United States Heading towards a Depression?

Buffett believes in eugenics and population control. And just because someone has billions of dollars doesn't necessarily mean they earned it out of sheer intelligence. Its about how you got the money and a lot of luck too. But you go keep kissing his liberal ass just cause he has a lot of money.

 

Even if we accept your theory, can we still say that you don't have the billions because of your lack of intelligence?

At least read something before you post, Warren Buffet is a self made billioner through his investments. It takes a lot of luck to be constantly lucky for almost 50 years.

 

He had a simple to follow mantra actually. Buy low on great companies.

 

Is not that simple, you have to know what is a great company and what is low.

 

@domainer and @jackuul

If it was so simple:

A. You do it.

B. Name others who have done what Buffett did.

Those that A). Subscribe to a political perspective in their gut and then B). Try and find every blow hard big mouth politician self promoter who mouth's off on your own political perspective:

A. Invariably miss details. You expend all your energy trying to ferret up some little stupid point that proves your gut.

B. Add nothing to honest debate, discussion, and learning.

BTW: I've bought and sold small businesses, not large. "great companies" is a complete misnomer...if it was already "great" you couldn't buy it cheap.

Everything I bought (on my own and with partners) met some of our unique characteristics. Every one needed work and we knew it.

Buffett has had a well-developed strategy for buying companies and into industries where he sees revenue and profit growth. He doesn't just buy businesses...he buys into industries.

All I can say is that if it was easy millions of others would have done it.

Its definitely hard.

 

I'm just going off of what he said he did. Bought great companies that had not realized their worth yet. I did not leave out any details - as I figured it would be easy to guess that he would have had to know which companies were great to begin with - or had the potential to be great.

Don't paint me into the same corners as anyone else. I was just pointing out what Buffet said his own strategy was.

 

Jackuul:

Of coincidence, about 10 minutes before I looked at this I was on the phone with one of my partners in business. We do a lot of things separately. We do a couple of things together. We were business associates for a long time and have been friends for a long time.

We discussed our mutual activities and then I asked him about something he is working on. He is trying to finish a lease on space he owns. One of the many companies owned by Berkshire Hathaway, Warren Buffett's business, is the tenant. Its a medium sized space relative to one of this particular businesses many spaces across the country. The lease is almost finished. He joked that he wanted a "personal guarantee on the lease from the person who owns the company". I asked him who it was. He said it was Warren Buffett. Before that I had no idea that Berkshire Hathaway owned (a part or all of) this company.

Years ago, as a commercial real estate agent I represented a tenant in this industry. I would never buy their products/ services for a variety of reasons.

I think the industry has potentially ultra high profit margins. Who would know unless you looked at it very very hard.

Secondly if you wanted to buy within this industry, for some reason, which company should one buy...and why.

Frankly, I am not aware that this particular business is "great". There are many competitors. To make it "great" requires a lot of work. Ultimately there isn't a lot to distinguish competitors, at least IMHO.

One only sees the potentially great profit margins in this industry if one makes everything work right within the business. Otherwise one suffers losses like everyone else. Secondly, making it great, requires constant effort. Its a reasonably big company. That means it requires lots of effort from lots of people in lots of places to make the whole thing work. Again, that isn't easy. One always has to deal with competitors. Someone/some competitor in that industry could be outworking the people who operate the business owned by Buffett right now. Some other competitor might start outworking and outsmarting the Buffett owned company tomorrow.

Buy things cheap. Look, that basic business knowledge existed long long before Warren Buffett was born. I suspect if he used the term "great" that reflects a statement that actually requires lots of work on his behalf, those that work for Berkshire Hathaway (the investment company) and then those that work within the companies that he purchases.

There is nothing at all easy about it.

The fact that Buffett has had amazing success over an extraordinary long time speaks for itself. The guy understands the way business works and the way markets work. It doesn't mean he is 100% correct all the time. It does show that he has invaluable insights that are better than most.

I liked his analysis in the article above. I believe if there was not government action last September...along with other governments similarly taking actions around the world, the current recession could easily have catapulted into a major depression. At this moment that isn't the case.

Current economic conditions suck. Basically all business activity all over the world is down from before this recession hit. That means millions of people are out of work everywhere.

Trillions of dollars of world wide wealth have evaporated. Stock values, real estate values, the values of equity in privately owned businesses and real estate have all evaporated. Everything is worth less. Its a big shaky time.

