Buffett on the Dollar: 'Our Present Over-Consumption is Unsustainable' 8 comments
Shai Dardashti
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Warren Buffett appeared at a fundraiser for Hillary Clinton in San Francisco Tuesday. Here are excerpts of personal notes from Nick Nejad:
Q: Your views on the US Dollar?
A: The most important question to ask in economics is "X happens, and then what?". We are living prosperously, but every day we are sending 2 Billion dollars overseas because we consume more than we purchase. It is similar to if we owned, say, a large farm in Texas. We are extremely wealthy, but every year we mortgage a little bit of that farm in order to enjoy more of the present. And it is gradual, but then at some point you have to spend an hour or maybe two hours a week of your work to go towards servicing this debt. The problem is at some point either foreign investors will stop financing our consumption, or our future generations will be burdened with debt and have to work some X hours towards servicing the debt of the earlier generation. But the present over-consumption is unsustainable.
Q: Your views on new products such as derivatives, SIVs, etc. ?
A: There's utility in securitizations. But the problem is these have become complex and the originators and investors have been stretched so far in part in the whole process.
"If you can't make money off the things you do understand, how do you expect to make money off the things you don't?"
Q: On Taxes.
A: In the U.S., 2 Trillion out of 2.5 Trillion in taxes come from income and payroll taxes. Of those, 60% is income taxes, and 40% is payroll taxes. I [Buffett] did a survey at Berkshire HQ and the average worker paid 33.2%. I paid 17.7%.
The worth of the Forbes 400 was 220 Billion in 1987, and for 2007 it is 1.5 trillion. A seven-fold increase. During the same period, wages went up only 80%.
Q: Sense for the future of our country, Warren?
A: In the 20th century, real standard of living increased seven-fold. That was unprecedented, and included the Great Depression and other scares. The American system has unleashed the greatest potential of its citizens. Back in 1790, China had 290 million people, and America had 4 million. But today look where we are at. We will be better off in the future, the real question is how it will be shared.
As always - amazing work, Nick. Thanks!
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This article has 8 comments:
That is profound. It is up to us to be able to educate those without wealth, to accumulate it, while balancing growth and consumption. It is not in our best interests to keep that wealth to ourselves. It is only another red check mark against us, when considering our debt. While socialistic and communistic ideals are insane, and lead to ruin, it'd be nuts to not realize you can only keep wealth to yourself for so long - before it leads to class clashes. The smart road, and to my mind - what we need to focus in on, more than anything else, is that last statement. We have to learn how to educate others in the U.S. - so that they can partake in wealth as well.
From NY Times
WASHINGTON — Pared-down energy legislation cleared the Senate on Thursday by a wide margin after the oil industry and utilities succeeded in stripping out provisions that would have cost them billions of dollars.
The legislation still contains a landmark increase in fuel-economy standards for vehicles and a huge boost for alternative fuels. But a $13 billion tax increase on oil companies and a requirement that utilities nationwide produce 15 percent of their electricity from renewable sources were left on the floor to secure Republican votes for the package.
----
To hell with global warming - the poor oil companies need charity from the american people in order to survive!!!!
The republicans continue to give liberal handouts of taxpayer $$$ to the oil companies which are making record profits!
DISGUSTING!!!!
2>Buffet has a left handed swing toward taxes, he could pay more, but asked on national TV he declined to comment. He wants to repreal the death tax, hell before the bill went into effect, my uncle left a large working ranch, to 8 of use to keep in the family, when the lawyers, feds, & other goverment blood suckers got finished, 4 of us had passed, feds 60%, lawyers 25%, after all was said & done I got a check for $125.00 and the feds still have the home, equipment, and hell of alot of prime land. My unc started out with nothing & made it into a dream to leave to his family, but the left has always taken the stance of high taxes & what is yours will be thiers at no concern of your wishes. That rance would have produce more great family jobs with pride, and the local town no longer is there.
So you miss guided, it's not the oil co's, it's the players on wall street shorting the markets, hell its traded every day where they bet on markets movement.
