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There Was A Time When Buffett Lamented A Plunging Dollar, Blasted The Trade Deficit And A "Squandering" America: We Miss That Buffett

Tyler Durden's picture


There was a time when Warren Buffett was actually a credible, respected investor, when his views were prescient, and when his every action was not predicated by some supreme hypocrisy merely seeking to perpetuate the ponzi market, and/or praise the status quo which forces his record bet on "endless" American growth to be aligned exclusively with what the Fed does each and every day, i.e., destroy the value of the dollar. Yet 7 short years ago, the very same Warren Buffett wrote a scathing op-ed in which he lamented the decline of the dollar, the surging US trade deficit, and pointed out that any profits he and Berkshire may make courtesy of his then brand new non-US FX longs, "would pale against the losses the company and our shareholders, in other aspects of their lives, would incur from a plunging dollar." Well, the dollar continues to plunge courtesy of QE, and the pain is about to be far more acute once Bernanke really gets involved in the next 3-6 months. And the irony is that on November 10, 2003 Buffett admonished: "A perpetuation of this [dollar decline] will lead to major trouble." So much for once held ideals. And ironically, the same Buffett who now preaches Keynesian ideals at every opportunity, concluded his letter as follows: "In evaluating business options at Berkshire, my partner, Charles Munger, suggests that we pay close attention to his jocular wish: “All I want to know is where I’m going to die, so I’ll never go there.” Framers of our trade policy should heed this caution—and steer clear of Squanderville." It is no wonder then that reading between the lines,  people tend to forget the brilliant investor that Warren once was, and focus on the two-faced hypocrite that his "assets" have forcefully converted him into.

For all those who need a first hand experience of Buffett then, and Buffett now, we present the Oracle's Fortune 2003 Op-Ed titled: "America’s Growing Trade Deficit Is Selling the Nation Out From Under Us. Here’s a Way to Fix the Problem—And We Need to Do It Now." Funny how ideals die when tens of billions of dollars are at stake. We dare Mr. Buffett to reissue this article verbatim today.



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Tue, 08/31/2010 - 12:47 | 555429 spekulatn
spekulatn's picture

Sell out Bitchez!

Tue, 08/31/2010 - 13:06 | 555497 Hdawg
Hdawg's picture

NWO sell out

Tue, 08/31/2010 - 15:38 | 555980 Dont Taze Me Bro
Dont Taze Me Bro's picture

He never sold out. He was a rotten s.o.b from the start but we were too naive to see it. I think the financial crises of 2009 brought everything into focus.

Think about it for a second: What drove the man to accumulate $60+ billion? It sure wasn't the need to help the world. An average saint would have stopped after making $1-5M. lols @ people who sanctified him.

Also, Buffett's edge did not come from his value investing method -- it came from his back-door dealings. His relationship with some of Wall St most corrupt/crooks go back to the early days of his career.

Tue, 08/31/2010 - 21:17 | 556678 Thomas
Thomas's picture

My take on Buffett...

(Thomas is a pen name).

In short, he's a dick. Just by chance, I got an email from the author on the original temptation article today. Gotta wonder what he thinks of Saint Warren now.

Wed, 09/01/2010 - 05:03 | 557106 Dont Taze Me Bro
Dont Taze Me Bro's picture

Great article Dave! You have a good insight.


Also, thanks for the Lewis link. This was my first time reading that article. I think Michael Lewis is a great writer. I am glad he left the business and became an author. He is doing a great service to our society by writing about this stuff.

I hope Tyler does a post on this (if he hasn't already done it before):

Tue, 08/31/2010 - 12:50 | 555435 Caviar Emptor
Caviar Emptor's picture

2 years from now: Buffet to speak to us via webcast from his compound in Sri Lanka

Tue, 08/31/2010 - 13:12 | 555522 Ripped Chunk
Ripped Chunk's picture


Tue, 08/31/2010 - 19:14 | 556498 Geoff-UK
Geoff-UK's picture


Tue, 08/31/2010 - 12:54 | 555453 LoneStarHog
LoneStarHog's picture

Bear Markets EXPOSE and DESTROY virtually everything.

Tue, 08/31/2010 - 13:04 | 555492 Paper CRUSHer
Paper CRUSHer's picture

Tis wat Oracle of Omaha juiced to say....."when the tide goes out all that remains on the sandy bitches are naked shorts".

