Buffett deepens dollar worries (US heading for Sharecropper Society)

[RamboLiberal]

http://news.ft.com/cms/s/14d1fb9c-8da0-11d9-a4d2-00000e2511c8.html

Warren Buffett has warned that the US trade deficit risks creating a “sharecropper’s society” as his letter to shareholders sounded an increasingly bearish tone about the value of the dollar.

The billionaire fund manager said his own performance as chairman of Berkshire Hathaway was “lacklustre” because he struck out in his quest for new investments. Annual results showed the book value of Berkshire shares underperformed the stock market for the second year in a row while full-year profits fell 10 per cent.

<snip>

Mr Buffett stepped up his warning about the US trade deficit and the need to finance it with foreign investment, devoting more than two full pages of the annual report to the topic.

“This force-feeding of American wealth to the rest of the world is now proceeding at the rate of $1.8bn daily, an increase of 20 per cent since I wrote you last year,” he said. “Consequently, other countries and their citizens now own a net of about $3,000bn of the US”

In particular, he warned that this meant a sizeable portion of what US citizens earned in future would have to be paid to foreign landlords.

[OrangeCountyDemocrat]

1. Is He A Democrat Or Repub?

He obviously has the wealth of the latter....but speaks more like the former. How anyone could say what he's saying about the $, and yet support this administration's policies, would be beyond me.

[Liberty Belle]

2. He's a maverick. Gave money to Kerry, Wes Clark, and

quite a few other Dems, but also worked on Schwarzenegger's transition team.

[burrowowl]

16. Demo

but he isn't going to suffer.

[PROGRESSIVE1]

4. He's a self described Democrat. A capitalist like myself,

but he is NOT A RIGHT WINGER/Supply Side ding dong.

He's a moderate.

[Blue to the bone]

7. Does the party label really matter?

He's either speaking the truth or he's talking BS. I say, read his words and then decide what you think of his message.

[drdtroit]

47. "Does the party label really matter?", exactly

we are far beyond political party affiliation. It has come to the point where there are three categories: the educated, the uninformed and the willfully ignorant. :(

[Trajan]

55. It certainly matters on Election Day ....

and when the gavel is struck in Congress ....'

And in the Courthouse ...

Yeah ... like it or not .. it matters ...

[ozone_man]

8. Didn't he and Gates short the dollar?

Not that it changes the accuracy of what he is saying.

[Dcitizen]

62. Omaha Democrat

was mentioned on LA Times as economic advisor if Kerry won the
e voting. He is a pioneer economist invented an adventure and very clever idea in international economics to restore the trade balance for the country by using trade coupons. That's the only new theory can save US economy, so frankly I must regard him as a great patriot economist in the modern time.

[lonestarnot]

3. Oh yes... as I have been saying....we're doomed. n/t

[w4rma]

5. Typical. Foreign press coverage, only. (nt)

[edhopper]

31. Not so

In todays NY Times Bussiness section. Page 2:
http://www.nytimes.com/2005/03/07/business/07place.html

[TahitiNut]

6. "sharecropper’s society" ...that's why I've called it Plantation Economics

But Warren Buffett's remarks are designed to inform the Ownership Society that they'll become sharecroppers in their own country, with only the slaves to look down upon. The Owners? Overseas; using cheap dollars for toilet paper after buying any assets worth buying in the U.S. It's the Global Wealthy (having no allegiance) who know the best butlers are British and the best stablehands are American.

[The Magistrate]

11. Mr. Buffet's Warning, Sir

Should be taken very seriously. The situation is not good for the currency of our country....

[fooj]

14. Magistrate-Once again, the truth does not elude you!

Peace!

[TahitiNut]

15. Indeed. He knows sell-outs when he sees 'em.

He's an old-school capitalist who realizes that the 'means of production' have no value without 'production.' He built his wealth knowing which side his bread is buttered.


I like this:
As Warren Buffett puts it, dropping inheritance tax would be like 'choosing the 2020 Olympics team by picking the eldest sons of the gold medal winners in the 2000 Olympics'.

It's a shitty way to pick pResidents, too. :shrug:

[The Magistrate]

18. That Is An Excellent Way To Put It, Mr. Nut

It is an odd thing, but by the time a certain mass of wealth is acquired, it is almost impossible to specify any particular "special interest" beneficial to its possessor. Of necessity the investment must be dispersed in so many directions that what particularly benefits one item in the portfolio is likely to injure some other item in it. The surest way for a person in this position to continue to increase their wealth is to plump for an increase in economic activity over-all, from which they are certain to derive a good profit from many directions, and for a sound currency, which will secure the value of their financial instruments. The policies surest to bring about these results are high wages, a progressive tax system supporting a fine-meshed "safety-net", and minimal recourse to force in international affairs....

[Zhade]

54. Right on, Magistrate! You and TahitiNut have this down pat.

:thumbsup:

[0007]

26. Why worry when junior and his boys have all the faith in the world

in Allen Greenspan? Who's gonna lister to Warren baby, except for a few stockholders?

United States of America is in a serious downfall and the opium supply is plentiful.

[Andy_Stephenson]

32. I agree with you magistrate.

Buffet's warning is not to be taken lightly.

[The Magistrate]

60. It Is Always A Pleasure, Mr. Stephenson

To find a point of agreement with you.

[Dover]

9. I wonder what 'cash equivalents' he owns?

Surely not dollars!

My hope was to make several multi-billion dollar acquisitions that would add new and significant streams of earnings to the many we already have. But I struck out,” he said “Additionally, I found very few attractive securities to buy. Berkshire therefore ended the year with $43 billion of cash equivalents, not a happy position.”

[TreasonousBastard]

10. This is a dupe, but it's still important...

to get the word out that the crisis "for our grandchildren" is NOT Social Security, but the current state of the US economy and the vast amount of debt we owe the rest of the world.

[Yosie]

12. He is 100% right---

do some serious reading --> not sheeple sound bytes on the web--->

1. Microeconomics by Paul Krugman, Robin Wells
2. International Economics: Theory and Policy (6th Edition) by Paul R. Krugman, Maurice Obstfeld

Good reads for a difficult subject. But worth the effort.

[Barkley]

23. Thanks for the refernces, Yosie!

I'll check these books out.

[greatbubba]

13. Invest in gold. The dollar saga is over.

[burrowowl]

17. No!

Buy Euros and keeep them under your mattress.

[screembloodymurder]

25. How does one buy Euros

[Demeter]

27. AAA Travelers Checks

is a quick and easy way

[amazona]

39. a quick easy way to lose BIG on transaction costs

If you belong to AAA they tell you the traveler's checks are free. Then you get to Europe and get hit with HUGE transaction costs if you actually want to use them.

I won't get fooled again.

The conservation movement is a breeding ground of communists
and other subversives. We intend to clean them out,
even if it means rounding up every birdwatcher in the country.
--John Mitchell, US Attorney General 1969-72

[Demeter]

51. Ah! But if the point is to Speculate in Euros....

one merely holds them, then turns them into US bank to return to dollars at some later date.

I didn't expect you wanted to actually SPEND them!

[alittlelark]

24. U R Sooo FUUUNY......

Tell us another one !!!.............................

[The_Casual_Observer]

19. But the stock market just keeps going up!

Regardless of how bogus this all is, it's still a bull market.

[Art_from_Ark]

20. He who runs with the bulls

gets trampled

[radfringe]

22. it's a common misperception

that the stock market reflects the state of the WHOLE economy. Most people look to the stock market as a barometer for the economy -- equating the stock market crash with causing the Great Depression. But the opposite is true -- the depression was already in motion and the crash was just one of the by-products

stock market is a bet - you bet that that the stocks you buy will increase in value so you can sell them and make money. More often than not -- stock values rise NOT because companies are doing well but rather because investors think a stock will rise in value -- this sets other investors into buying and causes the price to rise

What we have here is constipation -- money is clogged up at the top and is not "trickling down". Falling dollar and rising oil prices are increasing the cost of producing and transporting products -- this results in increases for the consumer. The stories of dragging a wagon load of money to the store to purchase ONE loaf of bread may be repeated.

[Catt03]

48. Is this correct also: nasdaq is a truer barometer than Dow?

[hatrack]

58. Hard to say, but it's interesting that the NASDAQ never really recovered

The Dow's bouncing around 11,000 or whatever it is these days, but the NASDAQ, a far broader index, is still about 40% of what it was before the tech crash.

Naturally, lots of what leaked out of the index was bubble gas, but as a broader market it's never really come back.

[Zynx]

61. The NASDAQ doesn't really have a fundamental base.

It's a much worse barometer to use than the Dow. Its numbers pretty much don't mean anything and most of the P/E ratios on component stocks are still rediculious by conventional standards. And its probably never going to see 5000 again. I know never is a long time, but still...never. Not gonna happen.

If you want a better example than the Dow, use broader indexes - the S&P or the Total Market Index. The Dow is just 30 companies, and the most recent shakeup of the Dow component stocks (what makes it up) was pretty arbitrary.

[Dogmudgeon]

21. We're on borrowed time

America is very "leveraged" right now. And that ain't good.

The only consolation is that "we" own a lot of foreign capital, too. There will be no planned castration of the Dollar; Armageddon will happen as a result of a cascade of market runs, devoid of planning or reason. And it will leave the entire world much poorer as its edifice of capital formation collpses like a skyscraper built with substandard steel.

