Billionaire Investor Warren Buffett: "We're still in a recession"

[engine]

Billionaire Investor Warren Buffett: "We're still in a recession" [reuters.com]

Billionaire investor Warren Buffett said the U.S. economy remains in recession, disputing this week's assessment by a leading arbiter of economic activity that the downturn ended more than a year ago.

"We're still in a recession," Buffett told CNBC television in an interview broadcast on Thursday. "We're not gonna be out of it for a while, but we will get out."

On Monday, the National Bureau of Economic Research said the world's largest economy ended an 18-month recession in June 2009, but cautioned that its assessment did not mean normal activity had resumed.

[HRoth]

I sometimes wonder how stupid these people think we "sheeple" are. I heard this report the other day and I thought "Where is it that the recession ended in summer 2009?" And now that they have made this pronouncement, do they think all those unemployed people and all those people who have lost their homes are going to run out and start spending money they don't have so the economy can get back to "normal"? They must be insane or think we are. The economy is never going to get back to "normal." One in seven people in the US are living in poverty. Highest it's been since the sixties. Is the recession over for them? And that number is just going to go up. Someone needs to give these guys what my grandma used to call a good smack.

[LifeinAsia]

recession- "A period of general economic decline; typically defined as a decline in GDP for two or more consecutive quarters."

That definition says nothing about jobs, home values, or the stock market. Macroeconomics and microeconomics are different beasts.

[HRoth]

Saying the indicator of recession is the GDP is like saying a novel is defined by being longer than 200 pages. I hate to resort to Wikipedia, but what the heck. Their def of recession: "Production as measured by Gross Domestic Product (GDP), employment, investment spending, capacity utilization, household incomes, business profits and inflation all fall during recessions; while bankruptcies and the unemployment rate rise." Sure sounds like recession affects the individual through unemployment, loss of income, loss of profits for businesses, rising unemployment, bankruptcy, etc., etc., etc. In short, you don't need an economist to know which way the wind blows when all you see are for sale signs, houses with huge weeds growing in front of them, and closed shops. Yes, the recession is over; long live the recession.

[Rugles]

Jobs are always the last thing to return after a recession. Also, that recession .. was deeper than any other in our lifetimes. So it would make sense the after effects last much longer too.

[dpd1]

Technically, it may NOT be over... But what good is the government, or anybody for that matter, going to do by going around and constantly reminding everybody about it all the time? All that will do is make it worse. I've said it before... I have friends who have made little to no effort to find new jobs. They're just kicking back, spending their severance, and waiting for the next unemployment extension to come in. Not that, that is what ALL unemployed people are doing. But if I know a few, multiply that times the whole population. So unemployment is not the best barometer to determine overall economic health.

[arieng]

I've seen the same dpd1, though luckily its oddity rather than norm. A member of my wife's family lost his job. He now collects unemployment and works a couple of days a week for cash under the table. He's netting more income now that he did while gainfully employed, yet constantly complains how illegal immigrants are the source of the problem.

For all the good that our unemployment system brings to some, it also brings out the worst in others.

[dpd1]

Yeah, I don't believe that scenario is the majority. But you figure... Even if 15% of people are doing that... That's hundreds of thousands. The problem with extensions is that nobody is paying in. In some states, you've got people going on their third extension, maybe more. That's just free money getting handed out, which covers maybe two years? If a healthy person can't find any job at all in two years, there's something wrong. Yes, you might have to go below your standard, and yes it sucks... But hey, we do what we have to. At least then you're paying into the system. But if the gov keeps backing that mentality and not really doing any checking to see who really deserves it... That's actually just HURTING the economy... Not helping. At least that's my opinion.

[HRoth]

I personally am not worried about the few people who are enjoying being unemployed, just like I don't worry about the few people who like being on welfare or who lie about being injured to collect worker's comp. I don't think that tiny percentage is the problem. I think it's the greed of multinational corporations that have sent all the jobs that those folks could be working at if they existed to other places so they could pay out bigger bonuses to stock holders. And all the money that those folks might have made at those jobs is not being spent at our shops; it's being spent in shops in China. But hey, if you want to blame it on some people who you think are lazy bums, go for it. It's comforting to believe that a few lazy slobs really have that much control over the economy that they can wreck the future. Me? I have a much more suspicious nature.

[dpd1]

Well, I never said that's the core of the problem. I just said that it certainly doesn't help. And I think it's more than just a few. Personally, yes, it does bother me to think that I busted my butt for the last 5 years, and actually GREW my business in that time. But it certainly didn't happen by itself... It took tons of hard work. And now I will most likely get my taxes raised to pay for all of this, some of which includes paying out money to potentially thousands of people who decided to turn their layoff into a two year vacation. That doesn't sit well with me. But no, obviously that is not the one and only cause of a bad economy. There are many reasons, and corporate greed is one of them. But people as a whole also play a part... Maybe the biggest part. People have a great amount of power... The power of choice. Most choose not to exercise that power responsibly, and continue buying stuff from overseas. They could easily say... 'No... I'm not going to go to Walmart and buy this stuff from China because it's cheaper... I'm going to do the right thing'. But most people don't do that. We reap what we sow.

