Will Obama's budget benefit, or bankrupt U.S.?

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Permalink Reply by Marita Topmiller on March 24, 2009 at 10:42am

Hi Ben,

Thank you for the references. I read your paper which has many profound points.

Because your article cites a quote from Warren Buffet. It states that Buffet has not bought any
stocks through some years, up to 2002. Warren Buffet IS BUYING NOW. I have
included some current Buffet advice. See below. I should also add that Buffet advises we
BUY AMERICAN. Seems simple enough - support your countrymen. It's good for them.
It's good for us. I am seriously considering getting away from my 15 year addiction to BMW's
and going back to Cadillacs. lol No more conspicuous consumption for me.

Since I am a Realtor, I watch the markets, I watch housing. The advice Buffet gives
below also pertains to housing - lowest prices / lowest rates in years signals BUY NOW.

"A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others
are fearful. And most certainly, fear is now widespread, gripping even seasoned investors. To be
sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions. But fears regarding the long-term prosperity of the nation’s many sound companies
make no sense. These businesses will indeed suffer earnings hiccups, as they always have.
But most major companies will be setting new profit records 5, 10 and 20 years from now.

Let me be clear on one point: I can’t predict the short-term movements of the stock market. I
haven’t the faintest idea as to whether stocks will be higher or lower a month — or a year — from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over.

A little history here: During the Depression, the Dow hit its low, 41, on July 8, 1932. Economic conditions, though, kept deteriorating until Franklin D. Roosevelt took office in March 1933. By
that time, the market had already advanced 30 percent. Or think back to the early days of World
War II, when things were going badly for the United States in Europe and the Pacific. The market
hit bottom in April 1942, well before Allied fortunes turned. Again, in the early 1980s, the time to
buy stocks was when inflation raged and the economy was in the tank. In short, bad news is an investor’s best friend. It lets you buy a slice of America’s future at a marked-down price.

Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a
dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.

You might think it would have been impossible for an investor to lose money during a century
marked by such an extraordinary gain. But some investors did. The hapless ones bought stocks
only when they felt comfort in doing so and then proceeded to sell when the headlines made them queasy.

Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts.

Equities will almost certainly outperform cash over the next decade, probably by a substantial
degree. Those investors who cling now to cash are betting they can efficiently time their move
away from it later. In waiting for the comfort of good news, they are ignoring Wayne Gretzky’s advice: “I skate to where the puck is going to be, not to where it has been.”

Warren Buffet ... from an article in the New York Times 10/16/2008

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Permalink Reply by Rodger (Todg) Smith on March 23, 2009 at 10:15am

In answer to the question, "I don't know." Like the rest I'm confused, but I voted for someone to lead and I am ready to either follow Obama's lead or another ... if one were out there. What doesn't confuse me is the political manipulation on the part of players who don't seem to have an alternative. This problem is bigger than either party and yet the parties don't seem to get that. After 8 years of being lied to, I think at least now we are getting truth out of the White House. So, in my confusion I'm going with the guy with the plan and the plan that is at least attempting to be transparent while actually getting something done. Not sure we have any other choice.

And, I would add that there isn't a trillion dollar ck being written on Tuesday and spent on Wednesday. It will take time to get this money into the system and in that time oversight from both sides of the political spectrum can be organized and programs re-defined or eliminate if necessary. In other words nothing is as absolute as many of the conversations seem to suggest.

We still have a lot of employed people and businesses. Many more than have been closed or employees laid off. Thinking how to control damage while supporting the positive parts of the economy strike me as prudent short and long term behavior. We have a Chicken Little mentality at the moment that I partly blame on people who have decided to start running now for 2012 rather than worrying about their constituents. I hope that a few of us start pointing out that the sky isn't falling. Yes, immediate assistance is required, but long term planning for a 21st century world challenged by environmental and world economical realities is critical. And it seems to me that is what Obama is trying to do. At least he is asking for support and ideas instead of hiding behind the office.

So, I still don’t know what is correct, but I am willing to give Obama’s plan a chance while I keep a close watch.

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Permalink Reply by Ben McCann on March 23, 2009 at 7:44pm

Well said Chris, good job, I agree with these comments.

