Warren Buffet Confirms US Recession

In recent months, amid the housing slump and credit crunch, US economic growth came to a standstill and many economists believe the world’s largest economy is heading for a recession.

While nobody can confirm if “recession” has really descended since we are bombarded with confident and pessimistic news in equal measure daily, Warren Buffett (arguably the most successful investor) has spoken – the United States is already in recession. His aforesaid remarks appeared in German magazine Der Spiegel.

Buffett said: “It is perhaps not a recession in the way that economists would understand it… but people are already feeling the effects and it will be deeper and longer than people think.”

Warren Buffett, the 77-year-old chief of the Berkshire Hathaway, blamed financial institutions for introducing instruments “they can no longer control” and said the “genie can no longer be put back in the bottle.” He also called for tighter regulation of the financial markets.

According to the Forbes annual billionaire’s list published in March, Buffett saw his wealth jump from 52 billion dollars last year to 62 billion, pushing Microsoft co-founder Gates into third position after 13 years at the top.

I really respect what Buffet has done to preserve and even increase his wealth despite this period of hardship and financial wealth destruction. It is easy to balloon one’s assets when the market booms as a rising tide lifts all boats but in times of recession, skills and intimate knowledge of the market will separate the wheat from the chaff.

I expect the stock market to have further adverse reactions to his bleak assessment of the US economy this week, so sitting on cash for the time being is wise. However, be prepared to zoom in on favorable stocks when the general mood turns over-jittery.

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3 Comments

Filed under Economy, Properties, Stocks

3 Responses to Warren Buffet Confirms US Recession

  1. Warren Buffet is right on about recession. The numbers do not yet add up to indicate this, but the facts are compelling. And, with most of the ARM mortgages in the U.S. not yet having reset, this could be a heavy and deep recession, indeed. The crunch of $4.00 (at the pump) gasoline is another looming disaster, waiting to happen.

  2. Hi Jack,
    Thanks for commenting on my blog. A lot of industries are in worse than recession. Warren Buffet looks at the hard numbers and doesn’t deny the fact that a recession is here.

    IF pump prices goes up to $4, there will be unrest among workers and countries may go to war over oil fields/refineries which will then push oil prices even higher.

  3. lol…Nice of Warren to confirm that for us. Like we didn’t already have a suspicion that was happening. But then again, I guess a, what is he, multi-billionaire, and a cheap one at that, should know.
    ;-)

    lalas last blog post..Pita Garden Restaurant Review

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