Saturday, March 05, 2005

Warren Buffet is concerned about the landlord

Warren Buffet's letter to shareholders once again warns of the fact that, if you live on debt, at some point you have to pay it back, and that paying it back won't be much fun. The FT quotes him here:

Mr Buffett stepped up his warning about the US trade deficit and the need to finance it with foreign investment, devoting more than two full pages of the annual report to the topic.

“This force-feeding of American wealth to the rest of the world is now proceeding at the rate of $1.8bn daily, an increase of 20 per cent since I wrote you last year,” he said. “Consequently, other countries and their citizens now own a net of about $3,000bn of the US”

In particular, he warned that this meant a sizeable portion of what US citizens earned in future would have to be paid to foreign landlords.

“A country that is now aspiring to an “Ownership Society” will not find happiness in – and I’ll use hyperbole here for emphasis – a “Sharecropper’s Society,” added Mr Buffett. “But that’s precisely where our trade policies, supported by Republicans and Democrats alike, are taking us.”

His bet against the dollar, and mine, are paying off handsomely. That said, apparently his other investments didn't do very well last year.


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