Monday, March 03, 2008

Buffett: "It ain't a savings glut..."

Bloomberg Reported that Warren "The Sage of Omaha" Buffett weighed in on the reserve paradox at the annual Berkshire meeting by scoffing at "the Savings Glut" hypothesis, and pointing the accusatory finger directly at the American Consumer. Culpability, of course, doesn't stop there, since Congress (who lowered taxes while increasing spending), the Fed (who cut rates to nearZIRP, & watched house prices vault and homeowners extract unsustainable amounts of equity at uber-high prices, while swapping low-rate fixed-rate (emphasis on "Fixed") for even lower, albeit temporary, floating-rate mortgages), as well as the Administration (who eschewed and obstructed all energy policy, waged war(s) and submitted further-bloated budgets while at the same time recommending the cutting of taxes), share the blame, which taken together, imply all my economics and finance education at university was for all intents seemingly irrelevant to anyone and everyone else concerned with public policy, and useful for nothing other than a personal understanding that America was The Short of The Century", and remains rather fucked.

Who wants to bet with me that NO Presidential candidate (except Ralph "Eeyore" Nader, the only non-kool-aid drinker of the bunch) will similarly point the finger and hari-karily suggest that America needs to RAISE fiscal revenues by about 4%, and that consumers need to reduce expenditure on overseas goods and services by a rough & dirty six percent.

5 comments:

Byrne said...

It would be very interesting to rewrite the last few decades of financial history in terms of the US as an awesome short. I can think of quite a few people who shorted the dollar to buy assets and wound up on the Forbes 400, and nobody who did the opposite. Hmmm.

"Cassandra" said...

America certainly wasn't the short of last century, but I still have a chart on my Wall (from the turn of the century) of S&P in terms of Gold. The Millennium more or less rang the bell, perhaps for eternity. It's hard to argue that a unit of Gold is attractive relative to a unit of the S&P here and now. All you can say is "I think inflation will get WORSE, and the LAST TIME it got worse it got more valuable (for a while)...

Anonymous said...

The Republicans may have a Damascene moment and nominate Dr. Ron Paul

rahuldeodhar said...

Hi,

I guess its time the US recession spread to other countries - EU first and Asia subsequently (Japan either tags on with EU or follows it).

I read somewhere that once the contagion spreads we will see rise of US - not because there is anything right going on - but simply because everyone else has fallen lower! Then we will see US dollar regaining part of its reserve currency status.


Rahul

Anonymous said...

"eschewed and obstructed all energy policy"
except for ethanol and streamlined nuclear power plant approval process. Ethanol (farm aid in drag) is a disaster: more top soil erosion, more underground water mining, more oil use, higher food prices, ... Wish they would have obstructed that. At least the faster nukes will come in handy when oil runs out.