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Tuesday, March 3, 2009

An economic pearl harbour - Warren Buffett

This is a BRILLIANT interview Warren Buffet did on Charlie Rose - very very insightful and provides us with his insights on the current economic crisis. Here is an article re his latest shareholders letter and also the original PDF...which knocked the market down dramatically!

Charlie asks him how we got here and from the 20m 30sec mark in the video he provides some excellent commentary!

All this noise and bailouts always resultants in a discussion about what happens after all this. Warren Buffett says the following; "In poker terms, the Treasury and the Fed have gone "all in." Economic medicine that was previously meted out by the cupful has recently been dispensed by the barrel. These once-unthinkable dosages will almost certainly bring on unwelcome aftereffects. Their precise nature is anyone's guess, though one likely consequence is an onslaught of inflation. Moreover, major industries have become dependent on Federal assistance, and they will be followed by cities and states bearing mind-boggling requests. Weaning these entities from the public teat will be a political challenge. They won't leave willingly."

Interesting times. We discussed this scenario at dinner over the weekend and it's clear that the entire worldwide core financial backbone is being nationalized! The USA Fed chairman says they're not...but how much more funding is really required before the USA government owns all banks, investment houses and car manufacturers? Are they simply acting as investors and JUST bailing out businesses...? Then why cap salaries and dictate generic business terms? - if this is not nationalizing these businesses then we're definitely not in a "recession" either ;-) Here's an interview on Fox news with the author of Freedomnomics about this.

Mind blowing numbers of the day;

Auto makers posted their biggest U.S. sales decline of the now-six-month plunge, as consumers with record-low confidence remained out of showrooms. General Motors Corp. said its U.S. light-vehicle sales fell 53% in February, while Ford Motor Co.'s declined 48% and Chrysler LLC's fell 44%. Japan's Toyota Motor Corp. reported a 40% decline.

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