Why did Warren Buffett THANK the Government for how it managed the economic crisis?
November 16, 2010
Pretty Good for Government Work
By WARREN E. BUFFETT
DEAR Uncle Sam,
My mother told me to send thank-you notes promptly. I’ve been remiss.
Let me remind you why I’m writing. Just over two years ago, in September 2008, our country faced an economic meltdown. Fannie Mae and Freddie Mac, the pillars that supported our mortgage system, had been forced into conservatorship. Several of our largest commercial banks were teetering. One of Wall Street’s giant investment banks had gone bankrupt, and the remaining three were poised to follow. A.I.G., the world’s most famous insurer, was at death’s door.
Many of our largest industrial companies, dependent on commercial paper financing that had disappeared, were weeks away from exhausting their cash resources. Indeed, all of corporate America’s dominoes were lined up, ready to topple at lightning speed. My own company, Berkshire Hathaway, might have been the last to fall, but that distinction provided little solace.
Nor was it just business that was in peril: 300 million Americans were in the domino line as well. Just days before, the jobs, income, 401(k)’s and money-market funds of these citizens had seemed secure. Then, virtually overnight, everything began to turn into pumpkins and mice. There was no hiding place. A destructive economic force unlike any seen for generations had been unleashed.
Only one counterforce was available, and that was you, Uncle Sam. Yes, you are often clumsy, even inept. But when businesses and people worldwide race to get liquid, you are the only party with the resources to take the other side of the transaction. And when our citizens are losing trust by the hour in institutions they once revered, only you can restore calm.
When the crisis struck, I felt you would understand the role you had to play. But you’ve never been known for speed, and in a meltdown minutes matter. I worried whether the barrage of shattering surprises would disorient you. You would have to improvise solutions on the run, stretch legal boundaries and avoid slowdowns, like Congressional hearings and studies. You would also need to get turf-conscious departments to work together in mounting your counterattack. The challenge was huge, and many people thought you were not up to it.
Well, Uncle Sam, you delivered. People will second-guess your specific decisions; you can always count on that. But just as there is a fog of war, there is a fog of panic — and, overall, your actions were remarkably effective.
I don’t know precisely how you orchestrated these. But I did have a pretty good seat as events unfolded, and I would like to commend a few of your troops. In the darkest of days, Ben Bernanke, Hank Paulson, Tim Geithner and Sheila Bair grasped the gravity of the situation and acted with courage and dispatch. And though I never voted for George W. Bush, I give him great credit for leading, even as Congress postured and squabbled.
You have been criticized, Uncle Sam, for some of the earlier decisions that got us in this mess — most prominently, for not battling the rot building up in the housing market. But then few of your critics saw matters clearly either. In truth, almost all of the country became possessed by the idea that home prices could never fall significantly.
That was a mass delusion, reinforced by rapidly rising prices that discredited the few skeptics who warned of trouble. Delusions, whether about tulips or Internet stocks, produce bubbles. And when bubbles pop, they can generate waves of trouble that hit shores far from their origin. This bubble was a doozy and its pop was felt around the world.
So, again, Uncle Sam, thanks to you and your aides. Often you are wasteful, and sometimes you are bullying. On occasion, you are downright maddening. But in this extraordinary emergency, you came through — and the world would look far different now if you had not.
Your grateful nephew,
Warren E. Buffett is the chief executive of Berkshire Hathaway, a diversified holding company.
It helped make him richer.
Where am I politically.?
I believe in protectionism
I believe in abortion for cases of rape/incest
I believe in no death taxes
I believe in socialized health care
I believe in small business
I believe in open borders
I believe in the moral nature of man without religion
I believe that a two party system is a failure of democracy
I believe in scientific research
I believe that minimum wage should be tied to inflation
I believe that no one should be a billionaire
I believe unions have served their purpose and must go
I believe in paying higher prices for locally produced goods
I don’t believe in god
I don’t believe in small or big government, but i believe in government
I don’t believe in NAFTA
I don’t believe in any broadcast media
I don’t believe that just because your are old that you are wiser then me
I don’t believe that I know my true convictions
I don’t believe that an armed populace is moral
I believe that global warming is happening *(northwest passage being accessible now)
I believe that future generations are going to hate us for burning OIL instead of using it for recyclable plastics
I believe in evolution
I think communism can never work
I like the idea of Anarcho-Capitalism but also feel people will be exploited under that system
I believe every has the right to regular health care, and not be bankrupted if they become sick
I believe in legalizing, taxing and regulation of soft drugs
I believe in 0.00% BAC while driving, and would want this applied to soft drugs when legalized/regulated
I belive that any city with a population of over 500,000 should have light rail & bus services 24 hours a day that leads into commercial, downtown, industrial and residential areas
I believe that we should should be institutionalizing a percentage of homeless people because of mental issues
I oppose the death penalty
I don’t believe a judge should have a party affiliation at any part during their life
I believe that military forces should be used for home defense only and any base that is not on your own territory is tantamount to a deceleration of war
I believe in freedom of speech until it comes to calling out race, sexual orientation, religion (or lack of), creed, or sex
I believe that culture is fluid but beliefs are like Non-Newtonian Fluids step on someones beliefs hard enough and it’ll solidify.