Tue, 08/31/2010 - 13:34 | 555601 whatsinaname
whatsinaname's picture

All those views were prior to the Buffett puts. Now he NEEDS the S&P to go to 1500 or BRK loses its skin.

Tue, 08/31/2010 - 12:56 | 555458 Azannoth
Azannoth's picture

He really needs to retire now before he destroys his reputation totaly

Tue, 08/31/2010 - 13:03 | 555485 septicshock
septicshock's picture

I believe he has ensured everyone that he will hold onto his position till his dying breath. I admired him for his charity once, now I detest the man for selling out.

Tue, 08/31/2010 - 13:10 | 555512 Hdawg
Hdawg's picture

His charity?...are you kidding me !?@#$

His foundation activities are not his decision. They are decided by the people that have left the doors open for him through the years.

Wakey, wakey

Tue, 08/31/2010 - 13:10 | 555516 spekulatn
spekulatn's picture

The Oracle of Omaha has not changed.

Folks no longer buy his bullshit.

Good for all.

Tue, 08/31/2010 - 13:19 | 555552 JR
JR's picture

Exactly. There was never a time when Warren Buffett was not an insider.

Tue, 08/31/2010 - 14:01 | 555676 Sudden Debt
Sudden Debt's picture

These are my principles and if you don't like them I have others - Groucho

I guess he thinks alike...

Tue, 08/31/2010 - 12:56 | 555460 LePetomane
LePetomane's picture

Buffet bought into Goldman.  nuff said.

Tue, 08/31/2010 - 13:00 | 555472 septicshock
septicshock's picture

And the cock sucker praised them to boot for cheating the public.

Tue, 08/31/2010 - 13:19 | 555551 william the bastard
william the bastard's picture

He was Obama's biggest endorsement after Teddy

Tue, 08/31/2010 - 13:06 | 555482 Spalding_Smailes
Spalding_Smailes's picture

I would have done the same thing ...

He really did get a great deal.


Buffett’s Berkshire Hathaway Inc. (BRK.A, BRK.B) agreed to buy $5 billion in perpetual preferred Goldman shares that pay 10% interest.  In addition, Berkshire receives warrants giving it the right to buy $5 billion worth of Goldman’s common shares at any time over the next five years at a price of $115 per share.

Based on Tuesday’s closing price of $125.05, Buffett made an almost instantaneous paper profit of about $437 million on the warrants. With yesterday’s advance, that paper profit rose to $783 million.

Tue, 08/31/2010 - 13:06 | 555499 LePetomane
LePetomane's picture

Oh it was a good deal alright.  It just so happens I don't listen to him anymore.

Tue, 08/31/2010 - 13:21 | 555558 william the bastard
william the bastard's picture

Shares went to $50 afterward.

Tue, 08/31/2010 - 13:25 | 555570 Spalding_Smailes
Spalding_Smailes's picture

And have rebounded to $189.00.

Tue, 08/31/2010 - 13:38 | 555612 william the bastard
william the bastard's picture

They went to $50 first and then he needed TARP and then he needed the US taxpayers to bail AIG to get the shares back to breakeven. What is the price now?

Tue, 08/31/2010 - 12:57 | 555464 Übermensch
Übermensch's picture

Hey look I still drive a 60s Oldsmobile... Love me pleeease.

Tue, 08/31/2010 - 12:57 | 555466 CosmoJoe
CosmoJoe's picture

Buffet enjoys making money, else he wouldn't be as rich as he is.  With that in mind, how can anyone be surprised when he advocates for policies that will keep him enriched?

Tue, 08/31/2010 - 13:13 | 555526 Azannoth
Azannoth's picture

He plans to give away 95% of his money anyway, why does he even give a shit why not give everything away now ? Is he that senile already or does he have a plan and does a 180 at the end ?

Tue, 08/31/2010 - 13:25 | 555566 william the bastard
william the bastard's picture

He missed the tech boom entirely.

Tue, 08/31/2010 - 14:58 | 555835 Frank Owen
Frank Owen's picture

"It is easier for a camel to go through the eye of a needle, than for a rich man to enter into the kingdom of God." He's worried about making it into heaven, so he's trying to buy his way in.

Tue, 08/31/2010 - 19:22 | 556511 Geoff-UK
Geoff-UK's picture

He wants to leave a legacy, with Berkshire Hathaway. 

