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Buffet: Economy On The Mend

Monday, May 6, 2013 - 9:30 AM
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Dear Readers,

Some just will not take a "yes" for an answer, when it comes to the recent improvement in the economy.  :-)  There is no way to please such "glass-half-empty" crowd.  :=)

Yesterday we discussed a little bit about the legendary investor Mr Warren Buffet, and the repect he has for Chairman Bernanke, and his view that FOMC's policies have helped the economy

 

Today we have reaffirmation of the same at link below:
https://news.fidelity.com/news/news.jhtml?articleid=201305060711RTRSNEWSCOMBINED_BRE9450AO_1&cat=Top.Investing.RT&IMG=Y

 

Some of the hilights:
Warren Buffett said on Monday the U.S. economy is gradually improving, helped by the efforts of Federal Reserve Chairman Ben Bernanke to stimulate it,

 

Also, yesterday we had a brief scenario-pondering in which we we wondering about a hypothetical stock market crash.  But per Mr Buffet the stocks presently are reasonably priced.
Stocks, in contrast, are "reasonably priced," though he continues to shy away from sectors such as media, where he cannot reasonably predict who will thrive in the long run.

 

Oh yes ... the pessimists will continue to pull their hair out over different crash scenarios, but per Mr Buffet:

 
Buffett also said investors should not fear major stock indexes at or near record highs, provided they are investing for the long haul. "I don't know how they will do in the next 10 days, and I don't think anyone should think about it," he said.

 

Bottom line:  At present there are plenty of reasons to be happy, I guess.  :-)

Yours Truly,
- Anon
3
ytytytytytytytyt158 posts since
Jan 28, 2013
Rep Points: 623
1. Monday, May 6, 2013 - 12:17 PM
Don't bet against the Fed.... and don't argue against Buffett.  Just go with the flow and make money... until you lose it all someday.:D  And do not come back and complain to Fed/Buffett.
5
51hh51hh1,476 posts since
Jan 16, 2010
Rep Points: 6,427
2. Monday, May 6, 2013 - 2:23 PM
Is the same Fed that said in 2008 the problem was contained?!?

It was noted at some point that sustained job growth of about 250K would be needed for the economy to make meaningful improvements.  When has that number been achieved in any consistent fashion?

cd :O)
4
ChrisCDChrisCD70 posts since
Nov 18, 2010
Rep Points: 457
3. Monday, May 6, 2013 - 8:44 PM
Dear ChrisCD,

We have not had different FOMCs in the USA ever.  So if you are referring to the "Fed" of 2008, then I believe it is the same FOMC that we have in 2013.  If you are one of the career FOMC basher, then ... well ... you know the answer already, don't you?

Now coming to the gist question about what did the "same" FOMC say. The one-liner you have is woefully short.  Generally FOMC puts out a detailed statement that runs in several paragraphs.  So if you have more details, then feel welcome to post so that we can explore the context and the date when the statement was put out. Otherwise it makes no sense to go by a terse one-liner.

Same goes with the second paragraph you've written. Who noted it? When? What was the context?  ...

Yours Truly,
- Anon
3
ytytytytytytytyt158 posts since
Jan 28, 2013
Rep Points: 623
4. Tuesday, May 7, 2013 - 12:20 PM
Okay so some of my dates were off.  It was in 2007.  From this article: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aygqZPuV0y14

 
Bernanke told Congress on March 28 that subprime defaults were ``likely to be contained.'' The Fed chief, who declined to comment for this story, changed his assessment last month.

On July 18, he told Congress that ``rising delinquencies and foreclosures are creating personal, economic and social distress for many homeowners and communities -- problems that likely will get worse before they get better.''

Paulson Comment

Paulson said June 20 that subprime fallout ``will not affect the economy overall.''

This week on CNBC, he provided a less definitive assessment, saying that markets have been ``unsettled largely because of disruption in the subprime space.''

``We've had a major correction in that housing sector,'' Paulson said. ``It will take a while for the impact of that to ripple through the economy as mortgages reset.''

O'Neal on June 27 called subprime defaults ``reasonably well contained.'' Merrill spokeswoman Jessica Oppenheim said this week that the company is confident his words accurately reflected the market at the time. O'Neal declined to comment.

