Will Barack Obama Listen to His Financial Mentor?
Warren Buffet wrote an op-ed piece in the New York Times warning us about soaring debts and deficits. But as recent as July 9th of this year, Buffet also called for a second stimulus. It doesn't take a financial genius to figure out these are conflicting assessments. But first let's look at Buffet's current warning in what he titles "The Greenback Effect". While Buffet applauds the efforts of George Bush, Obama, and the federal reserve in the "crisis" last fall, he warns that the levels of borrowing could crush this fragile economy if there is not fiscal reconciliation:
"The United States economy is now out of the emergency room and appears to be on a slow path to recovery. But enormous dosages of monetary medicine continue to be administered and, before long, we will need to deal with their side effects. For now, most of those effects are invisible and could indeed remain latent for a long time. Still, their threat may be as ominous as that posed by the financial crisis itself.
To understand this threat, we need to look at where we stand historically. If we leave aside the war-impacted years of 1942 to 1946, the largest annual deficit the United States has incurred since 1920 was 6 percent of gross domestic product. This fiscal year, though, the deficit will rise to about 13 percent of G.D.P., more than twice the non-wartime record. In dollars, that equates to a staggering $1.8 trillion. Fiscally, we are in uncharted territory.
Because of this gigantic deficit, our country’s “net debt” (that is, the amount held publicly) is mushrooming. During this fiscal year, it will increase more than one percentage point per month, climbing to about 56 percent of G.D.P. from 41 percent." (emphasis mine) LINK
While Buffet explains there are three ways to finance this enormous debt, he conveniently leaves out the one that could bring about fiscal responsibility:
"An increase in federal debt can be financed in three ways: borrowing from foreigners, borrowing from our own citizens or, through a roundabout process, printing money."
How about STOP SPENDING Mr. Buffet? Is this little fact not considered in your quest for financial stability? Could there possibly be ulterior motives? As much disdain I have for the folks at the Huffington Post, I can't help referring to this commenter:
"Warren Buffet frets about surreal deficits and how they might affect the economy. He heaps praise on both the Bush and Obama Administrations, and of course the Federal Reserve, for saving the world, but now saved, it's back to the business of growing his already obscene fortune, while perversely lecturing the country about living within its means.
Most of Mr. Buffet's core holdings (Wells Fargo, GE, American Express) were slated for destruction but for the "heroics" of trillions in bailouts/backstops. Just lucky, I guess. Nuthin' to do with a destroyed budget. Sure." link
Of course, the idiot that wrote about Buffet's op-ed in Huffpo titles his post, "Why Warren Buffet Must Support Taxes on the Super-Rich", complete with the ad hominem "pay their fair share" argument. (I've tried not to use the word "idiot" when describing the rhetorical regurgitation's of our lost liberal friends, but in this case, the man is simply AN IDIOT.)
Returning to "Buffets Baffoonery", after Warren proceeds to explain the remedies that suits his "priorities", the political ramifications enter the conversation:
"Even with these heroic assumptions, the Treasury will be obliged to find another $900billion to finance the remainder of the $1.8 trillion of debt it is issuing. Washington’s printing presses will need to work overtime. Slowing them down will require extraordinary political will. With government expenditures now running 185 percent of receipts, truly major changes in both taxes and outlays will be required. A revived economy can’t come close to bridging that sort of gap. Legislators will correctly perceive that either raising taxes or cutting expenditures will threaten their re-election. To avoid this fate, they can opt for high rates of inflation, which never require a recorded vote and cannot be attributed to a specific action that any elected official takes. In fact, John Maynard Keynes long ago laid out a road map for political survival amid an economic disaster of just this sort: “By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens.... The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”
Have you got this straight folks? Mr. Buffet is completely ignoring Obama and the Democrats spending spree, and advocating the process of inflation to provide cover for his political cronies. What's another few more dollars at the pump, or for that matter, insurance premiums can use a little boost, can't they? Oh wait, if Obama and the liberal socialist have their way, wouldn't this become more government debt?
From a Chicago Tribune article:
"Barack is here to increase the abundance, but to spread it around a little more so that it is inclusive prosperity," Buffett said.
Obama responded with plenty of praise and some humility. "Not only am I a less successful investor, but my jokes aren't as funny," Obama said, later calling Buffett "an example of what's best in this country."
Obama said he gets plenty of advice on the campaign trail, but "Warren Buffett is one of those people that I listen to." LINK
I would submit that the JOKE is being played on the American public by Buffet, Obama, and a Democrat Party that are laughing all the way to their government subsidized banks----and few of us are joining in the laughter. Perhaps if they spend some quality time in the unemployment lines, (or in jail where they belong), they can work on polishing Obama's jokes.