You know, like Henry Lehman, Emanuel Lehman, and Mayer Lehman did (Lehman Brothers, now deceased);  and Joseph Bear and Robert Stearns did (Bear Stearns, now deceased)...

Let's hope that insider-trading sonofabitch Buffett lives long enough to see Berkshire Hathaway's demise.


Tue, 08/31/2010 - 12:57 | 555467 Handle with care
Handle with care's picture

I've paid less attention to what Buffet has to say after Taleb pointed out that in a population of millions of investors there has to be a "Warren Buffet" emerging purely through the laws of probability and his success may not be due to any great personal attributes whasoever, other than those necessary as a pre-condition to being in the group from which a Warren Buffet would emerge

Tue, 08/31/2010 - 13:05 | 555496 Übermensch
Übermensch's picture

Well... u need to ask, what came first Buffet or the law of probability of someone like him  arising.

Tue, 08/31/2010 - 13:22 | 555561 mikla
mikla's picture

I've paid less attention to what Buffet has to say after Taleb pointed out that in a population of millions of investors there has to be a "Warren Buffet" emerging purely through the laws of probability and his success may not be due to any great personal attributes whasoever, other than those necessary as a pre-condition to being in the group from which a Warren Buffet would emerge


This is an absolutely brilliant comment, and mathematically true.  It also describes Bill Gates -- he's not a genius, never was, but was in the "right place at the right time" with a decent gorilla-arm business sense.  Both Gates and Buffet were inevitable arrivals given shifting landscapes (Buffet for the rise of the financial sector leveraging, including re-insurance, and Gates due to the need for established inter-operability among apps in the young PC industry).

Neither were geniuses, a person would have been in their shoes no matter what (we *would* have gotten that growth and standardization no matter what).  Of course, this comment is not to diminish their accomplishments:  Buffet and Gates individually *did* actually perform well where many others would have (and did) fail:  Buffet due to ability to perform fundamental analysis, Gates due to ability to monopolize technology standards.

This won't be repeated for those sectors.  Both sectors have peaked, and will move into monopoly decline forever (for lots of reasons).

Further, this is in contrast to Steve Jobs -- a true genius, a real rat bastard that nobody would want to work for, and a man that if accidentally born in the Soviet Block would have murdered millions of people by the time he turned 40.  However, he is a true genius that made Apple (and Apple is likely screwed when Jobs is gone).

Summary:  Hold no reverence for Buffet.  His meritorious investor statements and behaviors in the past are independent of the fact that today he is over-levered, and his self-serving statements now are to draw attention away from the fact that his "baby" will likely die before Buffet will.

Tue, 08/31/2010 - 15:09 | 555877 ElvisDog
ElvisDog's picture

I second your opinion on Gates. I know a number of high-level Microsoft people, and they tell me that in the last years that he was active in Microsoft they would cringe if Gates walked into one of their meetings. He didn't really know what was going on (i.e. hadn't stayed on the cutting edge) and they knew the meeting was going to bog down. I think he's one of those people who had the one good idea when they were young, and Gates happened to be in the right place at the right time to exploit it to the fullest.

Tue, 08/31/2010 - 15:29 | 555949 fearsomepirate
fearsomepirate's picture

Gates' good idea was to buy someone else's good idea.  Really, what made him was his understanding in the 1980s that who makes the operating system is more important than who makes the hardware, and if you get your OS into as many computers as possible, you win.  That's why Microsoft is huge and Digital Research (whom IBM first approached for an OS for their new 8088 line of PCs) doesn't exist anymore.

Tue, 08/31/2010 - 13:02 | 555476 Segestan
Segestan's picture

The US should just simply say .. NO!.... and default. There is plenty demand and skill in America, for the US to become what it was once designed for... Independence. tell the UN and the CCP ...Fuck OFF!

Tue, 08/31/2010 - 19:26 | 556521 Geoff-UK
Geoff-UK's picture

But...but...but then who would buy U.S. government debt?  The government would have to live within its means!

I actually pray California does this, and screws bondholders so badly that California is forced to pay for everything in cash for the next 100 years.

Tue, 08/31/2010 - 13:02 | 555478 digalert
digalert's picture

Buffett became an advisor to Obama...

I wonder? nah never mind

Tue, 08/31/2010 - 13:02 | 555480 pamriallc
pamriallc's picture

The recent commentary from Buffett has in fact been:  "The USA should be careful of Greenback Emissions" --  In other words, he was calling the USD something akin to refuse.