Okay, how are those quotes?  And no I'm not a career basher.  Nor, am I a career cheer leader either.  Just reporting the facts.  And sorry if my initial post was too brief.  I figured most here would be aware enough that I wouldn't need to dig everything up.  So I hope that helps.

For my second post, I readily acknowledged I couldn't remember who, when, etc.  But, I will dig it up later today.

And certainly if anyone has some contrary info they are welcome to post.  Be it a basher or a cheerleader.  :O)
4
ChrisCDChrisCD70 posts since
Nov 18, 2010
Rep Points: 457
5. Tuesday, May 7, 2013 - 4:18 PM
After four years of trillion-dollar deficits, the red ink is receding rapidly in Washington, easing pressure on policymakers and shattering hopes for a summertime budget deal.

Federal tax revenues are up and spending is down thanks to an improving economy, tax hikes enacted in January and the hated budget cuts known as the sequester. As a result, the U.S. Treasury has slowed the pace of borrowing from the frantic days of the 2008 economic crisis and was actually able to repay a tiny fraction of the $16.8 trillion national debt in the first quarter of this year. 

That might seem like good news, but it is unraveling Republican plans to use the debt limit deadline to force a budget deal before Congress takes its August break. Instead, the fiscal fight now appears likely to bleed into the fall, when policymakers will face another multi-pronged crisis that pairs the risk of default with the prospect of a full-scale government shutdown. 

Read more at: 
As red ink recedes, pressure fades for budget deal - The Washington Post 
2
Ally6770Ally6770936 posts since
Jan 16, 2010
Rep Points: 2,723
6. Tuesday, May 7, 2013 - 5:24 PM
Dear ChrisCD,

First Mr Paulson was not employed at Federal Reserve, and of course was not serving on the FOMC.  He was employed at US Treasury which is a separate department of the federal government.  Therefore he was not speaking on behalf of the FOMC/Federal-Reserve.

Next Mr O'Neil.  He was not a public servant, and was not represnting/speaking-for any government agency.  As a private citizen and as a CEO whatever he spoke did not represent any statement or any opinion of any government agency.

Finally coming to what FOMC Chairman told the Congress. Per your latest admission the year/month were 2007/March.  His words as quoted by you indicate that did not make any "guarantee" to the Congress that the problem was containted, but merely mentioned that the problem was "likely" to be contained.

So if we revisit your earlier question (Is the same Fed that said in 2008 the problem was contained?!?), then I must conclude that actually you were not told that the problem was contained by the "same" Fed.  Furthermore, if somehow you are under the impression that Mr Paulson and Mr O'Neil were spokespersons for the "same" Fed, then you are confused.  You need to learn to make clear distinction between different government agencies and also  between government and non-government bodies.  You also need to learn to parse the words very carefully, understand exactly what is the full statement, and then begin the critique. :-)

BTW, I believe that the servants (public) who are serving us exactly within the parameters we've give them, deserve a pat-on-the-back, in addition to the salary.

Yours Truly,
- Anon
3
ytytytyt64 posts since
Feb 28, 2013
Rep Points: 197
7. Tuesday, May 7, 2013 - 5:36 PM
Dear rosie43,

Indeed ... As I wrote towards the beginning of the thread, the economy is certainly improving.  But some just will not take "yes" for an answer.

It is fun to watch them pull their figurative hair out in their frustration over some imaginary problems like "triple digit inflation"! :-)

Yours Truly,
- Anon
4
ytytytyt64 posts since
Feb 28, 2013
Rep Points: 197
8. Wednesday, May 8, 2013 - 8:38 AM
Mr Anon:

Public servants should not hide behind vague language.  The fact is the contagion caused by sub-prime loans was never anywhere near contained.  So he (or you) are just hiding behing the fact that he choose his words so carefully so that "technically" he was not caught being very, very wrong.

I was not suggesting that everyone in my series of quotes was a public servant.  Just pointing out that people will say what they think you want to hear (the economy is improving).  The economy will not be improved until it reaches the point before the downtown and then some. 

Interesting, you also use quote from a non-public servant (Mr. Buffet) to back-up your assertion that the economy is improving because other public servants say it is.

