Just one time, it would be refreshing if Buffett were to issue a press release stating:
"For the record, I have no interest in buying or investing in any of the following: Hovnanian, Toll Bros, Countrywide, or any other cruddy company seeking a quick pop its' share price so the senior executives can dump their stock.
However, I might be interested in buying little Linda Lopez's lemonade stand in Los Alamos."
Come on Warren, you aren't getting any younger and imagine the pleasure of seeing ole Charlie Gasbag on CNBC soak his trousers when you said it.
Buffett talks about not timing the market based on macroeconomics, but he did time the housing market perfectly.
And look at when he bought and sold Petro China, likewise perfect timing.
But in a way, you could say neither really had to do with the macroeconomic picture. The house was simply over-valued based on fundamentals.
His advice to average investors is to just invest incrementally, say $100/month or whatever, so sometimes you might buy high, but then you will sometimes buy at the bottom.
Regardless of what Buffett says he definately pays attention to macroeconomics.
Buying BNI when the cost of oil is going up and the cost of the materials being transported (agriculture) via BNI is going up is an investment based on macroeconomics.
All that aside, he is definately the greatest investor of all time.
Who else could be so cool, calm and relaxed that they could make a statement like "Its amusing that commentators regularly hyperventilate at the prospect of the Dow crossing an even number of thousands, such as 14,000 or 15,000."
Getting the macro picture exactly right can be compromised by a "innovative" federal reserve (and now it seems bank of england). Only free markets allow true capitalism, and the end of the US free market has yet to be fully understood.
"For the record, I have no interest in buying or investing in any of the following: Hovnanian, Toll Bros, Countrywide, or any other cruddy company seeking a quick pop its' share price so the senior executives can dump their stock.
He would never say that because he MIGHT buy their stock - but God help those execs & stockholders because if he did he would want them VERY cheap.
"so sometimes you might buy high, but then you will sometimes buy at the bottom"
Sure! But what happens when you accumulate a bunch of stock and the incremental purchase is not even material in relation to the assets in portfolio. THAT'S WHEN DCA KICKS YOUR ASS. Because by definition you will have less time to DCA your way back out of the hole. That's when you need to be as nimble as a hedgie, or they'll wipe you out because you're playin' in their playground, and they know your usin' Buffett's recommended playbook.
Never in the history of America has housing, incomes, and government been leveraged to the limit of its income. In the last seven years, America leveraged so high taht we had a negative savings rate.
FOR THOSE ON THE BUBBLE, ANY CONTRACTION IN INCOME RESULTS IN DEFAULT...AND NEVER BEFORE HAVE WE HAD SO MANY ON THE BUBBLE.
HENCE, EXPECT PARABOLIC RISES IN DEFAULTS BETWEEN NOW AND THE ELECTIONS.
Add in rising food prices, fuel prices, and other non housing related expenses, combined with unprecendented stagnant wages.....figure 1/2 to 2/3 of America now lives paycheck to paycheck without much reserves to speak of.....
with home prices crashing, commodity prices skyrocketing, job losses kicking in, ....WE likely COULD HAVE 30-40% OF MORTGAGES DEFAULT BEFORE WE HIT BOTTOM.
That doesn't include CRE, credit card, municipal, ect....
central_scrutinizer, very funny. I was thinking the same thing.
Joe Klein's conscience, he kept that one - it's in the article I linked to. Hey, it's a nice area!
SweetHomeKilla, there are so many factors - I think the dollar is closer to the bottom than the top, and interest rates (ten year treasury) have probably bottomed. But who knows? I think one of the most important macro questions is: will China's economy slow significantly after the Olympics? There are all kinds of impacts on the U.S. (and the global economy) with either answer. I keep going back and forth on that one, and right now I think their economy will slow.
Maybe John Titor was just a bit early with his recounting of the early 21st century events. He was just a kid after all when the current crisis was occurring!
Yeah, well, Buffet also said don't invest in something you don't understand. And right now I just don't understand how companies can report such terrible losses and their stock barely moves down, and often moves up.
How would domestic slowdown in China affect (not effect) the US? I would assume you mean the commodity angle?
JJL
Ooh! Commodities! Clearly, a slow down in China would result in lower domestic prices for steel, copper, and concrete as overseas demand slackens and domestic supplies build back. Of course, prices won't drop much because of the high cost of energy, and I'm not yet convinced that the oil producers won't keep prices high by reducing production levels (shades of OPEC!).
That said, I don't think China's manufacturing sector takes much of a hit because they sell to the lowest socio-economic class here in the US through their wholly-owned subsidiary, Teh Wal-Martz. As the middle-class gets ground down, they will shop Mal-Martz instead of J.C. Penney, Target, and their local mall. After all, the lower classes are expanding and they still have to eat, wear clothes, and buy useless plastic crap.
don't let warren fool you, he may not think he invest on macroeconomic outlooks but he does, he just implements it through purchasing companies that will benefit from his long-term trend thesis. a guy like buffet is like a Grandmaster chess player....their minds clearly see 10, 15, 50 moves ahead in incredibly complex, constantly evolving scenarios.
if warren sees a lot of time for delveraging and much pain along the way, i wouldn't blindly take his word for it and invest based on that, but I would sure as heck do a ton of due diligence if i was gonna take the other side of the bet.
Manhammer: That said, I don't think China's manufacturing sector takes much of a hit because they sell to the lowest socio-economic class here in the US through their wholly-owned subsidiary, Teh Wal-Martz. As the middle-class gets ground down, they will shop Mal-Martz instead of J.C. Penney, Target, and their local mall. After all, the lower classes are expanding and they still have to eat, wear clothes, and buy useless plastic crap.
There's something completely repugnant in the way you kept referring to "lowest, lower... classes" in that gem of a comment of yours. If there was a message in there, it got totally lost, at least for me.
Wall Street didn't listen to Buffett as derivatives grew into a massive bubble, from about $100 trillion to $516 trillion by 2007. The new derivatives bubble was fueled by five key economic and political trends:
Sarbanes-Oxley increased corporate disclosures and government oversight
Federal Reserve's cheap money policies created the subprime-housing boom
War budgets burdened the U.S. Treasury and future entitlements programs
4.Trade deficits with China and others destroyed the value of the U.S. dollar
Oil and commodity rich nations demanding equity payments rather than debt
In short, despite Buffett's clear warnings, a massive new derivatives bubble is driving the domestic and global economies, a bubble that continues growing today parallel with the subprime-credit meltdown triggering a bear-recession.
Thomas Jefferson: "If the American people ever allow the banking system to control their money, first by inflation, then by deflation; their children will one day wake up homeless on the continent their fathers conquered."
Wait, that has a very familiar ring to it...almost like déja vu all over again. Hah! And some people said the forefathers could never have predicted the the future of the country they help build.
if i had to guess about what lies in China's and the US' future, i would have to draw a parallel going back to the 1920's with the US and Great Britain. Britain was the world's superpower at the time (like we are today) and was devaluing its currency like we are today resulting in a drawdown of their gold reserves. so instead of acting responsibly by raising interest rates, they asked us (China equivalent over the last 7 yrs) to lower our interest rates to prevent the run on their gold. this resulted in rampant speculation and a stock mkt bubble here leading to the great stock mkt crash of 1929 (similar to whats happening to the SSEC today). after that Great Britain was never the same.
I remember Buffett discussing why he sold the house in an old interview. He said the replacement value of the materials that went into building the house roughly came to $500k and the house sits on roughly 1/14th of an acre so with a $3.5 million sales price the land was being valued at more than $40 million an acre. I guess he thought the land valuation was a little rich ;>
more then just funding pensions - look at budget surpluses, exports, and what states are putting into infrastructure, education, job growth and so on.
Washington State is in top 5.
More and more living in these 'have act together states' vs most of the hurting rest and esp. deadbeat states is going to a crucial factor after Bushco has looted the US treasury more than any other admin in US history.