Where are people who actually read vs people who would rather curse those who have added so much to the system?

Tue, 08/31/2010 - 13:12 | 555523 thesapein
thesapein's picture

Confusing, isn't he? Someone probably put him on meds and whispers in his ear.

Tue, 08/31/2010 - 14:46 | 555808 Frank Owen
Frank Owen's picture

the manchurian investor

Tue, 08/31/2010 - 14:04 | 555683 Sudden Debt
Sudden Debt's picture

No one would have crossed the ocean if he could have gotten off the ship in the storm!

Tue, 08/31/2010 - 13:08 | 555509 SheepDog-One
SheepDog-One's picture

Buffet is now only concerned about his monthly hand job from Becky Quick.

Tue, 08/31/2010 - 13:11 | 555519 MarketFox
MarketFox's picture

Was Buffett not the 6th largest recipient of TARP ?


And was it not Buffett that had a 50% draw down ?


And what will happen to Buffett when the market declines to 5000 ?


And was Buffett a "Silver Spoon" ?


So tell me....just who is Buffett...really ?



Tue, 08/31/2010 - 13:12 | 555524 10044
10044's picture

He's always been an insider trade and a crook, that's the end of it

Tue, 08/31/2010 - 13:14 | 555528 Ripped Chunk
Ripped Chunk's picture

His Omaha country boy not one of them Wall Street guys story has been seen for what it is for years now. Bullcrap. 

Tue, 08/31/2010 - 13:15 | 555531 guidoamm
guidoamm's picture

For anyone fearing a hyperinflationary outcome  (as Mr. Buffet is on record to have predicted) then investing in BRK/A should stand them in good stead for coming years. In my opinion the performance of Buffet's fund is the ultimate barometer of what "flation" we are to die from...


Tue, 08/31/2010 - 13:15 | 555533 williambanzai7
williambanzai7's picture

Buffet, buffoon, what's the difference

Tue, 08/31/2010 - 14:05 | 555687 Sudden Debt
Sudden Debt's picture

a few billion dollar which he has and we don't :)

Tue, 08/31/2010 - 13:16 | 555537 firstdivision
firstdivision's picture

There was also a time when stock fundamentials meant something and technical analysis was relegated to a room next to the janitors closet.


So I see the fine folks at 33 Liberty have decided to dry todays line in the sand at 1050.

Tue, 08/31/2010 - 13:17 | 555538 william the bastard
william the bastard's picture

This from the guy that bought Goldman shares at $110 on the way to $50.

This is the same guy that endorsed Bezerk Insane Bowwow

Tue, 08/31/2010 - 13:17 | 555546 Bartanist
Bartanist's picture

Buffet, the "oracle of Omaha" is a media made character. That means, his character serves a purpose of MSM, which most likely is to add legitimacy to the illegitimate.

As for who he is personally? I do not know. Maybe he does not know anymore. His public persona has changed over the years.

Tue, 08/31/2010 - 13:22 | 555562 william the bastard
william the bastard's picture

Isn't he sequestered on the top floor of the Desert Inn?

Tue, 08/31/2010 - 13:24 | 555565 Mad Mad Woman
Mad Mad Woman's picture

Buffet Schmuffet. He's tarnished his crown a bit in the last couple of years.

Tue, 08/31/2010 - 14:57 | 555830 Hephasteus
Hephasteus's picture

He's just trying to make enough money to help the poor. Which when he's done will be everyone.

Tue, 08/31/2010 - 13:25 | 555572 oddjob
oddjob's picture

Buffett is an assface marionette.



Tue, 08/31/2010 - 13:27 | 555580 DonutBoy
DonutBoy's picture

I am sorry to day I agree with this post.  It would appear Buffet has moved from honest appraiser to opinion leader.  Spending the capital he earned over a lifetime - trust - in the cause of cheerleading.  Ok - let's see if I can do the math question and get this posted.

Tue, 08/31/2010 - 14:13 | 555718 Mad Mad Woman
Mad Mad Woman's picture

I hate those damn math questions.

Tue, 08/31/2010 - 13:32 | 555590 bigking12345
bigking12345's picture

Warren dad was a congressman in the 1920's or 30's, all his gains are therefore subject.

