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New Martenson Report Ready

Friday, October 17, 2008, 2:15 PM

One of the most emailed stories at the NYT website today is an Op-Ed piece by Warren Buffet entitled Buy American. I Am.


I think this piece deserves some closer attention because Warren Buffet
is so influential in the world of money. Let's examine his ideas
closely.

Link:  Warren's Risky Play

Note:  This report is for subscribers only.

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21 Comments

Lemonyellowschwin's picture
Lemonyellowschwin
Status: Platinum Member (Offline)
Joined: Apr 22 2008
Posts: 547
Re: New Martenson Report Ready
A brilliant person Mr. Buffet is, but the deity-like reverence in which he is held is a bit ridiculous.  I went and saw IOUSA and stayed for the "discussion" afterwards.  I must say that I thought his comments were shallow.  He basically scawfed at the notion that the national debt was a significant problem and dismissed the idea that the US was in for a world of hurt with the kinds of mantras that ring hollow to me -- America is the greatest country on earth, our people are the most creative and ambitious in the world, we're #1, rah rah rah, that sort of thing.
machinehead's picture
machinehead
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Posts: 1077
Warren, Meet My Buddy Ben

Echoing what Lemonyellowschwin said -- I heard some goofball financial commentator on TV bloviating that "Warren Buffett is the most successful stock investor in history; you can't argue with him." Buffett certainly has a stellar record, but so do others. Even more absurd is the notion that a good track record makes someone infallible. It is just as likely to boost their ego, and cause them to start making megalomaniacal mistakes (speaking from repeated personal experience). Money mouth

To me, Buffett is a sideshow compared to what Ben Bernanke is doing to the Federal Reserve. Last night I got stoned out of mah mind listening to a country band at a local club. But the Federal Reserve's freakish weekly reports sobered me up in a New York minute. Club Ben now sports a $1.8 trillion balance sheet -- almost double what it was a mere two months ago. In the past three months, M1 money supply has escalated at an awe-inspiring 19.5% rate.

On second thought, maybe I am hallucinating and these patently insane numbers are the product of an unhinged mind. Yes, maybe I'll wake up tomorrow and these disturbing inflationary phantoms will have stolen away. Make it all better, Ben. Cool

gregroberts's picture
gregroberts
Status: Diamond Member (Offline)
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Posts: 1024
Re: New Martenson Report Ready
 I seem to recall Alan Greenspan having a similiar reputation, people are starting to realize that he was responsible for blowing up the housing bubble. I think Peter Schiff has it nailed, the dollars doomed and we are in for a rough time.
switters's picture
switters
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Posts: 744
Re: New Martenson Report Ready

I agree fully with Chris's analysis and with the comments made so far.  I would add the following:

The mantra that "the market always goes up eventually" that Buffet and other investors chant religiously is quite ridiculous when the history of human civilization is considered.  How long has the stock market been around?  200 years at the most.  

Now, how long has oil been in mainstream use in the U.S.?  About 150 years.

The Hirsch report tells us (and most economists agree) that the relationship between economic growth and the growth of energy supply is roughly 1:1.  That means if energy supply grows by 3% in a year, we can expect the economy to grow by 3%. 

Is it any wonder, then, that in an age of cheap, abundant oil and dramatically increasing energy supply the stock market has continued to rise over time?

Unfortunately for Buffet and those that follow his advice, the underlying circumstances that permitted this perpetual growth in the market are changing.  Oil is peaking or has already peaked and no mix of renewables can replace it, which means we are headed for a long, steady decline of energy supply unless someone figures out nuclear fusion or makes a technological breakthrough on a similar scale.  If we're headed for a long decline in energy supply, by extension we're also headed for a long economic decline and a contraction of the stock market.

Buffet fails to address this reality in his editorial.  Thus I find it entirely unconvincing.

The fact that the market has gone up overall for the past 200 years is not conclusive proof that it will continue to do so.  It is pure folly to make that assumption when our current circumstances are considered. 

manilapoo_92's picture
manilapoo_92
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Posts: 1
Re: New Martenson Report Ready

Think about it. Why is Warren Buffet rich?

What is the one thing that he actually cares about?

He isn't an engineer that solves problems for us. He isn't a person with great ideas. He just purchases them.  He is totally and completely irrelevant to the growth and prosperity of human life on earth!!

Davos's picture
Davos
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Posts: 3620
Re: New Martenson Report Ready

Last week he said there is a 50-50 chance.I hope he is correct.

I think Soros is correct when he says this is a period of wealth destruction.

Buffet is sharp, I'm sure there is money to be made when there is blood in the streets. I will point out: He didn't say how much he was playing with or if it was being used to buy or short.

I think this entire site's preface is that our dollar is under pressure because it is backed by faith, and after I read Greenspan's 1967 article I sent it to Chris who has pointed out the other part of this sites preface - every warning light in the cockpit has been screwed with. This thing, if it continues is going to hit folks like a ton of bricks.

Right now I'm seeing very depression era things: People moving in with one another, articles on how to survive when your kids move back in with you, stories about parents moving back in with their kids, huge companies failing, bank seizures and failures, falling stock market, retail and automotive sector failure and so on. These are indicators of a recession or worse and our genius economist are just now using the recession word.

Maybe it is best, maybe if everyone knew it would be a lot worse becuase no one would want to spend, but I feel bad for those who think all is well because the rug, along with their 401k and food is going to get yanked from underneath them.

It also sounds like the credit cards are going to be the next area for melt down... 

pinecarr's picture
pinecarr
Status: Diamond Member (Offline)
Joined: Apr 13 2008
Posts: 2237
Re: Credit Cards Next

Re credit cards being next, folks may want to call their credit card companies to check their credit card limit! 

I have excellent credit, a good job, and usually keep my credit cards pretty much paid off.  But recently I've been charging some  emergency supplies I wanted to make sure I had on hand,in case they became harder to get later on.  Also a wood stove.  I called my credit card company's automated line  to check my credit balance, to discover that my limit had been reduced from $20,000 to $15,000!  I tried calling my other credit card company to see if the limit had gone down on that too, and their automated system tells you "the system is not currently available"!   It has been "unavailable" for a few days now.

So I'm thinking that the contraction of credit may already be hitting credit cards.  I'd be curious if anyone else has noticed similar things.

-C

gopbg's picture
gopbg
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Posts: 7
Re: New Martenson Report Ready
I hear the concerns from Chris on the Buffett article.  I think Chris might have a bent for being critical for the sake of being critical on this account. Come on this is the Master.
 Don't get me wrong I'm a fan of  Chris's  critical and analytical thinking. What I like most about Chris is his ability to make the complex seem simple!
However, the comparison to what is happening in the Japanese economy is not a good one. Japan is a very resource poor economy. It is my belief that one of the main incentives of  Japan's involvement  in World War II was to expand their geographic holdings. Japan does not like that they are resource poor.  With respect to their population they have very little ability to be self sufficient with their own grains, oil, and minerals. Having such a small land base and an intense population creates a whacked out set of variables on their economic system . Therefore,  If you believe that oil supply/growth is a significant catalyst on a countries economic conditions ( Prosperity has a direct correlation to the ability to sustain and grow oil and Natural gas resources  ) than I don't know how you can use Japan's economic history as a tool of what might happen in the good-ole-USA. SIDEBAR: this is why I like and invest so heavy in the Canadian  RESOURCE RICH economy.
I believe we are headed for a two tiered economy. An economy that  will  have big financial Winners and  Losers ( and those who have the benefit of Chris's thinking have a better chance of being winners) . Those investing  in "Essential " commodities will likely be winners, Technology that leads to labor and/or energy savings will be winners , those who provide educational services , and maybe those who invest in  Gold/Silver . (I have never been a Gold bug but Chris has me thinking) . Thus, what the market will deem Essential is the million dollar question.
The losers will most likely be RV dealers/manufacturers  , Car dealers/manufactures  who sell low MPG vehicles , manufactures and retail outlets of luxury items , new Commercial and Residential construction ,  and  financial services ( the world doesn't need so many of these  self serving too- smart -for- their -own- britches financial engineers. )
Golden Age's picture
Golden Age
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Posts: 61
Re: New Martenson Report Ready

Comparing the U.S. economy in 1929/33 to today's economy is like comparing a model T to a Corvette.  In 1929-33 the debt of most families was their home or the farm they lived on.  Today most families are up to their ears in debt from autos, homes, appliances, Hi-Def TV's, credit cards, etc.  Most of our manufacturing is done in Canada, Mexico, China or where ever labor is cheaper.  How many textile mills are there left in America. Are there any? 

The U.S. today is a debtor nation existing on borrowed money.  We send 700 Billion dollars a year overseas to purchase oil, according to T. Boone Pickens.  China holds a Trillion U.S. dollars, Japan maybe 500 Trillion, Saudi Arabia 600 Trillion dollars of debt we cannot pay. 

Our national debt may have reached a point where we cannot even pay the interest on the Trillions of dollars of debt we owe.  We are in danger of losing our status as the worlds currency and when that happens, TSHTF is upon us. I read a report somewhere that Iran opened a Bourse this week and can now process payments for oil for all nations and they will only accept Euro's. I would expect Hugo Chavez and Russia to be their first customers.  Maybe China? 

