Warren Buffett doesn?t Expect Double-Dip Recession

On Monday the billionaire investor Warren Buffet declared that the economy won’t backslide. He told the Montana Economic Development Summit that he saw “our businesses” coming back almost across the board. In addition, Buffett gave his Montana audience some banking advice. 


He stated that more people were employed this month compared one or two months ago. “Our businesses” consisted of insurer Geico, See’s Candies, Dalton-headquartered flooring maker Shaw Industries, International Dairy Queen, and the Ben Bridge jewelry chain. 


His outlooks contrast with the views of Professor Nouriel Roubini and Harvard University professor Martin Feldstein. They have thought of another recession


During the subprime crisis of 2007–2008, Buffett\’s Berkshire Hathaway suffered a 77% drop in earnings during Q3 2008. Buffett made a bet on the U.S. economy by buying railroad Burlington Northern Santa Fe Corp. for $ 27 billion in February. He proposed merger with the Burlington. The deal was valued at nearly $ 34 billion. 


Buffett said March 2008 “by any common-sense definition we are in a recession”. Amid unraveling markets and economy, he suggested buying stocks for the long term. Following his advice, investors who endured a drop of 26% and continued to hang on, today they gain up 19% almost two years later. However, some sold at the lowest prices of the bear market


He pronounced the U.S. economy had “fallen off a cliff” on March 9, 2009. In the long interview with CNBC, he reiterated his long-term optimism about the economy. 


The stock market gained momentum from Buffet’s optimism, rallying broadly. Prices had eight successive sessions of gaining. The Standard & Poor’s 500 Index jumped 1.1%. In August, double-dip worries were fueled by a stretch of weak economic reports; the S&P had been down 4.7%. 


The world’s largest economy expanded 1.6 percent in the second quarter. This annual pace exceeded the median forecast of economists surveyed by Bloomberg News. Unemployment rate jumped to above 9 percent, which tempers consumer spending. 


It is unlikely that the economy will be back into recession as “signs of life” appear in Bank of America Corp. U.S. banks got prepared to boost lending and encouraged businesses to seek financing for their ideas.


Economics is the study of our lives,our jobs, our homes, our families and the little decisions we face every day. Thus, I am keen on reading and studying economic issues.

Buffett Bullish On US Homebuilders

Billionaire Warren Buffett said the U.S. residential real estate slump will end by about 2011, predicting that’s how long it will take demand for homes to catch up with the supply.

According to Buffet’s latest annual shareholder Letter, “the industry is in shambles for two reasons, the first of which must be lived with if the U.S. economy is to recover. This reason concerns U.S. housing starts (including apartment units). In 2009, starts were 554,000, by far the lowest number in the 50 years for which we have data.

Paradoxically, this is good news. People thought it was good news a few years back when housing starts – the supply side of the picture – were running about two million annually. But household formations – the demand side – only amounted to about 1.2 million. After a few years of such imbalances, the country unsurprisingly ended up with far too many houses.”

Jokingly, Buffet offered three ways to adjust the imbalance:

1. Blow up a lot of houses, a tactic similar to the destruction of autos that occurred with the “cash-for-clunkers” program.

2. Speed up household formations by, say, encouraging teenagers to cohabitate, a program not likely to suffer from a lack of volunteers.

3. Reduce new housing starts to a number far below the rate of household formations.

“Our country has wisely selected the third option, which means that within a year or so residential housing problems should largely be behind us, the exceptions being only high-value houses and those in certain localities where overbuilding was particularly egregious,” he said. “Prices will remain far below “bubble” levels, of course, but for every seller (or lender) hurt by this there will be a buyer who benefits. Indeed, many families that couldn’t afford to buy an appropriate home a few years ago now find it well within their means because the bubble burst.”

Buffett built Berkshire into a $ 198 billion company. His deals transformed Berkshire from a failing textile mill into an enterprise that makes candy, produces power and sells flight time on private jets. The shares traded at about $ 15 when he took control in 1965; the Class A stock last closed at $ 119,800.

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Warren Buffett: A Biography of the most Intelligent Businessman Ever

Warren Buffett: A Biography of the most Intelligent Businessman Ever

Do you want to get to know Warren Buffett a little bit better?

Are you interested in how Warren Buffett became so successful?

Those that know about investors and philanthropist may be able to say that they have heard of Warren Buffet. It has been said that he may be one of the largest, and most well known, investor in the 20th century. Of course, he is also one of the richest men in the world. He is the CEO of Berkshire Hathaway. While you may think that this is a man that is only interested in benefiting himself, you may be shocked to know that this is not the case. This man has made a pledge to give away 99% of his wealth and he often gives to the Gates Foundation.

What you’ll learn inside: