While there’s a large domestic market, many of the famous names in automobiles and consumer electronics depend mightily on overseas markets – so, when the US economy gets pneumonia, they all catch cold.

The J-Folks I know are hoping that somehow this is non-fatal and the export-led party will eventually begin again. Maybe debt-forgiveness and a dollar devaluation are going to be parts of the new new deal?

Yet I can’t at the moment see when/how the US consumer begins major debt-fueled spending – for a while ‘frugality’ is a reality.

… Even in Japan. Now when I go get the “dozen eggs for 99c” Saturday morning special, there’s already a queue of 30 or more waiting for the doors to open at 10am. (But no Wall Mart style scrimmage like we saw in NJ. These are mostly older people and the shopping lanes are too narrow to do much damage in..)

Japanese NHK nightly news has covered the plight of part-time and contract workers being let go by many of these big firms – and while there’s an up-tick in unemployment, not (yet) much in the way of mass-layoffs.

In fact, for most of 2008, the “sub-prime” problem was reported as mainly a foreign affair with little collateral damage to Japan.

When LEH blew up attitudes started to change.

Here is the Philosopher’s Stone Ron Paul video
http://www.youtube.com/watch?v=8PIEGK0IbA4

> “I can find gloomier economists than that!”
>
> LOL!
>
> So can I, but none that can show any facts that
> this recession will last longer than a year or so.
> I wouldn’t underestimate the strength of the
> US economy.

Check out HSDent.com and his comments on the demographics of why the US economy is heading down after 2009, bubble or no bubble.

As for Buffett, I’m reading his biography “Snowball”, and his father was claiming the collapse of fiat currency would happen back in the 1930’s.

My personal guess is that Buffett will never lie, but you have to interpret what he says very carefully. Remember he owns whole companies even more than he owns equities, and I don’t think he has burnt through all his cash reserves to buy up at these prices.

I wish I knew about Peter Schiff a bit earlier, but the only doubt I have is whether the rest of the world really will be able to decouple from the US like Peter hopes it will.

And a final thought from Robert Kiyosaki, “If you want to understand the world economy, take a refugee from Zimbabwe to lunch.”…
http://finance.yahoo.com/expert/article/richricher/124339

Thanks for making the point that I alluded too… Yes we use a fiat currency. The federal reserve needs to be abolished, the government needs to be limited to its constitutional rights and we need to go back to some sort of gold standard.

It’s amazing how many people don’t realize the fed is a private institution and nobody is really quite sure who actually owns it. Bernanke is a bold face liar (“the central branks never talk about gold”) and his purpose is to make money for the feds owners and not serving the best interests of the American people.

Here’s the problem. Our entire economy — even our currency — is based on debt.

Dollars are debt notes. Look at them. It even says so on each bill.

The Fed prints dollars and LOANS them to the U.S. government. The government then has to pay back those dollars — with INTEREST — to the Fed.

But how?

Let’s boil it down to just two people in the entire economy. I loan you $100 and say, “You can borrow this $100 if you pay me back $110.”

You say, “Okay. But I only have $100. How will I pay back $110 if I only have $100?”

I say, “No problem, I’ll just print more dollars and loan those to you as well. So I’ll loan you another $100, that way you can pay me back $110.”

You say, “But wait. Now I’ll owe you $220, right?”

“Yes.”

“But all I will have is $200. How can I pay back $220?”

Etc, etc, etc.

This is how our financial system works. The Fed gets to create money out of thin air and loan it to the government at interest, which ultimately makes the private bankers running the Fed wealthy.

The government’s debt to the Fed accelerates over time… putting the American people into bondage and poverty.

Eventually the whole system crashes because the U.S. government can’t keep up with servicing the debt.

This is starting to happen now.

Until we abolish the Fed (which is illegal according to the Constitution) and the U.S. takes back the right to print its own money, our economy will suffer.

We could pay back the debt…. but with what? Since we have shifted the bulk of our manufacturing to other countries we don’t have anything to export (we can’t export our debt-laden consumer service economy).

True wealth is created by manufacturing products that then can be sold to other countries. Thats precisely what happened in WWII when the US was practically the only industrialized nation with a manufacturing base that wasn’t bombed to pieces… so after supplying our military and allies with war machines we re-tooled to supply the world with goods they wanted. That is arguably what brought us out of the depression.

What we do know is that Obama (and I believe McCain would have done the same so I’m not picking on the left or the right) has basically said he will spend as much as it takes to try and avoid the un-avoidable recession/depression.

Bernanke has fired the last salvo he has and is now out of bullets with the recent rate cut and has said from now on he is going to fire up the printing press and buy more government bonds… both of these things are going to increase the money supply and by definition that creates inflation.

The wild card in all of this are the trillions in US debt that China, Japan, UK, et el own in teasurys. What happens when those countries decide they want to cash out and invest in their countries instead of rolling them over? Obviously we don’t have the money to pay them back so we either stiff them or have to fire up the feds printing press to pay them back… ergo more inflation.

I have more faith in the free market then the government, unfortunately it keeps meddling with the market which is going to prevent recovery. History should have shown us that centralized goverment planning doesn’t work (USSR anyone?) and that the last new deal didn’t work and to this day we are still paying for it in the form of the Social Security Ponzi scheme.

-Jim

As far as Buffett going all in, I’m sure he is. Not with the grocery money though. I’m pretty sure his house is paid for, his modest (by most people in his position’s standards) will continue. He doesn’t have to worry about facing foreclosure or not being able to pay his bills.

So prepare yourself for the worst, plan for the best, as Winston Churchill said and Tony paraphrased, “Never, ever, ever give in.”

As Garrett Gunderson says in Killing Sacred Cows, “Ultimately, the only way to stay out of debt is to create more value in the world than we consume, or in other words, to serve more than we are served.”

Figure out how you create value, and someone will pay you for it.

@Kevin – I hadn’t heard that before… awesome joke. :-D

@Eric – Thanks for the compliment. And thanks for reading, too!