curious cat

Warren Buffett on the Dollar, the Recession, Subprime and Bear Stearns

user 190263, you are exactly right about that kid. he doesn't fool me for a minute, acting like he never played the game before, drinking cokes and eating candy bars. he is talking his book every chance he gets, trying to get everyone to panic, so he can pick up the pieces on his life size monopoly board. he had the insurance company, they sold him the railroads cheap and pretty soon, he'll have all the property and charge whatever he wants. heck, i knew it was all over when he picked the hat....

Current Financial Crisis Going Into Extra Innings

hey tony,

that's some list. you're right about america being resilient, too.
in fact, the best thing i can say about america is that we have do overs. we let people and businesses fail and begin again. we don't have debtor's prisons and we don't shame people into committing hari kari and we don't execute them if they fail to meet their quotas. sure, there are quite a few greedy bastards that deserve to be caned, but we draw the line at water torture, so what are the chances we can whack their feet with a stick?

still, the important thing is that america promotes opportunity and enterprise. america welcomes junk bonds and cdos and all the other alphabetical financial instruments, whenever some hyped up wall street genius creates them. we welcome high risk and high leverage. we take chances that other countries cannot even begin to imagine (well, there may be a few french bankers who have an imagination.) our "no punishment" environment nourishes risk because we know that when it works, it creates inconceivable wealth and benefits for everyone.

sure, the economy suffers from time to time, as you've highlighted above, but consider that our way of life is the most advanced in the world, from the best foods and medicines to the latest clothing, cars and homes. consider that everyone in america with half a brain has access to most of the same great stuff that bill gates can get and we all live better than just about anyone else in the world. we stumble, but we get up quickly and we go on to the next great thing, which might be room temperature super conductors, super cheap energy or nanotech whatevers.

The Big Whoosh: Is This The Beginning?

uwe... i'm 55 and i remember, as a kid working in a concession stand, selling peanuts, hollywoods, oh henrys, paydays, chewing gum and potato chips for a nickel each. i remember the first time we raised our prices and someone complained, too. i felt real bad because it still looked like a nickel bag of potato chips.

i remember having hamburgers at mcdonalds for a quarter and thinking how much the price had gone up, how much cheaper things used to cost just a few years ago. there was a time that i could see two movies, a double header, at the garden theater for a quarter and when the price went to $.50 for one movie! unbelievable!

when i was in high school, we shopped around for the lowest priced gasoline because we didn't want to pay the outrageous price of $.16 a gallon if we could get it for a penny or two less. i remember when nixon took us off the gold standard and lots of people were collecting silver coins because they were "worth more". as a young man, i earned less than $2.00 an hour. i only recently threw out my paystubs. i'm glad i only move once every twenty years or so.

trust me when i tell you that the price of everything has been going up for years. the only sustained reduction in prices that i have seen over my lifetime is the result of importing goods from japan, china and the other emerging nations.

think about the massive benefits we have enjoyed over the years from cheap imported fruits, vegetables, meat, fish, clothing, cars, computers, toys, etc. hell, if houses weren't so big, americans would have imported them, instead of the huge mexican labor force we invited. god bless them all and we complain that they want citizenship. when was the last time you went up on your roof to hammer a shingle? when was the last time anyone picked fruits or vegetables? evidently, we cannot make a machine that can do it cheaper than they can.

my point, and i do have one or two but i admit that i had a senior moment there, is that inflation is not new. commodities have gone up in price before. competition is good for everyone, even detroit. we live in the most exciting times, in the greatest nation, in the history of the world. rather than thank the lord for every breath we take, we complain, we fight, we compare ourselves to game show contestants, we are incapable of understanding zen because we are the only one that matters.

victimnation... you thought i forgot about you, didn't you? well, the truth is that our parents paid cash because they didn't have as great of a banking system as we do. they had gone through the depression and the "great wars" and had no faith in banks because the banks failed and the government did not come to the rescue. our bankers may fail, but our government has vivid recollection of what happens when you do not come to the rescue of your banks. our government is full of people that are that old.

besides, you have allowed the liberal media to mislead you into believing that most americans are in debt and cannot afford to pay for things. that is simply not the case. sure, there have always been those idiots who have to have more than they can afford, but we've always had chapter 11 and 13 for them. the rest of us pay with credit cards because it is convenient and then pay off our bill when it arrives every month. we get discounts when we do that too.

in fact, we have steadily increased our wealth as individuals, even as our politicians have made every effort to redistribute our hard earned money to people who do not understand what it means to work for a living. we have thousands and thousands of millionaires in america. we'd have one more if it wasn't for that pesky tech bubble fiasco, but we still have plenty.

my parents had a third grade education when they left the "old country". they had no money, they could not speak english and were in their mid-thirties when they came over on the boat (not a cruise ship either). still, they managed to raise eight children without government "assistance". they didn't have washing machines, dryers, refrigerators, microwaves, computers, disposable diapers or tv dinners.

they walked everywhere. they worked unbelievably hard, a lot harder than most young americans can imagine today. but, the people in emerging markets know exactly what that means. that's why they can see their futures improving. that's why their economies will not fail. there will always be a segment of the world's population that is busting their asses, excuse my french, to get ahead. if you think our economy will fail and our money will collapse, just invest in them. personally, i will put my money on the house.


i have seen gold and silver go up before. i have seen tech bubbles, housing bubbles and bubblicious gum. there's always a bubble right behind the last one. keep chewing, even when the flavor is gone.

The Big Whoosh: Is This The Beginning?

herb, you appear to be suggesting that the government will not stop at this bail out. so, doesn't it make sense that the federal government will do everything to bail out our other financiers in order to support our economy? if that is the case, and if everyone knew there were other shoes to drop, why should we have a "whoosh" and, for that matter, why should the stock market go down on this bail out news?

doesn't it make sense that the market would see this as evidence that it will not be allowed to tank? when the fed and bernanke finally acknowledged that there was a problem and began to emphasize the economy, the market took that as a good sign. eventually, the market began to worry that inflation might be a concern and stopped rewarding the rate cuts. ok, so what is the bail out concern?

is it that we are going to be too supportive of our financial system? is it that we are not allowing the people who made mistakes fail? heck, this is america, herb. we do not punish failure, we encourage risk. we do not have debtor's prison here. our goal is to encourage risk takers to finance exploration and discovery. that's why we have the biggest, the fastest, the greatest, and the most of everything.

besides, the worries about inflation are overdone, anyway. the only things going up in price are those assoiciated with the falling dollar. we have actually been enjoying significant deflation ever since the communist curtain fell and we started benefiting from billions of low priced competitors. how else can you explain the loss of jobs and unions in our country? how else can you explain our ability to purchase everything we want when our parents had to live from paycheck to paycheck?

i can accept a reasonable amount of gold hedging, of moneymarket and mattress stuffing to compensate for volatility, but there comes a point at which i have to recognize that our bankers hold all the cards and i never bet against the house, especially this one.