Warren Buffett and The Future
CNBC did an entire 3 hour expose on Buffett and I.O.U.USA. Well I don’t agree with everything. Two of his points that stuck with me are as follows:
- When the tide goes out you will see who is swimming naked, and it seems Wallstreet was a nudist beach.
- If you apply for a mortgage using the old yardsticks then you can get a mortgage.
These two points stuck in my mind because I have talked to quite a few people around this planet and asked, "is it that bad?" The answer is no, it is not that bad. BUT there is a caveat. If the person was conservative and did not buy two or three houses then all is ok. If however the people lived beyond their means then things are not great. Quite a few of those asked, including my wife and I are actually grateful for this downdraft because we could buy homes without paying an outrageous fee. One friend who lives in San Francisco said, "you know it is good that this happened since now we can a house." Meaning they were on the sidelines until now. This information re-affirms my thinking that it is the rich and leveraged that are having lots of problems.
The second issue and it ties into the first is that the creative financing of the past is done for. People will need to save and live within their means. Though this is less of a problem outside of North America, then inside North America.
I am a bullish on the future! Of course I am not buying caviar, and salmon. I am still buying my hotdog’s on special with sauerkraut.
Hello There Mr Roboto!
(the song and era says it all... http://www.devspace.com)
2 Comments Add your ownSubscribe
1. saurabh | August 25th, 2008 at 1:44 pm
SIr, regarding the Oil destruction point it is completely valid.I have a gut feeling that oil spikes create sudden demand for alternative sources of energy and the whole attention is focussed on it.BUt soon after oil slides a bit , the passion for that technology vanishes.Its like over the Oil producers know this and price flucuations are done to kill alternates..
Well, regarding the home loan issue, i have heard that almost 1 on 5 is affected out there in US and UK.Some issues of new writedowns called “credit card write downs” are also very much on the cards..please clarify this too
2. Christian | August 26th, 2008 at 5:02 pm
Well, regarding your point on oil and alternatives I completely concurr. If say oil were to drop to say 75 alternatives would drop off the face of the planet.
However, if oil were to stay around a 100 I am not so sure. BUT you are completely correct in that the oil producers can control this to their liking.
Good question regarding the credit card debt.
Here is what I see. Those that were in trouble with housing are in trouble with credit cards, but those otherwise are not. What bugs me is that I ask many many people and ask them, “hey you spending? You having problems?”
And I hear for the most part I am being conservative… Only those that had housing troubles seem to be having credit card troubles.
I do feel things are being overblown, but I can’t pinpoint other than the new FDIC results…
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