If this happens in the autumn of the year before a harsh winter with higher fuel prices, there will be a death count to go along with the financial stats. These problems are synergistic, involving finance, "Peak Oil", climate problems, political and religious terrorism, neo-fascism, public health (epidemics), and cultural upheavals.

I don't think many people appreciate the state we're in. These processes have been working since the 1970s and we were always able to compensate -- world-wide. But the slack we have is just about gone. We need to fix some problems and fast, or there will be more shit than fan.

--p!

[lonestarnot]

30. I have been wondering who they think is going to buy their goods and

services when they get Americans in such a spot that noone can buy or sell...

[amazona]

41. China has a huge population and huge pent-up demand

They will sell to the up-and-coming Chinese (and Indians) and not worry about the discarded U.S. worker.

It is already happening.

The conservation movement is a breeding ground of communists
and other subversives. We intend to clean them out,
even if it means rounding up every birdwatcher in the country.
--John Mitchell, US Attorney General 1969-72

[lonestarnot]

63. Guess you are right. n/t

[anarchy1999]

28. I honestly am confused by all this now. Buffett announced he was,

for this first time in the history of his company going to start trading in foreign currencies sometime last year. Why all the hype now? Everybody miss it when he started?

[Zech Marquis]

29. Damn! sharecropper society?

If Wareen Buffet is saying this--and the man hapens to know quite a bit about money matters (while not going apeshit and living like a hiphop rapper--the giant mnasions, 5 Hummers, 3 private jets,etc)--then we are FUCKED UP :wow:

[Stockholm]

33. Excuse a foreigner but what does the "sharecropper´s society" imply? n/t

[bemildred]

38. Think Russian serfs and you have the right idea.

Sharecroppers are farmers that do not own the land they work
and pay a "share" of the crop as rent on the land. It was common
in the Southern USA, might still be somewhat. The implication is
that Americans will no longer own their own means of production.

[Chicago Democrat]

42. A 'sharecropper' became the norm in the South after slavery was

abolished in 1865 after the American Civil War. Plantation owners rented the land to the ex-slaves in return for a "share" of the "crop". In these situations the sharecropper was completely at the mercy of the plantation owner and the net result was EXACTLY THE SAME OR WORSE! than slavery. The Sharecroppers relied on the plantation owners for seed and food which they were charged for at exorbitant prices, plus they were often cheated when the crop was sold. The ex-slaves were completely at the mercy of the owners of the plantations just like in slave days, if fact it was often worse because the plantation owner had no interest in the health or welfare of the former slaves.

[Bridget Burke]

50. Not all sharecroppers were black.

Neil Foley wrote "The White Scourge: Mexicans, Blacks, and Poor Whites in Texas Cotton Culture"--an interesting study based in East & Central Texas, but mostly relevant to the rest of the South.

Foley negotiates this ambiguous terrain by situating the narratives of African Americans, Mexicans, and poor whites within the larger context of agrarian transformation and white racial construction between the Civil War and the New Deal. Central to their stories is the collapse of an agricultural ladder whereby young male farmhands climbed through the stages of hired hand, sharecropper, and tenant farmer to farm owner. Influenced by eugenics, legislators, and large-scale ranchers, researchers blamed the failure of the system on the wretched racial hygiene of feeble-minded poor whites and the inferiority of Mexicans and blacks rather than on a land tenure system that privileged wealthy landowners.....

Foley convincingly argues that the "empty and terrifying attempts to build an identity based on what one isn't and on whom one can hold back" has supported racial hierarchies in the United States and has subverted potential interracial coalitions to bring about systemic change in a society dominated by class, racial, and gender inequality.

I've read the book; quotations are from this review: www.findarticles.com/p/articles/mi_m2082/is_2_62/ai_60578659

Edited to amplify that subversion of potential interracial coalitions--beware of those who seek to cause division, whether they're setting Blue States versus Red States. Or putting hot-button items on the ballot, so people end up voting against their own best interests.

[Chicago Democrat]

52. very true.

[cthrumatrix]

34. Buffett attacks American spending junkies

Buffett attacks American spending junkies

Simon Bowers
Monday March 7, 2005
The Guardian

Warren Buffett, one of the world's most successful investors, has launched his most withering attack to date on the US trade deficit, describing Americans as "rich spending junkies" who could turn into a nation of "sharecroppers".

In his annual letter to investors in Berkshire Hathaway, the fund he has run for more than 30 years, Mr Buffett painted a bleak picture of a future US in which ownership and wealth had continued to move overseas, leaving the economy in thrallto foreign interests and faced with financial turmoil and political unrest.

snip


http://www.guardian.co.uk/usa/story/0,12271,1432051,00.html

That pretty much sums it up.