IMO, we are in some deep Carp.  

 

 

 

 

 

Golden Age's picture
Golden Age
Status: Bronze Member (Offline)
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Posts: 61
Re: New Martenson Report Ready

Comparing the U.S. economy in 1929/33 to today's economy is like comparing a model T to a Corvette.  In 1929-33 the debt of most families was their home or the farm they lived on.  Today most families are up to their ears in debt from autos, homes, appliances, Hi-Def TV's, credit cards, etc.  Most of our manufacturing is done in Canada, Mexico, China or where ever labor is cheaper.  How many textile mills are there left in America. Are there any? 

The U.S. today is a debtor nation existing on borrowed money.  We send 700 Billion dollars a year overseas to purchase oil, according to T. Boone Pickens.  China holds a Trillion U.S. dollars, Japan maybe 500 Trillion, Saudi Arabia 600 Trillion dollars of debt we cannot pay. 

Our national debt may have reached a point where we cannot even pay the interest on the Trillions of dollars of debt we owe.  We are in danger of losing our status as the worlds currency and when that happens, TSHTF is upon us. I read a report somewhere that Iran opened a Bourse this week and can now process payments for oil for all nations and they will only accept Euro's. I would expect Hugo Chavez and Russia to be their first customers.  Maybe China? 

IMO, we are in some deep Carp.  

 

 

 

 

 

Fish Gone Bad's picture
Fish Gone Bad
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Re: New Martenson Report Ready
Buffet is known for being a cagey investor. If he is telling you to NOT be in cash, then you should really be in cash. His investments he has made recently are not things you and I can buy. He did not buy GE stock, he bought GE "I get paid first" super preferred stock. If things go south for GE, Buffet gets paid.
davefairtex's picture
davefairtex
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Posts: 5063
warren buffet

Warren Buffet is not saying "I'm buying everything", he says that he's buying equities.  He doesn't let us know what they are, but if you place this article in the context of what he's said over the years, he is advocating buying companies with a "large moat", with whom other companies have a very difficult time competing.  And with this letter, he's letting you know that some of these companies are very cheap.

In his mind, in 20 years, people will still drink soda, shave, eat, goods will still need to be transported, etc.  And companies will be providing those services, 20 years from now.  He believes he can pick the ones that are likely to survive, and possibly even prosper.

In his letter he pointed out that inflation is coming, and your cash will be devoured if you let it sit in the bank.  We know that too.   And, since his choice is either cash, or equities, Buffet says now is the time to switch from cash to equities, because now high quality companies are selling for big discounts.  Implicit in everything he says is, you still have to be careful which companies you buy.

Look at his letter using the filter Chris provides.  If you expect a world with decreasing resources, increasing money, and increasing people, AND you assume we'll have a functioning society 20 years from now, there are stocks you can buy that will probably perform much better than others in this upcoming period, even during a time of serious monetary inflation and a declining resource base.  I happen to agree with Buffet.

My favorites: oil drilling, production and servicing.  Solar, nuclear power, wind energy.  Rail transport.

Industries that might do poorly: airlines, long distance trucking, home construction, auto makers, $5 coffee shop chains.

Buffet is telling us, there's a big sale at the equity supermarket.  I think he's right.  But we should fold in the lessons we have learned from Chris - we cannot count on "endless economic growth" going forward to be the tide that lifts all boats.

But if you think society may still be here 20 years from now, you might consider going to the supermarket, buying some lobster that's selling for 50% off, and leaving the rest for someone else.  Of course the trick is identifying the lobster. 

JMCSwan's picture
JMCSwan
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Re: Warren Buffet's Reputation with TPTB...

Chris,

EDITED by ADMIN:  No posts that lean towards, or cross, the line of slander or libel wil be permitted on this site.  This post made claims about Warren Buffet that went too far and so it was removed.

Please only post words that you would be comfortable saying directly to someone (or in a court of law under oath).  

JMCSwan 

 

gopbg's picture
gopbg
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Re: Warren Buffet's Reputation with TPTB...
This post is way over the top. This site is way better than these comments.
JMCSwan's picture
JMCSwan
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Posts: 40
Re: Warren Buffet's Reputation with TPTB...

Way over the top of your understanding of what it means?

Or you prefer not to look at causes of problems, only superficially pretend to be interested in addressing fundamental sources of problems?

Strange, that's not what Chris Martenson's assistant's opinion was, in her recent email, requesting I please subscribe to this forum and provide the information I provided to her and related information to the subscribers of this site.