Tue, 08/31/2010 - 13:32 | 555591 william the bastard
william the bastard's picture

He endorsed Obama

He bot GS at 115 on the way to 50 and told America to do same

He missed Tech boom entirely

He is largest owner of Moody's, that acomplice to fraud

He owns Dairy Queen, world's worst "fast" food and name

Sorry Fortune Mag you paid too much


Tue, 08/31/2010 - 13:40 | 555617 mb666
mb666's picture

Hello, I am fairly new to this site. Why does it seem that every piece of material on this blog is overwhelmingly bearish? The fundamentals are poor, sure, but that hasn't stopped stocks' 30%+ rally of the 2009 lows. Aren't all the fears priced-in?

Isn't it common knowledge that the stock market is not a guage of the economy, incorporate's inflation and is driven by sentiment?

Truimph of the Optimists is a great book to cure perma-beer syndrome. Everything is cyclical. There are always doomsayers, gold-bugs, "the world is going to collapse" personalities. Panics and crashes occur every other decade or more frequently. As a test of American history, their have been many calamities. "Why is it different this time?" The US has recovered after all hardships. Is it really wise to bet that this time the collpase of an empire's demise is certain?

Perma-bear syndrome will cost you a lot in the financial markets. Either as losses or missing great opportunities.

Tue, 08/31/2010 - 13:46 | 555636 Ben Graham Redux
Ben Graham Redux's picture

Corporate America won't die but the important question is what is the present value of discounted cash flows?  I believe it's worth a lot less.  So when you lose your shirt and are forced to sell at the bottom, I'll be on the other side.

Tue, 08/31/2010 - 14:16 | 555725 mb666
mb666's picture

I agree that the fundamentals are dismal, but... I believe the market has already priced that in.

I'm not going to get into losing shirts because I'm not a guru who can predict the future. Our best guide is history, however, and panics and crashes are nothing new. Ultimately the US continues to persevere. Obviously there can be a downfall but what are the chances? According to Taleb, the probabilities are unquantifyable. But realistically, does logic permit us to allow that we can decease like the Roman Empire?

I like zero-hedge but there would be a lot more substance if it was not so overwhelmingly on the bear side. People that have been short (the bounce) for the past two have lost their own shirts. Fundamentals can be weak.... so what, doesn't mean the stock market can't go higher.

What good will a blog be if it continues to run purely bearish posts and the S&Ps trade near 1300?

On the matter of Buffett, I do think he is overrated. At the same time he is the wealthiest man in the world. Saying that he was just lucky or a crook is pointless. But as a fan of Taleb (and noted by a member earlier) based on probabilities their should be one lucky guy with his track-record. Taleb still credits certain Wall Streeters with trading skill (Soros, Simon). Buffett's survival for over half a century is tough to argue that it was all luck.

Tue, 08/31/2010 - 14:27 | 555761 Ben Graham Redux
Ben Graham Redux's picture

A stock price is nothing more than the present value of all (residual) discounted cash flows.  So what companies offer you a net positive expectation for return on your capital?  You're approaching the market like Stuart Smalley (Al Franken) approaches daily affirmations. 

The world will still be here when this market contracts but you are looking at the effects of a generation of misallocated capital.  Hoping/wishing that you get a return in the market is for someone who believes in fairy tales.  I invest in companies at prices that are attractive to me given my reading of economic fundamentals and I see precious few companies that warrant investment. 

Tue, 08/31/2010 - 15:14 | 555892 mb666
mb666's picture

Glad to hear a textbook definition on how stock's are "supposed" to trade. No wonder economics is such a "science".

Stocks can trade just off expectations. The market currently disagrees with you and anticipates growth. As long as the P/E remains around 16, we are trading at fair prices. My opinion is that we are neither oversold or overbought.

I'm in agreement with you about buying attractive companies at cheap prices when the economy looks good. Unfortunately you probably have to be more of a contrarian and start buying when things look bad. During the start of any bull market there will be doomsday predicitions arguing that this is just a bounce or so forth.

Stocks are fairly priced. Considering the stock market has a bullish bias from a historical perspective it would be far more risky to be short.

Do what you gotta do. We're not psychics here so we shouldn't be predicting who will lose their shirts. But being overly bearish/bullish is very dangerous. Zero-hedge seems like a perma-bear. I hope members were not shorting the market too early. There's always two sides to a story.

