Subscribe to this BlogBuffett: The economy needs Viagra
On Thursday morning, Warren Buffett said that a second stimulus package to help the economy might be called for. I'm not going to go into all the pros and cons of a second stimulus (you can read all about that here). But the metaphor that he used to break down the idea on Good Morning America was a little…how should we say it…odd. Buffett said, "Our first stimulus bill, it seemed to me, was sort of like taking half a tablet of Viagra and having also a bunch of candy mixed in as everybody was putting it into their own constituencies. It doesn’t have quite the wallop." (Credit to The Wall Street Journal's MarketBeat blog for picking this up.)
Viva Buffett!
In addition to Buffett's Viagra analogy, President Obama has fumbled over the definition of price/earnings ratios (fast-forward to about 1:50 into this clip):
And Treasury Secretary Geithner dumbed down his response to questions about the safety of the U.S. dollar and Treasury investments so much, that his audience of Chinese students broke out laughing:
I don't envy these guys. Trying to boil down an extremely complicated situation into a TV news bite is impossible. But I wonder what the Cialis folks think about Viagra getting all the attention?
OS,
In which country do you reside?
Massive government spending did more harm than good during the Roosevelt administration; the same is true of the Obama administration.
Profit seekers and risk takers are the actual drivers of our economy, not the government.
Government got us into this. Government is not the solution. It is the problem.
Government spending in a near depression is NOT socialism. It's called saving the economy.
Let me simplify it. Money changing hands for goods/services is the economy. If money doesn't change hands, we have no economy. Its called the velocity of money.
With their balance sheets dropping like a rock because of the real estate bubble, banks got scared and sat on their money. In turn, investors got scared (they cashed out to sit on their money), scaring companies and corporations, causing them to sit on their money. Then the consumer-at-large started sitting on their money because of all the bad news. The worse the news, the bigger the pullback by spenders of all types. The only other big spenders are the government and the purchases of food and other daily essentials. Thus, they are the only ones who can keep the money flowing and the economy from shutting down.
Therefore, the government (which is not influenced by bad news) HAD to spend a lot of money to keep the collapse in money velocity from dipping down so low that spending by all parties completely stops (depression).
As news improves, hopefully the psychological winds change so that consumers begin to spend again on items other than food and gas to start the velocity of money again, but a little less frivolously this time.
The number one problem is the TAXES both direct and all of the 'hidden' TAXES make it not worth it anymore!
I own multiple small businesses and have PLENTY of work enough to HIRE about 10 to 15 employees
NO WAY!
it's NOT WORTH IT anymore…..so I turn the work AWAY!
WHY should I take ALL of the RISK…put up with ALL of the headaches and problems then at the end of the year, the Government: Federal, State and Local walks off with more than HALF of what I make!
I got fed up with this garbage a few years ago Got out of total debt, paid off my home and now I am Semi retired!
I work one or two days a week…if even that!
I went from paying WELL over a hundred grand a year in Federal income taxes to PEANUTS!
I am ENJOYING my life at 54 NOW I am not allowing myself to be made a fool of working myself to death paying TAXES out the ying yang…..then at 65 ; 'retire' then after a few years take the eternal dirt nap!
NO….. I have had ENOUGH at 54 …. another PRODUCER CALL'S IT quits!
Soon as I hit 62 I am off to the Social Security office to get my 15 % in Social security taxes that I have paid on EVERY paycheck for YEARS!
Then I want MY free power scooter that I see advertised on TV paid for by the 'Government' AKA sitting duck TAX PAYERS…you.
I might become a 'Pastor' start a store front 'church' at the local strip mall, and get in on all of the TAX FREE 501C3 TAX EXEMPT goodies the Government gives to
'Pastors' to keep 'their' flock UNDER CONTROL AND in line. Keep them pacified with plenty of Religious narcotics.
President Obama and his adminstration did not create the ression we are in it was a gift he received from the Bush administration along with two wars . It's amazing that our troops have been in Iran for a number of years now and they still have not located those weapons of mass destruction . Clinton left the office with a budget surplus and in the span of eight years the Bush adminstration has left our nation in ruin.
Yah, Geithner unintentionally made a joke…of! George Bush and his regime made us the laughing stock of the globe. When a ship is sinking and a new captain takes what’s supposedly called the helm; the outcome is dependent more on the crew than the captain. Surely that in itself describes Democracy, or our Representative Democracy. We will continue to be laughed at until we also put the deadwood crew of representatives who were loyal to the last captain where they belong; on the mop and bucket brigade down in the bilge. We can complain and sink; or look for solutions that may or may not keep us afloat. The Chinese got the joke immediately in English. How many of us would get it immediately if in Chinese.
Warren teamed up with his cousin Jimmy to re write Margaritaville to reflect the current state of the economy:
Housing bubble pops
Credit default swaps
The G20 nations are all in a fuss
Credit dried up
After Lehman went bankrupt
laying the blame they're all looking at us because I'm –
Wasted away again out here in Omaha
searchin for my lost 401K
Some people claim that the recession's to blame but I know That it's everyone's fault.
Freddie Mac Indy Mac
Can't get his house back….
Can't even afford a Big Mac and Fries
Where all the joy went
on unemployment
and can't find a job no matter how hard he tries
[CHORUS]
Big Banks are all Zombies
Charging high credit card fees
Obamanomics is way out of hand
The FED is a Ding Bat
Now my Dodge is a FIAT!
and they're printing dollars as fast as they can
[CHORUS]
In regards to his Viagra comments: I am wondering, was Mr. Buffett sending a buy signal for Pfizer or for Eli Lilly?