In Bad Money, Phillips describes the consequences of our misguided economic policies, our mounting debt, our collapsing housing market, our threatened oil, and the end of American domination of world markets. Americas current challenges (and failures) run striking parallels to the decline of previous leading world economic powersespecially the Dutch and British. Global overreach, worn-out politics, excessive debt, and exhausted energy regimes are all chilling signals that the United States is crumbling as the world superpower.
"Bad money refers to a new phenomenon in wayward megafinancethe emergence of a U.S. economy that is globally dependent and dominated by hubris-driven financial services. Also bad are the risk miscalculations and strategic abuses of new multitrillion-dollar products such as asset-backed securities and the lure of buccaneering vehicles like hedge funds. Finally, the U.S. dollar has been turned into bad money as it has weakened and become vulnerable to the worlds other currencies. In all these ways, bad finance has failed the American people and pointed U.S. capitalism toward a global crisis.
A couple of weeks ago here I stated that I was sure the U.S. had replenished and replaced its grain reserves many times in the last 20 years. I was wrong. I wrote to the USDA asking if we do indeed still have grain reserves. Got this today:
The United States does not have a strategic grain reserve in the sense that the government buys and hold grain for purpose of releasing it in response to market conditions. United States grain stocks are privately held.
The U.S. does have the Bill Emerson Humanitarian Trust which can hold up to 4 million tons of grain for the purpose of responding to humanitarian food aid needs. The President authorized the release of approximately $200 million worth of grain from the Trust for food aid.
Thank you for writing.
Sincerely,
Stephen R. Crutchfield
Assistant Administrator
USDA Economic Research Service
1800 M Street NW Room 4149N
Washington, DC , 20002
(202) 694 5406 (office)
(202) 641 5978 (cell) scrutch@ers.usda.gov
Methinks you are correct; Washington State will be okay; combined with being in the top 5, they are also the furthest away from DC in the continental US.
The US will be like a deflated balloon after BushCo leaves office; you have to feel sorry for whomever gets handed the controls of the flaming pile of shit he has created.
NSA writes:
Received an interesting letter today that stated there are only 5 states in the US that can currently fund their public employees' pension funds.
With Calpers throwing money left and right trying to keep things above water (I know for a fact they are heavily invested in CRE and now adding heavily to commodities), I have to imagine 5 states will become 4 will become 3...and then they were none.
The pension funds are always the final and easiest targets.
Actually Alaska is the farthest away from DC in the continental US - Washington state is the farthest away of the 48 contiguous states - it is on the North American continent last I checked.
Received an interesting letter today that stated there are only 5 states in the US that can currently fund their public employees' pension funds.
Thanks for bringing this up. This is one of the biggest debt-driven scandals in the U.S. Due to federalism, the fed govt. is powerless to get the states to fund their pensions honestly, as they did with private DB pensions in the PPA 06. Of course, with Vallejo and perhaps many other localities, this problem also is huge at the local level. In some cases, state govts. are on the hook for pensions of local fire/police/teachers.
Some states are gonna go broke and default on their bonds and pensions. I believe the first states to go broke will be these:
NJ
MI
OH
It's not that they can't keep floating taxes and debt. It's that they will have a shrinking tax base as people get fed up and leave.
The populations of MI and OH will probably be 20-30% less in a decade. It's shocking to think about. We need a Marshall plan for these states.
Hillary's plan for green jobs and infrastructure improvements could be worthwhile for these two states.
NJ is a basket case unto itself and almost hopeless.
I'm hoping there is at least a full chapter on the Fed.
Speaker73 | 04.21.08 - 11:25 pm | #
Why is a private cartel in charge of issuing our money? Do we really work 4 months of the year to just pay back interest to the Fed? What if our treasury just issued it's own money and the private cartel had to borrow from it if it wanted a bank charter?
"The government should create, issue and circulate all the currency and credit needed to satisfy the spending power of the government and the buying power of consumers..... The privilege of creating and issuing money is not only the supreme prerogative of Government, but it is the Government's greatest creative opportunity. By the adoption of these principles, the long-felt want for a uniform medium will be satisfied. The taxpayers will be saved immense sums of interest, discounts and exchanges. The financing of all public enterprises, the maintenance of stable government and ordered progress, and the conduct of the Treasury will become matters of practical administration. The people can and will be furnished with a currency as safe as their own government. Money will cease to be the master and become the servant of humanity. Democracy will rise superior to the money power."
Abraham Lincoln.
Howdy neighbor! Better invest in a few means of self-defense, too, 'cuz things are going to get ugly here"
I am afraid you're probably right. Anyone that thinks the 90s LA riots can be explained away as a fluke is delusional. It was despair brought on by poor economic conditions, that turned to rage. The king beating & trial was just the fuse.
There's something completely repugnant in the way you kept referring to "lowest, lower... classes" in that gem of a comment of yours. If there was a message in there, it got totally lost, at least for me.
bzb
Well, I certainly did not mean to offend. Were you repulsed by the fact that there are poor people here in the US, that they are at the bottom of the socio-economic spectrum, that they tend to shop at Wal-Mart, or that I pointed out an unpleasantness? Not really being snarky. If I know what offended you, I'll try to avoid doing so in the future.
I love seeing records broken, like at the olympics. Think oil will break through $120, so we can celebrate that achievement ?
Not too long ago traders in Chicago were cheering in amazement as oil topped $100. Pitiful really. Comes out of the pockets of families putting a roof over their heads or paying for their kids' education.
FFDIC writes:
"Food Rationing Confronts Breadbasket of the World"
Paying $1/lb for rice is not exactly hardship. One lb is probably enough for a family for one day. Call me when people are paying $100(tank of gas) for a 25 lb bag of rice.
I can just imagine the poor people in CostCo with their carts full of $300 of frozen food and DVDs worried about the price of rice and beans.
Here, of course, you are right. It's no hardship, really (unless you happen to be really poor, or, er wealth challenged). However, if you happen to be one of the billion plus people living on less than a dollar a day in other countries, even half that is hugely distressing. Imagine paying half of your daily earnings just for food. Already many people here in the US pay more than half their daily earnings for housing.
While the US hasn't yet been crushed with high food prices (and BTW, your taxes will, must, and should subsidize the high cost of food for the poorest among us as the costs continue to spiral up with energy), it will cost us more than people think. Not just in terms of ready cash, but in terms of poor nutrition for those most at risk, the elderly and children, resulting in higher overall costs to society.
R. Manhammer - The point is that Americans whining about the cost of food is humorous. Most of us throw away more calories then we consume. Subsidizing staples like beans, rice, cheese and milk shouldn't be hard. Take the money in the budget for handouts to producers and allocate it to consumers.
Not too long ago traders in Chicago were cheering in amazement as oil topped $100. Pitiful really. Comes out of the pockets of families putting a roof over their heads or paying for their kids' education.
"They're f------g taking all the money back from you guys?" complains an Enron employee on the tapes. "All the money you guys stole from those poor grandmothers in California?"
"Yeah, grandma Millie, man"
"Yeah, now she wants her f------g money back for all the power you've charged right up, jammed right up her a------ for f------g $250 a megawatt hour."
Enron energy traders. And you thought the Huns were bad.
R. Manhammer - The point is that Americans whining about the cost of food is humorous. Most of us throw away more calories then we consume. Subsidizing staples like beans, rice, cheese and milk shouldn't be hard. Take the money in the budget for handouts to producers and allocate it to consumers.
w
There is, and has been for many years, an ongoing arbitrage in the lower socio-economic classes swapping precious cash resources for the most possible calories. Hence the dominance of McDonald's at the lower end of restaurant chains. Healthy stuff like rice, beans, and cheese, simply aren't in the mix. We can subsidize them, but that doesn't give people the hours required at home to prepare a healthy meal from basic, healthy foods.
Of course, you aren't talking about working class and the poor. You are talking about the middle class, and I agree with you.
The poor immigrants I know eat plenty of rice, beans, corn and meat. Healthier than McDonalds and just as cheap. They bring it from home or eat from lunch trucks. No McDonalds. If people are too lazy to cook then maybe they shouldn't eat.
My experience with my own family is that the largest and laziest members are the ones who eat fast food a lot. They could easily save money by eating at home but they are too lazy to cook regularly.
"Healthy stuff like rice, beans, and cheese, simply aren't in the mix. We can subsidize them, but that doesn't give people the hours required at home to prepare a healthy meal from basic, healthy foods."
Oh please, eating a healthy, inexpensive diet is not a luxury in the USA. For whatever reason, many people simply don't know how/don't care to do it. This does not just include poorer people by any means, but an unwillingness / inability to cook proper food does hit the poor harder than the well off. Rice and beans certainly need no subsidy for anyone in the USA. Infant formula and milk I can understand, but even if prices were to increase substantially I could still feed my family very well on a pittance. McDonalds or the like is a choice (generally a poor one), but it is made freely.
Hey CR- So why did Buffett buy the other house (next door? a few doors down?) Did he have a use for it? Was it just because it was too good a bargain to pass up? I have a hard time believing that he wanted to buy a place just because he might make a few million. If that were the case he'd have been scooping up a bunch.
I'm guessing he has a maintenance team looking after the properties while he's in Omaha, and that the incremental cost of having them look after two wasn't so high, but he had to have some purpose in mind that warranted the purchase and subsequent sale.
This does not just include poorer people by any means, but an unwillingness / inability to cook proper food does hit the poor harder than the well off.
Bob Mologna
" R. Manhammer writes:
This does not just include poorer people by any means, but an unwillingness / inability to cook proper food does hit the poor harder than the well off.
Bob Mologna
That's my point, thanks.
R. Manhammer | 04.22.08 - 2:56 am"
Still, what explains the fact that many poor indigenous Americans (immigrants seem to manage pretty well) are unable/unwilling to use cheap healthy staples to cook proper meals? It's as though there is a sense of fatalism in these communities. I'm puzzled by it. Most of my favourite meals I've cooked when I was poor and scratching for ingredients. There is some deep rot in our national psyche I fear.
Oh, wait a second... This is a finance and real estate blog, not a culinary anthropological one. That's where I went wrong...
The level of ignorance and arrogance on this post is depressing. Hundreds of millions of people in the world live on less than 1$ per day. If the price of the principal staple, rice, goes to 1$ per pound per day, then you are forcing millions into starvation. I'm sure you won't lose any sleep over that.
As far as Americans being too lazy to cook,I suggest you get your fat, Cheez Doodle eating ass off the couch and go down to the local super market. Take a calculator and buy one week's worth of fresh meat, fresh fish, fresh vegetable, and milk for a family of five. Then buy about one-third the calories in McDonalds or crappy prepared foods (cereal, cola, instant noodles, mac and cheese, etc) and tell me what the difference in cost is.
Also tell me how it would be to work a menial job for twelve hours a day six days a week (both parents) and then go home and cook a meal. When do you even shop for fresh food.
"As far as Americans being too lazy to cook,I suggest you get your fat, Cheez Doodle eating ass off the couch and go down to the local super market. Take a calculator and buy one week's worth of fresh meat, fresh fish, fresh vegetable, and milk for a family of five. Then buy about one-third the calories in McDonalds or crappy prepared foods (cereal, cola, instant noodles, mac and cheese, etc) and tell me what the difference in cost is."
What, exactly is the point you are trying to make? Why would we want to compare grocery costs to "one-third the calories in McDonalds"? McDonald's probably doesn't come off too badly on a calorie/$ basis if you get the cheapest items, but what is the 1/3 reference?
Don't know if you are really are an expat, but I've been dirt poor in the US, and I've been dirt poor abroad (with kids). I'd prefer to be here any day. I never fed my family on McDonald's, I couldn't flippin' afford it! Really, what point are you trying to make?
Also, I didn't say that Americans were too lazy to cook. Only that for some reason they often don't.
"Regardless of what Buffett says he definately pays attention to macroeconomics."
It may be a distinction without a difference, but you can frequently get the same answer (or the right answer) bottom up as top down.
The rail purchases was a fundamental call, although BNI is heavily into coal and Buffett also owns utilities, so he knows what's going on.
Railroads were like airlines until deregulation, and then it took some time for them to get traction and consolidate. Buffett said he was late to the party, but I'm sure that as a security analyst in the 50's, he had plenty of experience looking at railroads. Railroads were bad businesses for almost 100 years, and the main reason they got well was deregulation (the Staggers Bill) and consolidation. It took a century to squeeze the excess capacity out of the system. Anyway, earlier this year the 4 significant Class I railroads could be purchased for 120 billion or less. Buffett could have bought them except anti trust would have made it impossible.
Sort of the same as the $40 million an acre land.
The point being he has had a good record in calling market excesses, like the 2000 bubble (it's in the Fortune archive).
The level of ignorance and arrogance on this post is depressing. Hundreds of millions of people in the world live on less than 1$ per day. If the price of the principal staple, rice, goes to 1$ per pound per day, then you are forcing millions into starvation.
I'm with you expat, but it wasn't us who slashed interest rates to save our pigmen banker cronies.
That would be Blackhawk Bennie, "Hope Now" Hank and our wonderful Federal reserve.
eman,
Just think, If Jefferson were on financial TV today, he'd be met with the hosts and other panelists interrupting and laughing at him as he attempted to make a point.
Um, has everyone forgotten that Buffett has had quite a few foreign currency positions in the last few years? If that isn't a macroeconomic view, then I don't know what is.
I wonder if Buffett has ever landed in Omaha under sniper fire?
Paying $1/lb for rice is not exactly hardship. One lb is probably enough for a family for one day.
One pound of rice is about 1600 calories. The UN ration for a family of four with small children is about 8-9K calories per day. Or about 5-6 lbs of rice.
Here's a brutal article on the problems that food prices are causing:
And leave it to American's to make the situation worse. Tell them they can buy as much as they want and they buy a cup. Tell them that they can only buy one bag and they want to buy a swimming pool's worth.
And here's another brilliant idea! Let's turn the most rare calories of all, those that we can eat into gasoline! Not coal or natural gas but food!
And if a few hundred million people starve? We'll, it will be much better for the earth in the long run.
But, in another 8-10 months when the media has caught up with the story they'll send their $10-$20 bucks to the Red Cross.
I submit that perhaps food price wars were part of The Plan to put a governor on Chindia and southern hemisphere Islamist states.
Reagan's advisors realized that the Soviet economy was a Potemkin and we could simply outspend them without firing a shot.
He can't openly declare a resource war, but perhaps Bush's advisors recognize that nearly all our resource competitors are linked by the common thread of being unable to feed and irrigate themselves.
But, you know, Occam's razor. Perhaps the unintended consequences of biofuels were just the product of sheer idiocy.
"Today, the Federal Preserve, stepped in to give tax breaks and certain other rights including cash, swaps, Treasury bonds to - among others - ConAgra, Campbells, and Sara Lee. In this time of growing food shortages this special action was needed to prevent a collapse of the food system."
--- s Edward T. Schafer, US Secretary of Agriculture and friend of Commander-in-Chef, George W. Bush.
[Royal Bank of Scotland (shed 2.6 percent after it announced a record 12 billion pound ($24 billion) rights issue to cover a potential 5.9 billion pound writedown on the value of shaky assets and help rebuild a stretched balance sheet]
...
[RBS will offer 11 new shares for every 18 existing shares at 200 pence per share in the underwritten rights issue, representing a 46 percent discount to Monday's closing price.]