If I have 10 Apples and 5 are destroyed, I have lost 50%.  If I get one back a year later, headlines will read I have gained 20%.  In reality, I have now only lost 40%.  If my apples ever grow to 11, then my apple count has improved.

On the radio this morning, the DJ said if I bought a house today I should expect to pay 10% more than I did a year ago.  Now he rightly pointed out that is an improvement over last year, but not overall.  He realizes that if a seller bought it at $250,000 and can sell it for $175,000 vs. $157,500 a year ago, that isn't really an overall improvement.

The Gov't and its servants love to play with numbers to tell the story they want you to believe.  Such as California State Parks needed to close some becasue there wasn't enought money to keep them open.  We need to raise your taxes to save the parks.  Then they discover that someone was hiding about $60MM which would have more than covered the necessary expenses.

So sure, the union of GM, the Megabanks, the solar companies, Goldman Sachs, they can pat their public servants on the back.  But the people who are still unemployed (x years later), the people who lost their homes, the people who are excited when they can find a 1% CD rate for 1-year, I'm not so sure they feel as gracious.

cd :O)
4
ChrisCDChrisCD70 posts since
Nov 18, 2010
Rep Points: 457
9. Wednesday, May 8, 2013 - 9:31 AM
Dear ChrisCD,

Okay, then why is the public not firing the servants whose services are not needed/liked/wanted/appreciated?  ... Yes, the insiginificant minority may crow all it wants, but are they willing to do anything "actionable" besides the usual crowing?   What exactly are they doing (if anything) to turn their pathetic fringe opinions into something mainstream, so that they can take the country in the ... err ... "right" direction?  :-)

Oh BTW I do not mean that the insiginificant minority should just "shut the f*** up", quite the opposite actually on two counts.  (1) The insiginificant minority has the constitutional right to speak-up   (2)  Personally I enjoy the whining these sore losers do, and "blame the FED for everything" attritute they demonstrate. :-)

Anyways ... tell me what is this insignificant minority doing (if anything) to stop Ms Yellen from becoming the next FOMC chair-woman?  :-)

...

Now coming to hiding behind the vague language, and not to forget the wrong time-frame you gave of such language originally. It is the matter of one's perspective, comprehension that makes the language clear or vague.  What might appear vague to someone with little grasp of English may appear crystal-clear to someone who has great grasp of English.  In his wording the Chairman answered the question exactly accurately and completely  truthfully in 2007.

Why accurately/truthfully?  The crisis was in the beginning stages, and it was humanly impossible to make a judgement as to when it would be containted.  The Congress inquired about the opinion, and it was given - accurately and truthfully.

...
I was not suggesting that everyone in my series of quotes was a public servant.  Just pointing out that people will say what they think you want to hear (the economy is improving).

 

Really? ... Aren't "people" here saying that "US is getting destroyed", "There will be triple digit inflation", "US Dollar will collapse" ... I hear no message about the improvement in economy in such things!  :-)  Or maybe the people who say these sort of things deeply belive that others want to hear exactly this message?  :-)

 
If I have 10 Apples and 5 are destroyed, I have lost 50%.  If I get one back a year later, headlines will read I have gained 20%.  In reality, I have now only lost 40%.  If my apples ever grow to 11, then my apple count has improved.

 

What's with this Apple thing?  And quite frankly who really cares about how many apples you have? In this oversimplification you are missing that important point that measure of Nation's economy is way too complicated than your Apples.  It involves "Job Market", "Real Estate Market", "Bond Market", "Commodity Prices", "Inflation" etc.  Also it involves the "starting" point from where the mesaure is to taken. 

If you were to start the apple count when you had Zero apples, and now if you claim you have 6 apples, then you're up 600%.  No?  :-)

 
But the people who are still unemployed (x years later), the people who lost their homes, the people who are excited when they can find a 1% CD rate for 1-year, I'm not so sure they feel as gracious.

 

Aha ... the "unemployed" ... Now there are 165k less of them ... Right?  ... And our FOMC is on the roll, and given their mandate to fight the "unemplyment", I sure hope that we'll get to 6.5% unemployment sonner rather than later!

