Warren Buffett is Wrong
And that's a hard thing to write. But he's wrong. From Bloomberg:
Billionaire Warren Buffett said he is wagering on continued economic expansion and doesn’t expect a second recession.
“I would bet very heavily against that,” Buffett told Bloomberg Television’s Betty Liu on the “In the Loop” program today after data showed slowing U.S. job growth. “How fast the recovery will come, I don’t know. I see nothing that indicates any kind of a double dip.”
The unemployment rate unexpectedly climbed to 9.2 percent in June, the highest level this year, and hiring by companies was the weakest since May 2010, Labor Department data showed. U.S. employers added 18,000 jobs last month, less than the 105,000 median estimate in a Bloomberg News survey.
“It means that we’re still a ways off from getting to where we should be,” Buffett said in the interview, in Sun Valley, Idaho. “We’re seeing growth around the world, but it’s not mushrooming.”
Even genius billionaires can be wrong. Where's this growth "around the world?" Where's this growth at home? As Mollie notes below, the job report today is miserable. Unemployment actually increased to 9.2%.
And as usual, there's the familiar media trope about how all of this was unexpected, from the WSJ:
Nonfarm payrolls rose 18,000 last month, far fewer than expected, as small gains in the private sector were just enough to outweigh continued government-job losses....
Ever since Obama took the oath of office, we've been in a "recovery." A recovery with rising unemployment and stagnant growth, but somehow, someway, it's always been called a "recovery." A "sputtering" recovery. An "anemic recovery." A "slow" recovery.
That's like saying the Great Depression was a Great Recovery. Or a Drifting Recovery, Energized by World War.
Maybe the reason all of these bad economic numbers are so "surprising" and "unexpected" is because people keep insisting, in a fog of self-delusion, that is a recovery.
It's not. Warren Buffett is wrong. It's the start of a double-dip recession.
Now, everyone in the media, go back and look at the numbers with that in mind.
Not so unexpected now, are they?
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Dec '10
Re: Warren Buffett is Wrong
To add to that, this is what Buffett is saying. The big question is: What is he doing?
Jun '10
Re: Warren Buffett is Wrong
A dose of doggerel:
A man named Buffet
From his tuffet
Did decree
Recovery
Rob Long
Says he’s wrong
Jobless at 9-point-two
Ain’t no recovery due
Edited on July 8, 2011 at 8:35pmRe: Warren Buffett is Wrong
Nah, I'm going long BRK. It's a buy. Need railroads to move goods to and from ports to China. Plus insurance.
Dec '10
Re: Warren Buffett is Wrong
Kenneth
Absolutely spot on, Alan. Few people know what you know about Buffett. The man is a predatory rent-seeker. · Jul 8 at 9:09am
It gets even worse ... shortly after the meltdown, think it was in the WSJ in 2009, Charlie Munger wrote an op-ed that billionaires like Buffet and Munger were not only deserving but entitled to their Govt. bailouts but the "little" guys weren't entitled and should in essence "go eat cake". The worst kind of Crony Capitalism. Beyond disgusting.
Sep '10
Re: Warren Buffett is Wrong
We don't need Coca Cola nor Sees Candies but he is both a brilliant investor and a manipulator of public opinion and a willing receipient of crony capital from govt when its offered to him. He and Soros are always "talking their book" but nobody should expect them to do otherwise. I am sickend by the sychophancy that accompanies much of what is written about him and I dispise his politics but I still admire his ability as a money manager, Soro's too for that matter but he's even worse as a human being. With regard to Wall St economist - not analysts - there are at least as many professional doomsayers as optimists, most get it wrong most of the time because you have to vituperate to get noticed and most of the time things aren't all one way. Check out Ed Leamer's _Macroeconomic Patters and Stories_ if you want a very good view of the via media.
May '11
Re: Warren Buffett is Wrong
From my laymens point of view it seems like our economy isn't based on anything tangible. In the 2000's our financial sector flourished going from around 10% of our economy to over 20%. It seems like we have a plethora of rich hedge fund managers, but are they really creating anything of value? It seems like we've had a bubble economy the last 20 years a lot of it based on cheap credit. We have a Federal Reserve that artificially manipulates the economy. We still have real industry and industries that are still growing but it seems like much of our economy now is artificial. Much of our market based economy has been polluted by government\ big business partnerships and subsidies. I just wonder if we're going to be mired in a poor economy for awhile. Feel free to challenge any of my points I'm not an economist. This is really just my instincts and observations based on my limited view of the economy.
Sep '10
Re: Warren Buffett is Wrong
thelonius, I agree that the financial sector became too large and that the fed has played a large role in attempting to monkey around with the price level in ways that history shows will prove fruitless and costly however I would caution you in the following way, inaddition to the unwise growth of the financial sector and the government we have had a much longer and more durable shift toward less tangible but no less valuable economic activity over the past say 50 years. The rise of the service sector versus the industrial sector has caused much of the angst you express and I don't think it should. We can argue over whether we'd be better off with more software engineers than lawyers but I think we can agree that both groups are generally wealthier than say construction or auto or textile workers. Big labor is fond of decrying the deterioration of the manufacturing base when in reality we make as much or more than we ever did but we do it with fewer workers and far fewer unionized workers. I do not consider that a bad thing.
May '10
Re: Warren Buffett is Wrong
And Dilly Bars. Don't forget the Dilly Bars. Or cowboy boots and doublewide trailers.
Seriously, I'd buy the stock too if I had a spare $175K+ sitting around (or get ready to swoop in when Buffet is gone and the stock tumbles). All that insurance float is just too tempting. The harder question, though, is the one Rob raised.
May '11
Re: Warren Buffett is Wrong
Capt. Aubrey, thank you for the response. My concern is that in the past we have always had inventions like reinforced steel, the automobile etc. that not only created their own industry but created other industries. Have we had an invention or new business in the last 10 years that has had a profound effect on our economy? It seems like the biggest growth market in the last 10 years was in derivatives and hedge funds. Did creative financing have close to the same effect on our economy that the personal computer did?
Sep '10
Re: Warren Buffett is Wrong
There is a massive transition underway from the PC to mobile devices and the creativity of the ap makers and tablet makers is just begining to change things. I think the tablet is going to become the center of the enterprise and that the way we consume media is going to continue to change radically. There is massive disruption in the pharmaceutical and medical devices business as technology enables more individualized treatments and therapies, ironically this is going on while reimbursement structure is dehumanizing but everyone knows, at least,that it doesn't work. With regard to finance most of the change came from increased computer power and the ability to communicate and transact more rapidly. Even securitization is not a bad thing in itself but it was misused. I view the crisis as a failure of the regulatory structure not failure from innovation. Much of the innovation was the result of our idiotic tax code so I agree that innovation for the sake of dodging taxes is not productive but the fault lies with the tax code not the innovation.