One thing that some people are forgetting in terms of the increases in food prices is that most of the people who live on less than 1 USD a day live in rural areas. What do a lot of them do? They grow food, of some kind or another. At the very least this helps to protect them against rising food prices, and in some cases they are actually net beneficiaries.
This does not mean that there are not millions of people suffering from rising food prices, or that rising food prices are a good thing, but it is worth mentioning for the sake of balance.
--
"I was reading through the comments this morning and decided to switch to doing research on the Holocaust to cheer myself up."
You should start doing research on Financial Holocaust in America by Financial Nazis of New York City. Led by Evildoers Greenspan, Bush and Burn-ass-ke Financial Nazis built Debt Concentration Camps to "house" 30,000,000 households piped with financial poison gas called backbreaking debt-service.
Evil occurs in many forms and in America it took financial form. The secret goal of Financial Nazis of America is to make German Nazis look good! By galley, they will! My forecast is that Financial Nazis will cause at least 600,000,000 deaths, worldwide, over the next ten years as the whole financial system, built in NYC, leads to collapse of many govts, including the govt of the United States.
--
more...
My forecast date for the collapse of the US econo-political system, as it has existed, is 2030. Many other govts will start falling before that, e.g., prolonged martial law in India to control violence.
Evil of moneybags of London and NYC will become known as history is properly analyzed. These moneybags contributed greatly during 1890-1920 to the future Holocaust. Since they won they wrote the history covering up their dirty deeds.
Many parents today do not know how to cook or shop for healthy food. Cooking and making a budget are skills. Skills no longer taught at school and often not learned at home.
In the 1940s and 1950s lower income people tended to have a healthier diet than the upper middle class because they ate more (often home-grown) vegetables and less meat while the middle classes were eating more canned food and "modern" better-living-through science prepared food and meat with every meal. There is tons of research out there on this.
Many communities have efforts to increase community gardens and build gardening, budgeting, and cooking skills among young people. Teach your kids to cook! (and balance a checkbook)
kicker, try to keep the arguments in context. An article with an American whining about paying $1/lb for rice is just funny. People at CostCo whining about the price of rice is funny. I doubt many American families use more than 1 lb of rice a day. But if they use 2 lbs a day I am sure they will be able to afford the $2 a lot easier than someone in Indonesia.
People living in the third world worried about survival and being able to afford their staple foods is NOT funny.
Furthermore, the idea that prepared junk food is cheaper than staples is a myth.
I was amazed that Faux News economic commentators, including John Rutledge, called the USG's farm and ethanol subsidies criminal because of how they are hurting the poor around the world.
AMERICAN ECONOMY AND FINANCIAL SYSTEM ARE FULLY CRIMINALIZED AT LEAST FOR THE PAST TEN YEARS.
The War On Iraqis is just to take attention away from USG's criminality. 1% Iraqis support the Iraqi govt and only 20% Americans are satisfied with their govt (Congress's approval rating is in teens). Talk about America's and world's democratic dupes. Democracy will be fully discredited in a decade or two.
I was born in 1940 in a "middle class" family -- father engineer, mother pharmacist, but stay at home mom at the time. Our basic dinner was meat, potatoes, and canned vegetables (often home canned actually). My wife's background was very similar.
I think now my wife and I eat a healthier diet with less meat more fish and more fresh vegetables -- in the summer it is only one block to the farmer's market, although not any cheaper than the supermarket.
I remember one poster here a year or so ago who said when he started his business he and his wife ate red beans and rice until they couldn't stand them anymore. Then they ate black beans and rice. Not a bad diet actually if you have some hot sauce to go with it. Certainly tastes better (to me) than fast food of any brand.
Paying $1/lb for rice is not exactly hardship. One lb is probably enough for a family for one day. Call me when people are paying $100(tank of gas) for a 25 lb bag of rice.
I can just imagine the poor people in CostCo with their carts full of $300 of frozen food and DVDs worried about the price of rice and beans.
w | 04.22.08 - 1:14 am | #
W,
Get a clue, there are well over a billion people in this world who earn less than $1 a day. Not a hardship to pay $1 a pound for rice? Tell that to the people in the shanty towns of Calcutta or Jakarta.
Ummm, $1/lb is US retail price.
The price is generally lower in poor countries.
I'm sure the price of rice is a hardship for those making less than $1/day (or even $5/day). But the price is unlikely to be $1/lb.
A few minutes of googling shows April prices of (about) $0.20/lb in the Philippines, and about $0.25/lb in Nicaragua.
Painful? Doubtless. But not $1/lb.
(If anyone has more accurate info, please post it.)
kicker, try to keep the arguments in context. An article with an American whining about paying $1/lb for rice is just funny. People at CostCo whining about the price of rice is funny. I doubt many American families use more than 1 lb of rice a day. But if they use 2 lbs a day I am sure they will be able to afford the $2 a lot easier than someone in Indonesia.
Sorry, just a tad bitter about the ability of the "free market" to create a food shortage where there is none...
First? Just this once?
Ya gotta hand it to Buffet, as he always says..."buy what you know"
You know, deleveraging by its nature takes a lot of time, a lot of pain.
Especially when they just go leveraging into something else.
Just one time, it would be refreshing if Buffett were to issue a press release stating:
"For the record, I have no interest in buying or investing in any of the following: Hovnanian, Toll Bros, Countrywide, or any other cruddy company seeking a quick pop its' share price so the senior executives can dump their stock.
However, I might be interested in buying little Linda Lopez's lemonade stand in Los Alamos."
Come on Warren, you aren't getting any younger and imagine the pleasure of seeing ole Charlie Gasbag on CNBC soak his trousers when you said it.
Buffett talks about not timing the market based on macroeconomics, but he did time the housing market perfectly.
And look at when he bought and sold Petro China, likewise perfect timing.
But in a way, you could say neither really had to do with the macroeconomic picture. The house was simply over-valued based on fundamentals.
His advice to average investors is to just invest incrementally, say $100/month or whatever, so sometimes you might buy high, but then you will sometimes buy at the bottom.
"Especially when they just go leveraging into something else"
Schizophrenia defined:
http://clevelandfed.org/research/data/fedfunds/2008/April/18/image1.gif
IIRC, the Laguna Beach sale was not long after his wife (Susan) died. That may have played a role in his decision.
Regardless of what Buffett says he definately pays attention to macroeconomics.
Buying BNI when the cost of oil is going up and the cost of the materials being transported (agriculture) via BNI is going up is an investment based on macroeconomics.
All that aside, he is definately the greatest investor of all time.
Who else could be so cool, calm and relaxed that they could make a statement like "Its amusing that commentators regularly hyperventilate at the prospect of the Dow crossing an even number of thousands, such as 14,000 or 15,000."
Getting the macro picture exactly right can be compromised by a "innovative" federal reserve (and now it seems bank of england). Only free markets allow true capitalism, and the end of the US free market has yet to be fully understood.
"For the record, I have no interest in buying or investing in any of the following: Hovnanian, Toll Bros, Countrywide, or any other cruddy company seeking a quick pop its' share price so the senior executives can dump their stock.
He would never say that because he MIGHT buy their stock - but God help those execs & stockholders because if he did he would want them VERY cheap.
"so sometimes you might buy high, but then you will sometimes buy at the bottom"
Sure! But what happens when you accumulate a bunch of stock and the incremental purchase is not even material in relation to the assets in portfolio. THAT'S WHEN DCA KICKS YOUR ASS. Because by definition you will have less time to DCA your way back out of the hole. That's when you need to be as nimble as a hedgie, or they'll wipe you out because you're playin' in their playground, and they know your usin' Buffett's recommended playbook.
CR-
Have you considered significantly rising interest rates or continued dollar decline into you forecasts?
Do you think we can avoid both over the next 2 years?
Jesus Christ barely, that graph hurt my brain.
