http://www.nytimes.com/2010/11/17/opinion/17buffett.html?hp
Warren Buffett's letter to Uncle Sam will probably stand the test of time. It was published this morning in the NY Times.
He named some of the key people responsible for saving us from a Depression: Ben Bernanke, Hank Paulson, Tim Geithner and Sheila Bair.
Buffett goes on to point out that: these people "... grasped the gravity of the situation and acted with courage and dispatch."
Nobody ever talks about the fact that Bernanke, to cite one case, sent $350 billion to the EU central bank before the U.S. government even created a bailout fund because the EU was about to tank. Bernanke did that because he knew what he was doing. He's in the right place - his PhD was on the Great Depression.
Bernanke is now being criticized for putting $600 billion more into the U.S. system this week because that "purchase" will devalue the dollar and cause inflation (etc.). So, a barrel of oil will cost more. So what. Do we really think he doesn't know what he's doing? If some of that money gets to smaller banks that lend money to smaller businesses, then jobs (and growth) get created.
We'd like to thank Warren Buffett for giving some perspective to the situation.
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It's a great letter, and I agree, it will hopefully stand the test of time.
ReplyDeleteI just wanted to call out one point that I think will breeze over most people - what You say and what Buffet wrote is that the Federal Reserve responded well. They created sound monetary policies that helped stimulate the economy. It wasn't Congress spending money they didn't have and going into debt. It was Bernake who could act independently of the bureaucracy that is Congress these days and used his specialized knowledge to inject more real money into our economy. There is a distinct difference.
The point about bailing out companies & banks (again, really the federal reserve loaning them money) is still a tough one. If I remember correctly, "we" (our classes) pretty much disagreed with the idea, but it's hard to criticize in hindsight because GM and AIG pretty much worked out. If they had failed, it would be hugely criticized. It's also hard to say if in the long run it'll work out - who knows what kind of innovation could have come to the automotive industry had GM failed and someone else swept in to pick up the slack.
Either way, it's hard to complain with the results of how the federal reserve responded to everything back in 2008.
This seems apropos here:
ReplyDeletehttp://www.youtube.com/watch?v=PTUY16CkS-k
Craig and Marcelo: Thank you for your inputs! My thought was to put some balance back into the discussion because it seemed to me that anybody taking any action in government was going to be criticized for it no matter what it was.
ReplyDeleteNo response to my "Facebook" post? I'm shocked and appalled! :(