Buffett says in NBC interview that US is in 'economic Pearl Harbor'

[CatholicEdHead]

Source: StarTribune

OMAHA, Neb. - Billionaire investor Warren Buffett says the U.S. is engaged in an "economic Pearl Harbor."

In an interview that aired Sunday on "Dateline NBC," the chairman and CEO of Berkshire Hathaway Inc. said the nation's economic situation is not as bad at World War II or the Great Depression, but it's still pretty severe.

Buffett said Americans are in a cycle of fear, "which leads to people not wanting to spend and not wanting to make investments, and that leads to more fear. We'll break out of it. It takes time."

Buffett's interview centered on President-elect Barack Obama and the tough task he faces in fixing the U.S. economy.
...

Read more: http://www.startribune.com/business/37800999.html

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Yikes, this better get more press and Buffett is well received, but this is also over the holiday news cycle that can be buried.

[Demeter]

1. And Totally Self-Inflicted, To Boot! Nobody But Our GOP Govt. To Blame

and the enabling Democrats. That means you, Nancy and Harry.

[Warpy]

2. The only thing that will break people out of it

is attention to the demand side of the economic equation. People are terrified not because bankers and financiers fucked up and investments are turning to shit, they're terrified because they know their jobs are on the chopping block, they're drowning in debt, and their wages haven't kept pace with the true cost of living for decades, thanks in large part to that scumball and deadly enemy of the American working public, Greenspan.

This isn't some silly fashion, this terror felt by people who have jobs and who don't have jobs. It's the terror generated by having substituted going into debt for raises that never came. It's the terror of not knowing if there will be any income at all in the near future. It's the terror of what the health insurance industry has done to all of us.

Buffett is a smart man. I just wish he'd been smart enough to realize all of this because in the seeds of our fear lie the solution to it.

[stillcool]

3. you said it..

from the article it seems Buffett is doing a Bush and saying just go shopping. I love how experts say that Americans need to 'save' more.

[Deja Q]

4. The media says all sorts of things... including,

* "Americans need to save more"
* "The economy is crashing because Americans are not spending"

WTF


As usual, it's the consumer's fault. Nobody else's. Never is, even when the empirical evidence points to so many other facets.

[Hannah Bell]

20. they tell us there aren't enough workers to fund social security, but too many for the environment,

too.

then they run a commercial telling us to buy more shit.

[Deja Q]

5. Dunno how much of it is Greenspan's fault, but I otherwise agree.

[Warpy]

7. Read about what he did with the CPI market basket

of goods and services. It became a joke, just in the name of holding down wages and Social Security checks.

In fact, what needs to be done is price the market basket as it existed before Greenspan got in and figure out the real inflation in the cost of living from there.

Lying about inflation is what that man did best. He is responsible for cheating us all.

[Frank Booth]

13. Greenspan will never get the condemnation he deserves.

Except for maybe Bush and Cheney, he's more responsible for the collapse of this country than anyone else.

[No Elephants]

18. I'd give "credit" to Shrub's hero, Reagan. Also the Glass Steagall Act.

[Warpy]

30. It's all of a piece, really

and conservatives in both parties had a hand in it.

For instance, we'll never know if Phil Gramm's repeal of Glass-Steagall would have passed had Clinton had the good sense to veto it.

But it's about 80% GOP, this silly economic philosophy with retread tires reissued by Milton Friedman and adopted by conservatives in both parties.

Conservatives always think the economy runs from the top down. When they gain control of the country, they will always crash it. It never fails.

[acmavm]

31. Don't forget Mr. Deregulation, Phil Grahamm and his wife Wendy

[ProfessorGAC]

24. Are You Kidding, Toad?

Anytime a system is manipulated when there is nothing wrong, the system because even less predictable and stable. Greenspan's constant adjustment of interest rates to head off inflation that didn't exist created more variability and instability than should have existed. That lack of stability created more multivariate interaction as time went on, which resulted in a near-chaotic state.

