Thursday, February 7, 2008

Money is still cheap, but get out of the dollar

Buffet sees no credit crunch, continued decline of dollar

Billionaire Warren Buffett, chairman of Berkshire Hathaway Inc., said a credit crunch isn't under way and he forecast that the dollar's value is likely to decline. "Money is available and it's really quite cheap,'' he said. Buffett's company has the highest possible AAA credit rating and has more than $40 billion in cash available. The only currency Berkshire directly owns now is the Brazilian real, Buffett said. He blamed the declining dollar on the current account deficit.

Posted by little professor @ 12:05 AM (548 views)
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2 thoughts on “Money is still cheap, but get out of the dollar

  • Landofconfusion says:

    “a credit crunch isn’t under way ”

    The availability of cheap credit (at least here) has been confusing me for a while now. Technically banks should be increasing rates for higher risk customers and concentrating more resources on getting a larger slice of the prime sector. Although there are exceptions (Egg) this doesn’t seem to be happening as much as I would expect.

    Perhaps the full impact of ‘walk away’ mortgages in the US and higher interbank rates here hasn’t yet been felt? Also how much exposure to the banking market does Berkshire Hathaway Inc. have?

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  • “He blamed the declining dollar on the current account deficit.”

    This point in key. Everyone screaming about IR cuts but that is for lending money that has to be paid back. The current account deficit is the real “printing of money”. Bush’s tax cuts have a lot to answer for, under Clinton the current account deficit was closing. As for the UK, Crash Gordon started out well on the current account deficit although controversially by taxing our pension funds. But at the moment the UK current account deficit is as bad if not worse than the US.

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