Warren Buffett Reminds Us: The U.S. Economic System Still Works And Has A Bright Future

Warren Buffett appears in the interview below, asserting that the U.S. economy has indeed passed the brink and that, more importantly, the system is not broken. The country's best days are ahead.

It's a healthy reminder that I believe can be extrapolated to Europe as well.

With the recent crisis and claims that capitalism has somehow failed, many forget that a capitalistic system isn't supposed to be always a smooth ride. If we never had any crisis, then something would be truly wrong.

Thus when the stock market was slammed during the crisis, many pointed to the fact that stocks had gone nowhere in ten years as a result, rather than whining people should have been hunting for buy opportunities. The world economy, including the U.S. and Europe have come a long way in ten years. If a much larger business is the same price as in 1999, it might be a great deal.

While the year to date global rally surely begs for a technical correction, many international companies with franchises larger than ever, and that are expanding, remain much cheaper to buy out than they have been in the past. Regardless of whatever weakness we might see in the near-term, they'll be around for the better days Mr. Buffett knows are ahead.

Comments

[Tony Petroski:]

Mr. Fernando: Good article.

Mr. Buffett is "the only male" who is allowed into the "most powerful women's summit." The "CEO" interviewing him points out that he owns her company. Too funny.

I think this is a commercial for American Express.

Try V.

Oct 22 09:04 AM

[notsosmart:]

hes become just another mouthpiece for the wall st ponzi/casino to cover his ass.if hes so smart how come he did not see this mess coming & dump all his holdings @ the high to buy later @ the lows.

Oct 22 10:06 AM

[thiazole:]

Time for the rookies to come in and tell us how much smarter they are than Mr. Buffett...

Oct 22 10:28 AM

[Steve in TN:]

The only problem is how much stronger the U.S. would be today if we didn't have an anti-capitalist, anti-business govt. which will soon inflict upon us a much higher tax regime? A real tragedy for the U.S. in the making. Sure we'll get rid of Democratic control in 2 to 4 yrs but a lot of the damage will be irrevesible.
Buffett is a Democrat because he is a person of immense wealth who doesn't want to appear to greedy or insenitive to the needs of others (which I think is misplaced).

Oct 22 10:52 AM

[Mark Anthony:]

This is also my conclusion. The US dollar will collapse, but the US economy is trong enough to survive. There are still elements in our economy that the world wants from us:

seekingalpha.com/insta...

Oct 22 11:01 AM

[Mark Anthony:]

One thing I disagree with Warren Buffet is on the cash vs. cards debate. A long time ago I thought it was a great idea we will have a cashless society. Today I have a totally different opinion. A purely digital transaction system is a fiat system worse than fiat paper money system. It opens up all opportunities for scams and rip offs.

Read Karl Denninger's anger to his credit card company:
market-ticker.org/arch...

In a physical token based transaction system, like using precious metal coins, or even paper money, the consumers are in control. But in a virtual token based transaction system, credit card, debit card, the consumers are not in control, the banksters are in control. They could easily over-charge you, impose all kinds of fees and penalties, and commit other scams. Your privacy is invaded as well. The more I look at it, the more I believe people will walk away from the digital credit/payment system, and return to physical payment tokens, like cash and precious metal coins.

Oct 22 11:14 AM

[thiazole:]

I agree with most of your post, but I don't think Warren Buffett is a democrat. He supported Obama perhaps because Obama is such a good liar. I don't think he had any idea what Obama was going to try to do to business when he supported him. I haven't heard him say anything positive about Obama in quite a while, though, which leads me to believe that he is having regrets.

For the long term, I think it might actually be beneficial that Obama was elected instead of McCain. The antirepublican sentiment in the population was as strong as it has been since Nixon. If McCain had won, the mindless masses would be blaming him for economy which could have set us up for a decade of democrats after. Instead they are blaming Obama. The general population is too stupid to understand that business cycles happen regardless of economic policy. They see the economy getting worse, they look at who is president when it happens, and they blame "that guy". This alone has hurt Obama's approval rating significantly. When his economic policies really start to impact the economy (via rampant inflation and a shorter period between now and the next recession), perhaps that will be the straw that breaks the camel's back and move sentiment back to the republican party.


On Oct 22 10:52 AM Steve in TN wrote:

> The only problem is how much stronger the U.S. would be today if
> we didn't have an anti-capitalist, anti-business govt. which will
> soon inflict upon us a much higher tax regime? A real tragedy for
> the U.S. in the making. Sure we'll get rid of Democratic control
> in 2 to 4 yrs but a lot of the damage will be irrevesible.
> Buffett is a Democrat because he is a person of immense wealth who
> doesn't want to appear to greedy or insenitive to the needs of others
> (which I think is misplaced).

Oct 22 12:12 PM

[Socialism c...:]

I disagree. Strongly. This is not a binary question, but one of degree. I believe that with the decline in American morals...which translates to a decline in business ethics as well as personal capacity to excel, we may still have an economic system that works...but which works slightly less well as time goes on. That means a gradual decline -- not a bullish factor just because the crapola hits the fan quite gradually rather than all at once.

Oct 22 12:25 PM

[Bruce Krasting:]

You hanging your hat on Buffet's words? The buy and hold is dead. Wait one year and you will see that that is true. Buffet feels good today because global financial institutions have pumped in so much money even crap stocks can trade with 25 multiples. That is ending, and as it does it will drag us back to where we were a year ago. Buffett is no seer. He is just assuming that what has happened every recession in his life will happen again. This is different. Too much damage has been done this time.

Oct 23 09:27 AM

[Tony Daltorio:]

Even if what Mr. Buffett says comes to pass, most small investors won't benefit. Small investors don't buy quality companies for the long term. They simply buy the latest fad or hot tech stock and flip them. To modern American "investors", one week is considered long term.

Oct 23 02:58 PM