[HRoth]

Any one of us could be out there, so be charitable to those who are, lest the gods give you a hard lesson. Besides, it just makes for a better world for everyone to be charitable.

I have had this shop for ten years. Yesterday I compared this past September to September 2008 and practically wanted to burst into tears. Lots of businesses are taking a beating regardless of how well they have managed things or how hard they have worked. It can happen to you too. In this world, we can act but we also must experience the effects of forces that are far beyond our control.

It's certainly true about making a choice not to buy cheap stuff from China (although many people can't afford anything else, especially now). But it's difficult to choose something else when there isn't anything else to choose. I've posted before about how I have begun to buy vintage made in America goods off ebay to get something sturdy that is made here that I can afford. Not many people want used goods, though.

I hear about "responsibility" and the blaming of the little guy for our financial difficulties and remember back when gas prices were going so high a few years ago. Some show had an interview with an Exxon exec. The reporter asked him, "How can you justify raising the prices so high? I mean, people have to get to work." The exec shrugged and said, "China's willing to pay it." Where is their responsibility? You can't have it both ways. Either we are all responsible, including corporations, or no one is.

[enigma1]

I think it's the greed of multinational corporations

Yes but...when you have a healthy system in place, the greed becomes irrelevant. What is happening these years however is there are certain "agreements" in place to get the current situation. If the import-tax becomes negligible or doesn't apply for certain countries, it will affect the country's production and overall economy. Especially between countries with very different living standards.

At the same time to produce something in EU or States becomes increasingly difficult with bureaucracy and various strange regulations which lead people to seek an easy income.

Do you know what will happen if a country imposes the regular import taxes? There will be domestic production as before and anyone who wnat will have access to the basics without complaining about work.

I have friends who have made little to no effort to find new jobs

And likely this will continue till the governments stop the baby-sitting and get serious about it.

It's not only the unemployed btw you need to add the retired and minorities with certain disabilities. And is one thing for the government to try to help the society where and when it matters and another to dump resources without control.

So its up to current govs, if they wanted they could raise inflation, ease regulations for local production and move the economy, forcing corporations to bring back domestic production because of the competition this process creates.

[dpd1]

Oh, I'm absolutely all for charities. I give when I can. But I have friends who were laid off that have spent more money than I have in the last year... Cars, TVs, trips... Seriously, I don't exactly call that 'needy'. But yes, everybody has to be more accountable together. The public needs to be more responsible and stop turning a blind eye and expecting the government to fix all their problems. The corps need to be more ethical. And the gov needs to stop trying to make the masses happy based on getting elected, no matter how irresponsible it is. At some point, everybody has to make sacrifices, but now days... nobody will. Everybody thinks somebody else should.

[LifeinAsia]

The issue for myself (and other people in similar positions) is that we HAVE been sacrificing for many years already. We sacrificed the want of immediate satisfaction and held off buying things we couldn't afford. We sacrificed the big, new house and instead bought a smaller, older, fixer-upper that was less risky. We sacrificed by not subscribing to expensive cable TV with 100s of channels with the latest movies and instead use Netflix and see the movies a few months later. We sacrificed by not buying a huge SUV that sucks gas and instead bicycle to work.

Most of us who learned long ago to live within our means aren't really in the mood for bailing out those who haven't. And giving them government handouts at this point certainly isn't going to help them learn to live within their means now- it will only reinforce their lifestyles and make things worse in the future.

If you go to Vegas, gamble, and lose, you do NOT get a government bailout. Real life should not be any different.

Yes, there are many people who are in bad positions through no fault of their own. But there are also many others (individuals and corporations) getting government handouts who are in bad positions from their own making.

[willybfriendly]

Hard to replace a $25/hr job with a $10/hr job when one has already adjusted to the higher wages. Bills don't automagically decrease to remain commensurate with the new income level.

I suspect it will get a whole lot worse before it gets any better. No simple cause and certainly no simple fix.

The US has been described as a redeveloping nation...

[Rugles]

The US has been described as a redeveloping nation...

Interesting way to put it.

In the early 90's here in Canada. We were facing dire financial straits. So the governments made the hard choices, cut spending and increased taxes. This worked out perfectly, we posted 12 surpluses in a row and paid down 10% of our debt. Eventually they were able to start cutting taxes again due to the surpluses. Then when this recession occured we were in a better position to weather this financial storm than any other western nation.