I believe everyone should have a trade certificate, a community college degree or a university degree
open borders as in freedom to travel
protectionism as in local goods
and yes, I am buying local right now, No wal-marts around here, just their factories.
Impossible to define — you’re all over the place, and you contradict yourself several times. For example, you say that you’re in favor of open borders, and then you say you believe in protectionism. If you allow open borders forget about it. And as for paying higher prices for locally produced goods. Go ahead — you can do that now. Are you?
Are some Americans so mesmerized at the idea of change they have lost focus?
This was written by a black journalist and is one of the better pieces I have read regarding this election, he gives some excellent reflections!
By Thomas Sowell
Many years ago, a great hitter named Paul Waner was nearing the end of his long career. He entered a ballgame with 2,999 hits — one hit away from the 3,000-hit landmark — which so many hitters want to reach, but which relatively few actually do reach.
Waner hit a ball that the fielder did not handle cleanly but the official scorer called it a hit, making it Waner’s 3,000th. Paul Waner then sent word to the official scorer that he did not want that questionable hit to be the one that put him over the top.
The official scorer reversed himself and called it an error. Later Paul Waner got a clean hit for number 3,000.
What reminded me of this is the great fervor that many seem to feel over the prospect of the first black president of the United States.
No doubt it is only a matter of time before there is a black president, just as it was only a matter of time before Paul Waner got his 3,000th hit. The issue is whether we want to reach that landmark so badly that we are willing to overlook how questionably that landmark is reached.
Paul Waner had too much pride to accept a scratch hit. Choosing a president of the United States is a lot more momentous than a baseball record. We the voters need to have far more concern about who we put in that office that holds the destiny of a nation and of generations yet unborn.
There is no reason why someone as arrogant, foolishly clever, and ultimately dangerous as Barack Obama should become president — especially not at a time when the threat of international terrorists with nuclear weapons looms over 300 million Americans.
Many people seem to regard elections as occasions for venting emotions, like cheering for your favorite team or choosing a homecoming queen.
The three leading candidates for their party’s nomination are being discussed in terms of their demographics — race, sex, and age — as if that is what the job is about.
One of the painful aspects of studying great catastrophes of the past is discovering how many times people were preoccupied with trivialities when they were teetering on the edge of doom. The demographics of the presidency are far less important than the momentous weight of responsibility that office carries.
Just the power to nominate federal judges to trial courts and appellate courts across the country, including the Supreme Court, can have an enormous impact for decades to come. There is no point feeling outraged by things done by federal judges, if you vote on the basis of emotion for those who appoint them.
Barack Obama has already indicated that he wants judges who make social policy instead of just applying the law. He has already tried to stop young violent criminals from being tried as adults.
Although Senator Obama has presented himself as the candidate of new things — using the mantra of “change” endlessly — the cold fact is that virtually everything has says about domestic policy is straight out of the 1960s and virtually everything he says about foreign policy is straight out of the 1930s.
Protecting criminals, attacking business, increasing government spending, promoting a sense of envy and grievance, raising taxes on people who are productive, and subsidizing those who are not — all this is a re-run of the 1960s.
We paid a terrible price for such 1960s notions in the years that followed, in the form of soaring crime rates, double-digit inflation, and double-digit unemployment. During the 1960s, ghettoes across the countries were ravaged by riots from which many have not fully recovered to this day.
The violence and destruction were concentrated not where there was the greatest poverty or injustice but where there were the most liberal politicians, promoting grievances, and hamstringing the police.
Internationally, the approach that Senator Obama proposes — including the media magic of meetings between heads of state — was tried during the 1930s. That approach, in the name of peace, is what led to the most catastrophic war in human history.
Everything seems new to those too young to remember the old and too ignorant of history to have heard about it.
He is black and that is cool, its not about race to him!
Obama would be a disaster as president.
Open borders, tax the wealthy until we have no new jobs, gut the military, redeploy the troops to Pakistan, subsidize, subsidize, subsidize…
His demeanor scares me as well. If I didn’t think he was arrogant before, flipping off Hillary was hardly presidential.
