Buffett: Economy has 'fallen off a cliff'

[kpete]

Source: Raw Story

Buffett: Economy has 'fallen off a cliff'
Agence France-Presse
Published: Monday March 9, 2009


Billionaire Warren Buffett said Monday the US economy could recover in five years, likening the current battle against prolonged recession as a Pearl Harbor-like situation during World War II.

"It’s fallen off a cliff,” Buffett said Monday during a live appearance on CNBC. “Not only has the economy slowed down a lot, but people have really changed their habits like I haven’t seen.”

"I think that economy will be fine in five years, but I wish we'd get there faster," said Buffett, one of the world's richest men, in an interview with CNBC.

"America's best days are ahead, but how fast we'll go there is in question."


Read more: http://rawstory.com/news/2008/Buffett_Economy_has_fallen_off_cliff_0309.html

[aquart]

1. The man is an incurable optimist.

I'm estimating twice as long.

[CatholicEdHead]

2. Watch the markets drop even more over the next 24hrs

they took a big dive with Buffet's last negative comments. 6300 anyone? :scared:

[SmileyRose]

5. I was told 5000 is the target.

I know people pick numbers out of their butts all the time. One of the ladies I work with at the Atlanta food bank -- her brother is a security guy on the trading floor in Wall Street. She says the behind the scenes discussion is always about the 5000 mark and her brother seems to think the major players left are deliberately pushing things in that direction. For what reason he doesn't understand.

[CJCRANE]

10. Maybe that's when they go in and buy everything up

so starting the next 10 year growth cyle.

[Andy823]

16. I agree.

Not sure if the number is 5000, or maybe 6000, but you are right that at a certain point, those with the big money are going to buy up stocks at rock bottom prices! The more doom and gloom, and the lower the markets drop, the more average americans will be selling off their stocks, and that's the whole point for those people with the money and the clout to bring prices down to the point they buy, buy, buy!

[Baby Snooks]

26. In a different economy the "Rothschild Way " might work.....

The problem is the companies may end up in bankruptcy court and all they will have at that point is worthless stock.

What is happening on Wall Street is not the result of market manipulation but merely the result of a growing number of companies beginning to collapse under the weight of growing and unmanageable debt.

Reality is reality. And the reality is our entire economic system at this point is insolvent. All Congress is doing is throwing taxpayer money down the proverbial toilet and bankrupting not only us but our children and grandchildren and possibly our great-grandhcildren as well.

[girl gone mad]

27. Correct. There is no vast conspiracy here.

Traders are losing money in this market, too. There isn't some mystical puppet master who is going to swoop in and buy when the market drops to some nice round number.

[Greyhound]

24. Which is exactly what it is designed to do.

That's what debt-based currency and it's resulting economy always does, it is the only thing it can do.

[No Elephants]

15. Buy low, sell high?

[happyslug]

37. Bear market 1970-1982, lead to a low value in the stock market in 1982.

In October 1982, the Dow Jones average finally broke 1000 and kept raising above that level (more or less) from that date till the last few years.

http://finance.yahoo.com/q/hp?s=^DJI&a=09&b=1&c=1970&d=11&e=10&f=1982&g=d

From 1982 till 2007 Inflation made a 1982 Dollar equal $2.12 in 2007 Dollars, A dollar in 1987 equals $1.80 in 2007 dollars.

A third factor is during recession that follow a boom, the price of stock drops to about twice what it was prior to the boom (or less if the boom is less, a rough rule is that stock will return to the half way point between the pre-boom low and the boom high).

If we take these three factors together 1. Low value of Stock do to the previous bear market 2, the stock value at 1000 and 3, the $212% inflation since 1982), and assume that the market will return to its pre-boom base (Which happens in most recessions, through higher the the average prior to the boom), but measured in today's dollars not the dollars of the start of the base, it appears people think this bust will drop prices to what they were in 1982 under Reagan. , during his recession of 1982, the Dow Jones of 1982, adjusted for inflation, is over 2200 (as compared to what it was in 1982 in 1982 dollars, when it went over 1000). The 1000 in 1982 was viewed as undervalued given the bear market of the previous dozen years, some estimates by about a factor of 250%, which would have meant the market in 1982 should have been at 2500 not 1000. Take the 2500 and adjust it for inflation since 1982, you come to the 5000 figure.

