As a philanthropist, he is second only to Bill Gates.
As a tax advisor, Mr. Buffett is misguided.
In a letter to the NY Times on Sunday, Mr. Buffett tells of checking with his “mega rich” pals to determine if they, like he, have benefited from “extraordinary btax breaks” along with “other blessing showered upon us (them) by legislators in Washington who feel compelled to protect us (them).” Did he really need to ask? The sycophants in Washington protect Buffett and his “mega rich” pals because they collectively exert an “unfair” influence over elected officials. Politicians only coddle influential constituents, stop sending them campaign checks and the “blessing and protection” they’ve previously showered would soon dry up.
For a man who has made billions for himself and investors analyzing companies, his half baked solution to the government’s debt and the plight of the poor and middle classes is alarming. The United States does not have a revenue problem; it has a spending problem. Until the parasites in Washington acknowledge this and make substantial reductions to expenditures, no amount of additional revenue will suffice. Simply raising taxes (fair or otherwise) is moronic, they would merely devise other ways to spend it.
Here, are some suggestions that might actually yield results worthy of discussion. Note, none of them requires government intervention.
Create real jobs in America. Jobs in industries that create lasting value for families and communities rather than exploit “efficiencies” and “float.” Buffett made the bulk of his money with insurance and financial companies, companies that do not produce anything but simply extract a fee from society. Perhaps he could use some of those profits to restore meaningful jobs in industries like agriculture and manufacturing (of goods we need, not crap for landfills).
Encourage the development of a healthy economy rather than a growing one. An economy where all resources, waste, and costs are accounted and paid by users rather than shouldered by the poor and middle classes. To quote Liberty Hyde Bailey, “Finance and social morals must coincide.”
Deal with problems directly. How often are government programs regarded as efficient and well run? Why accept the waste? See it fix it, or see it fund it. Develop a nationwide network of non profits to replace as many government agencies as possible.
If Mr. Buffett and his buddies are altruistic in their desire to help the country, the time for suggestions to “12 members of Congress” is long past. Now is the time to do something. Writing letters is easy. Actions, as they say, are louder than words.
For those that are not on the mailing list (sign up here) we have moved! It’s not much of a move geographically in that we are just around the corner (literally) but it’s far enough that you might miss it if I didn’t say something. I drew you a map to make it easy!
After the initial shock of the Japanese triple tragedy (earthquake, tsunami, & ongoing nuclear) wore off and it’s reality set in, I began to ponder what if any long term economic implications might arise as a result. Commonwealth (my broker/dealer) recently issued a statement outlining their assessment of the situation which says the whole problem is “surmountable.” This is consistent with the “that which doesn’t kill you will make you stronger” ethos, however my apprehension isn’t so easily assuaged.
There will likely be supply shortages for products manufactured (or partially manufactured) in Japan and while this will be an inconvenience the bigger concerns are what Japan decides to do with it’s investments in the United States and the consequences of the nuclear situation. It’s not hard to imagine a scenario where the Japanese government reduces it’s foreign investments as a way of partially funding the massive cost of rebuilding. Even if they make a graceful (systematic and measured) exit the reduced demand for treasuries would result in increased borrowing costs for the US. With the amount of debt our country carries this additional interest expense would be immense and with our own economic challenges lingering (and on the horizon) repayment without dollar dilution and inflation is optimistic at best. The primary argument against this occurring is the amount of exports from Japan to the US and what they would do with the surplus dollars if not buying US treasury bonds. While this certainly sounds plausible, it may be another case of past experience not necessarily applying to the current (trade) situation.
Over the last decade, exports to the US have fallen by ~$51 billion annually despite a $217 billion increase in overall exports. “Our” economy now accounts for just 15% of Japan’s exports. Over that same time period China became a major importer of Japanese goods accounting for 19.4% of total exports, up from a mere 7.7% in 2001. China has become the lynch pin of global trade and yet the US only accounts for 5.8% of their exports (at least directly, these numbers to not account for items sent from China to other countries that ultimately make their way to the US).
The nuclear situation is by no means finished and may end up being a far bigger challenge than any economic “inconvenience” we’ll likely face…but I’ll save that for another post. I’m still ruminating on the investment possibilities and economic ramifications of the situation as it is (and continues to develop) but it’s clear that we (in the US) are more subject to the decisions of politicians in Japan and China than we realize.
Bloomberg is the source of the export numbers, view the full detail here.
This is an additional perspective on the economy and markets. However, it was NOT authored by me and therefore may deviate from statements I’ve made or beliefs I hold.
City Search, Picasa, Pet Smart, NetZero, eSolar, Uber Media and 69 other companies. What do they have in common? Bill Gross and Idealab, the company he founded.
By now most people have heard of the social network Twitter but my guess is few people outside of technology know Jack Dorsey, the man behind the phenomenon nor his latest venture Square, the mobile payment processing company. His observations on mobile payments as a platform and the potential of payments as a communication medium are insightful and another example of how innovation can occur in seemingly benign areas if one is willing to question the status quo.
