Warrren Buffett on the economy

[spookyturtle 9,466]

http://money.aol.com/news/articles/_a/bbdp...fell-off/374584

There is a video there and a few other things that don't work when I copied and pasted...That is where it say skip over this content.

Warren Buffett Says Economy Fell Off CliffBy JOSH FUNK, AP

posted: 2 HOURS AGOcomments: 992filed under: Financial CrisisPrintShare

Text SizeAAAOMAHA, Neb. (March 9) - Billionaire Warren Buffett remains confident that America's best days are ahead, but he says the nation likely will face higher unemployment and eventually inflation because of the current economic crisis. Buffett said the nation's leaders need to emphasize a consistent message, and they should support President Barack Obama's efforts to repair the economy because fear is dominating Americans' behavior.

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Buffett said the economy has basically followed the worst-case scenario he envisioned six months ago.

"It's fallen off a cliff," Buffett said Monday during a live appearance on cable network CNBC. "Not only has the economy slowed down a lot, but people have really changed their habits like I haven't seen."

Buffett said the changes are reflected in the results of Berkshire Hathaway Inc.'s subsidiaries. He said Berkshire's jewelry companies have suffered, but more people have been willing to switch to Geico to save money on car insurance. The three-hour-long interview aired from another Berkshire subsidiary that has been hampered by the economy, the Nebraska Furniture Mart store in Omaha.

He predicted that unemployment will climb a lot higher before the recession is done, but he also reiterated his optimistic long-term view: "Everything will be all right. We do have the greatest economic machine that man has ever created."

Fear and confusion have been driving consumer and investor behavior in recent months, Buffett said.

The nation's leaders need to clear up the confusion before anyone will become more confident, and he said all 535 members of Congress should stop the partisan bickering about solutions. He said politicians should also stop trying to use the current economic crisis to force through other policy changes.

"We ought to defer most of the things that get people riled up," Buffett said.

Skip over this content Buffett said he believes patriotic Republicans and Democrats will realize the nation is engaged in an economic war.

"What is required is a commander in chief that's looked at like a commander in chief in a time of war," Buffett said.

Whatever the government does to help the economy will likely benefit some people who made poor financial decisions, but Buffett said Americans should realize that everyone is in the same boat.

"The people that behaved well are no doubt going to find themselves taking care of the people who didn't behave well," Buffett said.

The current efforts to help revive the economy are likely to produce inflation that could be worse than what the country suffered in the late 1970s, Buffett said.

But even though the nation will have to pay for current policies with future inflation, Buffett said, the U.S. government still needs to act.

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What's in Buffett's Portfolio?Alex Wong, Getty Images34 photos "Be fearful when others are greedy, and be greedy when others are fearful," goes Warren Buffett's cardinal rule of investing. What's the billionaire invested in now? Click through the gallery for a glimpse at the Oracle of Omaha's portfolio as of Dec. 31.(Note: Please disable your pop-up blocker)

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"We're in a big war, and we're going to use money to fight it," he said.

Maintaining faith in the nation's banking system will be important to restoring the economy's health, Buffett added. He said President Barack Obama needs to make it very clear that consumers won't lose money in banks even if more fail.

"If you don't trust where you have your money, the world stops," Buffett said.

Most banks are in good shape, Buffett said, and even some of the troubled banks will be able to remedy their problems over time by reducing dividends and collecting the difference between interest payments they receive on loans and the interest they pay on deposits.

"The banking system largely will cure itself," Buffett said.

A little over a week ago, Buffett released his annual letter to shareholders describing the worst of his 44 years at the helm of Berkshire. The Omaha, Neb.-based company reported sharply lower profit because of its largely unrealized $7.5 billion investment and derivative losses.

Overall, Berkshire's 2008 profit of $4.99 billion, or $3,224 per Class A share, was down 62 percent from $13.21 billion, or $8,548 per share, in 2007.

Berkshire's fourth-quarter numbers were even worse. Buffett's company reported net income of $117 million, or $76 per share, down 96 percent from $2.95 billion, or $1,904 per share, a year earlier.

Buffett said he doesn't regret writing a commentary in the fall encouraging people to buy U.S. stocks, but he joked that in hindsight he wishes he'd waited a few months to publish the piece. Since that commentary appeared on Oct. 17, the Dow Jones industrial average has fallen from 8,852.22 to close at 6,626.94 on Friday.

Buffett stands by his overall advice that owning stocks over time will profit people greater than so-called safe investments.

"Overall, equities are going to do far better than U.S. government bonds at these prices," he said.