He deserves a LOT of the blame for what happened.
GAC

[madrchsod]

6. raise wages

[RCinBrooklyn]

8. Not really, We were attacked from within by greedy corporate giants.

[unkachuck]

9. "...the U.S. is engaged in an "economic Pearl Harbor."

....and you and your buddies are the Japanese....

....fuck you buffer, pack your BS up your ass....you and capitalism are the problem, not the cure.

....when capitalism stops working, we'll hire socialists....

"You couldn't have anybody better in charge," the Omaha resident said of Obama,..."

....buffer, why do I get the feeling if Lenin became President you'd be a life-long Communist....

[gratuitous]

10. Oh no! Not Pearl Harbor!

Why, oh why didn't George W. Bush protect us from this?

[xchrom]

11. recommend

[barb162]

12. He's being optiimistic. n/t

[JCMach1]

14. We are in the same cycle as the real estate bubble crash in Japan

It took them 10 yrs. to recover...

[acmavm]

15. Just one quibble with anything Mr. Buffet says. I notice he and his best

friend Bill Gates didn't seem to lose too much in the Wall Street fiasco. Didn't they invest in the same money market instruments that apparently every other stockbroker on the planet was diving into? And if they didn't, why not? What did they know? Because they sure weren't out there warning the public about the bad debt boondoggle everybody but themselves seemed to get trapped in.

[No Elephants]

19. Buffet did his own bailout, but he got much better terms than the US did.

[chill_wind]

28. "Goldman Shares Surged Before Buffett Deal Was Unveiled"

And somehow this all got buried and lost in the times...

September 24, 2008

An unusual surge in Goldman Sachs‘ share price in the last 10 minutes of trading on Tuesday raised eyebrows on Wall Street, as it came two hours before news of Warren E. Buffett’s big investment in the bank, Reuters reports.

Goldman shares rose more than $5 heading into the close of trading even as the rest of the market tumbled, leaving traders suspicious that inside information was used to make a profit.

http://dealbook.blogs.nytimes.com/2008/09/24/goldman-shares-surged-before-buffett-deal-was-unveiled/

It never really made the big google. It never even made the big DU.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x4081531

[depakid]

25. Buffett warns on investment 'time bomb (4 March, 2003)

The rapidly growing trade in derivatives poses a "mega-catastrophic risk" for the economy and most shares are still "too expensive", legendary investor Warren Buffett has warned.

The world's second-richest man made the comments in his famous and plain-spoken "annual letter to shareholders", excerpts of which have been published by Fortune magazine. The derivatives market has exploded in recent years, with investment banks selling billions of dollars worth of these investments to clients as a way to off-load or manage market risk.

But Mr Buffett argues that such highly complex financial instruments are time bombs and "financial weapons of mass destruction" that could harm not only their buyers and sellers, but the whole economic system.

Contracts devised by 'madmen'

<snip>

Some derivatives contracts, Mr Buffett says, appear to have been devised by "madmen".

He warns that derivatives can push companies onto a "spiral that can lead to a corporate meltdown", like the demise of the notorious hedge fund Long-Term Capital Management in 1998.

Derivatives are like 'hell'

Derivatives also pose a dangerous incentive for false accounting, Mr Buffett says.

The profits and losses from derivates deals are booked straight away, even though no actual money changes hand. In many cases the real costs hit companies only many years later. This can result in nasty accounting errors. Some of them spring from "honest" optimism. But others are the result of "huge-scale fraud", and Mr Buffett points to the US energy market, which relied for most of its deals on derivatives trading and resulted in the collapse of Enron.

Berkshire Hathaway, the investment group led by Mr Buffett, is pulling out of the market, closing down the derivatives trading subsidiary it bought as part of a huge reinsurance company a few years ago.

