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"There are deep-rooted structural problems that will cause America to continue to run a huge current-account deficit unless trade policies either change materially or the dollar declines to a degree that could prove unsettling to financial markets," he said.

If nothing is done, he said, the United States will continue to transfer ownership of assets to foreigners to finance American overconsumption. Americans, he said, will eventually "chafe at the idea of perpetually paying tribute to their creditors and owners abroad."

"A country that is now aspiring to an 'Ownership Society' will not find happiness in - and I'll use hyperbole here for emphasis - a 'Sharecropper's Society.' But that's precisely where our trade policies, supported by Republicans and Democrats alike, are taking us."

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In a 2003 article in Fortune Magazine, Buffett proposed that the United States achieve a trade balance - or at least a sharply reduced trade deficit - by issuing what he called import certificates to companies that exported goods from the United States. Those certificates could be sold by exporters, but imports would not be possible unless the importer had such a certificate.

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Free trade when it suits his class, regulation when it doesn't.

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Buffett has for a long time been lecturing fellow Americans about their bad habit of borrowing from abroad to live well today. He made a big stink about his currency trades in his March 2004 letter to shareholders. FORBES phoned him recently for an update, hoping for the news that the Scold of Omaha had softened his views on the decline of the dollar. What we got was more doom and gloom, more than we have ever heard from the man. In other words, he is not about to cover his short position on the dollar.

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In other words, he is not about to cover his short position on the dollar.

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I don't see where there is a problem with "US over-consumption," (as not to be confused with over-production and waste) since, first, poverty and declining spending power have been on a 25-year worsening trend, and, second, as a part result, US consumer markets have not expanded anywhere near a comparable rate as the expansion of capital investment outside the US to supply the US market.

This is one major cause of the 1996-97 Asian Crash. That's when, according to the various economic reports I have read, after years of investing in Third World sweatshop factories particularly in Asia prompted by the so-called "liberalized" trade rules, someone realized that consumer markets in higher wage countries were not sufficiently expanding at a rate that would allow all that Southeast Asian investment to recover its costs.

Then these major capitalist investor elites started pulling out their investments and dumping the currencies of all those Asian countries and buying up US dollars, leading to that huge artificial inflation of US dollar value.

Unless these lazy Americans are living on the street eating out of garbage cans, they have no justifable excuse ... even then, they have usually have children they can put to work as inner city drug dealers and prostitutes ... lazy bastards.

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People are acting like they still have the spending power and are going deep into debt.

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People are doing this? I wonder where they are learning this bad habit? Oh, I forgot, in the USA, a deficit is no longer a problem anymore.

[ 08 March 2005: Message edited by: No Yards ]

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try to "stick it" to the banks by claiming an inability to pay their bills.

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Originally posted by Mr. Magoo:
You must mean their Plasma Television bill, and their SUV gasoline bill, and their Trip On Expedia.com bill and...

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Originally posted by Mr. Magoo:
Fair enough. I'm just pointing out that if they can't pay their Visa bill, it's probably not because they bought the heart medicine for their poor sick granny on plastic. More likely that you just couldn't live without the 52" rear projection screen or the leather seats in the SUV.

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Originally posted by Mr. Magoo:
Fair enough. I'm just pointing out that if they can't pay their Visa bill, it's probably not because they bought the heart medicine for their poor sick granny on plastic. More likely that you just couldn't live without the 52" rear projection screen or the leather seats in the SUV.

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No, it's likely that they took Granny to the emergency room and charged the $10,000 bill to their Visa since they didn't have $10,000 in the bank. Then that accumulated interest at 27% (if they are lucky), and now it's $60,000 with no end in sight.

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Originally posted by Mr. Magoo:
Uh, I wasn't referring to the cause of bankruptcy in general. I was simply noting that if you're bankrupt, and you can't pay your credit card bill, then probably you can't pay off all the luxuries you charged on it.

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How can you isolate medical bills from every other expenditure? Particularly when medical bills are often unexpected?

The credit card companies are busily pushing cards on everyone regardless of the risk. They're intentionally making bad lending decisions and in fact they make much of their profit on late fees and penalty payments. This bill is designed to relieve them from the responsibility of those bad decisions. Socialize the risk and privatize the profit.

[ 08 March 2005: Message edited by: pogge ]

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Originally posted by Oliver Cromwell:

Yes, the USD has fallen quite a bit against the euro, the CAD and other currencies, but they still have a ten-ton current account deficit - I can't see any scenario in which the USD doesn't fall even further.