When will people wake up?
And to answer your question – yes – people are mesmerized by the idea of change. What they don’t realize is that change isn’t always for the better.
Will you review my essay please?
This is for a community college Into Business class.
Assignment: Write a discussion paper giving your opinion of how the current economic situation is affecting businesses here in the United States. Also, discuss how you see yourself being affected by the current economic situation. 1 – 2 pages long, double spaced.
I know the last paragraph and conclusion are a little weak, any ideas on beefing it up?
My Paper (rough draft):
The current economic conditions has placed a blanket of fear on the nation. Many people fear the downed financial markets and the number of job losses will lead to another depression. Even though the unemployment rates are rising and the crises in the stock market will make for a difficult year it is still no where near what occurred in the 1930′s. This fear of a recession is what aided the current recession. People are afraid of losing their jobs so they begin saving their money, when they decreased their spending it only increased the needed layoff by companies. We caused the recession but we can also fix it.
Large business corporations, “big box stores”, have always had the advantage over smaller, individually owned businesses. With their outside investors they have a greater number of resources to fall back on when needed. Large businesses single goal is to create a profit, often at the unintentional expense of the economy. Sending jobs overseas the cost of labor is cheaper and there is a greater perceived profit. When jobs are taken from our country it lowers the amount of available jobs, extending the amount of unemployed people. The people are now unable to purchase these corporation’s goods leaving the companies with a loss. These losses are what made the need for the government bail-outs in September 2008 so they could continue making their products. The government has to get the money from some where though, mostly from tax payers again leaving people unable or unwilling to do any spending leaving us in a continual cycle.
The small business owner without a wealthy investor to finance their business pursuits depend on bank loans to start up. When the mortgage crisis occurred the banks were more selective to whom they would give loans, leaving the small business owners without many options. Small businesses that are already running are having a harder time making a profit. Society is spending less and the small businesses are having trouble staying afloat and many do not make it. Given that in a normal economy only 80% of small businesses succeed past their first year it is even harder in these trying economical times.
I am lucky enough to still be a high school student living with my parents. This leaves me with very few financial responsibilities. I am aware that this economy may not change by the time I get out of school, and I want to be as prepared for it as possible. This education will be a very important role in my future. If I want to succeed in the business world, I need to have a solid college education to be capable to cope with anything the economy throws at me.
Overall the current economic standing for businesses is not favorable. This is why education is such an important step in life. If the next generations are educated they will be ready to step up and help change the economy for the better.
Thank you for any *constructive* critism.
Sure if you want to edit it go for it. I
t is an independent research project for a missed class (snow day) for a business class I take at a local CC, I am in dual enrollment.
The current economic conditions have smothered the nation in a blanket of fear. Many people fear that the downed financial markets and the loss of jobs will lead to another depression.
But even though the unemployment rates are rising and the crisis in the stock market will make for a difficult year, the current situation is still not close to what occurred in the 1930′s. This fear of a recession is what aided the current recession. People are afraid of losing their jobs, so they began saving their money. This decrease in consumer spending increased layoffs. We caused the recession but we can also fix it.
Large corporations such as the “big box” stores have always had the advantage over smaller, individually-owned businesses. With their outside investors, they have a greater number of resources to fall back on when needed. The single goal of large businesses is to create a profit, often at the unintentional expense of the economy.
For example, these corporations look for cheaper labor costs and the consequent increase in perceived profit by sending jobs overseas. But exporting jobs increases domestic unemployment. People are now unable to purchase these corporations’ goods, leaving the companies with a loss. These losses are what created the need for the government bailouts in September 2008. The government has to get the money from somewhere though, and taxing working people makes them unable or unwilling to do much spending — leaving us in a continuous cycle.
Small business owners without wealthy investors to finance their business pursuits depend on bank loans to start up. When the mortgage crisis occurred, the banks were more selective about their borrowers, leaving small business owners without many options.
Small businesses that are already running are having a harder time making a profit. Society is spending less and small businesses are having trouble staying afloat; many do not make it. Even in a normal economy, only 80% of small businesses succeed past their first year. It is even harder in these trying economical times.
As a high school student living with my parents, I have very few financial responsibilities. However, I am aware that this economy may not change by the time I get out of school, so I want to be as prepared for it as possible. My education will be a very important factor in my future. If I want to succeed in the business world, I need to have a solid college education to allow me to cope with anything the economy throws at me.
Finding the right places for paragraphs was difficult for this essay because the paragraphs have no structure. Most of your sentences are undeveloped “topic sentences” strung together with no elaboration.