[xchrom]

35. kick

well, not kick -- but this stuff is very important -- and i can't really add to what he said.

[EVDebs]

36. Buffett urges HIGHER corporate taxes too, how come ?

Warren Buffett Urges Higher Corporate Taxes
http://www.commondreams.org/headlines04/0306-01.htm

"Corporate income taxes in fiscal 2003 accounted for 7.4% of all federal tax receipts, down from a post-war peak of 32% in 1952. With one exception (1983), last year’s percentage is the lowest recorded since data was first published in 1934. Even so, tax breaks for corporations (and their investors, particularly large ones) were a major part of the Administration’s 2002 and 2003 initiatives. If class warfare is being waged in America, my class is clearly winning."

With the richest 1% (those individuals and companies making more than $3 million/yr) able to hide or avoid taxes entirely, Joe Sixpack on his declining wage is forced to make up the difference.

With wealth consolidation in our top-heavy society, it is wishful thinking that the world's 'designated consumer'--the US consumer-- is now being asked to start saving money !

If globalizing corporations and the super-rich would only pay more into the tax system maybe, just maybe, the US would be able to do the things this advisor to Gov Schwarenegger in CA wants us to do. As it is we are where Louis Brandeis said we'd be: "You can have great wealth or a democracy, but you cannot have both".

Kevin Phillip's "Wealth and Democracy" shows us what happens to societies with excessive concentrations of wealth...and it's not pretty.

[PROGRESSIVE1]

56. Thanks for the link.

[Nicholas D Wolfwood]

37. If he's so goddamn concerned why doesn't he run for office himself?

[Mari333]

40. well if history repeats itself

we all know what happened to Marie Anoinette and the aristocracy in France when they ignored the starving masses ...sadly , it has to get very very ugly in the US before people wake up ..



Let them eat cake! (or McDonalds)

[trogdor]

43. Can we be French?

I mean, if the rest of the world ends up owning the US outright, can New York be a French colony? I'd much prefer French to Chinese.

[Czolgosz]

44. Here's his letter to shareholders

It gets a little spooky when America's most successful investor tells his shareholders that Bush's economic policies, if allowed to go forward unchecked, "would undoubtedly produce significant political unrest in the U.S." because Americans "would chafe at the idea of perpetually paying tribute to their creditors and owners abroad. A country that is now aspiring to an 'Ownership Society' will not find happiness in . . . a 'Sharecropper's Society.' But that's precisely where our trade policies . . . are taking us."

<http://www.berkshirehathaway.com/2004ar/2004ar.pdf>

[Catt03]

49. The Democrats need to start framing this in a message

....and soon.

Bush's Ownership Society means Sharecropper's society

[madmark]

45. The coming fiscal malthusian correction will be brutal

And with the coming awful bk bill, the suffering will be widespread and deep. We will see how long red staters will continue to value gay marriage prohibition over negative macroeconomic conditions. If your a rapture enthusiast I suppose there could be no limit the pain tolerance.

[TexasLawyer]

46. Foreign Press v U.S. MSM

Notice that this report is being provided in the foreign press. In years past, Buffett's annual letter to shareholders has received a lot of coverage from MSM. Is it being ignored because it bears some very grim economic news?

I just Googled "warren buffett" and "sharecropper" and discovered how this story has been completely ignored, except in foreign and specialized financial sites.

So, just the happy news, please.

[edhopper]

53. See reply #31

[sidpleasant]

57. Yeah, but the good news is that gays can't marry ...

and anyway the real US financial crisis is Social Security which will be bankrupt in 8 years. These things must be true; the Leader Of The Free World told me so.

[enid602]

59. US dollar

I was in Argentina and Uruguay in November, and was surprised to see advertisements in the windows of Buenos Aires and Montevideo banks asking patrons if they are tired of seeing their dollar investments dwindle. My Argentine friends were very skeptical of Bush's handling of the dollar, particularly rumors of an impending privatization of Social Security. Argentina tried to do the same thing 4 years ago, which resulted in a serious currency crisis in which the peso ultimately lost 67% of its value. I flew back home 4 days after our election, and spent a couple of months trying to 'Bush-proof' my portfolio. Most IRA's and 402K's have 'international stock funds,' but you have to be careful, as stock markets tend to be unstable, and do not follow currency patterns. I was able to buy into a T. Rowe Price 'international bond fund' which invests 80% of its assets in Euro, Pound, Swiss Franc, Canadian and Australian Dollar and Japanese Yen AAA-rated government bonds. Although my money is still in the States, if the Dollar goes down, this investment will appreciate proportionally. I was in a conundrum about how much to invest in foreign securities, and settled on 40% of my portfolio. My experience in Argentina left me rather amazed about the huge international coverage with regard to the Dollar's ills. I'd not heard anything about it previously.