Friday, September 24, 2010

US is still in a recession, says Warren Buffett ............

INTERVIEW - EXCLUSIVE BY CNBC-TV18 - US is still in a recession, says Warren Buffett

B Y B ECKY Q UICK CNBC························· NEW YORK

The chief executive officer ofBerkshire Hathaway Inc., Warren Buffett, says he doesn't think the US reces- sion is over yet. He also admits in an interview that US tax poli- cy has tilted in favour of rich “guys“ like himself instead of the middle class. Edited ex- cerpts:

The National Bureau of Economic Research (NBER) said this week that the US recession officially end ed back in June of last year.

Well, they define it different- ly. But I ...think we're in a re- cession until real per capita GDP (gross domestic product) gets back to where it was be- fore. That is not the way the NBER measures it. But I will tell you that on any common-sense definition, the average Ameri- can is below where he was be- fore, or his family, in terms of real income, GDP. We're still in a recession. And we're not go- ing to be out of it for a while, but we will get out of it.

We're not going to be out of it for a while--a quarter, two quarters, a year down the road? Just from your business, what does it tell?

Our businesses are coming back...we've got 70-some busi- nesses. But most of them--the great majority--are coming back slowly... If you take our railroad business, and our rail- road business is typical of the other railroads...If you take the peak period for shipments and then you go all the way down to the bottom, we're 61% of the way back up. That's better, I think, than most businesses are in the country.

The Fed's Federal Open Market Committee also met this week and-- came out with a statement that has many looking at it saying the Fed is now poised to go ahead with quantitative easing, if the economy doesn't improve, at this point. Is that your understanding of that? And you think that's the right call?

Well, we've got three tools really in fighting a recession.
And the ones you read about are monetary policy, which is the Fed. And fiscal policy. I think the most important factor in getting out of the recession actually is just the regenerative capacity of American capital- ism. And we had many reces- sions in the history of this country when nobody even heard of fiscal policy or mone- tary policy. The country always comes back. ..And it's impor- tant to have the right monetary policy. It's important to have the right fiscal policy. But it's nowhere near as important as just the normal regenerative capacity of American capital- ism.

It sounds like you're asking for pa tience. That that's what it takes to get through this.

Well, unfortunately, I don't know how to do it...we have used up a lot of bullets. And we talk about stimulus. But the truth is, we're running a federal deficit that's 9% of GDP. That is stimulative...I mean, that is more stimulative than any poli- cy we have followed since World War II.

For businesses to be hiring, has Washington done enough at this point? Would you like to see more done? It sounds like from a stimulus perspective, you've seen enough. Maybe from the Fed's perspective, you have seen enough. Is there any- thing you would like to see dif- ferent in tax structure?

Well, I think for one reason or another, and everybody has their own explanation, senti- ment has turned very sour in the last three or four or five months. I hope we get over it pretty soon because it's not productive. We will come back regardless of how people feel about Washington. But it's not helpful to have people as un- happy as they are about what's going on in Washington. And I'm not sure exactly what's gonna get us out of that, but we'll get out of it.

My Reading :
Well, I know many must be trying to understand this news in a different ways and many will feel that USA is still not out of woods so the global market is still in danger.....
Many analyst will read it and interpret it in differnt way, or I can say will interpret it the way they likes.........
Here is what I feel......the things that my mind is taking note of is as under:
1)We're still in a recession. And we're not go- ing to be out of it for a while, but we will get out of it.

the last line, "but we will get out of it" says everything....
2)WB says that he hs some 70 business and all are coming back and that too in a great way....61% up from down!......
Now if the wrold analyst or experts , and the experts here in India says that US economy coming to normal is manupalation of figures then how WB Business is doing good?Is WB bluffing?

3)"And the ones you read about are monetary policy, which is the Fed. And fiscal policy. I think the most important factor in getting out of the recession actually is just the regenerative capacity of American capital- ism. "

Now the last line is bottomline....."Regenerative capacity of America's Capitalsim"
WB says , USA has seen many recession and they have come out of it everytime.Even when there was no fiscal policy or monetray policy even then America came out of it.When no one heard of such things America has come out of the recession and that is why he is so sure of US economy coming out of recession......
See,one( any country) cannot compare their economy with USA.It is totally a differrnt economy to deal with.Even I am not clear about the whole concept , but ....."Regenerative capacity of America's Capitalsim"........people spends and economy flourishes........that is the explaination in "NUTSHELL"........

So in the end I will say that ,my sense says that within next 6-9 months things should fall in place in USA.....


