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drrayjo

Warren Buffett Delivers Warning On U.s. Debt

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Buffett goes on to warn that "enormous dosages of monetary medicine continue to be administered and, before long, we will need to deal with their side effects. For now, most of those effects are invisible and could indeed remain latent for a long time. Still, their threat may be as ominous as that posed by the financial crisis itself."

The U.S. budget deficit is projected to reach a record $1.841 trillion for the fiscal year that ends Sept. 30.

Buffett notes that the nation's "net debt" (the amount held publicly) is increasing at a rate of more than 1% per month, and will have climbed, by the end of the fiscal year, to about 56% of G.D.P. from 41%. "Admittedly," he writes, "other countries, like Japan and Italy, have far higher ratios and no one can know the precise level of net debt to G.D.P. at which the United States will lose its reputation for financial integrity. But a few more years like this one and we will find out."

"Once recovery is gained," he writes, "Congress must end the rise in the debt-to-GDP ratio and keep our growth in obligations in line with our growth in resources.... With government expenditures now running 185 percent of receipts, truly major changes in both taxes and outlays will be required. A revived economy can't come close to bridging that sort of gap."

http://www.thestreet.com/story/10582079/1/...on-us-debt.html

Did Dave Cameron time his warning in our press to coincide with the Sage's?

Bet Dave doesn't think we've got a "few more years" of this left yet...

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Everything is pointing towards a BIG bust....but it just never seems to happen. Hail QE.

A big bust OR suffocating taxes, high unemployment and long, drawn out, recovery - pick your poison! ;)

It looks like we are heading for lost decades if the powers that be have their way, rather than a short sharp shock. Maybe once we're used to no growth, we can adopt monetary reform to steady, sustainability instead of boom/bust? Who knows though?

Either way, things are going to be a lot tougher for a long time.

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A big bust OR suffocating taxes, high unemployment and long, drawn out, recovery - pick your poison! ;)

It looks like we are heading for lost decades if the powers that be have their way, rather than a short sharp shock. Maybe once we're used to no growth, we can adopt monetary reform to steady, sustainability instead of boom/bust? Who knows though?

Either way, things are going to be a lot tougher for a long time.

I don't fancy the idea of lost decades at all. I would rather just have the sharp shock now and get it the fook over with, then we could at least start trying to build on a proper foundation.

I'm not sure how much control we have over any of this now. We might get the sharp shock anyway.

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I don't fancy the idea of lost decades at all. I would rather just have the sharp shock now and get it the fook over with, then we could at least start trying to build on a proper foundation.

I'm not sure how much control we have over any of this now. We might get the sharp shock anyway.

Very true. The government may try to borrow us (via QE or otherwise) into oblivion trying to stop it though. With QE, there is no real limit on how many years of productivity the government could choose to lumber us with... :unsure:

Then again, it is pretty easy to default on QE and face a sharp, nasty hit on the exchange rates. Say, the pound loses 90% of its foreign purchasing power. Debts and wealth both 10 times smaller in one hit. It would cost a relative fortune to import anything though, including oil.

If this inflationary pulse did happen, you would also have to wonder what the rest of the world would do too. Would they do the same? Would it be a case of the whole western world essentially purging itself of debt? Would there be war? Hmm... :blink:

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I rather like Denningers latest rant...

http://market-ticker.denninger.net/archives/2009/08/18.html

"Have we really turned into Prozac Nation? Is American Idol really that powerful? Have we become so immune to being ripped off over the last 30 years that when a bank re-orders our transactions to turn a $30 overdraft charge into $300 worth of fees on $50 worth of checks we're willing to simply bend over the table, place a stick between our teeth and take it, then ask "please Sir, may I have another?"

and..

"How long will you sit while both Democrat and Republican lie to you about how the "bailouts" and "handouts" will help the economy. Has all this grift helped? Did the "stimulus" keep unemployment from going higher as was promised? Did you really get help with your mortgage or were you offered a scam "forbearance" that amounts to the back-end loading of your balance, turning it into a balloon note or worse? Have you enjoyed watching JP Morgan and other big banks that got tens of billions of taxpayer dollars lease tankers and then bid up the price of oil - causing it to double - with your tax money? How about The Fed and Treasury funneling tens of billions in taxpayer money through AIG to a literal "who's who" of big banks so they could in turn pay billions in bonuses? "

Good stuff.

Wake up BRITAIN!

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Did Dave Cameron time his warning in our press to coincide with the Sage's?

Bet Dave doesn't think we've got a "few more years" of this left yet...

That's as close as Buffet has ever come to being a prophet of doom. I am just waiting for his deathbed speech when he can really open up. "My fellow Americans-we are fecked. Good luck to you all and God help America",

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Go for it Cameron. I've not been a fan but I have a feeling that if this is dragged centre stage he'll get an initial bad reaction from the TV media, but will strike a chord with people.

Time to stand out from the crowd.

Edited by bogbrush

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I don't fancy the idea of lost decades at all. I would rather just have the sharp shock now and get it the fook over with, then we could at least start trying to build on a proper foundation.

I'm not sure how much control we have over any of this now. We might get the sharp shock anyway.

I think the slow decline with lost decades is the game plan, a sudden collapse was unlikely. However there are always nasty surprises but so far everything has been mopped up.

Doublethink will be put to the ultimate test.

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Go for it Cameron. I've not been a fan but I have a feeling that if this is dragged centre stage he'll get an initial bad reaction from the TV media, but will strike a chord with people.

Time to stand out from the crowd.

Cameron is establishment. As far as I am concerned he and his ilk planned this whole thing. I can only presume that he is priming the sheeple for what will happen so he can then claim it was all the Tories.

ps Ex-Etonian and Oxbridge, hasn't Cameron done a marvellous job of convincing us he is one of us. Only private eye are game enough to blow his cover.

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