Buffett: Bernanke Signal To Raise Rates Would Be A "shot" Heard Around The World

[thecrashingisles]

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/10037553/Berkshire-Hathaway-board-backs-Warren-Buffetts-successor.html

Mr Buffett told shareholders in a traditional six hour Q&A session with business partner Charlie Munger that he had "a lot of faith" in US Federal Reserve chairman Ben Bernanke, who had led America into "uncharted territory" with its policy of near-zero interest rates.

He said that an eventual signal by the Fed to raise interest rates would be a "shot" heard around the world.

The duo also dismissed the value of Bitcoin, which has been touted as an online version of gold. Mr Munger said that he had "no confidence whatsoever in Bitcoin being any sort of universal currency." Mr Buffett simply said: "Of our $49bn (£31.5bn) we haven't moved any to Bitcoin."

When will Ben pull the trigger?

Edited May 4, 2013 by thecrashingisles

[scepticus]

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/10037553/Berkshire-Hathaway-board-backs-Warren-Buffetts-successor.html

When will Ben pull the trigger?

When Buffet backs up the truck for bitcoin?

[Errol]

When will Ben pull the trigger?

They pulled the trigger a long time ago and shot America fatally in the head. The crash is coming. Bernanke is leaving just in time to avoid being in charge when it happens.

[zugzwang]

http://www.telegraph...-successor.html

When will Ben pull the trigger?

Well done, Mighty Ben.

Full time US job numbers have increased to levels last seen in 2002. Wages and hours worked are falling, 46 million Americans are on food stamps. Speculative bubbles have been created in just about everything that can be traded, meanwhile the Fed balance sheet has quadrupled. Most of the world's economies are in or near recession.

Take a bow.

[interestrateripoff]

He has a lot of faith in Bernanke?

Senility has clearly set in.

[Crashman Begins]

What if they dont want to pull the trigger

What if these rates are what they want. So that is seems a no brainer

For everyone to keep on borrowing ? Including big businesses

The FED has been around since 1910, there's no rush for them to do anything.

[billybong]

Mr Buffett told shareholders in a traditional six hour Q&A session with business partner Charlie Munger that he had "a lot of faith" in US Federal Reserve chairman Ben Bernanke, who had led America into "uncharted territory" with its policy of near-zero interest rates.

That sounds more like he's saying he has a "lot of faith" in him as Ben must know what he's doing as for sure nobody else knows what on earth he's doing.

Edited May 5, 2013 by billybong

[Executive Sadman]

Well done, Mighty Ben.

Full time US job numbers have increased to levels last seen in 2002. Wages and hours worked are falling, 46 million Americans are on food stamps. Speculative bubbles have been created in just about everything that can be traded, meanwhile the Fed balance sheet has quadrupled. Most of the world's economies are in or near recession.

Take a bow.

And then the population was probably 10-20 million lower too!

[Venger]

He said that an eventual signal by the Fed to raise interest rates would be a "shot" heard around the world.

Heard from the bullet travelling through the hearts of UK and other high-cost countries in the EU Euro area, where they prefer to keep the zombies alive. UK would have less room to manoeuvre in raising rates, so maybe market money would gravitate back to the US.

For all their problems their currency is backed by firepower and huge natural resources. We've got welfare and extreme high costs especially for housing. Dollar strengthens and sterling falls, causing some panic and requiring BoE to act, beginning the act of purging the zombies, curtailing policies to special interest friends, like major builders, and allowing good money in.

Some people think high-cost UK is set for even higher wage inflation.

[okaycuckoo]

What if they dont want to pull the trigger

What if these rates are what they want. So that is seems a no brainer

For everyone to keep on borrowing ? Including big businesses

Rather then what they want - what if they had no choice?

I don't see the extra borrowing. What if they really can't pump up the borrowing?

[TrevorS]

Some people think high-cost UK is set for even higher wage inflation.

They will try. I expect the cap to be taken off public sector pay rises following an improvement in some minor economic indicators (green shoots justification, perhaps with 'hard-working' thrown in too).

[gf3]

zombies alive.

I think zombies have been given a bad name.

If by zombies we mean companies that don't make enough profits to make the share holding elite richer and what profits they make just go to its workers in wages. This seems totally sustainable and a good thing.

But I understand that rent seekers wouldn't like these companies much.

[Venger]

I think zombies have been given a bad name.

If by zombies we mean companies that don't make enough profits to make the share holding elite richer and what profits they make just go to its workers in wages. This seems totally sustainable and a good thing.

But I understand that rent seekers wouldn't like these companies much.

The companies I'm thinking of all all owned by older owners, some approaching and working on past retirement. Who still draw 6 figure salaries, get big pension contributions, have top end company cars, the best part of the profits going to them. Who bought homes decades ago + Gordon's boom on top. Winners still winning. Banks in some instance will allow younger people to buy in, requiring huge loans, and I know a couple of mugs younger people who've done so in their 30s and 40s. The companies themselves bloated and over-expanded, requiring forbearance and low rates given they over-expanded at the heights of the boom to try and grab bigger profits from market demand they thought was infinite.

So yes, great younger and more able workers are career blocked, with a ceiling on their earnings, due to forbearance not bringing about much needed restructuring. Allowing older people who've enjoyed the longest boom to keep on enjoying the cream of everything. Couple of encouraging signs is business further dropping off to support the all even after the stimulus. And of younger capable people finally tiring of it, and more talk and start of action of younger people setting up on their own, new competitor businesses.

However there is no doubt they are doing so in an environment where the costs of doing business, the investment required to start up (including commercial rents) and comply with everything, including regulatory costs and compliance to indemnity insurance premiums, are all heightened because the plug hasn't been pulled on the over-extended companies, where the long-term older winners are still winning.

There are very few companies I'll bet, that you're thinking of, where the owners being kept alive by forbearance haven't and don't still draw much larger pay than those they employ, except for perhaps very small companies. Pull the plug and get the older owners out, replaced by younger people, salaries below better able to be sustained or improved for able workers of value, and have some HPC mixed in as well.

Edited May 6, 2013 by Venger

[Crashman Begins]

Rather then what they want - what if they had no choice?

I don't see the extra borrowing. What if they really can't pump up the borrowing?

Then they get to take the physical assets from those who find themselves in financial trouble,

Such as houses, whole countries etc

But they would prefer to keep people in debt than have them go bust.

There's no money to be made in interest if borrowers go broke.

So of rates must be reduced to nothing / go negative so be it.

So I've heard.

Edited May 15, 2013 by Crashman Begins

[trekking]

They will try. I expect the cap to be taken off public sector pay rises following an improvement in some minor economic indicators (green shoots justification, perhaps with 'hard-working' thrown in too).

Nope, not going to happen any time soon.

Unless they start haemorrhaging vital key staff, and then they can just pay those some sort of retention bonus.

They want to shrink the civil service, undo the Blair and Brown years.

[Steppenpig]

I recall that buffet had actually bet the bank on some sort of option or stop-loss reinsurance thing or something that required the Dow Jones to be above 10,000 in 2017 (sorry, just made all those figures up, but it was something that looked like a low risk investment pre 2008. I did a bit of googling, but couldn't find it, and I don't have time). Plus he has major investments in insurance companies. Of course he thinks Bernanke is doing a great job.

Edited May 29, 2013 by BigPig