this is absolute BS about your tax idea. I don't know what drives some of you to criticize Buffett, but let me ask you something: Even if you avoided any tax, how do you make money if you did not pick great stocks and made excellent bets on the markets over a LONG period of time? This guy accumulated wealth over several decades through intelligent and bright forward-thinking. This guy has never been involved in any scam, suit, or similar incident that could have proven that he accumulated wealth unlawefully. Now, what I dont get is how some low-live pricxs read all kinds of different things into his way of making money. Do you think Buffett will call us guys up on the phone to discuss his strategy. Do you think everything he ever said on the air is in line with his strategic thinking and positions? Come on!!! You guys probably just follow other peoples' comments all the time and then you wonder when losing on your investments. I just do not get it!!! Same applies to G. Soros. There were times when he expressed his view on the markets and hords of little traders got into that market, not seing that this is exactly what Soros intended. At other times Soros was talking about the past, things that long time ago occured already. Funny world!!! Is it jealousy or is it plain stupidity that drives some to compile such comments?
I am not accusing Buffett of a "scam" and I do think he is a good stock picker. What I am accusing him of is hypocrisy. A main component of his compounded return rate over the years is tax avoidance. Its legal and I am in favor of it. Where he crosses the line is when he then condemns others for avoiding taxes (prop.13 etc.). Typical limousine liberal stuff.
In the case of central banks, generally they invest those dollar deposits into dollar denominated securities (e.g. large US bond purchases by Japan, China etc). As a rule they don't hoard dollars in vaults, as they do with gold. You are focusing simply on the initial deposit, and not on where the money ultimately ends up. As for Eurodollars, regardless of who owns them or where they are deposited, each Eurodollar deposit is matched by a corresponding deposit at a US bank. Eurodollar transactions simply transfer the ownership of these US-based deposits to foreigners. London-based Eurobanks are acting as financial intermediaries - unlike US banks, Eurodollar banks have no power to create dollar credits. In each case, once you go through the entire chain of assets and liabilities, you end up with an investment into a US-based asset whose ultimate ownership lies in foreign hands. It makes no difference whether a foreigner invests their dollars in US assets directly, or whether they deposit their funds into Eurodollar account, and the deposit-taking Eurobank then invests that deposit into US based assets. All you have done is interpolate an intermediary step - the ultimate effect is the same i.e. foreign dollar deposits end up very quickly in the US. In the rare cases where the bank simply sits on the funds, it would fall into the category of hoarding which I mentioned earlier. Finally, you have not yet explained why, if the trade deficit is so important, there have been long periods of dollar strength at the same time as a large trade deficit.
If you look at Buffet's long run return on capital, it is in the mid 20s. Good but not spectacular. His extreme wealth is based on the fact that he leveraged this return by using other people's money (his early investors, the float from his insurance company premiums) and corporate deal-making, has minimised tax by buy & hold, and has done this for a very long time (almost 50 years) thus benefiting from compound interest. Of course this is an excellent strategy to pursue for becoming stinking rich. However, someone with a superior long-term return, say 30% per annum with less volatility, would have made far less than Buffett if they were not around for as long or did not utlise other people's money to the same extent. Buffett would then be the better wealth-accumulator, but not the better stockpicker.
Dude, you are splitting hair! Investors in Buffet's Berkshire Hathaway are interested in generating WEALTH! Whether that is through stock picking, cash flow from his insurance business, buying and holding to minimize taxes, they dont' give a SHIET! The original investors of Buffet's funds are pretty darn happy with their returns for the last 30yrs or so. So, I really don't understand your point. He's perhaps the best money manager in history. Of course, you have to use OPM when you are at his scale. What's the big deal? You think he should open up an E-trade account and start with $25K and see how far he can go with that? That's doesn't make sense. The real part of great wealth accumulation is not making astronomical returns on small accounts(10,000%), but making great returns(his compounded annual returns is 25-30%) on billions. It's cool if people could make 10,000% on their 25K account and be happy. BUT then once they past the million dollar mark what then? They will be scared shitless and put in the money market earning 2%? See if they can compound from there to $30B...
Why does Vic try so hard to discredit Buffett? First time I heard about this was when he insult the Sage by twisting Buffett's tongue in cheek quote about the airline industry ... and now this? Its a bad case of penis...oops! billion envy, I reckon. How much wealth has Buffett created in his lifetime? And...um...how much has ol' Vic disintegrated in his? In any case, what is the worth of one economist writting that he disagrees with Buffett? How hard do you think it would be to find 5 economists who would vehemently agree with Buffett's stand on this issue?
I'm just waiting for him to make a remark regarding his purchasing of curriencies- what he bought/sold and why. The hell with the criticism, its petty.
Productivity growth is key for the US to be able to pay for all the cheap imports. Frankly I don't see Europe showing much growth in that department. They still live in the "What can my country do for me" world. Two main issues here: 1) The backwardly socialists don't understand economic freedom leads to wealth creation for everyone. The alternative is government regulated economy and we all know they don't know sh*t. 2) The average European woman rears ~ 1.7 children (if not lower). In the past Europe has attracted the most uneducated workers from the South. They had less than good experiences with them. The reflex now is to stop immigration altogether. Europe should understand immigration is very important, but now look for the highly educated immigrants! Taking above into account I am not seeing too much reason for concern on the part of US policy makers trying to defend their currency from freefalling (or other economic disasters).
I dont necessarily agree with many of Buffets ideas. However I generally agree less with purely academic economists and their multitude of pseudo scientific theories. The problem with "economics" is that much of it boils down to opinion with rare unambiguous experimental verification of the various positions. Nobody has a crystal ball - that works -and thus sound long term strategies implemented with sufficient capital are the best bet towards making money over time. Buffet has done well with his decision making so its usually worth a read to hear his remarks. I certainly give his opinions higher weight than the many other so-called financial leaders that color their opinions to help sell their bond and stock funds - and whose diatribes are usually full of self aggrandizement
I don't necessary agree Buffett said in his article. But to say he does not know the international-exchange accounts consist of current-account and capital-account, as implied by Prof. Boudreaux's letter, is ignorant. Some of Prof. Boudreau's students might not know this, but suggests that Buffett doesn't, that's a joke.