Buffett said he doesn't regret investing $8 billion of Berkshire's money in investment bank Goldman Sachs Group Inc. and conglomerate General Electric Co. last fall. Both companies gave Berkshire preferred shares paying 10 percent interest that Buffett said he doesn't think he could get now.

Buffett also said on CNBC:

That General Motors Corp. needs a new business plan to survive because its costs are too high, but it's difficult to predict how a solution will be reached. "You are in a terrible, terrible time period for the car makers every place."

Berkshire has made several large investments over the past year and reduced its cash on hand to $24.3 billion at the end of 2008. Buffett said that means Berkshire will likely write fewer insurance policies on catastrophic events in 2009 because he wants to make sure the company always has at least $10 billion on hand.

"My job is to be absolutely sure Berkshire doesn't need help from anyone in the worst of times," Buffett said.

Any deal negotiated last summer made the sellers very happy and the buyers unhappy today. That's part of why Buffett said Dow Chemical Co.'s $15 billion bid to buy rival chemical maker Rohm & Haas Co. has not been consummated. "The world has changed like nobody ever believed it would," he said.

But Buffett said the $3 billion Berkshire committed to the Dow deal remains solid if the two chemical companies can agree on how to close the deal.

Berkshire owns a diverse mix of more than 60 companies, including insurance, furniture, carpet, jewelry, restaurants and utility businesses. And it has major investments in such companies as Wells Fargo & Co. and Coca-Cola Co.

Copyright 2009 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without the prior written authority of The Associated Press. Active hyperlinks have been inserted by AOL.

2009-03-09 06:42:10

Edited March 9, 2009 by spookyturtle

[one...two...tree 2,762]

Good article, spooks, but your editing skills suck.

[spookyturtle 9,466]

Good article, spooks, but your editing skills suck.

Yes they do. How are you supposed to do it so the video is available when I copy and paste?

[one...two...tree 2,762]

Good article, spooks, but your editing skills suck.

Yes they do. How are you supposed to do it so the video is available when I copy and paste?

You can't unless it's a YouTube video.

[almaty 19]

f##k him..what does he knows...write another song...Margaritaville..was 30 years ago..

[one...two...tree 2,762]

f##k him..what does he knows...write another song...Margaritaville..was 30 years ago..

Some people claim there's a woman to blame, but he's come out and said it's his own damn fault.

[spookyturtle 9,466]

f##k him..what does he knows...write another song...Margaritaville..was 30 years ago..

I think he knows plenty. More than any of the Wall Street know it alls and more than anyone working for the US Government.

[I'm Gone 60]

"He said politicians should also stop trying to use the current economic crisis to force through other policy changes."

Obama are you listening

[spookyturtle 9,466]

"He said politicians should also stop trying to use the current economic crisis to force through other policy changes."

Obama are you listening

I think he was referring to the Republicans. He is not against what Obama is trying to do.

[I'm Gone 60]

"He said politicians should also stop trying to use the current economic crisis to force through other policy changes."

Obama are you listening

I think he was referring to the Republicans. He is not against what Obama is trying to do.

I think he was talking to both and since Obama now has the control to ram through just about anything, it most applies to him.

"We ought to defer most of the things that get people riled up," Buffett said.

[one...two...tree 2,762]

"He said politicians should also stop trying to use the current economic crisis to force through other policy changes."

Obama are you listening

I think he was referring to the Republicans. He is not against what Obama is trying to do.

I think he was talking to both and since Obama now has the control to ram through just about anything, it most applies to him.

"We ought to defer most of the things that get people riled up," Buffett said.

I hear what he's saying...we should leave our emotions out of the arguments. I can agree with that. That said, I don't think Obama's been heavy handed with using emotional arguments to win his case. He's pretty articulate and methodical. He's like a Vulcan.

[I'm Gone 60]

He's pretty articulate

http://www.washingtonpost.com/wp-dyn/conte...box1⊂=AR

Obama's Double Talk

By Robert J. Samuelson

Monday, March 9, 2009

To those who believe that Barack Obama is a different kind of politician -- more honest, more courageous -- please don't examine his administration's budget. If you do, you may sadly conclude that he resembles presidents stretching back to John Kennedy in one crucial respect. He won't tax voters for all the government services they want. That's the main reason we've run budget deficits in 43 of the past 48 years.

Obama is a great pretender. He repeatedly says he is doing things that he isn't, trusting his powerful rhetoric to obscure the difference. He has made "responsibility" a personal theme; the budget's cover line is "A New Era of Responsibility." He says the budget begins "making the tough choices necessary to restore fiscal discipline." It doesn't.

