HELLO EVERYONE! - Buffett Says He Has Increased Bet Against U.S. Dollar

May 1 (Bloomberg) -- Billionaire investor Warren Buffett said he increased his bet against the U.S. dollar on concern that the country's trade deficit will weaken the currency.

``We think that over time that the dollar is likely to decline in value against some of the major currencies,'' said Buffett, 73, in an interview before Berkshire Hathaway Inc.'s annual shareholder meeting in Omaha, Nebraska. In the last few months, Berkshire has added ``more than a little bit'' to its foreign currency holdings, he said. They were last disclosed at $12 billion as of yearend.

Foreign currencies represent Buffett's biggest purchase in the last two years. The Berkshire chairman has built a fortune buying undervalued assets and today sees little opportunity in stocks. He bought currencies as the dollar began a 25 percent slump over 24 months and the U.S. current- account deficit ballooned to a record quarterly average of $137.7 billion in the first nine months of 2003.

Buffett, the world's second-wealthiest man, started the meeting, which drew an estimated 15,000 guests, with a video of jokes and skits featuring California Governor Arnold Schwarzenegger and Microsoft Corp. Chairman Bill Gates.
http://quote.bloomberg.com/apps/news?pid=71000001&refer=us&sid=afZ6zjZwmS4A

I guess his joining with Kerry is a "good" thing? I leave it to the rest of you to decide.

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Sleep well.

n/t

Precious metals are real money...The morons in Washington can't print endless quantities of it like they do with the little green rectangles. Protect what you have from Bu$hco.

Buffet on to his economic "team".

However, I don't see how the feds can jack up the interest rates too much without popping the real estate bubble on which so much of the perceived satisfaction with the economy and from where so much purchasing power is coming. Furthermore, the dollar going up really jeopardizes what little manufacturing is left in the midwest swing states.

A 'strong dollar" against foreign currencies keeps imported goods cheap for the consumer, presumably lowering inflation and interest rates. Foreign capital flows into American markets more easily with a strong dollar.

A weakening dollar, as Buffett projects for the future, raises the cost of imports and would presumably weaken confidence in investments by foreigners in U.S. markets. A weakening dollar can be the result of a slowing economy.

But there is an argument that there is an over-dependence by foreigners on the strong dollar and that there would be a benefit in weaning some of the investment off of the inflated U.S. currency. The current policy of the White House would agree with this in that they would not seek to artificially inflate our currency, and they would seek to keep the currency as stable as possible to avoid an exodus from our markets by foreign investors.

A strong dollar hurts exports, hurts farmers. It has a dampening effect on both our export growth and on our manufacturing sector.

Imports have soared over the Bush term and our trade deficit is widening. Exports have been relatively flat during the same period.

A weakening dollar will help boost the economy in the same way low interest rates do. Our products will become more competitive with imports. Our costs of producing goods would be less expensive relative to imported goods.

One adverse effect could be an increase in inflation, but the Fed could cut interest rates to compensate.

Overall, a weaker dollar would be a plus for those of us who are burdened by NAFTA, and other trade policies which make our manufacturers and farmers less competitive because of cheap imports.

Buffet is foreshadowing the inevitable direction of economic policy under the coming Democratic administration which will seek to level the playing field and put a stop to the flood of these cheap imports which undermine our own business interests, and robs us of jobs.

Smart.

weak dollar boosts exports. The only ones who won't be happy about that is the rich scum who've moved jobs to China.

Buffet is like Nader in one regard - he only bothers to talk when he wants to tell the truth. He recenty said that "if there's a class war going on in America, then my class is winning."

I thought we are about as low as we can go and have been for some time. Am I wrong?

Also the risk of inflation could be offset by rising employment and better wages that would result from a level playing field.

n/t

I will add though, this does not feel right.

Strong dollar hurts exports, makes it hard to compete with lower cost imported goods.

Weak dollar helps exports, makes it easier for our manufacturers and farmers to compete against lower cost imports.

BTW, Buffett, except for a recent foray abroad, mostly invests in American businesses.

of the last 100 years tells people that Bush's policies are wrecking the economy and driving down the dollar, yes, I'd say that's a good thing.