Tue, 08/31/2010 - 15:25 | 555937 Ben Graham Redux
Ben Graham Redux's picture

I'm sorry, I didn't realize you were an amateur when I commented on your ideas.  You've got a surface understanding of markets and companies - enough to be dangerous.  Anyone who looks on average PE's to justify their stance is either an amateur or someone too lazy to delve into the numbers that support the average PE thesis. 

Tue, 08/31/2010 - 15:29 | 555953 mb666
mb666's picture

The market is not a friendly place for perma-bears. Good luck doom-sayer.

Tue, 08/31/2010 - 15:33 | 555967 Ben Graham Redux
Ben Graham Redux's picture

Who ever said anything about being a perma-bear?  People who have gotten it right, as I have, over the past ten years are situational bears and situational bulls.  I strongly recommend you get out of this market until you've learned more because you clearly don't get "it".

Tue, 08/31/2010 - 17:09 | 556279 RockyRacoon
RockyRacoon's picture

You could limit yourself to Leo's articles and that should solve your problem.  It won't, however, give you an overall view.  Confirmation bias works at both ends of the spectrum.  Best of luck.

Tue, 09/07/2010 - 13:21 | 567505 Geoff-UK
Geoff-UK's picture

We're not PERMA-bears here.  We just recognize manipulated markets when we see them.  Please stick around ZeroHedge for a couple weeks--there are a plethora of articles that will chart out when huge movements happen in seconds to goose the market from 3-4 p.m. on Thursdays and Fridays.

And that's why so many bears at ZH...

Tue, 08/31/2010 - 13:49 | 555647 firstdivision
firstdivision's picture

Welcome to ZeroHedge, but the sentiment will be the same until normalcy returns to the market.

Tue, 08/31/2010 - 14:14 | 555710 Spalding_Smailes
Spalding_Smailes's picture

Well after Tarp,Talf,Citi SIV's,Cash for Clunkers,Swap Lines,AIG (Back door bailout of worldwide banking system),Dubai,Greece,Rubin ... Securitization > the process of turning a bag of fucking garbage into 30/1 levered, synthetic, quadrillion.....

Wait.......oooowwwwwwwssssssshhhh (Hopium Hit!)

How is this cyclical?



This the biggest smoke and mirror, hocus pocus, rigged to the high heavens casino in the world.Enjoy ...


Tue, 08/31/2010 - 14:23 | 555749 mb666
mb666's picture

Panics are cyclical. Variables are different, but market crashes are expected.

Wall Street bailouts, the use of high leverage to disaster, bankruptcies, restructuring are not uncommon. Perhaps this is priced in by the market, which is smarter than all of us.

As long as the S&P maintains a P/E of about 16 then the market, at least historically, is neither overbought/oversold. The problem is that you have to put complete faith in the accounting practices of corporations to assume that the numbers are legitimate. I'll favor trust of the government over conspiracies.

Would people have made money shorting the stock market because of the doomsday predictions of ZH since 2009? Will ZH only remain to be bearish if the market goes to 1300? I'm just looking to two sides of the story. 

Tue, 08/31/2010 - 15:08 | 555858 Spalding_Smailes
Spalding_Smailes's picture

Can you solve a debt crisis with more debt, can you cure the problem or are you kicking the can?

This is not a liquidity crisis. This has nothing to do with the s&p and p/e price to fantasy. This is all about a 40 year old debt bubble that just broke in 2008.


Tue, 08/31/2010 - 15:17 | 555904 mb666
mb666's picture

So this time is different?

I'm sure this is the first time in history that countries had debt problems.

Tue, 08/31/2010 - 16:03 | 556082 Hamsterfist
Hamsterfist's picture



Perhaps you would do well to study history.  You see there once was a little people called the Romans...  The Dutch...  The Spanish...  or any of the other of hundreds of empires that the collapse was engineered by debt.  So no, this is not the first time in history something like this has happened.  

Tue, 09/07/2010 - 13:25 | 567519 Geoff-UK
Geoff-UK's picture

hamsterfist, i've come to the conclusiong that mb666 is trolling.  He's not geniunely asking for info or trading projections in a respectful manner.

His understanding of stock valuations from Ben Graham have distracted him from the debt and monetary situation...which makes most of us wear Depends on a daily basis.

This will not end well, but capital will stay in the market longer than otherwise as long as optimists continue to avoid cognitive dissonance...which lets me buy more PMs with my FRNs. 

