The letter, written in a jokey tone for the New York Times opinion pages, is addressed to “Uncle Sam” and signed “Your grateful nephew, Warren”.
Buffett makes the case that while the Government can be “often clumsy, even inept” it responded quickly to the financial crisis that enveloped the world in 2008, pumping vital liquidity into the system at a time when banks had stopped lending to each other.
“When the crisis struck, I felt you would understand the role you had to play. But you’ve never been known for speed, and in a meltdown minutes matter. I worried whether the barrage of shattering surprises would disorient you,” Buffett wrote.
“Well, Uncle Sam, you delivered. People will second-guess your specific decisions; you can always count on that. But just as there is a fog of war, there is a fog of panic — and, overall, your actions were remarkably effective.”
Buffett said that while the US Government had copped a lot of criticism for failing to prop up the housing market, too many Americans commentators had become convinced that house prices would never fall.
“That was a mass delusion, reinforced by rapidly rising prices that discredited the few sceptics who warned of trouble. Delusions, whether about tulips or internet stocks, produce bubbles. And when bubbles pop, they can generate waves of trouble that hit shores far from their origin. This bubble was a doozy and its pop was felt around the world.
While many in business circles may agree with the sentiments in Buffett’s letter, it appears the thoughts of the world’s second richest person have not gone down well with many commentators, who have been quick to point out community anger at the huge bailouts given to the US banking sector, and the fact that unemployment remains stubbornly at 10%.
As academic Raymond J. Learsy wrote in the Huffington Post: “What Mr. Buffett conveniently overlooks is the many millions of Americans who continued in the domino line losing jobs, homes and nest eggs, while the likes of his favourite investment bank, Goldman Sachs, in which he had invested billions, were making themselves and Mr. Buffett richer.”
Buffett’s letter co-incidentally came on the day US President Barack Obama announced Buffett had won the nation’s highest civilian honour, the Presidential Medal of Freedom.
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