Buffett deepens dollar worries.
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| Mr Buffett stepped up his warning about the US trade deficit and the need to finance it with foreign investment, devoting more than two full pages of the annual report to the topic. “This force-feeding of American wealth to the rest of the world is now proceeding at the rate of $1.8bn daily, an increase of 20 per cent since I wrote you last year,” he said. “Consequently, other countries and their citizens now own a net of about $3,000bn of the US” In particular, he warned that this meant a sizeable portion of what US citizens earned in future would have to be paid to foreign landlords. “A country that is now aspiring to an “Ownership Society” will not find happiness in – and I’ll use hyperbole here for emphasis – a “Sharecropper’s Society,” added Mr Buffett. “But that’s precisely where our trade policies, supported by Republicans and Democrats alike, are taking us.” |
Buffett attacks American spending junkies.
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| “Without policy changes, currency markets could even become disorderly and generate spillover effects, both political and financial,” Mr Buffett warned. “Such a scenario is a far from remote possibility that policymakers should be considering now,” the billionaire said, though he conceded policymakers’ “bent, however, is to lean towards not so benign neglect”. Mr Buffett said in the last 10 years foreign powers and their citizens had accrued about $3 trillion worth of US debt and assets such as equities and real estate. At current rates, he predicted that in another 10 years’ time the net ownership of the US by outsiders would amount to $11 trillion. “This annual royalty paid [to] the world would undoubtedly produce significant political unrest in the US. Americans … would chafe at the idea of perpetually paying tribute to their creditors and owners abroad. A country that is now aspiring to an ‘ownership society’ will not find happiness in - and I’ll use hyperbole here for emphasis - a ‘sharecropper’s society’.” |