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Is that why the US dollar is worth about half as much now than it was under Reagan when the external deficit as percentage of GDP was about the same?

Edited to add link of dollar - yen exchange rate over a few decades (The dollar rose in the first GWB years in spite of rising twin deficits):

http://research.stlouisfed.org/fred2/data/EXJPUS.txt

Edited to add link to budget deficits. Now you can have fun finding out just when there was a meaningful correlation between current dollar values and underlying fundamentals.

If it was that easy to speculate in currencies many of us would be doing just that.

[ 08 March 2005: Message edited by: VanLuke ]

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Why do they charge such high interest Magoo?

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To make profits.

Why do people accept these terms, since credit cards are far from a necessity (and in fact many people simply refuse to use them)?

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This bill is designed to relieve them from the responsibility of those bad decisions.

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Originally posted by Mr. Magoo:
Why should Visa suck it up because you really wanted a toy, and now, for various reasons, you can't pay for it?

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Because unfortunately, the cost of basic health and human services is enough to drive people to bankruptcy. Therefore, we need lenient bankruptcy laws (i.e. Visa should suck it up).

Let me be clear: I abhor the practice of charging luxuries and then declaring bankruptcy when the bill comes. I am 100% with you on this one! I can't tell you how much I hate that. But as long as credit cards are the only payment option for a good number of people seeking emergency medical care, and as long as that option drives a good number of people to bankruptcy, I think we need lenient bankruptcy laws. It's giving some real losers a break, I agree. But that's too bad.

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Originally posted by vmichel:

Sorry VanLuke, I will withdraw now!

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No problem vmichel. I just wanted to play 'peacemaker' and had second thoughts about my post right away

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Originally posted by Mr. Magoo:
To make profits.

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They could make profits charging lower interest rates. Why do they feel they need the higher rates? (hint: risk.)

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Why do people accept these terms, since credit cards are far from a necessity (and in fact many people simply refuse to use them)?

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Because many people don't understand what they are signing on to unil it's too late.

If someone is trying to commit a fraud, then there are laws to deal with that possibility.

But, if this is such a good idea, prevent ways in which people can get out of declaring bankruptcy to get out of its responsibility to the lender, mayb esomething along the same lines should be enacted to put the same responsibility on corporations?

As far as medical bills go, middle class Americans elected politicians that oppose medicare and must compensate for that. Note, I have full sympathy for the poor Americans who are screwed with private medicine and are in a weak political position. But the middle class, especially the upper middle class, has elected those politicians and now should be saving like mad for those medical bills that exceed what their HMO will cover. Hey, its a given that Granny will need serious medical care in the not too distant future.

[ 08 March 2005: Message edited by: Privateer ]

[ 08 March 2005: Message edited by: No Yards ]

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Originally posted by No Yards:
Then logically, it would be better to simply outlaw credit rather than outlaw bankruptcy.

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Originally posted by Privateer:
I'm convinced that the reason housing prices are skyrocketing in many places is the banks are getting careless about how much they lend to people with more limited means ..

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Because many people don't understand what they are signing on to unil it's too late.

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If I'm not mistaken, you cannot sign up for a credit card without signing off on having read and understood their terms of service.

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Originally posted by Mr. Magoo:

If I'm not mistaken, you cannot sign up for a credit card without signing off on having read and understood their terms of service.

Unless you mean that people don't understand ahead of time just how tempting it will be to buy everything now (since they don't actually have to pay for it).

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You mean people like Enron, Nortel, Arthur Andersen, WorldCom, etc.

On the bright side, the "poison pill" that prevented this bill from passing two times before, the one that would also prevent anti-choice protestors who commit crimes from using hidden trusts and bankruptcy to prevent them having to pay fines, passed as well, so now the anti-choice people will be pissed at the Repugnicans.

Also, it seems that the top 10 bankruptcy states are red states ... another case of your ignorance making you your own worst enemy.

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Originally posted by Privateer:
.... and they can't - simply can't - do it, what will happen? Debtors prison?

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On a related note, this will happen to squegee kids and panhandlers who can't pay their fines here in BC it seems. Not 'debtor's prison', just simply prison.

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So what do you think? No bankruptcy for coporations, or treat credit cards as stock investments in people?

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Will the credit card companies get to act like the Board of Directors would for a real company? Decide what a person can or cannot do, what they will or will not invest in? If so, let's go with that one then.