  1. Dear Mr Rajeev

    One of your favourite Stock Navin Fluorine is
    going to rock on monday, what a great announcement.

    NSE Announcements on Navin Fluorine

    Navin Fluorine International Limited has informed the Exchange that the Board of Directors in their meeting held on September 24, 2010 have approved Buy Back of equity shares of the Company to the extent of Rs.1355.17 lacs. The "Buy Back" Size is 3,38,792 fully paid up equity shares of Rs.10/- each at a price of Rs.400/- per equity share. The Buy Back would be conducted through "Tender Offer Route" at a price of Rs.400/- per share (Face Value Rs.10/-). The proposed Buy Back is to the extent of 10% of the paid up capital and free reserves of the company as on March 31, 2010. The company will proceed with giving effect to the said resolution as per applicable rules / regulations.

  2. Rajeev,

    Congratulations ! ! ! ! ! ! ! ! !

    You have hit Double Century (number of followers has reached 200)

    I wish you all the best to meet your aspirations.


  3. Rajeev ,

    Any View on financial technology . As you better know mostly people in USA are much interested in currency trading. In india this thing is just started up and currently Financial technology providing that platform. And recently they applying for new exchange but sebi has rejected their application. But some people saying they are opening up exchanges in other countries too. Isn't it a good business when banks performed that much.

  4. Rajeevji - Just a few days back WB had mentioned that he was bullish on US. Now he is saying it is in recession. I am not getting the point.

  5. Rajiv bhai
    please sujjest your view on hb stockholding and h b leasing.
    hb stockholding sale full stake of bell ceramic which he buy at throwaway price also hold decent holding in sugar scrip like dcm shriram ind
    in my view ready to blast both scrip
    Promoter BHASIN also increase their stake in both co.

  6. Rajiv bhai
    give your view on lotus eye care and Avon corp at cmp
    in my view 50% return in 6 month from cmp

  7. nirash,
    There was nothing wrong in Navin at any was just hold...It will give phenominal return and I have no doubt about it....I gave the call on Navin way ahead before any one can recognize it...

  8. TT,According to me, Financial Tech is out of reach from small investors....U know, I do not track highfliers stocks.....I like buying cheap..

  9. ashok,
    HB Portfolio and HB Leasing and even HB Estate ,all 3 looks excellent....

  10. ashok, I am tracking Avon Corp since I am seeing the promoters buying from market..but what I do not like about it is the eq has become huge.....but as promoters has bought from the market and increased the stake, it should give good returns..
    Lotus Eye Care, I do not track it..but tell me what you have got of it....

  11. Thanks blog has reached double century on followers.....

  12. Rajeev,

    Its ok you don t track this stock. But on morality ground isnt it is anybody right to any legal business on which he is capable to do . But if somebody has monopoly on that and they had the power .. can reject their right. Certainly this thing set the pattern on which way we are going.

  13. TT,
    I am unable to understand ur comments...

  14. Dear rajeev,

    MSP steel is up by almost 60% in 1 month after your call. Great call but i missed it.

    please keep sharing

  15. Rajeev,

    I am talking about financial technology's application for opening up exchange is rejected by SEBI by saying they are not following proper guideline & MCX-sx is dishonest ( Their case is already is in bombay high court). Now they are going to appeal in SAT against that decision. May be I dont know the whole truth but it seems like financial technology is right this time (and they have done everything for that)as they are going to appeal against SEBI decision . My point is that this time SEBI is showing dictatorship ... if they doesn't want a exchange then why they initially stop them. May be its is my idiot thinking , I am not shore about this thing

  16. Rajiv bhai
    lotus eye care cmp 17 is south base hospital . ipo come at higher rate and promoter buy some land with ipo money.
    this is take over target of fortis health care with in 6 month.
    may be easily double from cmp 17.
    i ask advice from prestige investment in face book they say easily go 25 in 4 month.
    but for me your advice is valueable than any other.
    please sujjest me.(take your own time because i know very well you are very busy person)

  17. Dear Rajeevbhai ,

    Beckons hit a 20%uc in today's volatile market.Scrip would be a very good bet if the company discloses their shareholding percentage in this ensuing AGM as to how much the Sardars hold themselves. Anyhow a collaboration with a German company for technical knowhow was announced just recently.

  18. mech,
    I wrote here in reply for Beckons Ind that it is a story that is coming up, needs to see whether it comes out good or not...but then one can always buy some 500-1000 shares because at that time and even now it is going cheap and if the story get materialize then it can be a huge multibagger.....