I thought Warren bought a house in Laguna Beach back in the 60's(or was it 50's)? Did he sell that one?
Never in the history of America has housing, incomes, and government been leveraged to the limit of its income. In the last seven years, America leveraged so high taht we had a negative savings rate.
FOR THOSE ON THE BUBBLE, ANY CONTRACTION IN INCOME RESULTS IN DEFAULT...AND NEVER BEFORE HAVE WE HAD SO MANY ON THE BUBBLE.
HENCE, EXPECT PARABOLIC RISES IN DEFAULTS BETWEEN NOW AND THE ELECTIONS.
Add in rising food prices, fuel prices, and other non housing related expenses, combined with unprecendented stagnant wages.....figure 1/2 to 2/3 of America now lives paycheck to paycheck without much reserves to speak of.....
with home prices crashing, commodity prices skyrocketing, job losses kicking in, ....WE likely COULD HAVE 30-40% OF MORTGAGES DEFAULT BEFORE WE HIT BOTTOM.
That doesn't include CRE, credit card, municipal, ect....
Take a look at Vallejo CA tomorrow.
central_scrutinizer, very funny. I was thinking the same thing.
Joe Klein's conscience, he kept that one - it's in the article I linked to. Hey, it's a nice area!
SweetHomeKilla, there are so many factors - I think the dollar is closer to the bottom than the top, and interest rates (ten year treasury) have probably bottomed. But who knows? I think one of the most important macro questions is: will China's economy slow significantly after the Olympics? There are all kinds of impacts on the U.S. (and the global economy) with either answer. I keep going back and forth on that one, and right now I think their economy will slow.
Best Wishes.
Maybe John Titor was just a bit early with his recounting of the early 21st century events. He was just a kid after all when the current crisis was occurring!
NY - The Sun
Food Rationing Confronts Breadbasket of the World (food will become more important than housing)
Food Rationing Confronts Breadbasket of the World - April 21, 2008 - The New York Sun
Yeah, well, Buffet also said don't invest in something you don't understand. And right now I just don't understand how companies can report such terrible losses and their stock barely moves down, and often moves up.
So I ain't buying.
CR,
respectivley,
How would domestic slowdown in China affect (not effect) the US? I would assume you mean the commodity angle?
How would domestic slowdown in China affect (not effect) the US? I would assume you mean the commodity angle?
JJL
Ooh! Commodities! Clearly, a slow down in China would result in lower domestic prices for steel, copper, and concrete as overseas demand slackens and domestic supplies build back. Of course, prices won't drop much because of the high cost of energy, and I'm not yet convinced that the oil producers won't keep prices high by reducing production levels (shades of OPEC!).
That said, I don't think China's manufacturing sector takes much of a hit because they sell to the lowest socio-economic class here in the US through their wholly-owned subsidiary, Teh Wal-Martz. As the middle-class gets ground down, they will shop Mal-Martz instead of J.C. Penney, Target, and their local mall. After all, the lower classes are expanding and they still have to eat, wear clothes, and buy useless plastic crap.
don't let warren fool you, he may not think he invest on macroeconomic outlooks but he does, he just implements it through purchasing companies that will benefit from his long-term trend thesis. a guy like buffet is like a Grandmaster chess player....their minds clearly see 10, 15, 50 moves ahead in incredibly complex, constantly evolving scenarios.
if warren sees a lot of time for delveraging and much pain along the way, i wouldn't blindly take his word for it and invest based on that, but I would sure as heck do a ton of due diligence if i was gonna take the other side of the bet.
"Especially when they just go leveraging into something else."
You mean like crude oil commodities contracts where $7,500 allows you to control 1,000 bbls of oil currently valued at around $117,500?
Yeah, leveraging works really well when it's going your way but look out when the bottom falls out.
The Berkshire Hathaway annual meeting is the weekend after next.
Any of you going?
Warren buys what he knows and he buys it cheap. Read his letter to shareholders. Simple and to the point.
Kind of opposite of the real estate queen who bought at the top because "no one told us".
This ain't rocket science, unless you are trying to pull of fast one.
In a reccent interview to CNBC-India, veteran Indian Investor R.J. predicts depression in US.
Manhammer: That said, I don't think China's manufacturing sector takes much of a hit because they sell to the lowest socio-economic class here in the US through their wholly-owned subsidiary, Teh Wal-Martz. As the middle-class gets ground down, they will shop Mal-Martz instead of J.C. Penney, Target, and their local mall. After all, the lower classes are expanding and they still have to eat, wear clothes, and buy useless plastic crap.
There's something completely repugnant in the way you kept referring to "lowest, lower... classes" in that gem of a comment of yours. If there was a message in there, it got totally lost, at least for me.
Texas passes New York on Fortune 500 list
Texas passes New York on Fortune 500 list |
News for Dallas, Texas | Dallas Morning News
| Dallas Business News
Wall Street didn't listen to Buffett as derivatives grew into a massive bubble, from about $100 trillion to $516 trillion by 2007. The new derivatives bubble was fueled by five key economic and political trends:
4.Trade deficits with China and others destroyed the value of the U.S. dollar
In short, despite Buffett's clear warnings, a massive new derivatives bubble is driving the domestic and global economies, a bubble that continues growing today parallel with the subprime-credit meltdown triggering a bear-recession.
Oil and gas prices are the headline news item on the local news.
Joe Six must be terrorized with this combination of plummeting house prices and soaring gas prices.
I know lots of people with big SUVs who are saying they're having problems despite having healthy six-figure incomes etc.
Must be a nightmare for anyone living paycheck to paycheck or margin call to margin call.
Thomas Jefferson: "If the American people ever allow the banking system to control their money, first by inflation, then by deflation; their children will one day wake up homeless on the continent their fathers conquered."
Wait, that has a very familiar ring to it...almost like déja vu all over again. Hah! And some people said the forefathers could never have predicted the the future of the country they help build.
..."buy what you know"
I don't know anything, and that's why I ain't buying nothing. Besides, all my credit cards are maxxed out.
Received an interesting letter today that stated there are only 5 states in the US that can currently fund their public employees' pension funds.
North Carolina is one of them; don't know the other 4. Might be something for state employees to check into, though.
if i had to guess about what lies in China's and the US' future, i would have to draw a parallel going back to the 1920's with the US and Great Britain. Britain was the world's superpower at the time (like we are today) and was devaluing its currency like we are today resulting in a drawdown of their gold reserves. so instead of acting responsibly by raising interest rates, they asked us (China equivalent over the last 7 yrs) to lower our interest rates to prevent the run on their gold. this resulted in rampant speculation and a stock mkt bubble here leading to the great stock mkt crash of 1929 (similar to whats happening to the SSEC today). after that Great Britain was never the same.
CR,
I remember Buffett discussing why he sold the house in an old interview. He said the replacement value of the materials that went into building the house roughly came to $500k and the house sits on roughly 1/14th of an acre so with a $3.5 million sales price the land was being valued at more than $40 million an acre. I guess he thought the land valuation was a little rich ;>
Best,
PDX
whoops, they included that tidbit in the article you linked to.
@ NSA
more then just funding pensions - look at budget surpluses, exports, and what states are putting into infrastructure, education, job growth and so on.
Washington State is in top 5.
More and more living in these 'have act together states' vs most of the hurting rest and esp. deadbeat states is going to a crucial factor after Bushco has looted the US treasury more than any other admin in US history.
idoc you should pick up this book...
Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism
by Kevin Phillips
Amazon.com: Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism (9780670019076): Kevin Phillips: Books
In Bad Money, Phillips describes the consequences of our misguided economic policies, our mounting debt, our collapsing housing market, our threatened oil, and the end of American domination of world markets. Americas current challenges (and failures) run striking parallels to the decline of previous leading world economic powersespecially the Dutch and British. Global overreach, worn-out politics, excessive debt, and exhausted energy regimes are all chilling signals that the United States is crumbling as the world superpower.