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The state doesn't mind, it seems, to spend ten or twenty times the amount of money the fine would have brought in to make a point.

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You'd rather go the other way and send out the message that if you have fines and you can't afford to pay them then that's okey dokey? Just keep on committing offences, so long as you can't pay?

Here's a novel idea for anyone who doesn't have money to waste on fines, and who doesn't want to go to jail either: don't offend.

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Originally posted by Mr. Magoo:

You'd rather go the other way and send out the message that if you have fines and you can't afford to pay them then that's okey dokey?

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I did no such thing

I only pointed out that the state doesn't mind throwing you in the slammer to make a point. (demonstration effect)

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don't offend.

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And in the case of 'street kids': 'Don't eat'

[ 09 March 2005: Message edited by: VanLuke ]

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I only pointed out that the state doesn't mind throwing you in the slammer to make a point.

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And then promptly described that as "heartless". But, if you're really not proposing an amnesty for those who can't pay fines then fair enough.

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And in the case of 'street kids': 'Don't eat'

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Really?? Here in Toronto there are numerous drop-in centres where someone on the street can get a bite, and there's even a van that drives around delivering sandwiches, drinks, etc.

And will continue to do so *in this case* because of the relation of 'offense' and punishment.

Have you ever eaten at a food line? And since when is washing windshields 'stealing'? Or panhandling for that matter?

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And since when is washing windshields 'stealing'? Or panhandling for that matter?

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This is the first explicit mention of either in this thread. While it's true that I do have amazing psychic abilities, reading your mind isn't one of them, so I asked "Are you actually telling me ..." to find out.

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Originally posted by Mr. Magoo:

Will the credit card companies get to act like the Board of Directors would for a real company? Decide what a person can or cannot do, what they will or will not invest in? If so, let's go with that one then.

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Well yes, I believe they do. They choose to whom they will extend lines of credit, and what that credit may be used for. I think that would be "deciding what a person can or cannot do, what they will or will not invest in."

I think it's a fair point being made above. In the case of loans by a corporation to an individual (like a Visa), you ask that we put the burden on the lendee to handle that credit responsibly. Strict bankruptcy laws relieve the corporation of much of its responsibility to make a wise investment.

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I think that would be "deciding what a person can or cannot do, what they will or will not invest in."

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I'm thinking more like "You can buy food with your credit card, but NOT consumer electronics" or some similar.

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In the case of an individual loaning money to a corporation (investment), do you ... put the burden on the lender to make a wise investment?

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In the case of an investor or stockholder, there's a partnering of interests. If the company succeeds beyond expectation, the stockholder is guaranteed a share of the profits. The stockholder also has some control, assuming they have voting shares, in ensuring the company is successful.

In the case of a cardholder, there's no similar pairing of interests. If the cardholder makes millions, but seldom uses his card, the Credit Card company will see minimal profit. There's no "payoff" to counterbalance the risk. What's more, the company cannot "vote" on whether the cardholder should or should not invest in a big screen television during a recession, etc. So I see the two situations as categorically different.

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Originally posted by Mr. Magoo:

I'm thinking more like "You can buy food with your credit card, but NOT consumer electronics" or some similar.

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Apologies for the drift onto credit card technology but I thought that card companies do have this choice?

Every point-of-sale is categorized by the lending institution, and every card may be programmed to only work for certain categories. And although it is rare, I did think there were some card companies that would offer limited access cards commercially.

The level of categorization is very precise. You could prevent someone from buying home electronics but allow them to buy food pretty easily.

This usually comes up with corporate cards, for example - my coroprate card won't work in a bar or liquor establishment, for example, but will in a grocery store. That's a choice my employer made, but that the bank programmed into the card. It simply will not be authorized in a bar cash register.

So yes, I thought that the card companies did have the option of restricting your electronics purchases. But most choose not to, as that's not a real popular option for most consumers! Nonetheless, this restriction is possible. Most banks choose not to use it for personal credit, but that is a decision.

To get to the point of this long post: Visa did choose to give customer X a personal credit card that could be used for home electronics. So when customer X files for bankruptcy for his big-screen TV, I don't think it's fair to say "hey, Visa had no choice in what he was going to use that card for."

Thank you for the explanation about sharing risks. I will digest that...

