Stuart Varney on Warren Buffet, PIMCO on Keynes, Ron Paul on Libya, and Obama's New Econ Genius

Lots of icon busting today so let's start with Stuart Varney's evisceration of billionaire Obama-supporter Warren Buffet:

I can't believe Sam Antar's candid admission of his light sentence.  You can bet the SEC will issue a statement and appear to be "doing something" while not actually doing a thing. I don't always agree with Varney, but he is on point when it comes to Berkshire Hathaway's financial interests and Moody's.  Speaking of Berkshire's financials, it looks like big profits are coming its way, via Zerohedge:

• BANK OF AMERICA AGREES TO SELL 13.1B SHRS OF CHINA CONSTRUCTION


• BANK OF AMERICA SEES SALE GENERATING $8.3B PROCEEDS


• BANK OF AMERICA KEEPS 5% STAKE IN CCB


• BOFA SEES CUTTING RISK-WEIGHTED ASSETS BY ABOUT $16.1B BASEL


• BOFA SEES SALE GENERATING ABOUT $3.5B ADDED TIER 1 CAPITAL


• BOFA SEES GAIN $3.3B ON SALE

In summary: That's $13.3 billion in new capital in the past week that BofA promises it does not need.

Hmmm, either Buffet got lucky or knew something was up.  Now of course insider trading shouldn't be a crime (see Murphy and Tamny), but hopefully Buffet's upcoming fundraiser for Obama will keep the SEC away for now.

While Varney has jumped on the bandwagon of "let's point out Warren Buffet's hypocrisy," it looks like PIMCO is jumping on the "let's bash modern Keynesianism" bandwagon.  This of course is a good thing:

Saying No to Keynes and Fiscal Folly

• ​Taxpayers have been hoodwinked into believing the cost from profligate government spending is low relative to the benefits.


• The Keynesian revolution ignited a decades-long abuse of the core principle of Keynesian economics:  for government to increase spending when private sector aggregate demand weakens and stymies job growth.


• The central banker is left to shoulder the burden, seeking all the while to pressure the fiscal authority to amend the abuse of Keynesian economics and decades of fiscal folly.

"Politicians and the beneficiaries of their fiscal illusions for the past 80 years abused the Keynesian philosophy, relentlessly and dangerously pursuing the use of debt for self-aggrandizement. Today, the citizens of indebted nations bear a heavy burden and must begin repaying the debts. It is a herculean task, because the debts are mountainous.

Now this analysis is far from perfect economics.  Yes, Keynesianism today is far perverted from the original theory but what do you expect when politicians have a printing press to back up all their pet projects?  Did Keynes really put that much faith in elected officials to turn off the spigot of easy money in good times?  It's one thing to criticize the "animal spirits" of business, but Keynes didn't seem to consider politicians fallible humans.  What PIMCO doesn't realize is that government spending will never be as efficient as private sector spending and that the theory of idle resources is a myth.

Ron Paul has a great commentary out on Libya today as he questions whether or not overthrowing Gaddafi was a good thing:

We already see grisly reprisals from the US-backed rebels against their political opponents.  There are disturbing scenes of looting and lawlessness on the part of the rebels.  We know that some rebel factions appear to be allied with Islamic extremists and others seem to have ties to the CIA.  They also appear to have a penchant for killing each other as well as supporters of the previous regime.  The tribal structure of Libyan society all but ensures that an ongoing civil war is on the agenda rather than the Swiss-style democracy that some intervention advocates suggest is around the corner.
What is next after such a victory?  With the big Western scramble to grab Libya's oil reserves amid domestic political chaos and violence, does anyone doubt that NATO ground troops are not being prepared for yet another occupation?

This will be interesting.  Whoever wins the 2012 election (with the exception of Paul of course) will most likely invade Iran for some miniscule reason.  Think WMD's, political oppression, or posing more of a threat to Israel.  Before then however, I predict that Obama will call for either troops in Libya to "nation build" or some kind of bombing campaign in Yemen.  While I would like to think his base would be skeptical of Obama attempting both, I am losing faith.

Now the big news today was Obama's appointment of a new head for the Council on Economic Advisers, Mr. Alan Krueger.  To see how clueless is Mr. Krueger is, check out the title of the book Kreuger co-authored:

Myth and Measurement:
The New Economics of the Minimum Wage 

Aww yes, these "new economics" surely disprove the law of scarcity as the minimum wage does not cause unemployment.  God knows what this guy will come up with.

I will end with a great quote from Charles Hugh Smith's latest post on Of Two Minds:

"Here is the ugly truth about the Savior State, welfare state, social welfare state, or whatever you choose to call the Central State: The Savior State displaces and destroys community and social capital. By making individuals dependent on the Central State for free money, free food, free housing, etc., then the State has taken over the natural function of community."

A friend of mine is doing a senior seminar project on the destruction of civil society.  This quote could be his whole project.