A Few Words from Warren Buffett

[Tarheel]

Apart from his political leanings which I almost always disagree with there's no denying Buffett's business acumen; I was rather struck by his negative outlook on the economy.  At least he's not quoted as blaming 'this mess' on 'the evil Bush Administration' like every official of The ONE's administration seems to do.  But his long-range outlook seems to look a little more cheery.  I do like what he says about the future of home purchases.  However he's obviously a follower of Keynes in endorsing government interventionism.

This is from Bloomberg.com, all emphasis is my own:

Buffett Says Economy Will Be ‘In Shambles’ for 2009 (Update1)


By Rick Levinson

Feb. 28 (Bloomberg) -- Billionaire Warren Buffett said the economy will be “in shambles” for the rest of this year as financial firms take losses tied to reckless loans made during the housing boom.

The Standard & Poor’s 500 Index will probably gain in three-quarters of the next 44 years, just as it did in the period since Buffett took over Berkshire Hathaway Inc. in 1965, he said today in his annual letter to the company’s shareholders.

While Buffett and business partner Charlie Munger can’t predict how stocks will perform in 2009, they’re certain “that the economy will be in shambles throughout 2009 -- and, for that matter, probably well beyond,” he wrote.

Gross domestic product shrank at a 6.2 percent annual pace from October through December, the most since 1982, the Commerce Department said yesterday in Washington. Buffett said the consequences of the U.S. housing bubble are now “reverberating through every corner of our economy.”

Home purchases should involve an “honest-to-God down payment of at least 10 percent,” Buffett said. “Putting people into homes, though a desirable goal, shouldn’t be our country’s primary objective.”

Buffett endorsed efforts by the U.S. government to prevent the failure of financial firms including Bear Stearns Cos., which was sold to JPMorgan Chase & Co.

‘Immediate Action’

“Whatever the downsides may be, strong and immediate action by government was essential last year if the financial system was to avoid a total breakdown,” Buffett said. “Had that occurred, the consequences for every area of our economy would have been cataclysmic. Like it or not, the inhabitants of Wall Street, Main Street and the various Side Streets of America were all in the same boat.”

Buffett’s letter accompanied the release of Berkshire’s fourth-quarter results, in which net income fell 96 percent to $117 million on losses from derivative bets tied to stock markets. Berkshire shares have fallen 44 percent in the past year as the value of the firm’s top stock holdings dropped and losses increased on the derivatives.

By the fourth quarter of last year, “the credit crisis, coupled with tumbling home and stock prices, had produced a paralyzing fear that engulfed the country,” Buffett said. “A freefall in business activity ensued, accelerating at a pace that I have never before witnessed. The U.S. - and much of the world - became trapped in a vicious negative-feedback cycle. Fear led to business contraction, and that in turn led to even greater fear.”
...

Here's the link:

http://www.bloomberg.com/apps/news?pid=20601087&sid=a1L50vuf_HiM&refer=worldwide

[Townhallsavoy]

I heard Steve Forbes yesterday say that Obama's plan to fix our economy is worthless and that things will only get worse until he makes changes.

Fun times. 

[GarMan]

I heard Steve Forbes yesterday say that Obama's plan to fix our economy is worthless and that things will only get worse until he makes changes.

I don't see The O'bama making the types of changes that we would hope for...  We really just need to encourage ourselves to take the appropriate free market steps, and things will improve with time.  There's a ton of great opportunities right now for consumers, producers and achievers.  It's just a matter of time before the right people make the most of these circumstances.