[ 09 March 2005: Message edited by: vmichel ]

[ 09 March 2005: Message edited by: vmichel ]

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Warren Buffett recently made headlines by saying America is more likely to turn into a "sharecroppers' society" than an "ownership society." But I think the right term is a "debt peonage" society - after the system, prevalent in the post-Civil War South, in which debtors were forced to work for their creditors. The bankruptcy bill won't get us back to those bad old days all by itself, but it's a significant step in that direction.

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And as for Magoo's pathological fear that the great unwashed will end up with a bigger TV than he has:

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The credit card companies say this is needed because people have been abusing the bankruptcy law, borrowing irresponsibly and walking away from debts. The facts say otherwise.

A vast majority of personal bankruptcies in the United States are the result of severe misfortune. One recent study found that more than half of bankruptcies are the result of medical emergencies. The rest are overwhelmingly the result either of job loss or of divorce.

To the extent that there is significant abuse of the system, it's concentrated among the wealthy - including corporate executives found guilty of misleading investors - who can exploit loopholes in the law to protect their wealth, no matter how ill-gotten.

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Originally posted by Mr. Magoo:

I asked "Are you actually telling me ..."

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I made it quite clear what I meant and you deliberately ignored the final part of my sentence, the one starting with an 'if', i.e. if this law is any indication

You never did answer my question: Did you ever line up in a food line for something to eat?

Probably not because if you had you'd never talk about "free food" being available. (Delivered and all, eh? Presumably the homeless call in on their cell phones for that to say at what corner they want it delivered at.)

It's not free and the currency is part of a person's self esteem and self respect.

Furthermore, mental illnesses, chemical dependencies and alcoholism force some people into the position to beg for food if they want to obey the law here (since that outlaws washing windshields and panhandling).

I repeat that in my universe it's a sign of a heartless society (the description which caused you to react) and a sign of stupidity on the part of the lawmakers (since they are not likely to pay their fines and jails are expensive).

I also found your rhetorical question addressed to me quite hurtful having worked as volunteer for over three years at a food line (until my health did not permit me anymore).

You say you can't read my mind. Fair enough. But could you be so kind to read ALL I post, including any conditional clauses?

In the end it just boils down to you and I having different values, not to who is wrong or right as values can't be either.

Edited to add:

Hate to quote myself but to set the record straight this is WHAT I did say:

quote:

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On a related note, this will happen to squegee kids and panhandlers who can't pay their fines here in BC it seems. Not 'debtor's prison', just simply prison.

The state doesn't mind, it seems, to spend ten or twenty times the amount of money the fine would have brought in to make a point. (Point being that we are a heartless society if this law is any indication)

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[ 09 March 2005: Message edited by: VanLuke ]

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I made it quite clear what I meant and you deliberately ignored the final part of my sentence, the one starting with an 'if', i.e. if this law is any indication

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I assumed it to be rhetorical. In other words, I assumed you were saying that our society is, in fact, 'heartless'.

Are you saying it is, or are you undecided? It's clear that we are going to jail those who cannot pay a fine, so does that mean that we live in a 'heartless' society, or no?

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You never did answer my question: Did you ever line up in a food line for something to eat?

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Nope.

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It's not free and the currency is part of a person's self esteem and self respect.

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Uh, when I pointed out that not offending is always an option for those who can't pay a fine and don't want to be jailed, you responded by equating "not offending" to "not eating". I don't think it's unreasonable of me to inform you that here in Toronto at least, a van drives about ensuring that 'eating' and 'offending' don't have to mean the same thing. You can eat, in Toronto, without having to commit a crime or any kind. Assuming you don't mind free sandwiches. I'll grant you that that pales in comparison to a hot pizza with the toppings of your choice, or a buffet dinner, but it's a damn sight better than starving, and whatever price it extracts in dignity is surely less than that extracted by begging and it's a lot safer than darting out into traffic to wash a window for a quarter.

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: if someone who has been fined cannot pay the fine, do you believe they should face other punishment (jail, service, etc.) or no?

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yes

Free sandwiches are preferable to stolen pizza.

The question however remains, is it a just law and I find it kind of interesting that you seem to be against laws forbidding washing of windshields (without intimidation) and panhandling and this was all I was talking about in my post.

Did I mean that our society is a heartless one (not withstanding the many good souls, who among other things make free sandwiches possible)?

yes

As I said, it's a question of different values and there's no argument about this as there are no 'right' or 'wrong' values per se.

