won the popular vote in the first three states for either the Democratic or Republican nomination, except for the senator from Vermont.
It is not just the young, either. Bernie appears to be building a coalition of minority voters, pulling them off the sidelines and into his grass-roots campaign.
Here’s why that matters for Buffett. He invests in a number of the big banks that received Wall Street bailouts. This is one of Sanders’ favorite areas to attack corporate greed and the disparity with how ordinary people are treated.
This leaves Berkshire Hathaway particularly exposed to a Bernie Sanders-led ticket in November’s general election.
Given this knowledge and the fact that Warren Buffett is one of the wealthiest men in the world, it’s unsurprising to see him go after America’s most well-known socialist.
He told CNBC today:
I’m very much in sympathy with the fact that Senator Sanders believes that a lot of people are getting left behind and through no fault of their own. And there’s all kinds of aspects of capitalism that need, in some ways, to be regulated. But I don’t believe in giving up the capitalist system.
Not much of a surprise there. Buffett stated he wasn’t ready to commit to supporting Bernie Sanders, suggesting Mike Bloomberg was his preferred candidate.
But then Buffett went and undermined his own argument by accidentally outlining how out of touch he is with the economic and medical plight of the U.S. working class.
Everything you see is the product of a system that’s worked like nothing’s ever worked in the history of the world… I do believe that anybody who’s willing to work 40 hours a week and has a couple kids should not have to have a second job.
Hedge fund billionaire Ray Dalio warned years ago that current fiscal policy, disproportionately favoring stock market investors over cash savers, was always doomed to create vast social divisions.
Buffett is telling people to be grateful for everything Wall Street has created, as though that wealth isn’t concentrated among a small group of elites.
While Wall Street counts its trillions, many Americans lack access to baseline medical services. That’s why large non-profits like Remote Area Medical do more emergency healthcare for the desperate in the United States than anywhere else in the world.
The red-hot stock market might benefit billionaires like Warren Buffett and Michael Bloomberg. But a record number of Americans are struggling just to afford basic housing costs.
Yet Buffett refuses to support an increase in the federal minimum wage, which hasn’t budged from $7.25 an hour since 2009.
He should have seen a working-class champion like Bernie Sanders coming from a mile away.
Disclaimer: The opinions expressed in this article do not necessarily reflect the views of CCN.com.
This article was edited by Josiah Wilmoth.