Berkshire Hathaway’s 92-year-old Co-chairman Warren Buffett dumped 86% of his $4.1 billion worth of Taiwan Semiconductor Manufacturing Company [TSMC] stock in Feb., saying Berkshire Hathaway has better use for the cash. Buffett reacted to geopolitical concerns over Beijing’s stern warnings last summer of 82-year-old former House Speaker Nancy Pelosi (D-Calif.) visiting Taiwan. Pelosi’s visit came after weeks of warnings from Beijing that there would be consequences to her visit. Chinese President Xi Jinping rejects in the strongest possible way Taiwan’s independence from Mainland China. He has offered Taipei many opportunities to re-unify the independent democratic island with Beijing, all rejecting his offers. Xi vowed before granted another six-year-term as Chinese Communist Party Chairman that if necessary he would take Taiwan by force.
Taiwan was once a province of Mainland China before Chinese nationalists led by Gen. Chaing Kai-shek fled to the Island of Formosa in 1949 during the height of the Maoist Revolution. Since the Maoist Revolutions, President Dwight D. Eisenhower did everything possible to support Taiwan’s fledgling democracy, signing he 1954 Sino-American Mutual Defense Treaty, protecting Taiwan from a possible Communist invasion. Twenty years later, former President Jimmy Carter ended the mutual defense treaty and declared his one-China policy, recognizing only Beijing. After Pelosi’s visit, Xi sent fighter jets and warships into the Taiwan Strait, breaching the Defense Identification Zone, threatening Taipei. Over a month after Pelosi’s visit, Biden pledged U.S. troops to defend Taiwan in the event of a Mainland invasion. Xi accused Biden of breaching the 1979 Taiwan Relations Act.
Buffett took the saber rattling seriously, selling off 86% of his TSMC holdings in Feb. 2023, attesting to his concerns about possible war with Communist China over Taiwan. Contingency plans for a Beijing takeover involving Taiwan Semiconductor, the world’s biggest chipmaker, of bombing TSMC facilities was enough for Buffett, prompting him to bail out. Buffett’s decision to bail out of TSMC shows 80-year-old President Joe Biden’s foreign policy has real consequences for global investors. When you consider the massive sell-off in equities over the last year since the Feb. 24, 2022 start of the Ukraine War, trillions have been lost in global wealth. Yet Biden continues to escalate the proxy war with the Kremlin, no matter what consequences to the U.S. and global economy. Buffett decided on his own to sell his TSMC shares due to unstable geopolitical warnings.
Hosting 45-year-old French President Emmanuel Macron last week, Xi hoped to divide the European Union on the issue of Taiwan. Macron said after meeting Xi that the European Union must operate independently of the Biden’s foreign policy. Macron told the foreign press that France and Brussels cannot rubber stamp a more belligerent U.S. policy toward China. Macron was criticized by Eastern European countries for not backing Biden’s Taiwan’s policy, defending the island nation from a possible Beijing invasion. Macron’s remarks irked the White House because it wants Brussels to back its Taiwan policy. But with the White House funding a bloody proxy war in Ukraine, Brussels has no interest in backing a war with Communist China. Like the U.S., the EU has grown increasingly dependent of China for its own economy, already battling a slowdown from the Ukraine War.
Biden has not acknowledged the economy impact of the Ukraine war on the U.S. and global economy. Boycotting Russian oil alone fueled the worst inflation, especially in energy, in over 40 years, leaving consumers reeling from higher prices. Price and economic fallout from a U.S. war with China would be catastrophic for the U.S. and world economy. Macron let the world know that the EU would not automatically follow the U.S. into a new conflict with Beijing over Taiwan. Taiwan’s 66-year-old President Tsai Ing-wen didn’t help matter his past week visiting 58-year-old House Speaker Kevin McCarthy (D-Calif.), pledging his loyalty to Taiwan’s democratic independence. Buffett’s decision to bail out of the world’s largest chipmaker indicates that the prospects for U.S. war in Taiwan have increased. Buffett doesn’t bailout of investments unless he sees real problems on the horizon.
Macron reacted publicly to Biden’s foreign policy, too aggressive for the French President’s taste. Macron has tried to play peacemaker in the Ukraine conflict, continuing to maintain ties to 70-year-old Russian President Vladimir Putin, all rejected by Washington and Kiev. Macron let Biden know he wants no part any war with Beijing, not matter what the excuse. For Buffet to unload most of his TSMC portfolio, he must have some real intel on what’s brewing in Taiwan. If Biden doesn’t change his China policy soon, the U.S. could be fighting a two-front war with the world’s biggest nuclear superpowers. Brussels wants no part of Biden’s aggressive policy toward China, nor does the EU want a war with the Russian Federation on the European Continent. Whatever problems Kiev has with Moscow, there no reason to drag the rest of Europe into WW III, possibly nuclear war.
About the Author
John M. Curtis writes politically neutral commentary analyzing spin in national and global news. He’s editor of OnlineColumnist.com and author of Dodging The Bullet and Operation Charisma.
