Buffett's gloomy economic predictions

He definitely is a reliable economic advisor.   Thanks for posting this.  So much for

all the hoopla over what a great Prez O is.  He can't keep blaming Bush during his whole

Presidency now can he?

No one wants to comment I see.  The truth cannot be run from too much longer.

Watch it in the autumn: that's when the next wave of trouble will hit. The summer will be chilled; very chilled. It is already noticeable: fewer people about doing things. This is just the calm before the storm and the phoney 'war'. Wait until all the toxic sludge that has been hidden, re-packaged, backed by government, and stolen, comes vomitting back up. Right now, CEOs and anyone with money is selling stocks and shares and cashing out. They are using the sucker rally to get as much money as possible to cover their positions for the big collapse coming.

There will be no recovery. Period.

What happened is twofold, first of course is the value and assets of America, namely our currency, was a giant ponzi scheme built upon the petrodollars scheme established earlier but reaffirmed and sealed in 1973 by Kissinger. What could go wrong with a license to print money as fast as developing and industrialized nations could use middle east petroleum and give you real goods, natural resources and services for your worthless paper?

Plenty, you just need to defer paying the piper as long as possible. (the war in Iraq was all about slowing that castastrophe down- Saddam had already switched to sales of oil in euros, we had to attack him because he had no wmd! when Blix gave him a clean bill of health sanctions would end and the combined petroleum exploration assets of China, Russia and France would go in overnight and start pumping reserves now believed to be bigger than Saudi Arabia. It's all in high pressure wells, the stuff virtually flies out of the ground with a lift cost of fifty cents a barrel. Iran and Venezuela and others were also eager to open a "petroeuros" market, and with the US seizing the US assets of middle east nations it suspected of funding terrorism after 9/11 several other OPEC nations were eying defiance of the petrodollar hegemony in place. We'd have seen a dollar crash of epic proportions. You can believe this or continue the media pushed nonsense that George Bush is stupid and one stupid man forges US foreign policy.)

Secondly the China coddling policies of Clinton's eight years with US corporations and consumer lust for cheap goods caused a transfer of intellectual properties- largely the manufacturing know how of 100 years  of American industrial revolution, to be handed to 1.3 billion industrious people. Not just patents and copyrights, secrets to making things that used to be called industrial espionage to give away. Put simply, there used to be a $20 hammer and a $2 hammer on the wall at Sears.There was good reason to buy that $20 hammer as it lasted ten times as long, and only half a dozen nations knew how to make steel that good so you could export it around the world, if the dollar dipped too low that hammer was a better deal overseas and prevented economic catastrophe here.

To market a hammer here American consumers would accept when it closed its US factory for short term profits, the US company sent its engineers to China and taught them how to make it better, like we made it here. Now there is a $20 hammer and and a $5 hammer with little difference. The $20 hammer even cut its price to $15, no help there. Consumers in other nations have no reason to buy that $15 hammer and thus there will be no dollar recovery and we will feed off ourselves until our former glory is but a memory. Clinton's budget balancing act came because as stockholders sold off brick and morter assets of factories and their stocks, they paid a lot of capital gains and dividends taxes- in short he financed his balanced budget merely because he facilitated the selling off of America's manufacturing sector.

The real estate debacle came because of the closure of factories. Wall St. needs a real industry to invest in, like manufacturing, where you put out money and get a return as the product comes to market. With no manufacturing developing to invest in, they created a fake industry- junk mortgage bonds- to attempt an investment vehicle. It was obviously not sustainable, and most people claiming to be victims were really themselves speculators and created their own problem. They were hoping to get in and never see a downturn.

We're all screwed. The bailout had to happen, BTW, and don't look at it like we should expect to see $700 billion worth of value in the action. It was merely to put a halt to the downslide, to give the illusion to consumers and the world that the government had the power to step  in and save the day, that they had the worth to do it.  It was the overture itself, not what it could really do.

My opinion FWIW. I'm broke too so am not that smart I guess.

Hello Batvette...

But you can choose to be broke and docile;

or broke and vocal and defiantly Patriotic...

I am afraid you may be right.  I don't want you to be right, but you may be...

I will not go gently into that good night.

Respectfully,

Don Mashak

The Cynical Patriot

I think we're on the same page here, I just don't know how to go about it and I suspect too many Americans are far too timid to join in any revolution, be it intellectual or physical.

I think you'll like what this guy has to say:

http://www.youtube.com/watch?v=jeYscnFpEyA

In my youth, I worked in three different factories, in three different towns.  In each of those cases, the primary and secondary economic footprints of the respective factories was the only real driver for the  sustenance of a decent standard of living in each  town.  In each case, the factories were eventually shut down and moved (two to Mexico, and one to China). 

At the time of the closings, we we all told that the wonderful, emerging new service sector would be our financial rescue plan.   The "emerging" service and "knowledge worker" industries would soon make us forget about those dirty old factories ("It's better for you if we ship that dirty unskilled work offshore", they said)

In retrospect, we have learned that (as batvette has implied) the "knowledge worker" craze was financed by the sell-off of our industrial base (there was no other place to put money), and now, only a few years after the "dot-com bubble burst", those IT positions have been "out-sourced" to places like India and China. 

Recent articles on public radio (npr.org) have indicated that a new trend has been found in the increasing number of American ex-knowledge industry workers who are actually emigrating to India in search of work -- albeit at sixty percent pay cuts!

Now they tell us that we should all work in the health industry, but as they say this, companies in the U.S. are now "testing the waters" for the potential offshoring of pharmaceutical product manufacture.

And those towns of my youth?  These days they are a good destination for your family, if you think that you can get by on  the  Walmart company's benefit package.  Now, in each of those little bergs, the respective "city chambers and economic promotion" departments uniformly list one very good enticement in their  "bring in the business" brochures:  real estate is cheap.

I want to second what "Anonymous" posted about the service industry illusion. I wondered years ago, and still do; if we send our "dirty factory jobs" offshore (Mexico & China), what does that leave the factory workers to do? Knowledge and service based jobs eh? Well, now that a lot of that is being sent overseas too, what are the people to do for work? I don't feel like we as Americans are guaranteed prosperity just because we're good looking! We have to actually do something and actually manufacture something.  I don't get it. If we lose the rest of our industrial base, all the "service industry" in the world ain't going to mean a hill of beans because nobody will be able to afford a service! Wake up America..everytime we buy some cheap, made in China crap from WalMart, we're cutting our own throats. But now, the made in China stuff is almost as good as our own. We may indeed already be screwed. 

Hello Batvette:

We not be on the same paragraph, but we are on the same page.

Something has to change before the country is irreversibly lost.

Respectfully,

Don Mashak

The Cynical Patriot