I am NOT trying to be accurate or even scientific, I am trying to see where this 5000 number is coming from and the above is the best answer I can come up with. A lot of "rules" that are at best guesses. Inflation is a factor, as is the boom, but the exact relationship is hard to determine.

[IrishBuckeye]

43. Shorters market. / nm

nm

[Xenotime]

46. Exactly. And M$M blame Obama for the market performance. Obama is trying to save it.

[CC]

3. So Buffet decides to make things even worse. n/t

[Psephos]

4. Following Schumer's example

Also, all the gloom and doom from the WH and Pelosi before the stimulus vote didn't help either.

[FrenchieCat]

6. You mean all of the truth?

[Psephos]

22. As I see it...

FDR got it about right. Speak plainly about the realities, and then lead towards resolution with a combination of grounded optimism, courage, and unity.

What I've seen over the past half-year has been politicians pushing emotional levers either up or down as needed for political and legislative objectives. I haven't seen all that much that reminds me of FDR.

[Psephos]

21. wrong subthread n/t

[GeorgeGist]

7. Warren Buffet, one of the world's greediest men, ...

knows full well that his ilk drove the economy off the cliff.

[Psephos]

23. You mean Warren Buffet, who gave away almost his entire fortune to charity? You're clueless.

He's one of the most generous philanthropists of all time.

http://money.cnn.com/2006/06/25/magazines/fortune/charity1.fortune/

http://abcnews.go.com/GMA/MellodyHobson/Story?id=2118501&page=1

[ogneopasno]

30. No, no -- GeorgeGist means the Warren Buffet who's spoken out against EFCA and parroted right-wing

lies about "end of the secret ballot" for union organizing.

[Psephos]

32. Once you or George give away 40 billion dollars I might listen a little closer to both of you.

Or even a thousand dollars.

Or even a week or two of your time to a place that could use it, if that thousand is a bit dear these days. By my calculation, Buffet's donation represents about 30 years' worth of the entire output of his adult life.

In the meantime, I stand by my original assertion that whatever else he is, Buffet is emphatically not "one of the world's greediest men."

[Tansy_Gold]

33. It was never his money to begin with

Unless he actually worked MAKING SOMETHING USEFUL all he did was take the money someone else had earned, shuffle it around, take a cut, and move on to something else.

Labor creates all wealth. Wealth doesn't create itself.



TG

[bread_and_roses]

45. Got it in one, TG

It can't be said too often.

[Psephos]

47. Your understanding of wealth creation is political, not economic

That's especially distressing in this case, given how many pension funds, 401K accounts, state treasuries, nonprofit endowments, and other broad swaths of our population and institutions have been enriched by investing in Buffet's Berkshire Hathaway. Especially distressing also, because from previous posts it's clear you're a smart person.

Of course, "wealth doesn't create itself." Wealth is a creation, first and always, of human creativity and ingenuity, applied in a thousand ways to address the needs and wants of others. It is not a zero-sum entity, and one person growing wealthier does not mean another must grow poorer. Quite the opposite. I'm surprised you make such an elementary mistake. How exactly do you think global GDP and standards of living increased exponentially over the past century? Besides raising living standards, created wealth also funds the tax engines that allow us to have working government.

To take an example, Steve Jobs has become very wealthy, through creativity, vision, drive, and the ability to deliver to others what they want. He didn't take anything from other people to make this happen. After paying taxes, creating thousands of excellent jobs, and spurring growth in the companies that supply Apple, the wealth that remains is his. Do you also think "it was never his money to begin with"? I don't use Apple computers, and I've heard Jobs is a prickly guy, but he has been a *major* net good for this country. There are thousands of other examples.