Wed, 09/01/2010 - 02:13 | 557036 laughing_swordfish
laughing_swordfish's picture

In any market, permanent bulls make money, permanent bears make money, but those who do not take the time to formulate a reasoned stance toward the markets based on RESEARCH never do.


Tue, 08/31/2010 - 13:44 | 555627 Ben Graham Redux
Ben Graham Redux's picture

I agree with the sentiments that he's bastardized his legacy but in his prime, he was something special.  As a younger man, he made some great decisions and earned his wealth.  It's sad to see what he has become.

Tue, 08/31/2010 - 13:47 | 555639 Scarlo
Scarlo's picture

The above link discusses Buffett's view of Thriftville versus Squanderville, back in October of 2003.  The point he's making of staying out of Squanderville is one he argued FOR (not against) back in '03 as well.  The issue of a weak versus strong dollar is related, but somewhat different.  We could have a strengthening Dollar and still remain competitive (see Switzerland, Sweden, Germany (during reign of Mark post WWII). 

I think this post is quick to cast stones.


Tue, 08/31/2010 - 14:05 | 555682 tom
tom's picture

There are two ways to fix a trade deficit: increase productivity, or weaken the currency. Buffet's proposal was just a hairbrained, totally unworkable method of weakening the currency. What the government needed to do in 2003, and still needs to do now, is stop foreign borrowing. That would weaken the dollar.

Tue, 08/31/2010 - 14:06 | 555693 pamriallc
pamriallc's picture


the U.S. dollar? “Analysts say that what really worries them is that foreigners will

start moving out of the dollar.”

Next time you see something like that, dismiss it. The fact is that foreigners—

as a whole—cannot ditch their dollars. Indeed, because our trade deficit is

constantly putting new dollars into the hands of foreigners, they have to just as

constantly increase their U.S. investments.

It’s true, of course, that the rest of the world can choose which U.S. assets to

hold. They can decide, for example, to sell U.S. bonds to buy U.S. stocks. Or

they can make a move into real estate, as the Japanese did in the 1980s.

Moreover, any of those moves, particularly if they are carried out by anxious

sellers or buyers, can influence the price of the dollar.

But imagine that the Japanese both want to get out of their U.S. real estate

and entirely away from dollar assets. They can’t accomplish that by selling their

real estate to Americans, because they will get paid in dollars. And if they sell

their real estate to non-Americans—say, the French, for euros—the property will

remain in the hands of foreigners. With either kind of sale, the dollar assets held

by the rest of the world will not (except for any concurrent shift in the price of the

dollar) have changed.

The bottom line is that other nations simply can’t disinvest in the U.S. unless

they, as a universe, buy more goods and services from us than we buy from

them. That state of affairs would be called an American trade surplus, and we

don’t have one.

You can dream up some radical plots for changing the situation. For example,

the rest of the world could send the U.S. massive foreign aid that would serve to

offset our trade deficit. But under any realistic view of things, our huge trade

deficit guarantees that the rest of the world must not only hold the American

assets it owns but consistently add to them. And that’s why, of course, our

national net worth is gradually shifting away from our shores. 

If everyone moved away from the USA suddenly--- we'd be immediately the most

productive country on the PLANET with huge trade advantages.  Our trade partners

don't really want that, nor can they afford it.

Shawn Mesaros, Pamria, LLC

Tue, 09/07/2010 - 13:27 | 567524 Geoff-UK
Geoff-UK's picture

And what about a failed Treasury auction?  Repeated?

Tue, 08/31/2010 - 14:31 | 555773 malek
malek's picture

Well if things are moving your (Berkshire's) way, it's easy to act congenial or even as running on strict pinciples.

Now that things are going against you, it's a lot harder to take some inevitable losses walking tall - while all the other big players are using all means to squirm out and stick the tab to someone else.

This is not an excuse, but an explanation.
I also lost a lot of my respect for WB.

Tue, 08/31/2010 - 16:54 | 556243 cocoablini
cocoablini's picture

You expected him to be ethical and have any character? Here' s a guy who made his fortune during the longest bull market in history. He's not going to make a cent with his choo- choo trains and insurance businesses if the economy goes I to a depression. He's talking his book- just like Bernanke and Geithner. They have one world view, and it's part of the pyramid hologram script

Tue, 08/31/2010 - 19:51 | 556562 Coldfire
Coldfire's picture

The Anacle of Omaha.

Wed, 09/29/2010 - 06:59 | 612127 Herry12
Herry12's picture


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