P.S. At the church where I helped we had a perennial problem of funds to pay for the food (not all was donated day old bread etc) to hand out. By forcing more people to rely less on their own resources by washing windshields or even panhandling the help system has to cope with more strain.

P.P.S. I lost track of how many times Nortel has restated their books. (3 times?) Falsifying the books helped set the stage for robbing "little old ladies" (and others) of their retirement savings. Yet Roth (I believe his name is) paid himself a bonus of 145 million, the biggest in Canadian history (if memory serves) "while Rome (Nortel) was burning".

Why does this government get away with attacking poor people and the biggest crooks don't even get charged? (How many Enron execs were charged? Convicted?) Or are you saying that Roth was not a crook when he did this? If so that would be interesting by itself in the present context, i.e. washing windshields is against the law but plundering people's savings is apparently not, or at least doesn't get prosecuted.

Do you really disagree that we live in a heartless society generally speaking? Wouldn't spending priorities be a criterion?

In this particular case, I think the law itself could be more compassionate — specifically, it shouldn't be prohibiting panhandling or safe window washing outright — but it should also be enforced so long as it's there (or struck down, or replaced with a better law, etc.). Anything else just looks (and is) inconsistent.

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Why does this government get away with attacking poor people and the biggest crooks don't even get charged?

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you should know by now that I do not advocate armed revolution. So I take this as rhetorical.

The law was not passed because of traffic safety consideration.

Even totalitarian regimes usually pass laws to 'legitimise' their odious practices.

Should they all laws be followed? Does your general statement above (about paying the price for not obeying) apply to clearly unjust laws?

Is there something wrong with a society that lets its government get away with attacking the poor without an outcry (other than some lone voices)from the 'general' population?

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you should know by now that I do not advocate armed revolution. So I take this as rhetorical.

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It was. I'm not picking a fight here.

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Should they all laws be followed? Does your general statement above (about paying the price for not obeying) apply to clearly unjust laws?

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Well, proponents of civil disobedience say no, but then civil disobedience actually requires punishment (to embarrass the state). Beyond that, I guess it's up to the individual to decide what laws they're okay with breaking, but I don't know what to tell them with regard to the penalty. I, personally, will cross the street if there are no cars coming, but if I were to be charged with jaywalking I wouldn't have much of a rigorous legal defence, beyond saying "I don't agree that I should be prohibited from crossing the street in the middle if I can do so safely." It's my belief, but it's not terribly likely to get me any clemency.

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Is there something wrong with a society that lets its government get away with attacking the poor without an outcry (other than some lone voices)from the 'general' population?

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That depends. An animal rights activist might say the same of a society in which people can still eat meat, or own pets, or wear leather. I, personally, would disagree with them.

To many citizens, laws against panhandling aren't about 'attacking the poor' so much as they're about making sure that you can walk a block or two without half a dozen guys hitting you up for money "for coffee", often persistently or aggressively.

Me, I don't think panhandling should be outlawed all of a piece, and I think that "Safe Streets" laws are too broad to be of any use for anything other than selective targetting of individuals. But at the same time I've seen and encountered aggressive panhandlers, I've been harangued for not giving, and in some cases for not giving enough, and so I'm not ready to assume that the sole reason why people aren't up in arms over panhandling laws is because they hate the poor, or they're heartless and don't care.

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But at the same time I've seen and encountered aggressive panhandlers, I've been harangued for not giving, and in some cases for not giving enough...

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And, as with all advertising, you are under no obligation to either listen or respond.

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I have *never* been hassled by any panhandler and I do not look very strong.

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Originally posted by Privateer:
I don't care if you're rich or poor, if you don't like my attitude when I'm walking down the street minding my own business you can go to hell. What are they the attitude police.

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No. They are just human beings and often deeply troubled ones. Talking about attitude:

I can understand that but your previous post seemed to indicate no compassion.

Glad I'm mistaken

However attitude can make a difference (without elevating panhandlers to be the 'attitude police')

I was deeply impressed when I was in Morocco and saw well dressed, obviously well-to do men, bow deeply in front of beggars while giving them some money.

I was also told that in Spain excuse my perhaps faulty Spanish) people say "Perdonne me hermano" ('forgive me brother') when they didn't want to, or couldn't, give anything.

Buffet on US Trade Policy

In case you didn't know, he's the second richest man in the world according to Forbes.

How ironic

Edited to add:

And yes, we do live in a heartless society.

[ 11 March 2005: Message edited by: VanLuke ]