Bloomberg.com: Worldwide
By Rick Levinson
Feb. 28 (Bloomberg) — Billionaire Warren Buffett said the economy will be “in shambles” for the rest of this year as financial firms take losses tied to reckless loans made during the housing boom.
The Standard & Poor’s 500 Index will probably gain in three-quarters of the next 44 years, just as it did in the period since Buffett took over Berkshire Hathaway Inc. in 1965, he said today in his annual letter to the company’s shareholders.
While Buffett and business partner Charlie Munger can’t predict how stocks will perform in 2009, they’re certain “that the economy will be in shambles throughout 2009 – and, for that matter, probably well beyond,” he wrote.
Gross domestic product shrank at a 6.2 percent annual pace from October through December, the most since 1982, the Commerce Department said yesterday in Washington. Buffett said the consequences of the U.S. housing bubble are now “reverberating through every corner of our economy.”
Home purchases should involve an “honest-to-God down payment of at least 10 percent,” Buffett said. “Putting people into homes, though a desirable goal, shouldn’t be our country’s primary objective.”
Buffett endorsed efforts by the U.S. government to prevent the failure of financial firms including Bear Stearns Cos., which was sold to JPMorgan Chase & Co.
‘Immediate Action’
“Whatever the downsides may be, strong and immediate action by government was essential last year if the financial system was to avoid a total breakdown,” Buffett said. “Had that occurred, the consequences for every area of our economy would have been cataclysmic. Like it or not, the inhabitants of Wall Street, Main Street and the various Side Streets of America were all in the same boat.”…
http://www.bloomberg.com/apps/news?pid=20601087&sid=a1L50vuf_HiM&refer=home
Twenty-four years of neocon “economics” brings us to what looks like a world economic disaster. But the neocons have the solution – tax cuts.
Tax cuts can fix what ails the economy. Spending America’s GDP on wars and rumors of wars? Not to worry. Tax cuts will fix it. Fixed-rate mortgages gave way to Adjustable Rate Mortgages(ARMS). Trying to budget an adjustable rate anything ought to be a scary thought. But not to worry – because, again tax-cuts will manage the economy.
And the cherished belief that the tax-cut is the proper tool to control the economy still reins supreme. It kinda reminds one of the villagers of old, looking that first steam locomotive in the eye and declaring it was driven by horses. Even in the face of evidence to the contrary, cherished beliefs can be difficult to dislodge.
And America is now experiencing the second instance of a failed economy on the Republican’s watch. And the Republicans, by and large, still don’t seem to get it. They are still harping tax cuts.