BTW the FOMC has no authority/mandate to do anything about the CD rates.  You know this. Don't you?

...

Bottom line my dear ChrisCD:  The language and the economy both need careful/measured consideration for one to understand the meaning!

Yours Truly,
- Anon
3
ytytytytytytytyt158 posts since
Jan 28, 2013
Rep Points: 623
10. Wednesday, May 8, 2013 - 12:13 PM
First, I'm not sure why you keep getting hung up on 2007 vs. 2008.  I was going by memory.  Having the year wrong doesn't change my overall point. 

As to what is the insignificant minority doing.  Well they are trying to be the warning bell, the yellow canary in the mine, etc.  After all it was the minority that called the problems way back then.  It was them that continue to make the call that things may not be so rosie as others want to pretend.  (Look Ma, I can carefully craft my reponse, too.). 

And I can use numbers as well as the next guy.  You are right, I didn't say where my Apple Count started.  And sure it was simplistic.  It was simplistic to make a point.  It isn't an improvement until the original value is met and surpassed.  And of course that original value is different for everyone and different for the different sectors in our economy.  Fuel prices are down from over $4/gal but well above $3/gal and $2/gal. 

Yes the DOW traded about 15,000 and that is record high.  And many people are profiting from it.  Great.  Just don't believe everything your great public servants tell you (regardless of what party they represent).  After all, they (or their writer(s)) are very carefully crafting each and every response.

And no the FOMC doesn't set CD rates (I never said they do), they set the Fed Funds which affects CD Rates. 

So, don't shut the front door just yet.

cd :O)

 
2
ChrisCDChrisCD70 posts since
Nov 18, 2010
Rep Points: 457
11. Wednesday, May 8, 2013 - 12:57 PM
Dear ytytytyt

I hope you don't think I was being critical of what is happening in the economy. To the contrary, I am very grateful to what has beem accomplished considering all the obstacles that have been put in the way.  I only wish that more could have been done fixing roads, insulating homes, buildings, schools, more fuel effecient cars etc  for those in need etc. 

I know that energy efficiency is the long term answer for a lot of our problems. We were able to build a new home with 2000 square feet on the main floor and heat and aircondition the main level as well as  the walk out basement  in Michigan and our total utililty bill for gas and electric averaged $123.79 a month for the last 12 months. Wouldn't it be wonderful if everyone could do that? Think of the jobs it could produce to insulate everyones home, to replace windows, furnaces and air conditioners. Our utility bills are $50 a month cheaper than in our old house and we did not have air conditioning or lawn sprinklers in our old house. I still have 2 refrigerators and a manual defrose freezer in this house. 
2
Ally6770Ally6770936 posts since
Jan 16, 2010
Rep Points: 2,723
12. Wednesday, May 8, 2013 - 3:26 PM
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My Dear ChrisCD,

So you go by memory, rather than checking the details first ... how does that work ... Accuse first, check the facts later?   :-)

The month/year holds great importance when it comes to the crisis we faced.  Who said what and when holds significance because we can tally what was known at the time when the stament was made.  Also we know who was the resident of the White House, not an insignificant detail I imagine.

Let us talk some more about the current Chairman, and what was this insignificant minority upto when then President Bush was about to nominate Dr Bernanke when the then Chairman Greenspan was about to step down?   Was the insignificant minority crowing as loudly back then?  Did the insignificant minority bother to lobby President Bush not to nominate Dr Bernanke?  How about lobbying the Senate not to confirm?

Anyways, those crowing about this have another chance now.  Change to get-off-your-b**t and stop Dr Yellen ... (Hey and if you fail you can revert back to crowing! )

Yours Truly,
- Anon
2
ytytytyt64 posts since
Feb 28, 2013
Rep Points: 197
13. Wednesday, May 8, 2013 - 4:52 PM
Dear rosie43,

I am in complete agreement about the energy!

Checkout the post I made on April 30, 2013 - 8:50 PM at link below.  The point (a) of the 4th bullet! ...

http://www.depositaccounts.com/forum/thread/13479-abby-spoke-cautiously-optimistic.html

Yours Truly,
- Anon
2
ytytytyt64 posts since
Feb 28, 2013
Rep Points: 197
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