Sometimes you need leaders who make the unpopular choices and act like mature adults.

[dpd1]

Most of us who learned long ago to live within our means aren't really in the mood for bailing out those who haven't. And giving them government handouts at this point certainly isn't going to help them learn to live within their means now- it will only reinforce their lifestyles and make things worse in the future.

If you go to Vegas, gamble, and lose, you do NOT get a government bailout. Real life should not be any different.

Yes, there are many people who are in bad positions through no fault of their own. But there are also many others (individuals and corporations) getting government handouts who are in bad positions from their own making.

I totally agree... I recently duked it out with a card company over the phone. They refused to lower an already too high rate. I have perfect credit. The rate should not be anywhere near where they have it. I asked them why it was so high, since I had perfect credit and was a long time customer... also considering the fact that they were STILL tempting college kids with new cards for half that rate on their web site. After much hemming and hawing, the support person made the mistake of telling me they "had a lot of people defaulting". Wrong answer. I said..."Oh, so in other words... You give cards to irresponsible people... They walk away and default... Then you stick their debt onto the good customers with good credit to pay for them, like me"? No response. I asked them: "How much longer do you people think us responsible people are going to be able to keep propping everything up for all the deadbeats that you willingly take on out of greed"? No response.

I personally think we're kind of at a level point now. It will probably stay like this for a while. But I certainly don't see any major boom for a while. But that had to happen. When you've got idiots buying modest two bedroom homes for 800k, thinking they can "flip it" and still make money because they watched them do it on some stupid TV show... Obviously things had to correct themselves at some point and come back down to reality. The insanity had to end somewhere. So here we are.

[ken_b]

My CC interest rate is too high, mid teens.

I don't care, I pay it in full every month so I don't pay any interest anyhow.

Not a bad deal.

I'd like more interest on our CDs though, that would be cool.

[enigma1]

@dpd1 your phone conversation, is a classic example monopolizing a sector and where certain regulations apply to one entity but not another. So on the one hand a bank appears like a private entity and therefore theoretically they can impose whatever interest rate they want and to whoever they want to, but on the other hand when they're about to bankrupt the government jumps in and bails them out. Let them liquidate and let competition rise. After all that's what capitalism is all about.

[HRoth]

The credit card company raises their rates, blames it on other customers, and you swallow their reasoning. I don't know--could they have raised their rates because they are greedy #*$!s? Hmmm.

Myself, I haven't even owned a credit card or borrowed any money since 1985. If I can't afford to pay cash, I don't buy it. According to the thinking of a number of people here, that makes me a saint and the rest of you irresponsible louts. That and a dollar fifty will buy me a newspaper.

Self-righteousness doesn't solve problems. If you can't see that you are part of a community, maybe just consider that if people have no money--for whatever reason--they aren't going to be buying in your shop. So it is your problem too. Maybe you think there is this sudden Ebola virus of irresponsibility and laziness going around, but what are you going to do about it? Talk about how you think you are better than the customers you don't have anymore? Cold comfort indeed.

Me, I consider that we are seeing a little scrap of our future as a nation. I'm changing my business and my way of life to (hopefully) accomodate it.

[Rugles]

Myself, I haven't even owned a credit card

How do you book a hotel room, rent a car or book a flight? Or do you never travel.

[HRoth]

Debit cards. No interest. No fees.

[incrediBILL]

Debit cards. No interest. No fees.

Not as much protection either and a single typo can empty your checking account.

Besides, I pay off my CC monthly so I have no interest and no fees either.

[dpd1]

The credit card thing has multiple contributions to the big correction. Not only is it taking people's money, but holding it as well. Some people have no choice... If you don't have money, you don't have money. As long as people could swing the minimums, they kept on using the cards. They stopped when they couldn't ignore the issue any more, then no more buying. So it's a circle... But I know many people who also say... Never again after this. Which is why all these guys are scrambling to grab as much as they can, while they can. But the sad part is... The very stuff that caused all this is still going on. Nothing has changed. I've met numerous young people that have ridiculously high card debt. Even after all that's happened, the companies are still handing them out like candy, and the people are still spending what they don't have. Which just goes to show that all the bailouts in the world aren't going to solve much.

[HRoth]

That's the way it used to be, incredibill. Not anymore. Recently someone tried to run a $2000 charge for lumber on my card. They just stopped it right there, even though I had the so-called "overdraft protection." Also, my bank typically will hold any foreign originating charge, even though I periodically buy from foreign suppliers. No evil eye, it's been pretty good all these years, and not one fee paid, not one cent of interest.

Not all merchants get a lower rate on debit cards. But a lot do. The less that goes to the cc companies, the better it is, IMO.