For example, I thought that your essay was going to detail the differences between the current economic situation and the Great Depression because you wrote this: “Even though the unemployment rates are rising and the crises in the stock market will make for a difficult year it is still no where near what occurred in the 1930′s.” But you just wrote it and then dropped it, never to mention it again.
Then I thought that your essay was going to be on this topic: ” We caused the recession but we can also fix it.” But it turned out to be just another topic sentence you wrote and then dropped without ever mentioning it again.
This is what makes your essay seem unfocused and meandering. It seems like the title of this piece would be “Some Random Stuff I Remember From Class,” or maybe, “I Don’t Have Anything to Say on This Topic.”
Your essay would be vastly improved if it had a narrow focus that you developed properly. I think you could dismiss the “business” part of the assignment with one or two strong paragraphs, and then dig deeper for the part about how it affects you. Make up some details about curtailing your own spending, inability to find a job, and your parents’ actions. If you develop this topic, you will have a much better paper.
NOTE: It is not uncommon for the openings and endings of essays to be weak, as you noticed yourself. Very often the remedy is just to delete them when you are proofreading.
Why is socialism seen as being so horrible?
One can look at history and find that for many years the government had a total non intervention policy with companies. We call it the Gilded age.
Companies could do as they pleased, workers had no rights to organize for better conditions, and when they attempted to do so, Federal troops were sent in to stop them. They faced truly brutal and in many cases inhumane conditions, rampant child labor, no workers compensation for injury or death, highly unfair wages, highly unsanitary and unsafe workplaces, price gouging, etc.
There were huge monopolies that prevented new businesses, highly unethical business practices occurred on a daily basis,great fortunes were built on the backs of thousands of people who worked for slave wages, and the vast majority of the wealth belonged to only a select few, while almost half the nation was in poverty.
History shows us what pure unrestrained capitalism leads to, and frankly it is not pretty. Yes the companies of the gilded age brought the United States untold wealth, power, and productivity, but it was at the cost of the quality of life for just about everyone.
It was with the populists at the dawn of the 20th century and their socialist ideals that eliminated child labor and put children into schools, made workplaces safe and sanitary, regulated the quality food and drugs so that they were safe to consume. They initiated workman’s compensation, created the first labor unions to fight for higher wages. They created government regulation of prices so that companies could not price gouge their customers. They created anti-trust laws so that small business could take root and provide niche services. The government established wilderness preserves, national parks and monuments, national forests, environmental protection regulations that are the sole reason America still has its great forests and wild areas.
It was the socialist ideas and government regulation of businesses that essentially saved us from ourselves and our insatiable greed.
When government regulations were relaxed in the 1920′s we had a short boom followed by the great depression. To get ourselves out of that FDR gave us the New deal with all its social benefits, but it took Hitler threatening to take over the world to get our economy back on track.
So, why then, is socialism so horribly feared and despised in America? Our quality of life is largely dependent on the fights for socialist ideals that previous generations fought for. It doesn’t make much sense to me, so could someone please explain it to me.
First i would like to put on some adjustments on the first answerer’s statement. Yes communism is not the same as socialism, however, in order to achieve a socialist society, you should have first stabilized communism (although in Marx’s theory, socialism should be achieved first before transitioning to communism, pragmatically, still i will have to stick with my statement as per Vietnam). This way, there will be a transition of going to a higher form of government. This is the same as the history of Vietnam.
Going back to your question. Why is it feared by everyone as horrible? Like what you said, there is a vast monopoly of capitalist in different countries, that’s why we have globalization. Should we have socialism, will it be fine with the capitalist to have their assets and investments, be equally distributed for everyone depending upon their amount of work expended in production? And in return, could have higher or greater compensation than what they have? I think the answer is a big NO. And so, there will be a lot of resistance, especially coming from the people at the peak of the social pyramid class, the chance is that this capitalist will pull out all their capitals and investments in that country. Meaning, there will be lesser investments which will result to a more unstable economic status in that country, do you think the government will allow that? To have their country suffer economically due to the withdrawal of investments? This means the country will drastically fall down, economically and globally. Many people will suffer. Hence a cultural revolution will come henceforth, maybe one of the reasons why it is feared by many.
This is a long argument if we are to present every facet of this theory. However, can you imagine a life with equality? Where there is no social stratification? Where the government is governed FOR the people and BY the people? Where every resources of the country is solely for the consumption of its people and not only for one person? I think that’s worth pondering about if we think that socialism is horrible.
I hope this helps, love lots!
Powered by Yahoo! Answers