Oracle of Omaha's bet against the dollar

[ckramer]

Stay away from the dollar.

That's the advice from the Oracle of Omaha this year to investors in his investment group Berkshire Hathaway.

"Our country's trade practices are weighing the dollar down. The decline in its value has already been substantial, but it is nevertheless likely to continue. Without policy changes, currency markets could even become disorderly and generate spillover effects, both political and financial," Buffett said.

"Americans end up owning a reduced portion of our country while non-Americans own a greater part. This force-feeding of American wealth to the rest of the world is now proceeding at the rate of $1.8 billion daily ... consequently, other countries and their citizens now own a net of about $3 trillion of the U.S. A decade ago their net ownership was negligible," Buffett said. He added that if foreign investors were to earn 5 percent on the net holding, then the United States needs to send $5.55 trillion of goods and services abroad every year to service the U.S. investments then held by foreigners, which means that 3 percent of its annual output would be going offshore.

Not only that, "as time passes, and as claims against us grow, we own less and less of what we produce. In effect, the rest of the world enjoys an ever-growing royalty on American output ... we are like a family that consistently overspends its income. As time passes, the family finds that it is working more and more for the 'finance company' and less for itself," Buffett said.

link

Are we fucked yet?

[revolution now]

1. thanks bush

even the smartest investor in america hates you

[fertilizeonarbusto]

2. I'm SOOOOO glad I switched my 401(k) funds around

Nervous now, folks? :scared:

[rkc3]

3. US Treasuries hit a "supply wall" in today's trading.

Doesn't sound like a big deal, but it would appear we've forced too much of our debt down the world's collective throat.

See http://finance.yahoo.com/mp

Stories at 11:52 and 3:12 provide some commentary.

[FloridaPat]

4. This goes beyond Bush. This has been going on for decades.

Thanks US government. What a waste. I think we should take every politician in the world and literally send them to the sun. Or shoot them at sunrise.

When are the people in this country going to wake up?

[PROGRESSIVE1]

5. It all started with Reagan.

[davekriss]

7. Yes it did

At the start of the Reagan administration we owned 3.7 times more of the rest of the world than the rest of the world owned of us; by the end of his second administration the rest of the world owned 0.8 times more of us than we owned of them. (Source: Benjamin Friedman, Day of Reckoning: The Consequences of American Economic Policy Under Reagan and After. Mr. Friedman is the William Joseph Maier Professor of Economics at Harvard University.)

Things continued to get worse, even through the Clinton years, to the current disaster. The U.S. is rotting out at it's core, just like all over-extended hegemons throughout history. Hold on to your hats, folks, as the end is not likely to be pretty. It was a collapsed economy, rampant inflation, and social insecurity that saw the rise of Hitler in Germany. What will our current circumstances bring forth? A last violent thrust forward of neo-liberal imperialism?

Say "Iraq" everyone...!

[Dcitizen]

6. It's very bad.

Deficits will be big trouble, history may not forget what GOPers chose. The US GNP growth has its limit and much lesser the emerging economies which may not interest in support the dollar by their miserable inflation. So it's worth what it should be.