"Bad money refers to a new phenomenon in wayward megafinancethe emergence of a U.S. economy that is globally dependent and dominated by hubris-driven financial services. Also bad are the risk miscalculations and strategic abuses of new multitrillion-dollar products such as asset-backed securities and the lure of buccaneering vehicles like hedge funds. Finally, the U.S. dollar has been turned into bad money as it has weakened and become vulnerable to the worlds other currencies. In all these ways, bad finance has failed the American people and pointed U.S. capitalism toward a global crisis.
A couple of weeks ago here I stated that I was sure the U.S. had replenished and replaced its grain reserves many times in the last 20 years. I was wrong. I wrote to the USDA asking if we do indeed still have grain reserves. Got this today:
The United States does not have a strategic grain reserve in the sense that the government buys and hold grain for purpose of releasing it in response to market conditions. United States grain stocks are privately held.
The U.S. does have the Bill Emerson Humanitarian Trust which can hold up to 4 million tons of grain for the purpose of responding to humanitarian food aid needs. The President authorized the release of approximately $200 million worth of grain from the Trust for food aid.
Thank you for writing.
Sincerely,
Stephen R. Crutchfield
Assistant Administrator
USDA Economic Research Service
1800 M Street NW Room 4149N
Washington, DC , 20002
(202) 694 5406 (office)
(202) 641 5978 (cell)
scrutch@ers.usda.gov
km4,
Methinks you are correct; Washington State will be okay; combined with being in the top 5, they are also the furthest away from DC in the continental US.
The US will be like a deflated balloon after BushCo leaves office; you have to feel sorry for whomever gets handed the controls of the flaming pile of shit he has created.
NSA writes:
Received an interesting letter today that stated there are only 5 states in the US that can currently fund their public employees' pension funds.
With Calpers throwing money left and right trying to keep things above water (I know for a fact they are heavily invested in CRE and now adding heavily to commodities), I have to imagine 5 states will become 4 will become 3...and then they were none.
The pension funds are always the final and easiest targets.
California is toast regardless what CALPERS does.
NSA,
Actually Alaska is the farthest away from DC in the continental US - Washington state is the farthest away of the 48 contiguous states - it is on the North American continent last I checked.
km4
looks like an interesting read.
tj & the bear writes:
California is toast regardless what CALPERS does.
Being a resident of the fine state of California, perhaps I should just invest in butter and jam.
Speaking of interesting reads, Amazon just notified me that they shipped Ron Paul's new manifesto, "Revolution"
Amazon.com: The Revolution: A Manifesto (9780446537513): Ron Paul: Books
Already #34 overall on Amazon, #1 in basically all "Political" categories.
I'm hoping there is at least a full chapter on the Fed.
NSA,
Thanks for bringing this up. This is one of the biggest debt-driven scandals in the U.S. Due to federalism, the fed govt. is powerless to get the states to fund their pensions honestly, as they did with private DB pensions in the PPA 06. Of course, with Vallejo and perhaps many other localities, this problem also is huge at the local level. In some cases, state govts. are on the hook for pensions of local fire/police/teachers.
Some states are gonna go broke and default on their bonds and pensions. I believe the first states to go broke will be these:
NJ
MI
OH
It's not that they can't keep floating taxes and debt. It's that they will have a shrinking tax base as people get fed up and leave.
The populations of MI and OH will probably be 20-30% less in a decade. It's shocking to think about. We need a Marshall plan for these states.
Hillary's plan for green jobs and infrastructure improvements could be worthwhile for these two states.
NJ is a basket case unto itself and almost hopeless.
e-man,
Howdy neighbor! Better invest in a few means of self-defense, too, 'cuz things are going to get ugly here.
I'm hoping there is at least a full chapter on the Fed.
Speaker73 | 04.21.08 - 11:25 pm | #
Why is a private cartel in charge of issuing our money? Do we really work 4 months of the year to just pay back interest to the Fed? What if our treasury just issued it's own money and the private cartel had to borrow from it if it wanted a bank charter?
"The government should create, issue and circulate all the currency and credit needed to satisfy the spending power of the government and the buying power of consumers..... The privilege of creating and issuing money is not only the supreme prerogative of Government, but it is the Government's greatest creative opportunity. By the adoption of these principles, the long-felt want for a uniform medium will be satisfied. The taxpayers will be saved immense sums of interest, discounts and exchanges. The financing of all public enterprises, the maintenance of stable government and ordered progress, and the conduct of the Treasury will become matters of practical administration. The people can and will be furnished with a currency as safe as their own government. Money will cease to be the master and become the servant of humanity. Democracy will rise superior to the money power."
Abraham Lincoln.
Here is one vote against the decoupling theory that Wall Street is counting on:
Singapore's GIC warns of global recession, crisis- International Business-News-The Economic Times
I can't wait till the deleveraging is complete and the stock market bottoms so I can buy stocks to hold forever, a la Warren Buffet.
Come to think of it, the same goes for the housing market.
km4, the Kevin Phillips book Bad Money was a good read, you could understand what he was saying while he scared the pants off you.
We just had him in for our book salon at firedoglake.
Firedoglake » FDL Book Salon Welcomes Kevin Phillips: Bad Money
He tries to word it kindly, but it's clear he thinks we're in for some real pain.
"tj & the bear writes:
e-man,
Howdy neighbor! Better invest in a few means of self-defense, too, 'cuz things are going to get ugly here"
I am afraid you're probably right. Anyone that thinks the 90s LA riots can be explained away as a fluke is delusional. It was despair brought on by poor economic conditions, that turned to rage. The king beating & trial was just the fuse.
hey tj, no problem for you though, with a pet bear, I think you're safe.
There's something completely repugnant in the way you kept referring to "lowest, lower... classes" in that gem of a comment of yours. If there was a message in there, it got totally lost, at least for me.
bzb
Well, I certainly did not mean to offend. Were you repulsed by the fact that there are poor people here in the US, that they are at the bottom of the socio-economic spectrum, that they tend to shop at Wal-Mart, or that I pointed out an unpleasantness? Not really being snarky. If I know what offended you, I'll try to avoid doing so in the future.
I love seeing records broken, like at the olympics. Think oil will break through $120, so we can celebrate that achievement ?
Not too long ago traders in Chicago were cheering in amazement as oil topped $100. Pitiful really. Comes out of the pockets of families putting a roof over their heads or paying for their kids' education.
It's a backbreaker for the US economy.
FFDIC writes:
"Food Rationing Confronts Breadbasket of the World"
Paying $1/lb for rice is not exactly hardship. One lb is probably enough for a family for one day. Call me when people are paying $100(tank of gas) for a 25 lb bag of rice.
I can just imagine the poor people in CostCo with their carts full of $300 of frozen food and DVDs worried about the price of rice and beans.
Buffet says 'it will take a long time to get over'.
CR says 'mildest recession ever.'
Who do you believe? I am torn.
Paying $1/lb for rice is not exactly hardship.
w
Here, of course, you are right. It's no hardship, really (unless you happen to be really poor, or, er wealth challenged). However, if you happen to be one of the billion plus people living on less than a dollar a day in other countries, even half that is hugely distressing. Imagine paying half of your daily earnings just for food. Already many people here in the US pay more than half their daily earnings for housing.
While the US hasn't yet been crushed with high food prices (and BTW, your taxes will, must, and should subsidize the high cost of food for the poorest among us as the costs continue to spiral up with energy), it will cost us more than people think. Not just in terms of ready cash, but in terms of poor nutrition for those most at risk, the elderly and children, resulting in higher overall costs to society.
Japan's hunger becomes a dire warning for other nations
R. Manhammer - The point is that Americans whining about the cost of food is humorous. Most of us throw away more calories then we consume. Subsidizing staples like beans, rice, cheese and milk shouldn't be hard. Take the money in the budget for handouts to producers and allocate it to consumers.
