“We have an incredible economic system that unleashes the American spirit. We have a wonderful future ahead of us.” — Warren Buffett
This is part 2 of my report on Warren Buffett’s 50th anniversary shareholder meeting, known as the “Woodstock of Capitalism.”
Buffett told his adoring audience of more than 30,000 in Omaha that he was bullish on America. This is an important issue today, because many Cassandras are warning of an impending disaster caused by big government or errant states like ISIS or North Korea.
Yes, there are concerns. Buffett said his optimism can be nullified by mad men engaged in terrorist attacks or cyber attacks.
“The United States and China, the two superpowers, need to have good relations,” Buffett said.
There will be panics and bear markets from time to time. Buffett opined that there is “still too much risk in high finance,” and “derivatives are too much like the old bucket shops.” Furthermore, “there’s too much speculative fever in China,” Buffett said.
Buffett and his business partner, Charlie Munger, are skeptical of global warming predictions. Overall, they don’t try to predict macroeconomic events.
“We are swimming all the time, and let the tide take care of itself,” Munger told the audience. Berkshire Hathaway has more than $60 billion in cash and is ready to put the money to work, especially during “turbulent times,” Munger added.
Munger conveyed that taxes are too high, especially in California where he lives, while Buffett said corporate taxes are “not onerous.” Munger is a Republican; Buffett is a Democrat, even though his father was a hardcore conservative Republican.
Many doomsayers are predicting the collapse of the U.S. dollar.
But Buffett (and I) disagree with them.
“The U.S. dollar will be the world’s currency in 50 years,” Buffett predicted. Buffett explained he expects rising inflation and rising interest rates.
Munger expressed concern about the Federal Reserve “printing too much money” and wasting it rather than spending it on much-needed infrastructure.
Both Buffett and Munger consider “The Wealth of Nations” (1776) by Adam Smith to be one of their favorite books on sound economics.
“Adam Smith teaches us about the productive power of the capitalist system,” commented Munger.
They are also fans of Benjamin Franklin and his three virtues, “industry, thrift and prudence.”
As Munger said, “If you don’t know how to save, I can’t help you.”
Big savers inevitably become wealthy.
Yes, income inequality is a big issue, but they don’t offer much in the way of solutions. If the minimum wage were raised too much, it would cause “massive unemployment.” Better to offer an earned income tax credit.
Munger is especially skeptical that more education will do the trick. Although Buffett attended Columbia Business School, Munger never took any business classes. He was skeptical about the value of a college education.
“Be as rational as possible… Berkshire Hathaway is a temple of rationality,” Munger said.
You Blew It! Bill Clinton’s Free Reign in the White House?
“It’s illegal but I’ll do it anyway!” — Bill Clinton
During the campaign of 1996, I jogged with President Bill Clinton on the beaches of Del Coronado Hotel in San Diego. After our jog, he signed my dollar bill but right before doing so, he said, prophetically, “It’s illegal, but I’ll do it anyway.” Read the story and view my photos with him.
That seems to be the modus operandi of the Clintons in recent years, as exposed in Peter Schweizer’s new book, “Clinton Cash.” According to the book, “The Clintons’ most lucrative transactions originate not in places like Germany or Great Britain, where business and politics are kept separate by stringent ethical rules and procedures, but in despotic areas of the developing world where the rules are very different.”
Indeed, President Clinton has become involved in the following sleazy operations:
–He received $500,000 to give a speech on HIV/AIDS in 2005 in Kazakhstan, and later a Canadian company gained big stakes in the uranium business there, after which Canadian mining magnate Ian Telfer donated more than $2 million to the Clinton Foundation (only now have the donations been disclosed).
–Once Hillary Clinton was appointed Secretary of State, he spoke twice in Nigeria for $700,000 each time.
–One day before the United Arab Emirates’ foreign minister met with Secretary Hillary Clinton, Bill Clinton was in Abu Dhabi receiving $500,000 for a speech.
James Freeman of The Wall Street Journal concluded, “One can only imagine how much Mr. Clinton will charge if his wife wins in 2016.”
Be the First to Ask a Question
Can you do me a favor? We are gearing up for the dream debate between Paul Krugman and Steve Moore at this year’s FreedomFest, scheduled for 10:30 am on Thursday, July 9, in the Celebrity Ballroom in Planet Hollywood, Las Vegas. Steve Moore tells me that everywhere he goes, it’s the #1 topic of conversation. I urge you to be there and help me fill the Celebrity Ballroom — sign up now at www.freedomfest.com, or call toll-free 1-855-850-FREE.
At the end of the debate, attendees will have a chance to ask a question. I’ll be the moderator of this debate, and I’d like to give my subscribers the first chance to ask a question to either Paul Krugman or Steve Moore. So if you have a question, send it to email@example.com.
In case you missed it, I encourage you to read my e-letter column from last week on Eagle Daily Investor about Warren Buffett’s “trade secret.” I also invite you to comment in the space provided below my Eagle Daily Investor commentary.
Good investing, AEIOU,
Presidential Fellow, Chapman University
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