Warren and Hillary are just a political hysteric.
Ouch, don't get me wrong. I am not with GWB all-heartedly too.
But look at what they said in the article carefully. Don't you think their arguments are self-defeating?
Well, I will say Hillary is right to ask us surrender our kid's education to a STATE if she is with ancient country "Sparta" where people were ordered to send kids to a state-run kindergarten after they were borne. Well, I am a Athenian who wants to create a ecology where at least one of parents educate children as a lifetime chance of sweet and valuable memory as Warren described.
But ask Warren: "Do we give our people that chance?" When our society is transforming into a "double income household" that our ancestors never heard. We even see some couple working 4-5 partime jobs to bring in bread for the family. The married couple even hardly see each other in the house. How can they take care of their kids except sending them to other's preschool or public school?
How can they be so hypocrisy? They support "death penalty" when they know they can fully use the statue que to "avoid" the tax and the poor is unable to do that. Situation is just as Warren said he only pays 17% tax while the average Joe has to pay more than 40% tax.
Our society has more wealth disparity as Warren mentioned that the rich increased 300 or more wealth at the expense of the poor working classes whose wage increase only 80%.
Gee! What a funny world for those VIP to play with the poor VSP as their slaves who has no time to think or even to vote!
I ask, who am I to dare?
As reported within ‘Seeking Alpha’ <seekingalpha.com>; Posted: December 14, 2007
Buffett on the Dollar: 'Our Present Over-Consumption is Unsustainable'
By Shai Dardashti <dardashticapital.com&g...;
Warren Buffett appeared at a fundraiser for Hillary Clinton in San Francisco Tuesday. Here are excerpts of personal notes from Nick Nejad:
Q: Your views on the US Dollar?
A: The most important question to ask in economics is "X happens, and then what?” We are living prosperously, but every day we are sending 2 Billion dollars overseas because we consume more than we purchase. It is similar to if we owned, say, a large farm in Texas. We are extremely wealthy, but every year we mortgage a little bit of that farm in order to enjoy more of the present. And it is gradual, but then at some point you have to spend an hour or maybe two hours a week of your work to go towards servicing this debt. The problem is at some point either foreign investors will stop financing our consumption, or our future generations will be burdened with debt and have to work some X hours towards servicing the debt of the earlier generation. But the present over-consumption is unsustainable.
Arnie Sherr responds: It is ever so enlightening when one among the wealthiest says we are living prosperously. Mr. Buffett refers to “X” as if he personally is affected by same. If in fact Mr. Buffett even operates his own vehicle filling his gas tank causes him not a wince, I am sure. Irrefutable and altruistic requests for and approval of home heating oil, natural gas, and electricity delivery increases pass through his ‘overfilled with personal corporate relevancy mind’ leaves little room for notice let alone real concern. He speaks ingenuously of trade imbalance, as if only he is aware. He even analogizes same with a Texas farm example! He refers to “we” or should I say “us” as wealthy. I read from his use of “we” that he believes “we” are all members within his aura of wealth. He also predicts countries like China will shut off the loan flow. Perhaps he’s correct; correct of it all. Where was Warren Buffett while all of this was developing? My word, isn’t hindsight overrated?
Q: Your views on new products such as derivatives, SIVs, etc.?
A: There's utility in securitizations. But the problem is these have become complex and the originators and investors have been stretched so far in part in the whole process.
A Quote: "If you can't make money off the things you do understand, how do you expect to make money off the things you don't?" Warren Buffett
Arnie Sherr responds: Derivatives are merely knockoffs (counterfeits), ideas, terms, or items that evolve from things similar or original to. Whereas SIVs are merely Structured Investment Vehicles; funds which borrow money by issuing short-term securities at low interest and then lending that money by buying long-term securities at higher interest, making a profit for investors from the difference. SIVs are a type of structured credit product; they are usually from $1bn to $30bn in size and invest in a range of asset-backed securities, as well as some financial corporate bonds. An SIV has an open-ended (or evergreen) structure; it plans to stay in business indefinitely by buying new assets as the old ones mature, and the SIV manager is allowed to exchange investments without providing investors transparency / the ability to look through to the structure.
