WB ain't dumb and he isn't given to frivolous statements.
What he said..... "A country that is now aspiring to an 'Ownership Society' will not find happiness in--and I'll use hyperbole here for emphasis--a 'Sharecropper's Society,'" Buffett wrote, "But that's precisely where our trade policies, supported by Republicans and Democrats alike, are taking us."
How sweet is that ? Now better hope you don't have a medical emergency and go bankrupt, seeing as the new bankrupcy reform bill won't let you wipe out those pesky credit card debts...speaking of pesky details, didja know that 46% of people who go bankrupt do so because of medical costs...
Oh, yeah, medical costs... we have an aging baby boom population with massively increasing medical costs and we're grown dependent on A. cheap migrant labor to do the work that old, unhealthy americans can't and B. cheap money caused by foreigners buying lots and lots of american bonds... almost 1 trillion dollars worth... well, OK, 900,000,000,000 but who's counting nickels ?....
A low US Dollar isn't necessarily a bad thing. When the dollar is low, US products are cheaper overseas. People in Europe and Asia will tend to buy US products more when they are cheaper. That encourages growth in American firms. Another thing, it's cheaper for people outside the US to travel to America for a vacation and to spend their money here. So domestic businesses like Disney World benefit. A smart investor moves his stocks into international funds and waits for the dollar to bottom out. Then switch to American investments as the dollar starts to climb. So never fear, there is money to be made. You just have to know where to put it. The world isn't losing confidence in America.
That sounds good in theory but it doesn't explain why the US trade deficit is so high. And the world is losing confidence. Both the South Korean and Japanese governments have recently said publicly it would be to their benefit to diversify their debt holdings away from US dollars.
If you actually read the article, you'd see that the greatest factor influencing the dollar these days is low interest rates in the US vs. other countries. Low interest rates are due to several factors, primarily inflation.
Currency prices aren't really an indicator of economic health. Wyoud you prefer double digit inflation and interest rates?
That is the exact problem. Investers are skiddish about the dollar because of the soaring national debt and the fact that we keep borowing from other countries to finance it. As more and more investers believe the debt is out of hand and cannot be sustained, the dollar goes down further and further. We have to keep borrowing more and more because the foriegn currency we are borrowing is at a lower exchange rate -- the money costs us more and more and the debt spirals. Yes a lower dollar can have some benefits in the short run, but would you prefer that the dollar loses it's place as a preeminent currency? Then we would not even be able to borrow to finance the borrowing because the debt will be so huge nobody thinks we can pay it back. We have to get our debt under control. It is out of hand and it is irresponsible. I fear we are headed for disaster.
Our technological elite is increasingly becoming dominated by people who were not born in this country and who relish their "world" view. While that is not a bad thing, it does cause one to consider what would happen if this country became a second rate economic power. But while I have some concerns, the mere fact that we have so many nationalities making up our fabric as a country bodes well for our future. We will make the hard choices and overcome the large huddles that lie ahead, but the faces of those doing the yoeman work will not be what we have historically seen.
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