Within the US there are all sorts of potential problems still on the horizon. A big one is the miserable state of commercial real estate. I've seen different estimates suggesting across the board, US Commercial Real Estate has lost 35-40% in value. In my region the most prime space seems to be worth about 25% less than before the recession. That all means that the lenders are going to take a beating. It appears though that not every deal with loans coming due will fall into bankruptcy. Loans are being extended.

In any case, with every loan that goes into foreclosure, for every medium to small bank that carries those loans....there will be big problems. More medium and small banks will fail. You know what...right now that problem isn't even close to as bad as that situation was in the late 1980's/early 1990's. Not even remotely close.

For all those that scream about government intervention and how glorious the "market" is....go work in a market. Make it happen.

In the last part of Buffett's article he warned about the issues of debt and inflation. He is deeply aware of these issues and the problems that surround them. He described how an economy can cover debt. He also warns about how politics can encourage inflation.

I'm in agreement with his general perspective. From a personal perspective and as a business person I'd say, work hard, avoid debt, cross your fingers and hope stuff works out.

 

Growing, on borrowed money.

That's the same kind of thinking as people who say "Of course I still have money, I still have checks in my checkbook!"

The economy isn't "growing" in any meaningful sense, we're just borrowing more from future generations and spending it now.

Pulling more money out of the private sector and into government overhead is one certain way to force a depression. And that's just exactly what is being done.

Buffet helped to engineer this mess -- for a purpose.

Cui bono? Ask yourself why a value investor would purposefully support government initiatives which he knows will destroy the economy?

Ask yourself why he will then publicly tell people to get back into the stock market and invest in America, while he himself is doing the opposite.

Buffet's large corporations will do well under the regime of national socialism which is being implemented in the United States. Consumers won't. Citizens won't. Small businesses wont. Only government and big businesses will.

Yes, to see how he and his cronies in Washington are going to stick it to us next.

 

I have just read that the United States is currently the 3rd highest debtor in the world.
A large fall. Unbelievably large. Obama has been borrowing 800 Billion since he has taken office from countries such as India and Mexico.
At the G8 summit they have spoken about an economical shift taking place.
Just like during the great depression the shift went from Europe towards the United States, economical power is now shifting back to Europe.
Those of you who believe the US is recovering are dead wrong. Indeed the United States is falling into a deep whole and will soon be so in debt that economical disaster will occur.
Please don't drink the cool aid and listen to Obama.

Things are not getting better. They are getting worse than ever.

Asian countries are also rising and starting to own large percentages of the US economy.

The first step to recovery would be honesty.

The media wants you to think everything will be alright, but the leading economists of the world will tell you otherwise:

http://www.myloansconsolidated.com/2009/08/22/gerald-celente-on-alex-jones-34/

 

Here's what Chris Weber recently wrote in Daily Wealth:

As of the end of July, the dividend yield on the S&P 500 has fallen to only 2.13%. When the rally began in March, the yield was over 3.5%. That is a huge fall in a short time.

Then, as stock prices have soared, earnings of companies have just not kept pace. In many cases, they are down sharply. This imbalance in price to earnings is shown in the weird spike in the P/E ratio on the S&P 500. It is now up to 127 times annual earnings, up from less than 20 times earnings at the rally's start in March.

In other words, the dividend yield and the P/Es were not what you see at real bottoms. In really low markets, investors are shaken so much that years are required for them to regain bullishness.

Instead, I think what we've been seeing are the types of violent rallies within bear markets we saw throughout both the 1930s and the 60s-early 70s.

So once again, I'm just watching the stock markets. My position is that if the Dow Industrials and Transports can both better their previous record highs that they reached back in the second half of 2007, then I'll be interested and ready to say that we are really off to the races again.

What I think is more likely is a repeat of the period of 1966 to 1975, where we'll see a series of rallies within a bear market. In other words, this will be an easy time to lose money, and a hard time to make it. ​

Transportation stocks are a very important early indicator of a recovery, and they aren't indicating the recovery that the fifth column fourth estate is spouting.

But more than that, it must be remembered that economic failure doesn't just happen, it is caused. Sometimes it might happen due to bumbling; we all know that politicians aren't the sharpest knives in the drawer. At other times though, depressions are caused to achieve political goals.