There are two inherent risks thereof. First, the solvency of the SIV may be at risk if the value of the long term security that the SIV has bought falls below the short term securities that the SIV has sold. Second, there is a liquidity risk, as the SIV borrows short term and invests long term; i.e., out-payments become due before the in-payments are due. Unless the borrower can refinance short-term at favorable rates, he may be forced to sell the asset into a depressed market.
Mr. Buffett speaks of securitizations as though they offer utility. For now, his assertion may have substance, but predictably certain securitizations (i.e., credit card lenders) are facing economic divertive; otherwise, financial challenges un-witnessed in the banking industry since the great depression.
As for his quote; I am not naïve enough to believe those from years past did not understand the ramifications to be dealt with hence. They from years past are those “Cashocrats” who manifest themselves as elected agents of “We the People” who have pushed and continue to push their altruistically self serving and special interest agenda in spite of the certain risk that SIVs, banking, and utilities destine for those who shall be inheritors of their greed-laden initiatives to be dealt with long after they have departed here from.
Q: On Taxes.
A: In the U.S., 2 Trillion out of 2.5 Trillion in taxes come from income and payroll taxes. Of those, 60% is income taxes, and 40% is payroll taxes. I [Buffett] did a survey at Berkshire HQ and the average worker paid 33.2%. I paid 17.7%.
The worth of the Forbes 400 was 220 Billion in 1987, and for 2007 it is 1.5 trillion; a seven-fold increase. During the same period, wages went up only 80%.
Q: Sense for the future of our country, Warren?
A: In the 20th century, real standard of living increased seven-fold. That was unprecedented, and included the Great Depression and other scares. The American system has unleashed the greatest potential of its citizens. Back in 1790, China had 290 million people, and America had 4 million. But today look where we are at. We will be better off in the future, the real question is how it will be shared.
Arnie Sherr asks Mr. Buffett:
Q. Where were you while all of the above was growing slowly into the monster anomaly it has become? Certainly, one whose successes have become iconic to onlookers must have in some ways either benefited from that of which you seem to easily dichotomize as both misunderstood securitizations and a prediction that “we” will be better–off in the future or your evidenced success was simply accidental. If you don’t mind, I’ll adhere to the former!
To summarize: It pains me to reward of and/or listen to those supposed knowledgeable who inhabit the top 3.4% (those who earn greater than $200k per year according to a US Census Bureau 2006 American Community Survey S1901) and more accurately those at the top of the mega-wealth pyramid about conjecture after the fact when the real truth is that because of their own greediness they purposely remained silent. Only after all is exposed do they seek accolades for standing tall; bountiful with explanation as though they were in no way part of its evolution or conversely part of its prevention.
If what you sense is anger then you are very perceptive; and I have allayed my feelings well.
Some may analyze me as jealous; perhaps, but not of the wealth. That of which I may be perceived as jealous is the ever lessening opportunities for reaching and sustaining successes within the top 3.4% for me and looking to the future, my son, daughter and theirs to follow. Mr. Buffet refers to wage growth over a period not delineated within his reference; it is apparent, however that he is not referenced today or times recent. Factually, incomes have raised little in comparison to this nation’s soon to end economic growth. Many attest it has continually fallen short of the CPI which for the sake of this illustration is for this past year 4.21 percent. Over the past five years the CPI has never dipped below four percent and more likely was a bit above. Mortgage companies who presented altruistically ARM mortgages are examples of corporate inhumanity; but then it is well to understand that corporations are not human; they are entities that exist only for profit and growth regardless of their order of achievement. Human consideration no longer fits within global initiative. The “Cashocrats” that we have elected to look out for “We the People” have selfishly opted to yield to the bribes of “Special Interests” rather than to promote the principles on which the great land was founded.
After reading this you to may feel some emotion, of sorts! Here’s hopin’?