Who doesn't love the image Warren Buffett projects in the media?

The beloved stock-picker, with his mantra "buy smart, sell never", has become an American icon.  He preaches the free market, capitalism, smart business practices and running a tight ship.  He lives frugally in a modest home, doesn't flash his (extreme) wealth and claims that through hard work and dedication one can succeed in America.

And now, Berkshire is set to report what may be the best quarter in his firm's history.

The truth is somewhat different.

Buffett has repeatedly used his influence to exempt himself from laws that apply to everyone else.  Among them is an exemption from reporting requirements when he acquires or sells significant stakes in companies; these actions are required, for ordinary people, to be reported to the SEC and filed publicly.  Warren has an exemption.

He was a "smart investor" in Goldman and others during the crisis, getting usurious interest rates and terms on capital he provided to help these companies out.  But was he really just making a bet?  The evidence says otherwise; Warren's statements both at the time and later one made clear that he had every expectation, and perhaps even inside information, that the government would not allow these firms to fail.  That is, he didn't make a bet - he jumped in front of the taxpayer, a form of legal "front running", to garner a guaranteed profit.

Wells Fargo, a firm that Berkshire has a massive holding in, is a bank with dubious reserves and provisions in its mortgage book.  One of many, of course.  Yet Warren, Mr. Ethics, has refused to demand that Wells (along with other financial firms he holds) come clean on their loan book valuations, despite overwhelming evidence from seized banks thus far that essentially every bank is and has been overvaluing these so-called "assets".

Berkshire owns a big chunk of Moody's, a stake they recently trimmed.  But Moody's is in fact at the heart of the credit storm - it was only through the granting of ratings that we now know were absolutely unsupportable that the credit bubble was able to be blown and maintained in the first place.  Worse, Berkshire's other businesses, the core of which are insurance and banking-related firms, were and are absolutely reliant on that ratings business in order to raise capital in the markets.

Vertical integration often leads to a conflict of interest.  While Berkshire is not the sole owner of any of these firms, their stake is large and influence considerable.

More stunning is the pernicious manner in which Buffett has talked out both sides of his mouth when it comes to government bailouts and handouts.

Berkshire has stakes in Goldman, Wells, American Express, US Bancorp, General Electric, M&T Bank, Bank of America, Sun Trust and more.  All of these have received enormous amounts of bailout money - both directly and indirectly through FDIC-backed bond issuance. Indeed, about 3/4 of the credit issuance over the last few months of these firms has been at zero market risk as a consequence of government guarantees.

This isn't "free market capitalism" at all, and neither is "lending" money to an entity at usurious rates while expecting that the government will backstop your loan. 

Yet that is exactly what Warren did - more than once.

Warren may be a shewed investor, but of late, it appears that the lesson Warren is really imparting is that once you amass a big amount of money the most effective way to profit is to figure out who will extort bailouts for their bad behavior from the government, then front-run that bailout in those firms.

That leaves me with more of an image of John Dillinger than "The Oracle of Omaha" for Warren's visage, and this is the guy who epitomized "investing for the long haul" over the space of more than 30 years.

That's a sad reflection of what this nation, which used to value hard work and a solid persona and business ethic, has become.