With today's depressed economy, big deficits are unavoidable for some years. But let's assume that Obama wins reelection. By his last year, 2016, the economy presumably will have long recovered. What does his final budget look like? Well, it runs a $637 billion deficit, equal to 3.2 percent of the economy (gross domestic product), projects Obama's Office of Management and Budget. That would match Ronald Reagan's last deficit, 3.1 percent of GDP in 1988, so fiercely criticized by Democrats.

As a society, we should pay in taxes what it costs government to provide desired services. If benefits don't seem equal to burdens, then the spending isn't worth it. (Exceptions: deficits in wartime and economic slumps.)

If Obama were "responsible," he would conduct a candid conversation about the role of government. Who deserves support and why? How big can government grow before higher taxes and deficits harm economic growth? Although Obama claims to be doing this, he hasn't confronted entitlement psychology -- the belief that government benefits once conferred should never be revoked.

Is it in the public interest for the well-off elderly (say, a couple with $125,000 of income) to be subsidized, through Social Security and Medicare, by poorer young and middle-aged workers? Are any farm subsidies justified when they aren't essential for food production? We wouldn't starve without them.

Given an aging America, government faces huge conflicts between spending on the elderly and spending on everything else. But even before most baby boomers retire (in 2016, only a quarter will have reached 65), Obama's government would have grown. In 2016, federal spending is projected to be 22.4 percent of GDP, up from 21 percent in 2008; federal taxes, 19.2 percent of GDP, up from 17.7 percent.

It would also be "responsible" for Obama to acknowledge the big gamble in his budget. National security has long been government's first job. In his budget, defense spending drops from 20 percent of the total in 2008 to 14 percent in 2016, the smallest share since the 1930s. The decline presumes a much safer world. If the world doesn't cooperate, deficits will grow.

The gap between Obama rhetoric and Obama reality transcends the budget, as do the consequences. In 2009, the stock market has declined 23.68 percent (through March 6), says Wilshire Associates. The Wall Street Journal's editorial page blames Obama's policies for all of the fall. That's unfair; the economy's deterioration was a big cause. Still, Obama isn't blameless.

Confidence (too little) and uncertainty (too much) define this crisis. Obama's double talk reduces the first and raises the second. He says he's focused on reviving the economy, but he's also using the crisis to advance an ambitious long-term agenda. The two sometimes collide. The $787 billion "stimulus" is weaker than necessary, because almost $200 billion for extended projects (high-speed rail, computerized medical records) take effect after 2010. When Congress debates Obama's sweeping health-care and energy proposals, industries, regions and governmental philosophies will clash. Will this improve confidence? Reduce uncertainty?

A prudent president would have made a "tough choice" -- concentrated on the economy; deferred his more contentious agenda. Similarly, Obama claims to seek bipartisanship but, in reality, doesn't. His bipartisanship consists of including a few Republicans in his Cabinet and inviting some Republican congressmen to the White House for the Super Bowl. It does not consist of fashioning proposals that would attract bipartisan support on their merits. Instead, he clings to dubious, partisan policies (mortgage cramdown, union card check) that arouse fierce opposition.

Obama thinks he can ignore these blatant inconsistencies. Like many smart people, he believes he can talk his way around problems. Maybe. He's helped by much of the media, which seem so enthralled with him that they don't see glaring contradictions. During the campaign, Obama said he would change Washington's petty partisanship; he also advocated a highly partisan agenda. Both claims could not be true. The media barely noticed; the same obliviousness persists. But Obama still runs a risk: that his overworked rhetoric loses its power and boomerangs on him.

[spookyturtle 9,466]

I respect Buffett's opinion more than I do all of the naysayer journalists and annalists.

[I'm Gone 60]

I respect Buffett's opinion more than I do all of the naysayer journalists and annalists.

Buffett said he doesn't regret writing a commentary in the fall encouraging people to buy U.S. stocks. I guess that was one of his respected opinions? LOL

Edited March 10, 2009 by I Quit

[spookyturtle 9,466]

I respect Buffett's opinion more than I do all of the naysayer journalists and annalists.

Buffett said he doesn't regret writing a commentary in the fall encouraging people to buy U.S. stocks. I guess that was one of his respected opinions? LOL

I guess he's not as smart as you. Let's see, then you must be Bill Gates as he is the only one in the US that has more money than Buffett. Bill, why are you on VJ? I thought you were happily married and enjoying your retirement. Any chance of giving VJ members a deal on Window 7?