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Permalink Reply by Jim Peters on March 23, 2009 at 1:52pm

If you truly believe you are getting honesty from this administrtation you are either unbelievably naive or completely brainwashed. Judging by your "8 years of lies" statement I would guess it is the latter. You should listen with an open mind to the transcripts of Barney Frank's support of Fannie Mae from years back and the transcripts of the Bush leadership statements about the disastrous effects of that continued support.

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Permalink Reply by Ben McCann on March 23, 2009 at 7:46pm

@ Jim, now that would actually require that we educate ourselves on this situation and look at facts that the Majority of the American Public doesn't want to know about,... They love their darling socialist leader, I heard he walks on water too... although if you provided links to these documents and video commentary ( they do exist on youtube... that would help ) Good stuff Jim.

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Permalink Reply by Kim Tracy on March 23, 2009 at 10:17am

One of the bigger lessons that President Obama is learning right now is that no matter what you promise on the campaign trail, bringing it into fruition is an entirely different matter. Keep in perspective that the Senate & House would in theory be aligned with his efforts since they have the majority at this time. What sounds good on the trial does not necessarily work well in practice. We're digging a bigger hole for ourselves with all of these bailouts and temporary bandaids. We are far enough into this recession that it may just be time to let business take its course. Some of the greatest creativity & improvements come from the worst of circumstances. Throwing more money at this problem is not going to "fix" this, it will simply prolong the inevitable.

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Permalink Reply by Ben McCann on March 23, 2009 at 7:49pm

Right on Kim, I have a sneaking suspicion that is why GOOD OLE BOY McCain didn't make such crazy promises as Obama, he had been in the Game long enough to know that he couldn't keep those promises, but Obama told people what they wanted to hear....

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Permalink Reply by Bill Starr on March 23, 2009 at 10:19am

The bigger chunk government takes from us the less healthy our economy becomes. Spending more than comes in just throws us more into debt and sets the stage for ever worsening inflation.

Henry Hazlitt Weighs in on the Current Crisis

Bill Starr
Columbus, Indiana
Mon, 23 Mar 2009, 10:19 am EDT

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Permalink Reply by Steve Stuck on March 23, 2009 at 10:24am

The budget is just a distraction with what the fed is doing. Last week it printed $1.3 Trillion to cover bonds of mortgage backed securities. Now, we are implementing a plan to buy up toxic assets, oops, they just changed the wording to "legacy" assets. That is now a minimum proposal of $1 Trillion dollars and it could balloon to $4 Trillion dollars. Another question, what else in debt will be thrown into this bad bank theory?

The world will start shifting to unpeg from the dollar as we tank it even more. This dollar inflation is being done on purpose and isn't just some accidental happen stance. Before you call me crazy, there is a direct correlation in devaluing your dollar with inflation that makes your debt worthless. Read up on it.

I read Amity Shlaes book "The Forgotten Man" before this administration started. You can use that as a chapter by chapter format to watch what this administration and Congress is doing.

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Permalink Reply by Ben McCann on March 23, 2009 at 7:51pm

100% accurate comments my friend... Is anyone listening ?

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Permalink Reply by Elliott Parker on March 23, 2009 at 10:38am

It's difficult to see how a budget that will lead to almost $10 trillion in deficits won't result in a devaluation of the currency and rapid inflation. What a disaster.

No president should accept such staggering deficits, much less hold them up as some sort of goal.

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Permalink Reply by Andy Horning on March 23, 2009 at 10:38am

I hate to toot my own horn, guys, but, then, I'm not the only one who'd predicted all this many years ago. ...Many thousands of years ago, in fact.
All the economic and social problems we're about to face have been the sole subject of all of my political endeavors.
We humans keep doing the same stupid things and we keep thinking we're breaking new ground.
This is not confusing. It is dumb.
Please, please look deeper into this. Don't trust the media sources which happen to be owned by the same few people who own the central banks and our politicians.
Citizens have chosen all the problems we now face, and we have the power to fix them. But first, we have to understand that we're falling into our human default state because we've once again failed to learn from our own history.
Read the constitutions, state and federal, and assume that you're being deceived on multiple fronts. Learn for yourself because it's important.

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