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Politics : Don't Blame Me, I Voted For Kerry -- Ignore unavailable to you. Want to Upgrade?

To: sea_biscuit who wrote (58818)	3/7/2005 12:14:24 PM
From: Cynic 2005	Respond to of 81568

If you are short US dollar because of Bush's atrocious foreign and domestic policies, you are in good company! It is none other than Warren Buffet! It is about time the Republigoons brand the Oracle of Omaha a traitor and anti-American. biz.yahoo.com FT.com Lex: Buffett/trade deficit Sunday March 6, 1:45 pm ET Warren Buffett's letters to shareholders at times read like scripts from The Waltons TV show. But the billionaire fund manager's folksy style is a breath of fresh air for currency investors used to the obfuscation of Alan Greenspan, chairman of the Federal Reserve. Mr Buffett believes the dollar has further to fall and the US trade deficit risks turning America into a "sharecropper's society". It is only fair to point out that the chairman of Berkshire Hathaway is talking his own book. The value of the group's foreign exchange contracts mostly short positions against the dollar increased to $21.4bn at December 31 2004 from $12bn the previous year. That caveat aside, Mr Buffett's reasoning has merit. Some might argue that while foreigners are happy to finance the US deficit by recycling their corresponding surpluses into dollar assets the situation is sustainable. But, as Mr Buffett's sharecropping analogy highlights, that argument ignores the transfer of wealth that accompanies persistent large trade deficits. US net external liabilities are currently about three times export earnings. With a trade deficit amounting to 5.4 per cent of gross domestic product, net indebtedness continues to grow. It is unlikely that America can trade its way out of the problem. Since 1991, the share of exports in US GDP has remained static, at close to 10 per cent, while the share of imports has jumped by five percentage points. Not all of the transfer of wealth to the rest of the world leaves US control. Part of the deficit reflects trade between US-based companies and their overseas subsidiaries. But it has been the willingness of foreign central banks, particularly in Asia, to accumulate currency reserves that has allowed the deficit to persist without more significant dollar depreciation. As US indebtedness grows, so does the risk that its creditors' appetite for dollar assets wanes or they at least require a higher return. The dollar has already proved sensitive to suggestions that South Korea might diversify the currencies in which it holds its foreign exchange reserves. In Mr Buffett's words, US "spendthrift behaviour won't be tolerated indefinitely".