US already in recession, says world's richest man Buffet

[Vampire]

US already in recession, says world's richest man Buffet

Sat May 24, 1:39 PM ET

BERLIN (AFP) - While economists quibble, the world's richest man has decided: the United States is already in recession. So Warren Buffett tells German magazine Der Spiegel in an interview to be published on Monday.

"It is perhaps not a recession in the way that economists would understand it... but people are already feeling the effects and it will be deeper and longer than people think," Buffett said on a visit to Frankfurt.

Buffett, the 77-year-old chief of the Berkshire Hathaway holding company, blamed financial institutions for introducing instruments "they can no longer control" and said the "genie can no longer be put back in the bottle."

Buffett, who overtook Bill Gates this year as the world's richest man, said he believed the financial markets should be more tightly regulated.

According to the Forbes annual billionaire's list published in March, Buffett saw his wealth jump from 52 billion dollars last year to 62 billion, pushing Microsoft co-founder Gates into third position after 13 years at the top.

US economic growth has slowed dramatically in recent months and a growing number of economists believe the world's largest economy will experience a recession during 2008 amid a housing slump and related credit crunch.

This is interesting, especialy considering from where it comes . . . but I supose it was expected from long time already.

[JP226]

By definition it is not possible to be in a recession. If he's speaking towards a contraction which I imagine he is, then it's possible.

[Senno]

This is interesting, especialy considering from where it comes . . . but I supose it was expected from long time already.

Buffet could practice what he seems to preach and give most of his fortune to government. It only takes a loose billion or so to live on. Right?

No. Buffet knows governments don't spend money effeciently, so he's going to give his moola to different foundations upon his death.

[Hunter Makoy]

Buffet's been saying we were in a recession for a long time. we're basically pretty much at the bottom of it right now. Altho doesn't suprise me that Buffet would want more govt. control on the markets. wouldn't help in the long run tho.

[Thanatos]

Buffet's been saying we were in a recession for a long time. we're basically pretty much at the bottom of it right now. Altho doesn't suprise me that Buffet would want more govt. control on the markets. wouldn't help in the long run tho.

Bottom of the recession? I'm sorry, we can still slide down further, MUCH further.

[Hunter Makoy]

Bottom of the recession? I'm sorry, we can still slide down further, MUCH further.

obviously we COULD slide down much further, but we're not going to.

[Hotspur]

Watch what happens when gas hits $4.25 a gallon this summer...

[Thanatos]

Watch what happens when gas hits $4.25 a gallon this summer...

People'll start rioting.

[HorseArcher]

Watch what happens when gas hits $4.25 a gallon this summer...

Just wait until it's over $6.00

Right now oil is 132 dollars, 3 dollar drop since its highest a few days ago, but this is only a small fluctuation.

You do know, that today's gas-pump price does not reflect the current crude oil price, right?

Right now, I think we are burning the 115-120 price tag a few months ago. It's the water ripple effect, much like you throw a rock into a lake and it takes time until the waves reaches the shores.

Also consider this article (just a few hrs ago), which is exactly says what something I posted several weeks ago:

[Logik]

US already in recession, says world's richest man Buffet

I agree to some extent.And really if we are not careful our economy can get worst.

[Fabolous]

Watch what happens when gas hits $4.25 a gallon this summer...

People will drive alot and complain about high gas prices. But keep driving. Just like always.

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I was talking to my Economics professor, head of his department. He likes to tell the story of how people started talking about stocking up on supplies and preparing for a post-nuclear type situation (in terms of living off supplies for months, and possibly having to defend those supplies against rouge bands, and about lacking serious government help or hopes of immiment relief) because gas prices were rising rapidly, and when prices hit the grand total of $1 things would go off the end. Prices hit $1. People kept driving. Nothing of the senario played out.

People will probably start driving more fuel efficent cars. Less SUV's, less Hummers. Safety ratings and now fuel efficency will drive new car purchases. I am not sure that is a bad thing either. Hybrids will probably get more play.
And the search for new fuel sources will gain even more attention. Every time the price of gas rises this happens. Maybe eventually we will find a viable alternative... rising prices will only drive this more, though the high prices will be very hard for many to cope with.

[Garnier]

Watch what happens when gas hits $4.25 a gallon this summer...

People will start (or rather, already are) driving less, and/or pay more for when they do drive. As the price increases, people will either spend more money on gas, or drive less and less. It's not suddenly going to end America...

[Exarch]

what does he mean by 'ppl are feeling the pinch'
i dont see any riots or ppl starving in the streets ala germany 1930

[Thanatos]

People CAN live without cars. They use bikes instead. Look at India and China.

[roy34543]

Thats the whole point.
People in america are usign gas and oil less (due to efficiency, Knowledge about it being harmful to the enviroment, price etc) But India and china are driving the cost up.
If it wasnt for them, it would be going down

[Erik]

Thats the whole point.
People in america are usign gas and oil less (due to efficiency, Knowledge about it being harmful to the enviroment, price etc) But India and china are driving the cost up.
If it wasnt for them, it would be going down

Question is: less than what?
Americans are still using twice as much as Western Europeans, and more than 50 times as much as Chinese and Indians.

You also need to remember that most of the world started to moderate consumption 15 years ago.
Oil consumption in America has grown so fast in the past 15 years, that a small reduction (let's call it a correction) in one or two years isn't going to make up for that.

[Каие]

Depends how you define a recession,my teacher told me there a different views on what defines a recession or slump because we haven't had one for a while but he went to university during one, and he made it pretty clear, "two consecutive quarters of negative growth" It either is or isn't.

[Senno]

Depends how you define a recession,my teacher told me there a different views on what defines a recession or slump because we haven't had one for a while but he went to university during one, and he made it pretty clear, "two consecutive quarters of negative growth" It either is or isn't.

That's correct. Buffet is just describing the practical reality as he sees it.

I don't disagree essentially.

But going abroad to make such comments can be counter-productive. Markets try to read the tea leaves when forecasting the future. If Buffet thinks it's bad, it must be true. So the economy might keep heading that way under the psychological impetus.

Look at movements in the market both before and after the Chairman of the Fed testifies before Congress. There is movement based on people trying to predict what that testimony might be.

There is a psychological component to the economy. It's irrational, yet it exists. So it must be treated accordingly.

From what I know about Buffet, I believe that he is concerned that the ethics of business are in the toilet, therefore there must be stricter government controls.

Personally, I think all the regulations imposed to promote growth in places, also retards growth in others. Law of unintended consequences. So Congress hammers down that problem, continually causing new problems.

How do we address that in the current business climate? It's hard to do. Perhaps at law and business school start stressing ethics a bit more.

And ethics does not = religion. Let's keep that clear.

[JP226]

The best way to put gas is, what happened when housing prices went to high? The internet bubble? Anyone have any logic as to why a commodity would be different? Nop matter how far you beat the avergae, you got to come down, it's the average. The higher you are the further you fall.

[Senno]

The best way to put gas is, what happened when housing prices went to high? The internet bubble? Anyone have any logic as to why a commodity would be different? Nop matter how far you beat the avergae, you got to come down, it's the average. The higher you are the further you fall.

And create opportunities as well. If I am a young person I'm happy home prices are cheap. New buyers, first time buyers, quite the opportunity.

And now we seem to have a better internet business model, in general. Lessons learned.

Yet lessons are also easily forgotten. They keep needing to be reinforced.