Not too long ago traders in Chicago were cheering in amazement as oil topped $100. Pitiful really. Comes out of the pockets of families putting a roof over their heads or paying for their kids' education.
It's a backbreaker for the US economy.
barely
Perhaps you remember these:
"They're f------g taking all the money back from you guys?" complains an Enron employee on the tapes. "All the money you guys stole from those poor grandmothers in California?"
"Yeah, grandma Millie, man"
"Yeah, now she wants her f------g money back for all the power you've charged right up, jammed right up her a------ for f------g $250 a megawatt hour."
Enron energy traders. And you thought the Huns were bad.
R. Manhammer - The point is that Americans whining about the cost of food is humorous. Most of us throw away more calories then we consume. Subsidizing staples like beans, rice, cheese and milk shouldn't be hard. Take the money in the budget for handouts to producers and allocate it to consumers.
w
There is, and has been for many years, an ongoing arbitrage in the lower socio-economic classes swapping precious cash resources for the most possible calories. Hence the dominance of McDonald's at the lower end of restaurant chains. Healthy stuff like rice, beans, and cheese, simply aren't in the mix. We can subsidize them, but that doesn't give people the hours required at home to prepare a healthy meal from basic, healthy foods.
Of course, you aren't talking about working class and the poor. You are talking about the middle class, and I agree with you.
The poor immigrants I know eat plenty of rice, beans, corn and meat. Healthier than McDonalds and just as cheap. They bring it from home or eat from lunch trucks. No McDonalds. If people are too lazy to cook then maybe they shouldn't eat.
My experience with my own family is that the largest and laziest members are the ones who eat fast food a lot. They could easily save money by eating at home but they are too lazy to cook regularly.
"Healthy stuff like rice, beans, and cheese, simply aren't in the mix. We can subsidize them, but that doesn't give people the hours required at home to prepare a healthy meal from basic, healthy foods."
Oh please, eating a healthy, inexpensive diet is not a luxury in the USA. For whatever reason, many people simply don't know how/don't care to do it. This does not just include poorer people by any means, but an unwillingness / inability to cook proper food does hit the poor harder than the well off. Rice and beans certainly need no subsidy for anyone in the USA. Infant formula and milk I can understand, but even if prices were to increase substantially I could still feed my family very well on a pittance. McDonalds or the like is a choice (generally a poor one), but it is made freely.
Hey CR- So why did Buffett buy the other house (next door? a few doors down?) Did he have a use for it? Was it just because it was too good a bargain to pass up? I have a hard time believing that he wanted to buy a place just because he might make a few million. If that were the case he'd have been scooping up a bunch.
I'm guessing he has a maintenance team looking after the properties while he's in Omaha, and that the incremental cost of having them look after two wasn't so high, but he had to have some purpose in mind that warranted the purchase and subsequent sale.
Meanwhile, back at the ranch, the Shanghai Composite continues to plummet.
000001.SS: Basic Chart for SSE Composite Index - Yahoo! Finance
A breakdown of the Northern Pacific yuan recirculation current could have unpleasant effects on our economy.
This does not just include poorer people by any means, but an unwillingness / inability to cook proper food does hit the poor harder than the well off.
Bob Mologna
That's my point, thanks.
" R. Manhammer writes:
This does not just include poorer people by any means, but an unwillingness / inability to cook proper food does hit the poor harder than the well off.
Bob Mologna
That's my point, thanks.
R. Manhammer | 04.22.08 - 2:56 am"
Still, what explains the fact that many poor indigenous Americans (immigrants seem to manage pretty well) are unable/unwilling to use cheap healthy staples to cook proper meals? It's as though there is a sense of fatalism in these communities. I'm puzzled by it. Most of my favourite meals I've cooked when I was poor and scratching for ingredients. There is some deep rot in our national psyche I fear.
Oh, wait a second... This is a finance and real estate blog, not a culinary anthropological one. That's where I went wrong...
Still, an interesting question to ponder.
The level of ignorance and arrogance on this post is depressing. Hundreds of millions of people in the world live on less than 1$ per day. If the price of the principal staple, rice, goes to 1$ per pound per day, then you are forcing millions into starvation. I'm sure you won't lose any sleep over that.
As far as Americans being too lazy to cook,I suggest you get your fat, Cheez Doodle eating ass off the couch and go down to the local super market. Take a calculator and buy one week's worth of fresh meat, fresh fish, fresh vegetable, and milk for a family of five. Then buy about one-third the calories in McDonalds or crappy prepared foods (cereal, cola, instant noodles, mac and cheese, etc) and tell me what the difference in cost is.
Also tell me how it would be to work a menial job for twelve hours a day six days a week (both parents) and then go home and cook a meal. When do you even shop for fresh food.
"As far as Americans being too lazy to cook,I suggest you get your fat, Cheez Doodle eating ass off the couch and go down to the local super market. Take a calculator and buy one week's worth of fresh meat, fresh fish, fresh vegetable, and milk for a family of five. Then buy about one-third the calories in McDonalds or crappy prepared foods (cereal, cola, instant noodles, mac and cheese, etc) and tell me what the difference in cost is."
What, exactly is the point you are trying to make? Why would we want to compare grocery costs to "one-third the calories in McDonalds"? McDonald's probably doesn't come off too badly on a calorie/$ basis if you get the cheapest items, but what is the 1/3 reference?
Don't know if you are really are an expat, but I've been dirt poor in the US, and I've been dirt poor abroad (with kids). I'd prefer to be here any day. I never fed my family on McDonald's, I couldn't flippin' afford it! Really, what point are you trying to make?
Also, I didn't say that Americans were too lazy to cook. Only that for some reason they often don't.
This has gotten terribly off track.
Don't knock my Cheez Doodles!!
I eat them by the oodles
Try the Puffed White Cheddar
Yum - it don't get no better!
Where have all the optimists gone?
Optometrists? We don't need no stinking optometrists around here buddy boy. I'll have the BBQ pork shoulder, thanks.
"Regardless of what Buffett says he definately pays attention to macroeconomics."
It may be a distinction without a difference, but you can frequently get the same answer (or the right answer) bottom up as top down.
The rail purchases was a fundamental call, although BNI is heavily into coal and Buffett also owns utilities, so he knows what's going on.
Railroads were like airlines until deregulation, and then it took some time for them to get traction and consolidate. Buffett said he was late to the party, but I'm sure that as a security analyst in the 50's, he had plenty of experience looking at railroads. Railroads were bad businesses for almost 100 years, and the main reason they got well was deregulation (the Staggers Bill) and consolidation. It took a century to squeeze the excess capacity out of the system. Anyway, earlier this year the 4 significant Class I railroads could be purchased for 120 billion or less. Buffett could have bought them except anti trust would have made it impossible.
Sort of the same as the $40 million an acre land.
The point being he has had a good record in calling market excesses, like the 2000 bubble (it's in the Fortune archive).
RBS is first in line at BOE trough, looking for $24B, will write down $7B...and the beat goes on as the Beatles used to say.
The level of ignorance and arrogance on this post is depressing. Hundreds of millions of people in the world live on less than 1$ per day. If the price of the principal staple, rice, goes to 1$ per pound per day, then you are forcing millions into starvation.
I'm with you expat, but it wasn't us who slashed interest rates to save our pigmen banker cronies.
That would be Blackhawk Bennie, "Hope Now" Hank and our wonderful Federal reserve.
eman,
Just think, If Jefferson were on financial TV today, he'd be met with the hosts and other panelists interrupting and laughing at him as he attempted to make a point.
Ummm, sonny and cher said the beat goes on most famously, not the beatles, while were being OT.
Um, has everyone forgotten that Buffett has had quite a few foreign currency positions in the last few years? If that isn't a macroeconomic view, then I don't know what is.
