The Buffett Rebuff

Stimulus Success = Consumption

I will say it again – the US is a consumption Economy. This is a rock solid fact. Even Berkshire Hathaway is feeling the impact. Buffett said himself it will get worse before it gets better. I think I have heard this before – hummm in fact I even said it!

The stimulus packages – certain to be more of them – are not getting to the street. In fact, even if money does get to the street it will be stepped on so much that it won’t stimulate consumers to consume. Worse, if you see all these programs they mostly target low income families. Another fact is the consumption power of these families is not close to the consumption power of the rich and upper middle class that represent a large percentage of consumption worldwide and definitely in the US. I frankly don’t see the entitlement consumers shopping at Dillard’s, Nordstrom’s, airlines, fancy new cars etc… Even if they did the money they will get in stimulus may not even pay for one month of their utilities. It wouldn’t even pay my electric bill.

So “Here We Go Again” to borrow a famous line from Regan – bailing out large businesses only to face a marketplace that is devastated and can’t or won’t consume their products, goods and services. So will this hurt for a long time – you bet! Why? Because manufacturers can’t make more goods if retailers don’t buy them and retailers can’t buy them into their stores because consumers aren’t buying from the retailers. It is a very vicious cycle and one we will not get out of until the government and private industry realize – close out sales, rebates, discounts and more won’t solve it. Also, take into account that all the sales and sell offs are severely reducing margins on products so their sales will continue to suffer while they try to unload things people can’t buy. You get the point.

Unemployment. Forget about those 10%+ buying anything shinny and new. Worse and not presented to us is underemployment. Yesterday a family member was hiring for a front desk position. A man came in having made over $100k last year and was applying for a front desk job at $20k. This is a huge problem too. There are millions having to accept much lower pay to even try to make ends meet and I assure you this puts our figures in the toilet for sure. Then there are those 30-60-90 days late, foreclosures, bankruptcy and the unemployable. That is more tens of millions. That is the consumer landscape. If you believe me that the US is a consumption economy and every business has to sell something – then take the facts above and add them up. Yes it equals prolonged – perpetual economic turmoil and decay in all sectors not just those with high visibility.

First force credit bureaus to adjust FICA scores for the economic conditions to enable people to get on their feet. Those that have kept good credit may cry out for justice but frankly it is what it is. The last 2 years and next 2 years need to be calculated differently or not weighted as heavily in the credit ratings. An immediate mental boost and a chance to even get back into the market in say 2 years not 5 to 7 to 10. We need these people to be able to just live and provide for their families but we also need them to stimulate the economy too.

Second allow a onetime refinancing of all credit held by anyone and any business. You want to free up capital and have banks make a boatload of money then package up everything and get it in line with the economy so people are not under pressure and devastated further again so they can feel good, have mental relief and key – HAVE CONSUMER CONFIDENCE. I assure you if you don’t fix that everyone will lose. And by the way it will reduce the toxicity of all those loan portfolios We The People – as we are called – own now.

Third stop the government borrowing any money. The National Debt is cancer – it is likely already terminal. I offered the 10% solution and getting traction but clearly not enough. America needs to own America. Period! We have to rally, and even by law, have all institutions in the US managing, today over $70 trillion, invest in a US debt fund to buy all this currency and debt back. I just ask for 10% of the total value of their portfolio (not individuals – but they can opt in) into this debt buyback fund. It’s a great investment – because we all know the stock market would boom and their portfolio value would go up far above 10%.

Oh by the way these are just a few – and can you see one thing – NO MONEY required from the government. That’s right, sell Economy Bonds to create a savings nation. Commercialize government like the US Postal Service did. Reduce every faction of government – State, Local, Municipal and Federal. Treat the US like a business. Get an Office of Financial Defense in place to clean America’s clock before the world does it to us. Fact is

You are making it happen.

Watching it happen

Or

It is happening to you.

We are clearly watching it happening and you better believe me it is happening to YOU.