More: http://news.bbc.co.uk/2/hi/business/2817995.stm

[LiberalLovinLug]

16. Can you imagine

where the USA would be right now if Nixon, Reagan, Bush 1 and 2 , along with all their cohorts in the Federal Reserve and private industry had not hijacked and gambled away the wealth of the country after WW2. And we could include a few "moderate" Democrat leaders and their tutu clad peers on the hill in there as well.

Reagan pulled the solar panels off the Whitehouse that Carter put up there. Al Gore of course never got to have a chance or even half the money spent in Iraq could have helped auto makers lead the world in green transportation years ago. Even Kerry may have stopped the financial meltdown with a Democrats eye towards the dangers of a gluttony of deregulation. The middle class would be healthier, with universal medicare already in place, and environmental work place standards a top priority. They'd be more competitive with the now surging Rest-of-the-World expertise in new green products so that jobs and confidence in American industry would be high.
There would be no war debts caused by an out-of-control military industrial complex that spends more than all other nations combined, so roads, schools, and government services would be funded and be administered by happy well paid unionized workers. Democrat style (Obama) middle class tax breaks would have come sooner further generating energy for the economy, rather than tax breaks to billionaires who off-shored their extra cash.

There'd be no increase in terrorists caused by blowback recruitment that is now taking place all over the Middle East because of the huge folly of the Iraq invasion. Not to mention millions of people's needless violent deaths would be prevented.

I probably missed a lot, but damn it is frustrating to watch so many Americans vote against their best interest every election. But They have the machine. They have the biggest industries, the most influential media companies, and the most $ to throw around to appeal to the basics of instincts. You know that when Obama makes his first real stumble they will all jump on him like a pack of rabid dogs, I am praying that Obama really is special enough to withstand all that and once again chip away at that wall of fear that the Republicans have built up between the public and the amazing possibilities of where America could get to if they just can throw that fear away and truly enter the 21st century as the innovative, progressive, socially responsible nation it is destined to be.

[underpants]

21. Edward Bernays

http://www.youtube.com/watch?v=9Kp24ZeHtv4

THE CENTURY OF SELF(EPISODE 1):The story of the relationship between Sigmund Freud and his American nephew, Edward Bernays. Bernays invented the public relations profession in the 1920s and was the first person to take Freud's ideas to manipulate the masses. He showed American corporations how they could make people want things they didn't need by systematically linking mass-produced goods to their unconscious desires.

[Delphinus]

23. Important point!

Thanks, underpants.

[LiberalLovinLug]

32. Wow looks interesting

thanks

[No Elephants]

17. And Arbusto says, "Why did it have to happen on my watch?" As though

it had no more to do with with him or his Administration than a bird taking a dump on the White House lawn.

Tomorrow, tomorrow, I love ya, tomorrow. You're only a daaaaayyyyyyy away!

[LiberalLovinLug]

33. Because that wasn't the Plan

They saw it coming and stoked it with further deregulation, tax breaks, and simply ignoring Wall Street behavior for years. The Plan was to have it blossom during the first months of the new administration. "missed it by thaaaaaaaaaaat much"

The chimp is still smirking though, it is still Obama's mess to clean up. And the Reich Wing radio blowhards are already on the ball with the absurd theories about this being the Obama recession.

You know...the fear of the new communist dictatorship coming with the new socialist states of America has caused panic in the financial district. :eyes:

[underpants]

22. Whinin' hippie

:grr:

[lonestarnot]

26. The richies are managing jobs, of course it's an economic Pearl Harbor!

[chill_wind]

27. Uhh--he also said Obama should have kept Paulson onboard in his new admin

for a year or two or least. Back in the October bailout debate, which is when he first actually started throwing out that phrase. Just saying.

[secondchances]

29. A feeling of optimism...

is a good place to start. A President that makes people feel they have a chance doesn't hurt either. I think Buffet feels really good about Obama, as most smart people do. As bad as things are, I haven't felt this positive in years (8 to be exact!!)