But, if it makes you uncomfortable, pushing the envelope of your emotional, psychological, political etc. comfort zones, and you prefer not to have anyone provide you with the opportunity to challenge yourself, to grow your psychic, emotional and political muscles and to grow beyond the current paradigm of political correctness; be my guest.

Regards,

JMCSwan

Kjalnot's picture
Kjalnot
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Re: New Martenson Report Ready

 

Is there a point when you look at your comments, notice every word was written with capslock, and think to yourself, Damn, I'm a nutter.

 Seriously, that is the number one sign that you are mental. 

Davos's picture
Davos
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Posts: 3620
Re: New Martenson Report Ready

About then (1929) verses now discussion:

I agree. Things now are very different. Then we had a quasi gold standard. Now we don't.

Now (if you back out 40% of GDP as cooked) and add in the 43 trillion not counted as debt, we spend 654% more than we make.

And apparently don't know it if we say things like our debt is only 64% of our earnings/GDP.

Also, if you read Greenspan's 1967 article http://www.scribd.com/doc/192230/GOLD-AND-ECONOMIC-FREEDOM-Alan-Greenspan you will see that he says the Fed then diagnosed the cure (contraction in markets) as the disease and treated it causing the crash.

So here we have Ben dropping cash like never before.

No, I'd say this thing is going to hit us like a ton of bricks. Also, the social fabric then was quite different. Road rage and that sort of stuff wasn't in the vernacular. 

 

caroline_culbert's picture
caroline_culbert
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Posts: 624
Re: New Martenson Report Ready
[quote=manilapoo_92]

Think about it. Why is Warren Buffet rich?

What is the one thing that he actually cares about?

He isn't an engineer that solves problems for us. He isn't a person with great ideas. He just purchases them.  He is totally and completely irrelevant to the growth and prosperity of human life on earth!!

[/quote]

I agree!!!

caroline_culbert's picture
caroline_culbert
Status: Platinum Member (Offline)
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Posts: 624
Re: New Martenson Report Ready
[quote=cmartenson]

One of the most emailed stories at the NYT website today is an Op-Ed piece by Warren Buffet entitled Buy American. I Am.

I think this piece deserves some closer attention because Warren Buffet is so influential in the world of money. Let's examine his ideas closely.

Link:  Warren's Risky Play

Note:  This report is for subscribers only.

[/quote]

 

I think this quote, by Buffet, is the saddest dictum I've heard. 

             [A simple rule dictates my buying: Be fearful when

             others are greedy, and be greedy when others are fearful.]

Not only is his idea risky but it is unethical.  He credits himself of buying up cheap "American" equities but this is coming from a guy I imagine can take that type of risk.  Why he is advising others to do the same makes me wonder about his common sense capacity.  Sure, he's a rich man and many want to emulate him by imitating his very moves but... wow.

It's a sad world we live in when fear and greed are the necessary and sufficient factors to wealth.  If that's the case, then I'll denounce wealth altogether.  I would hate to have to wait for a person, state, or country to fall to its knees, in fear, so I could satisfy my greed.  I also hate knowing that when I'm down on my luck I should be fearful of those that want to exploit the opportunity.

Essentially by agreeing to live in a world controlled by money, we have a system that rewards us with money as long as we are willing to fight for it.  We are rewarded with a job, food, and housing.  We must fight for it because 1% of the world's population owns more than 40% of the world's wealth.  That leaves the remaining 99% fighting for the remaining 60%.  After doing the math, take a look at the percentage of people who lost the fight?  We, not only "they", walk in fear of the greedy and are greedy upon those that fear us.  We should change that.

Caroline

Trevor's picture
Trevor
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Posts: 5
Re: New Martenson Report Ready
BRK has 35 billion in the bank -- the only investmetn it made was GS for 5 billion @ 10% preference shares  -- the vast bulk of Buffet's wealth is there -- I am sure his persoanl account is significant but the reality is it small in compansion so he is FAR from all in!
Amanda Witman's picture
Amanda Witman
Status: Peak Prosperity Team (Offline)
Joined: Mar 17 2008
Posts: 409
Re: Warren Buffet's Reputation with TPTB...

[quote=JMCSwan]Strange, that's not what Chris Martenson's assistant's opinion was, in her recent email, requesting I please subscribe to this forum and provide the information I provided to her and related information to the subscribers of this site.[/quote]

I think there may have been a misunderstanding.  To be absolutely clear, anyone who e-mails us with feedback or questions is encouraged to consider sharing them in the forums so that others can discuss and contribute.  We expect forum users to play nice and to post respectfully, regardless of the topic.

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