N/T

You see weak dollar and assume it means weak America. Then you further assume this is an opportunity to hit Kerry because of his advisor Buffett's foresight. Too bad that strong dollar policy is an anathema to Democrats who stand with those hurt by policy that encourages cheap imports.

Another slap at Kerry bites the dust.

BTW, Where is your argument? You provide no insight into your opinion of a strong dollar policy. It looks like you just threw this out hoping it would stick to something.

Who's going to get stuck with all the debt in the United States, Japan, Germany and elsewhere when it comes due?

A few months ago, I was chatting with an old brokerage firm friend over sushi in Tokyo, and I asked him that same question.

His answer: "When I was a young man, we used to say that 'future generations' will have to pay dearly for our folly. Well, now the future has arrived, and we are all very surprised to find out that WE are the so-called 'future generation.'"

The same is true here in America. So if you think you have plenty of time between now and then, think again. You won't have long to wait before the debts come due.
http://www.martinweiss.com/Articles/Article.asp?ArticleID=1120

Want more:

Current U.S Debt Bubble Chart (1929 repeat)
http://www.comstockfunds.com


AND MORE:


How to Return to the Gold Standard
by Bettina Bien Greaves
There is no reason, technically or economically, why the world today, even with its countless wide-ranging and complex commercial transactions, could not return to the gold standard and operate with gold money. The major obstacle is ideological.

Many people believe that it would be impossible to return to the gold standard--ever! There are just too many people in the world, they say, and the economy is too complex. Many others look on a return to the gold standard as an almost magical solution to today's major problems--big government, the welfare state, and inflation. What is the truth of the matter?

Certainly if the United States went on a gold standard, it would have to carry out many reforms. The federal government would really have to stop inflating, balance its budget, and abandon welfare state programs. Most voters are not ready for such reforms. And politicians, pressured by voters and special interest groups for favors, hesitate to pass them. Thus the major stumbling block to monetary reform is ideological. If this basic obstacle could be overcome, however, a return to gold money would become a realistic possibility.
http://www.fee.org/vnews.php?nid=191

More here than anyone wants to know:

http://www.moneyfiles.org/

The monthly military cost in Iraq is running at about $4 billion, according to the Pentagon. Spending peaked in September at $7 billion and dropped to as low as $2.7 billion in November. Expenses climbed to $6.4 billion in January as violence by Sunni and Shiite Muslims spread.

Bush faces the prospect of a fiscal drain similar to what happened during the administration of President Lyndon Johnson, said Hawaii Senator Daniel Inouye, 79, the senior Democrat on the Appropriations Committee panel that handles defense spending.

From 1963 to 1968, federal spending rose annually by 4.8 percent as Johnson, a Democrat, funded the war in Vietnam and his Great Society entitlements, including education, Medicare health insurance and urban renewal projects, according to the Cato Institute. The federal deficit increased from $4.8 billion to $25.2 billion, or 2.9 percent of gross domestic product.

This year, the estimated deficit would equal 4.2 percent of GDP, due partly to the Bush administration's tax cuts and 5.5 percent annual expansion in real federal spending. The increase excludes the $87.5 billion supplemental appropriation for Iraq during the fiscal year ending Sept. 30.

http://www.bloomberg.com/news/economy/politics.html

Gold:

I recall some time ago that there was this family who hoarded silver to raise and control the price. Take that same scenario and apply it to a gold based ecomomy. That would be even more centralized than the monopolized one we have now. How about some fiscal responsibility from Bush? I don't think it would take a drastic shift in our monetary standard to start restoring some sanity to the economy.

Just takes some leadership to turn things around. Corporations are benefiting at a greater rate than individuals, more so in this Bush era. And although we need to encourage business, as the article you provided stated, even Buffett accepts that the benefits are lopsided.

n/t

On edit:

Not the "family", it was the "brothers".

there just might be many somethings to stick in many places. Thanks BigTree for your insight.

I like the drift of most of your posts.

this is what will happen. He's correct. What's your problem with Buffett, anyway?

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What is the message being given? Kerry and Buffet?? That is my question?!

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