The Democrats voted to spend somewhere around one trillion taxpayer dollars to reward their campaign supporters. They also raised the minimum wage, which has a well understood effect on the unemployment rate. Unemployment is the easiest way to bring a nations economy to it's knees. Tax increases are another -- and the Democrats are promising those as soon as possible. Regulation and the bureaucracy necessary to support it are a third method of destroying an economy -- and both the executive and legislative branches are printing those faster than they can read them.

Everything we see points to one of two possible conclusions:

• The Democrats are more ignorant than I can possibly imagine
• The Democrats are doing this on purpose

I think the truth of it is a little of both. Clearly some Democrats are simply ignorant. But it also seems that some very influential people in the Democratic party would very much like to obtain a degree of power over Americans that you just can't have over free and prosperous individuals.

We may be focused on the economy, but I believe that some very smart people are focused on much larger goals.

 

This has been a long time in the making. Its more about power than ignorance.

Those democrats that follow those in power, are the ignorant. The ones in power, or not at all ignorant. They know exactly what they are doing. Leading their ignorant fools into oblivion in search of complete and total power over all.

 

The extremes of the right wing, fortunately a tiny minority, are so misdirected with regard to economics its scary. Several points:

1. The US economy went into a severe recession under the leadership of the Bush administration. Hey extremists....look it up...or alternatively invent some misinformation.

2. The crisis was caused by a 4 part bubble of a) extreme growth in the residential mortgage...with the extremist part focused on cr@ppy @ssed mortgages. b) the "market" yes...the private market fueled the excessive growth in the bubble. More securitized residential securities were purchased than govt backed mortgages issued by Fannie or Freddie. Look it up. That means that the explosive growth in liquidity in the market was fueled by private sources....yes folks....the "market". c). Too much credit was extended everywhere...i.e. car loans at slightly more than 100% of value. My oh my...where did credit values go? All of this was fueled by the "most holiest of the ...(drum roll please) "the market". d). Unregulated financial institutions created "credit swaps" a form of gambling insurance. This multiplied the actual losses and directed them back into institutions that are critical to the ongoing process of the international financial world.

3. I know the extremists don't like to mention this but the world financial system was near collapse about 1 year ago this September. Institutions wouldn't lend to one another. Everyone in business was worried about the "other guy". Credit dried up. Speak to real business people as opposed to theorists.

4. The September infusion of cash into financial entities saved the world financial system from collapse.


While the extremists on the right scream about debt and the fact that they don't believe the "stimulus" legislation is working consider the following:

1. It appears that the recession has bottomed world wide. Hey its at a bad point. Overall business volume is down and shaky. It could drop..it could bounce back. Its very shaky now. The world wide economic conditions are simply weak.

If it has bottomed out a serious reason is.....

2. World wide stimulus money injections from governments everywhere. Cripes, China's government poured money into its economy..as did the US, France, Great Britain, Germany, Australia, etc. etc. etc. Where else was money coming from? World wide spending was at a standstill.

Now when the right wing extremists scream about debt, etc. and how it is going to harm America...I have a question.

Which America?

How many Americans have lost their jobs since the recession started at the end of 2007? 5 million? 7 million?

Some of the Stimulus money has gone to extended unemployment benefits. Some has gone to Cobra to extend insurance coverage without individuals having to take the full burden of coverage....especially individuals who lost their jobs.

Uh...these Americans who lost their jobs didn't cause the recession. They are the unfortunate recipients of the world wide economic shrinking.

Should the country help them out?

I think so. Right wing extremists don't think they should get anything. That is the bottom line. You want an example of a courageous leading right wing extremist who was leading the fight to keep unemployed people from getting more benefits?

Mark Sanford.....yep....you can trust old Mark Sanford. Mr...."I'm going to tell everyone else how to live their lives....exits from the state, goes into hiding, cheats on his wife, uses govt money to go on "excursions", lives high off the govt money while he is holding back on regular Americans--Mark Sanford.

He is a great example of someone who doesn't want to extend unemployment benefits or Cobra to Americans who are the victems of this massive recession and horrendous growth in unemployment. Oh yeah....South Carolina has one of the highest unemployment rates in the country.

Where do these guys come from? I suppose the same place as Will went...the guy who ran away from America and now spouts off about what works for the US economy.

@ Will. Here is what works. Stay in the US and work. That is what contributes to beating the recession. Run away--that contributes to enlargening the recession.

We have ever growing debt levels. It is indeed worrisome. Take your choices...do you think that every American who loses their job should be shoved off the gang plank or do you think they deserve help?