What? More money flushed down the toilet and saddled as a burden to us and future generations??? You must be out of your mind? Where are the results from the first stimulus we HAD TO HAVE? It sounds like the result is government mismanagement, greed in hording the dollars that did go out, and more. I haven't seen a dime spent near me, and unless I happen to be a bridge worker (which I'm not) it wont benefit me. SHOW ME THE PROOF THAT THIS IS WORKING> otherwise, get your act together on the allocations to PROVE that $$ can work before asking us taxpayers for another dime.
Buffett is best known as Mr Hypocrisy by those who have been following him closely.
1) One of his company General Re was a major player is selling toxic derivative to manipulate balance sheets before he purchased it and AFTER he purchased it. Buffett was fully aware of this (at least after he had purchased it) and continued most of the practice has it was one of the most lucrative of all his companies (by far).
2)It was revealed a number of years ago (in a sworned testimony by an insurance broker during a governement led investigation in Australia of a dubious large bankruptcy partly caused by toxic derivatives sold by one of Buffett's subsidiary company) that Ajit Jain, the manager of National indemnity (belonging to Buffett), was actively devising products that he knew were being used for producing misleading financial reports, and he was trying to find a way with the broker to do it so that the regulator would not be able to find out;
3) Buffett wrote in his annual reports a few years ago that he talks daily with Ajit Jain and is aware of all his important contracts so it is very highly doubtful he was not fully aware of these deals;
4) When the story was about to broke out, Buffett, broke a long time tradition and succeed in preempting it by first revealing in a very unusual press release (yet leaving most troubling details out)
5) Under pressure from institutional shareholders, Buffett officialy said he would put a new board member that would be independant and request people to submit their candidature. In the end, he rejected them all and his board remains almost entirely composed of close friends or people he directly or indirectly have power over on. Virtualy nobody truly independant knows exactly what is going on in his companies.
6) His financial reports remains as cryptic as ever, revealing the very minimum details, still refusing quaterly discussing, and making a farce of his annual assembly by make it nearly impossible for anyone to ask meaningful question amid the deluge of questions from people with no financial knowledge and even 12 year old kids ant the very skillfully entertained carnivalesque atmosphere.
7) He made the written promise that he would pay a dividend if his stock (Berkshire Hathawa) would not be as lucrative as a t-bills on a 5 year period, yet like most other promise he made, he broke this one yet again when his stock didn't and he paid strictly nothing.
he urged everyone to buy Wells Fargo a short months ago, while at the same time (as it was revealed much later) his company was actively selling it
9) he used his easy access to the media to promote Goldman Sach and Paulson (formely from Goldman) because he has extremely close ties to Goldman Sach (which bring him to his plate most of his acquisition) and Goldman Sach was heading toward bankruptcy: Buffett succeeded in having the taxpayers bailing it out (via his friend Paulson, but not before he had himself made an investment to capitalise on it raking millions on the operations in a very very short amount of time at huge expense to the taxpayers;
10) he delayed his annual report publication by 1 week and tried to influence the stock of Wells Fargo (of which he is a huge shareholder) which was going to be hit by the result of the stress test singled it out as a very poorly managed bank. He outrageously lied to the public when he said that Wells Fargo had the highest possible standards and implying that it was not involved in dubious or unethical loans to non creditworthy homeowners. At about the time, Richard Cohen was revealing in the Washington Post the following:
"At age 61, after 13 years of uninterrupted unemployemnt and at least as many of living on welfare get got a mortgage. She got it even though at one time she had 23 people living in the house (576 square feet, one bath) and some ramshackle outbuildings. She got it for $103,000, an amount that far exceeded the value of the house. The place has since been condemmend…. Halterman's house was never exactly a showcase – te city had once cited her for all the junk (clothes, tires, etc) on her lawn. Nevertheless a local financial institutin with the cover-your-wallet name of Integrity Funding LLC gave her a mortgage, valuing the house at about twice what a nearby and comparable property sold for. … Ingergrity Funding then sold the loan to WELLS FARGO & CO"
When Buffett says the economy needs a "stimulus" what he is truly saying: my net worth needs a stimulus from the taxplayers because I have stupidly invested in pretty much all the bubble area of the economy now crumbling (housing industry: carpet, housing, high-price furniture rental that nobody wants, private jet leasing, dubious balance sheet manipulation contracts presented as "re-insurance contracts", recreation vehicles, oil company investment at the peak of oil price, spectacular sp500 bet that turned out perfectly ill-timed and creating huge losses, etc).
Buffett should assume his errors not have the taxpayers bail him out.
Buffett wants millions of americans that can barely survive in the current condition send him their savings while he sit on 30 billions of cash and can easily afford a 50% drop of his net worth.
It is OUTRAGEOUS.
What a shame. Mr. Buffett has joined the dyed-in-the-wool Socialists.
Gee, Warren, guess you're trying to rig the Ovarian Lottery just a leeeettttllle bit more, eh?
Government intervention in the economy is not akin to Viagra – it is akin to the results of overdosing on that substance.
You can't get a little bit pregnant, Warren.
Ronald Reagan was a bought and sold shill of the medical industry and then the wealthy conservative idealogues. His "government is the problem" mantra has proven to be true only when he and his kind (See Bush/Cheney) are in charge. Every minimally intelligent person on the globe realizes and admits that without government intervention, the mess caused by the conservatives who were in charge for the past 8 years would have brought down our economy and deeply damaged the global one.
Rant on all you Rove-led lemmings. You were manipulated in 2000, and 2004 – and you brought this mess on the rest of us. Accept that responsibility like a man, rather than a weak-kneed sissy/victim.