Saturday, May 01, 2004
The Kerry campaign's economic advisor bets against the dollar
'Buffett says he has increased bet against US dollar' - headline, Bloomberg.
Buffett also said he has become an economic adviser to Democratic presidential candidate John Kerry.
I understand trading, and hedging against currency risk. I also understand politics. Do Warren Buffett and John Kerry think there is anything wrong with mixing the two of them in such a blatant way? Does the Kerry campaign care that its wealthiest supporter is "betting" against American currency?
Either Buffett is acting against the interests of his investors in supporting John Kerry, or he believes that Kerry's election will exacerbate the dollar's decline. I do not see how there can be another answer.
UPDATE: Brendan over at The Facts Machine argues that "if a stink is going to be made about Warren Buffett and John Kerry, then that stink should make its way to Sacramento too." I disagree. The governor of California can have no material influence over dollar policy, and the President of the United States surely does. My point, however, is not so much to tag Kerry for having an economic advisor who is hedging his dollar exposure, or even speculating against the dollar. My observation relates to Buffett more than Kerry, notwithstanding the slightly inflammatory header to this post. If Buffett is both trading against the dollar and supporting Kerry, he either believes that Kerry's election would weaken the dollar, or he is making a political choice that is contrary to the interests of Berkshire Hathaway's investors. While he is under no obligation to vote in accordance with his business decisions -- many people vote against their economic interests, narrowly construed -- in Buffett's case his political influence derives from the success of Berkshire Hathaway. So his support for Kerry is at the least ironic. Or he may in fact believe that Kerry's election would be bad for the dollar, even if he prefers Kerry as President for any number of other reasons.
Buffett also said he has become an economic adviser to Democratic presidential candidate John Kerry.
I understand trading, and hedging against currency risk. I also understand politics. Do Warren Buffett and John Kerry think there is anything wrong with mixing the two of them in such a blatant way? Does the Kerry campaign care that its wealthiest supporter is "betting" against American currency?
Either Buffett is acting against the interests of his investors in supporting John Kerry, or he believes that Kerry's election will exacerbate the dollar's decline. I do not see how there can be another answer.
UPDATE: Brendan over at The Facts Machine argues that "if a stink is going to be made about Warren Buffett and John Kerry, then that stink should make its way to Sacramento too." I disagree. The governor of California can have no material influence over dollar policy, and the President of the United States surely does. My point, however, is not so much to tag Kerry for having an economic advisor who is hedging his dollar exposure, or even speculating against the dollar. My observation relates to Buffett more than Kerry, notwithstanding the slightly inflammatory header to this post. If Buffett is both trading against the dollar and supporting Kerry, he either believes that Kerry's election would weaken the dollar, or he is making a political choice that is contrary to the interests of Berkshire Hathaway's investors. While he is under no obligation to vote in accordance with his business decisions -- many people vote against their economic interests, narrowly construed -- in Buffett's case his political influence derives from the success of Berkshire Hathaway. So his support for Kerry is at the least ironic. Or he may in fact believe that Kerry's election would be bad for the dollar, even if he prefers Kerry as President for any number of other reasons.
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