Financial innovators such as Buffet create wealth by directing capital to worthy companies that can turn it into jobs, services, sales, and growth...and away from companies that no longer deserve to be funded, because of their stagnancy, poor management, inefficiency, or obsolescence. If you think financial efficiency is irrelevant then I suppose you also think thousands of earmarks in a spending bill are meaningless, too.

Political thinking is dogmatic thinking, and I hear the threadbare dogma of zero-sum conceptions of wealth repeated over and over. We can't afford dogma in economics any more than we can afford it in stem-cell research or anthropogenic climate change or any other matter of critical importance where politics acts as a blinder to scientific understanding.

We need open minds and education about how economics actually works. Of course there are *plenty* of financial dick-heads and greedy bastards. Just as there are plenty of dick-heads in religion, politics, school-teaching, and every other human field. The world has no shortage of dick-heads. That's no excuse for ignorance and no justification for broad-brush bigotry and vilification.

[JJ]

42. one does not become a billionaire without cheating someone

Nothing any one person could possibly do in a lifetime, could possibly be worth a billion dollars, much less 40 billion or more.

[stillcool]

34. What's he supposed to do?

pay taxes on all of it? From the book "The Rich and the Super-Rich" by Ferdinand Lundberg, circa 1968 available for free down-load due to it's copyright expiration...here: http://www.soilandhealth.org/index.html

[stillcool]

35. oops..double post

[JJ]

41. philanthropist?

I think the word is spelled P-A-R-A-S-I-T-E.

Just because he gave away what he could never actually use anyway, to get his name on a bunch of plaques and buildings, doesn't change the fact that he and his kind have been stealing from those that actually produce value through manipulation of the system, while producing nothing of value themselves.

[lyonn]

8. Well Mr. Buffet, what kept you from informing us during bush's

lazy, daisy, scooping up the money years that you had a problem with how the economy was going? Did Buffet not notice, being the economic wizard that he is, that the people were being screwed and that the economy was a phony economy?

People were hammering their house to pay the bills. That is not a stable economy. Jobs were being lost for years or income cut but as long as they could refinance their house to buy more, all was cool. Course the banks and loaning institutions were making what we once called worthless loans to the people and they couldn't care less about the bottom line since they sold their assets in bundles, or whatever, and crammed the rest of their bootie into some unknown institution/bank? Hell, we don't know what the corp. higher ups did with their winnings.... Luckily, we the lowly tax payer will eventually pay for this f-up.

[bdamomma]

9. well it won't take 45 days for this economy to recover

like the stupid talking heads are asking for Obama to do, it will take him two terms or maybe lower to straighten things out that he inherited!!!

[No Elephants]

18. If Obama does not improve the economy significantly in term 1, he may not get term 2.

[shanti]

11. so....

we're in a free fall now...

[PM Martin]

12. Really? I didn't notice.

:sarcasm:

[bemildred]

13. Who knew things could change fast like this?

Has this sort of thing ever happened before?
:think:

[CJCRANE]

14. How about 9/11?

On September 10th everything was fine then the next day it's global war.

Somewhat of a surprise if you ask me but then again "no one could have imagined" it.

[bemildred]

19. Exactly. I could swear this is not the first time a Ponzi scheme has collapsed too. nt

[Grinchie]

20. This is a slow motion avalanche that is in the first second of free fall.

Think of it like the World Trade center. If the towers had fallen like this economic cycle, meeting resistance such as TARP, Federal Reserve TAF, Bear Sterns Bailout, AIG Bailout, Wall Street Bailout, etc.

it would have fallen in about 30 seconds instead of 9 seconds, which is total free fall. Strangely enough, the WTC was built of Steel, had an extremely well designed infractructure, yet none of that got in the way of a free fall. It defies physics, and shows it falling without any resistance.