I wonder if Buffett has ever landed in Omaha under sniper fire?
Paying $1/lb for rice is not exactly hardship. One lb is probably enough for a family for one day.
One pound of rice is about 1600 calories. The UN ration for a family of four with small children is about 8-9K calories per day. Or about 5-6 lbs of rice.
Here's a brutal article on the problems that food prices are causing:
'Perfect storm' food crisis grips globe - Scotsman.com News
And leave it to American's to make the situation worse. Tell them they can buy as much as they want and they buy a cup. Tell them that they can only buy one bag and they want to buy a swimming pool's worth.
And here's another brilliant idea! Let's turn the most rare calories of all, those that we can eat into gasoline! Not coal or natural gas but food!
And if a few hundred million people starve? We'll, it will be much better for the earth in the long run.
But, in another 8-10 months when the media has caught up with the story they'll send their $10-$20 bucks to the Red Cross.
Buffett always says he doesn't time the market. Then he says: buy at the right price.
In the end, there is no difference.
I submit that perhaps food price wars were part of The Plan to put a governor on Chindia and southern hemisphere Islamist states.
Reagan's advisors realized that the Soviet economy was a Potemkin and we could simply outspend them without firing a shot.
He can't openly declare a resource war, but perhaps Bush's advisors recognize that nearly all our resource competitors are linked by the common thread of being unable to feed and irrigate themselves.
But, you know, Occam's razor. Perhaps the unintended consequences of biofuels were just the product of sheer idiocy.
Driving into work today I noticed gas had gone up 7 cents a gallon overnight.
I was reading through the comments this morning and decided to switch to doing research on the Holocaust to cheer myself up.
By next week I predict this announcement:
"Today, the Federal Preserve, stepped in to give tax breaks and certain other rights including cash, swaps, Treasury bonds to - among others - ConAgra, Campbells, and Sara Lee. In this time of growing food shortages this special action was needed to prevent a collapse of the food system."
--- s Edward T. Schafer, US Secretary of Agriculture and friend of Commander-in-Chef, George W. Bush.
MAKE IT HAPPEN!
[Royal Bank of Scotland (shed 2.6 percent after it announced a record 12 billion pound ($24 billion) rights issue to cover a potential 5.9 billion pound writedown on the value of shaky assets and help rebuild a stretched balance sheet]
...
[RBS will offer 11 new shares for every 18 existing shares at 200 pence per share in the underwritten rights issue, representing a 46 percent discount to Monday's closing price.]
No matter what the issue is, if the Bushies are involved, it is sheer idiocy.
One thing that some people are forgetting in terms of the increases in food prices is that most of the people who live on less than 1 USD a day live in rural areas. What do a lot of them do? They grow food, of some kind or another. At the very least this helps to protect them against rising food prices, and in some cases they are actually net beneficiaries.
This does not mean that there are not millions of people suffering from rising food prices, or that rising food prices are a good thing, but it is worth mentioning for the sake of balance.
--
"I was reading through the comments this morning and decided to switch to doing research on the Holocaust to cheer myself up."
You should start doing research on Financial Holocaust in America by Financial Nazis of New York City. Led by Evildoers Greenspan, Bush and Burn-ass-ke Financial Nazis built Debt Concentration Camps to "house" 30,000,000 households piped with financial poison gas called backbreaking debt-service.
Evil occurs in many forms and in America it took financial form. The secret goal of Financial Nazis of America is to make German Nazis look good! By galley, they will! My forecast is that Financial Nazis will cause at least 600,000,000 deaths, worldwide, over the next ten years as the whole financial system, built in NYC, leads to collapse of many govts, including the govt of the United States.
Jas
--
more...
My forecast date for the collapse of the US econo-political system, as it has existed, is 2030. Many other govts will start falling before that, e.g., prolonged martial law in India to control violence.
Evil of moneybags of London and NYC will become known as history is properly analyzed. These moneybags contributed greatly during 1890-1920 to the future Holocaust. Since they won they wrote the history covering up their dirty deeds.
Jas
Bring back home-ec!
Many parents today do not know how to cook or shop for healthy food. Cooking and making a budget are skills. Skills no longer taught at school and often not learned at home.
In the 1940s and 1950s lower income people tended to have a healthier diet than the upper middle class because they ate more (often home-grown) vegetables and less meat while the middle classes were eating more canned food and "modern" better-living-through science prepared food and meat with every meal. There is tons of research out there on this.
Many communities have efforts to increase community gardens and build gardening, budgeting, and cooking skills among young people. Teach your kids to cook! (and balance a checkbook)
kicker, try to keep the arguments in context. An article with an American whining about paying $1/lb for rice is just funny. People at CostCo whining about the price of rice is funny. I doubt many American families use more than 1 lb of rice a day. But if they use 2 lbs a day I am sure they will be able to afford the $2 a lot easier than someone in Indonesia.
People living in the third world worried about survival and being able to afford their staple foods is NOT funny.
Furthermore, the idea that prepared junk food is cheaper than staples is a myth.
--
On food prices...
I was amazed that Faux News economic commentators, including John Rutledge, called the USG's farm and ethanol subsidies criminal because of how they are hurting the poor around the world.
AMERICAN ECONOMY AND FINANCIAL SYSTEM ARE FULLY CRIMINALIZED AT LEAST FOR THE PAST TEN YEARS.
The War On Iraqis is just to take attention away from USG's criminality. 1% Iraqis support the Iraqi govt and only 20% Americans are satisfied with their govt (Congress's approval rating is in teens). Talk about America's and world's democratic dupes. Democracy will be fully discredited in a decade or two.
Jas
I was born in 1940 in a "middle class" family -- father engineer, mother pharmacist, but stay at home mom at the time. Our basic dinner was meat, potatoes, and canned vegetables (often home canned actually). My wife's background was very similar.
I think now my wife and I eat a healthier diet with less meat more fish and more fresh vegetables -- in the summer it is only one block to the farmer's market, although not any cheaper than the supermarket.
I remember one poster here a year or so ago who said when he started his business he and his wife ate red beans and rice until they couldn't stand them anymore. Then they ate black beans and rice. Not a bad diet actually if you have some hot sauce to go with it. Certainly tastes better (to me) than fast food of any brand.
Back to basics I say.
And back to housing, finance, and economics. OK?
after that Great Britain was never the same.
idoc | 04.21.08 - 10:54 pm | #
Little things like WWII and the loss of their empire might have played a role there as well, in addition to the monetary policy vs. the U.S.
Paying $1/lb for rice is not exactly hardship. One lb is probably enough for a family for one day. Call me when people are paying $100(tank of gas) for a 25 lb bag of rice.
I can just imagine the poor people in CostCo with their carts full of $300 of frozen food and DVDs worried about the price of rice and beans.
w | 04.22.08 - 1:14 am | #
W,
Get a clue, there are well over a billion people in this world who earn less than $1 a day. Not a hardship to pay $1 a pound for rice? Tell that to the people in the shanty towns of Calcutta or Jakarta.
Ummm, $1/lb is US retail price.
The price is generally lower in poor countries.
I'm sure the price of rice is a hardship for those making less than $1/day (or even $5/day). But the price is unlikely to be $1/lb.
A few minutes of googling shows April prices of (about) $0.20/lb in the Philippines, and about $0.25/lb in Nicaragua.
Painful? Doubtless. But not $1/lb.
(If anyone has more accurate info, please post it.)
the economics of food is economics.
kicker, try to keep the arguments in context. An article with an American whining about paying $1/lb for rice is just funny. People at CostCo whining about the price of rice is funny. I doubt many American families use more than 1 lb of rice a day. But if they use 2 lbs a day I am sure they will be able to afford the $2 a lot easier than someone in Indonesia.
Sorry, just a tad bitter about the ability of the "free market" to create a food shortage where there is none...