3/3/09

Warren Buffett

So that all within blogging distance are clear on this point, this blog is unbiased. One day the blogs may lean left the next day they may lean right. Thats how I roll. I am one of the few I know who is truly down the middle, more on that in later blogs.

Warren Buffett (not Jimmy for those of you living under a rock for a decade or two) is one of the they most astute investors and businessmen on Earth. He has been a republican for the bulk of his life and not a rino (republican in name only) either, a Nebraska republican. In the last election Warren Buffett backed a democrat for the first time in his life!

Why do you think Warren Buffett backed now President Obama? It is likely because he saw that continuing the Bush administration policies just wasn't working. This isn't a slam on Bush, just some of the tired old policies of his party. Trickle down economics worked well for Reagan (but what wouldn't have worked after the disastrous Carter years?) and produced growth of 3.42% in the 80's. BTW, Clinton presided over growth of 3.76% in the 90's. The 00's under Bush saw just over 2% and obviously ended with a recession.

The point is that Paris Hilton can only buy so many pairs of shoes which is supposed to trickle down ultimately to the guy who parks her car at the mall. This works for a while, maybe a decade or two until it doesn't, like any cycle so here we are.

Median household income per the US census was $50557 in 2000 and $50223 in 2007 or growth of 0% (as opposed to income growth of 8% under Reagan and 14% under Clinton).

Point is that during the 00's, we had growth of 2%, not great but still growth nonetheless, but the incomes actually went down! That is a business model that just can't work long term and didn't. That is why Warren Buffett voted democratic for the first time in his life. It was time for a change!

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