The economy on the other hand, is getting a whole lot of resistance, but it has already started fallin, and their is no way to remove the law of gravity at this point. You can only throw some cushions in from of it to dampen the impact when it finally hits the ground.

People seem to have lost a sense of what really matters as well. Life does not end in a depression. Good friends, family and happiness are all available to us any time we choose. If the greed monkeys want your home, they will take it, no matter how good the economy is.

The most frightening this is our Food Sovereignty being destroyed by untested GMO Poisons in our food, eventually contaminating even the most meager farms with Corporate patent infringement liability. It's like taking your food after you did the work of growing it.

I agree with Buffet in that Americans spending habits are changing. They need to change a whole lot more if we are to save the Earth from uncontrolled consumption of finite resources. We can no longer squander the Earth because God said that man inherited it. We do not have the rights to eat all the fish, pollute the environment, or treat any other organisms as unimportant. Everything has a place on the earth, but as we have seen, we cannot wipe them out in the name of profit or on a whim.

[Greyhound]

25. Everybody that has llived through it before, or has studied the history

of this economic system. It is rooted in and based on theft.

[HillWilliam]

17. I beg to differ, Mr Buffet. It didn't "fall" off a cliff.

It was pushed by the likes of B*, Greenspan, Norquist, several complicit "let's deregulate everything and oversee nothing" repug-majority Congresses, and a host of greedyass Ayn Randians.

Just sayin'.

Oh, and may they all rot in hell.

[Jambalaya]

29. Thank you,HW

That was my absolute,initial response.
WTF? FALL off a cliff? HELLO???
PUSHED off for the insurance,no doubt,especially when you and the insurer have an "understanding" so to speak.

ANYBODY here ever see the classic movie,"Double Indemnity"?

[ogneopasno]

28. That's what happens when you buy up small factories and shut them down, WARREN. And FYVM for your

opinions on EFCA, too.

[FrenchieCat]

31. Warren Buffett had much more to say than what is in that one soundbyte!

And it is sad that this is the part being quoted.

Here's what he also said.....

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=132&topic_id=8253688&mesg_id=8253688

[BlueIdaho]

36. Thank you FrenchieCat

Once again - you go out of your way so we know the whole story and not just the sound bites. Now if the muddle headed media could just do the same...

[blaze]

38. To quote FC's OP in the linked thread

"I watched Warren Buffett this morning on CNBC. Although the Corporate media headlines quote him as saying we are "going over a cliff", what they are neglecting to explain to us is that he stressed that the public is being confused by the messages sent by partisan congress (he named the Republicans as needing to allow the majority in doing their job), and the media (muddled messages)....and that what we need is unity behind the President, as we are fighting an economic war, and like a conventional war, a crisis in confidence can only be generated by those second guessing every move the President makes (he referred to WWII as an example, if 500 people would have questioned when and how to land on Normandy, would that have helped?)....and that we need to allow President Obama to be the CIC on this economic war.

Buffett went on to say that things could have gotten a whole lot worse than they are.

He stated that confidence is a big part of possible success, and that there has been little done by the media or anyone else to instill confidence, and therefore the cycle continues on a downward spin.

Guess the corporate media didn't like that part of the message, because they are not repeating it much."

We can't let the media win this war.

[unkachuck]

39. "It’s fallen off a cliff,"

....so what are you going to do about it, buffy?....it's your system, it's your party....

....may I suggest you try investing a little 'harder'....maybe have a heart-to-heart chin-wag with your fellow greedsters, ask them to do the same....and when you get another chance to ugly-up the TV, I want you to shout in your loudest rich old voice to wall street,

"...invest baby, invest!..."

[politicalminded]

40. Opinions are great but facts are better

Take a look at a great site: www.anitaestellblog.com for facts instead of people's opinions. It's great to go to one place and see such a wide range of information that leads you to countless other places!

www.anitaestellblog.com

[xchrom]

44. i like buffett -- i think he's mostly an all right on guy.

i think he knows exactly what he's talking about.