I think they deserve help.

 

See also CRA, Carter, Clinton and save yourself the embarrassment and extra time writing next time.

 

Mia: Prove it. Show some facts. I'm a big fan of your "facts". Off the top of my head, without having to draw back on precise references here is my favorite.

1. The guy you cited who A). Couldn't count the number of states that voted for Obama and the number of states that voted for McCain. (you and that guy have to have problems counting.) He, and you, also liked the fact that places with more square miles should get more votes. Again I suggest, if that is the way you feel, you bow down to GWorld. I understand he lives in Canada....and they have a lot more square miles than the US.


Repeating something endlessly that is bizarre from a strictly economic point of view, (ie something from 30 years ago caused a bubble economic disaster....since every other economic disaster in modern times occurred from recent bubble overaction is fact enough to realize how stupid these comments are and how they reflect simple partisanship.

I so wish there were some common sense Republicans around. They vanished. More likely they became Dems or Independants because of the craziness of the extreme elements of the Right.

 

Look man, I've already played that game. Do your own work and your own research. Have you guys become so lazy that you cannot investigate reality on your own???

This might help, since you are too lazy to read the sources I've cited for quite some time now: http://www.youtube.com/watch?v=1RZVw3no2A4&feature=iv&annotation_id=event_597487

Fannie and Freddie were both created for the express purpose of giving out money to people that never should have had it, and that they knew would never pay it back. The whole idea behind the CRA, Fannie, Freddie, etc., was to encourage the lending of money to people that could not pay it back. Do that for 30 years, and you have what we have now... A big mess.

Take a few months off and start reading up on the CRA. Fannie, Freddie, and take a better look at who ran these organizations, who benefited from them politically, and who all contributed to bilking billions out of them never once accounting for it, or insuring it would be paid back.

Please do your own research and stop wasting my time.

 

Yeah he really is a waste of space. He just keeps spouting off Buffetts and Obama talking points. The guy doesn't have a clue about economics let alone what caused the mess.

 

It's really weird; it's almost as if someone stole earlpeal's account. He's been a member here a long time and it's only recently that he's been calling everyone who disagrees with his posts "right wing extremists." He also didn't used to engage in a lot of personal attacks.

We all have our bad days/weeks/months/years. If it is the same guy, I hope he pulls himself together soon. I can't imagine what sort of emotional shock it must have taken to drive him to this level of desperate faith in "the government."

Unfortunately, it doesn't appear that the government is going to be helping earlpearl or anyone else who is not actively contributing to the personal and political fortunes of the Washington elite. The poor will continue to get their usual "dole for votes" trade. The rich will pay a lot more, in a lot more creative ways, and they will receive a lot more in return for their "investments." The middle class, of which I believe earlpearl is a member, don't have the mass of votes or the mass of dollars to be of interest to the Obama administration.

 

As usual it is obvious that mia has no idea what he is talking about but may be he can tell us even if Carter was wrong more than 30 years ago, what did all the republican presidents such as Reagan, Bush senior, Bush idiot done while they were president? Do you mean that Republican presidents are as useless as their loud mouth supporters?

LOL. coming from a person who claims he knows more than Buffet about economy but lack the ability to even discuss the most basic economic points. Loud mouth Republican as it's best.

People including earpeal have started to see you and your friends as what you are. I have news for you, it is not 2001-2006, people have waken up and have seen how Bush administration destroyed the country both morally and economically. This is the reason that people like you (right wing extremists) has been thrown to the garbage bin of history by majority of Americans.

 

Are you asking how many of the 57 Obama states?

 

gworld, Austrian Economics is not the same as Reaganomics and Keynesian - I recommend learning what it is, how it works, and pretty much why it is (imo) the best methodology while not discarding other models. While statistics, charts, and graphs are nice to have and to see what has happened - they don't say what will happen nearly as well as a psychological understanding of what people are influenced by, along with how the mechanics of the market are likely to work out.

While we may see a short term market uplift - the long term is looking a bit more dire. Who predicted the housing bubble two years before and was laughed at? Certainly not a Keynesian. While Austrian lacks so-called "Scientific" modeling, saying the market is a science is also a bit of a stretch seeing how emotions and the logical outcomes of things sometimes (well, alot of the time) just don't come out the way expected. It was Peter Schiff that outed the bubble and crisis to come in 08 - and was literally bashed on-air by another economist and pretty much called crazy. Months later and the downturn begins.