Buffett: U.S. economy recovering but debt an 'ominous' threat

(Analyst's Note: Mr. Buffett has been a strong supporter of Obama from well before the election. He now expresses strong concern about US debt progression. Is this timed to aim at health care proposals or just at more spending in general? Eight months into his term Obama is frightening financial expert supporters with his spending to date? It would appear the US is near danger! )

From the Baltimore Business Journal:

Warren Buffett, the billionaire investor who has the ear of President Barack Obama, says the U.S. economy is improving, but the financial price of the stimulus and other big spending bills are looming as a new threat.

Buffett, chairman of Omaha, Neb.-based Berkshire Hathaway Inc. (NYSE: BRK), wrote a guest op-ed for the New York Times in Wednesday's issue titled "The Greenback Effect" and said that while mistakes were made in the attempts to end the recession and restart the lagging economy, a meltdown of our economy was avoided by a "gusher of federal money."

"The United States economy is now out of the emergency room and appears to be on a slow path to recovery. But enormous dosages of monetary medicine continue to be administered and, before long, we will need to deal with their side effects," Buffett wrote in the op-ed. "For now, most of those effects are invisible and could indeed remain latent for a long time. Still, their threat may be as ominous as that posed by the financial crisis itself."

He said that the country's "net debt" - that which is publicly held - is mushrooming and that it is growing at one percentage point per month. And while much of the driving force behind the economic recovery plans lies with the executive branch in the form of Obama, the U.S. Treasury Department and the Federal Reserve, Buffett said the ultimate solution to the debt problem lies with Congress.

"Our immediate problem is to get our country back on its feet and flourishing — 'whatever it takes' still makes sense," Buffett wrote. "Once recovery is gained, however, Congress must end the rise in the debt-to-G.D.P. ratio and keep our growth in obligations in line with our growth in resources."

In July, Buffet told cable TV network CNBC that it's a good time to invest in stocks, even with the Dow having recovered to back over 9,000. He said in that interview that investors shouldn't wait until businesses turn around before investing in stocks again.

"If you wait until you see the robin, spring will already be over," he said then.

Weiss Global Forum - Expert Economic Insight

Analyst's Notes: A Must Read Article: You could not do better than follow Dr. Martin Weiss and friends as they watch investments and other economic trends. Recently, they fielded a "Weiss Global Forum" that has better insight and advice on our current economic times and trends than I have ever seen, bar none.

Here are some notes I took:

* Investment capital is moving from the West to the East. China is the major center of economic activity in the East. Over recent years, despite the economic crisis in the West, China has continued strong growth with little in the way of hesitation. That government has cleared its debts and become a storehouse of capital from commercial activity with the west.

* Some of the former "Third World" nations have overcome their debts, inflation, and economic troubles and become stable. Their national management of debt and relaxation of oppressive regulation of commerce have yielded huge profits for investors that are not available in America or Europe. Nations like Brazil, China, and Indonesia are strong candidates for investment by private individuals and public organizations.

* China has moved ever more aggressively toward national investments in foreign natural resources (Oil, iron, gold, etc.) to support their ever growing manufacturing activities. China has begun to invest in its own rural development and opened access to its huge rural population to projects, products, and growth. Demand is great and needs are great. The economic growth potential is huge. The Chinese government is making the business environment very favorable for growth and investment. China has become the world's largest car manufacturer.

* European economic troubles and EU advancing business regulations mirror American problems except they may be worse. Weiss people recommend avoiding investment in Europe, including Eastern Europe (who have "swallowed the Koolaid" along with all other European countries.)

* National demographics (Percentages of citizens by age group, birth rates, etc. affecting economic performance both in production and in purchases.) strongly favor business in China, other eastern nations, Brazil, and several former "3rd World" nations. They are exactly opposite those of the US and Europe.

Readers who want to know the economic outlook for the next few years and who want to avoid blackhole investment would do well to watch the video of this Forum broadcast. It speaks volumes to those of us who have great concern about US national security and current economic decisions/stimulus and our national debt issues. The consequences of these observations and predictions should be drivers to analysts seeking a strong national economy.

The Forum video is available for a few days only... if you click here. Please do!