Jump to content

Charlie Munger: Basically, It's Over


farnamstreet
 Share

Recommended Posts

And then came the twin shocks. Hydrocarbon prices rose to new highs. And in Basicland's export markets there was a dramatic increase in low-cost competition from developing countries.

I would tend to believe that WEB prepared BRK for these shocks and that his appetite for BNI is not unrelated to these events also...

Link to comment
Share on other sites

Just over 6 years ago, Buffett warned about going to Squanderville.

http://money.cnn.com/magazines/fortune/fortune_archive/2003/11/10/352872/index.htm

  • In evaluating business options at Berkshire, my partner, Charles Munger, suggests that we pay close attention to his jocular wish: "All I want to know is where I'm going to die, so I'll never go there." Framers of our trade policy should heed this caution--and steer clear of Squanderville.

 

A parable about how one nation came to financial ruin (Slate.com)

http://www.slate.com/id/2245328/pagenum/all/

Link to comment
Share on other sites

The parable frames the issue in binary terms--borrowing spenders v. prudent savers.

 

Yet, when you look out at fiat currencies, the US looks relatively less bad than Japan and Euro nations.  Profligate borrowers will continue their habits while they can.  And if there are fiscal or currency crises over the next decade, to where will all the savings flee?  Not the renminbi.  Gold/silver?  Perhaps for a intermediate time.  Most likely though, the dollar, and the US will continue to borrow. 

 

In the long run, Munger will be right.  But if the Euro/Yen fall faster or sooner than us, then the game will continue for a supremely long time.

 

 

Link to comment
Share on other sites

"Meanwhile, hydrocarbon imports would amount to 30 percent of GDP, instead of 15 percent"

 

The number don't quite add up, assuming the U.S net imports of oil remain constant at 12 million a day *365*80= roughly 350 billion dollars or 2.5% of gdp as of today.  For oil to make up 15% of gdp prices would need to go up above 450$ a barrel w/ no drop in demand, for 30% we'd need to see 900$.  Thats one hell of a shock...

Also has trade ever come close to being 25% of GDP in the U.S? 

 

Link to comment
Share on other sites

"Meanwhile, hydrocarbon imports would amount to 30 percent of GDP, instead of 15 percent"

 

The number don't quite add up, assuming the U.S net imports of oil remain constant at 12 million a day *365*80= roughly 350 billion dollars or 2.5% of gdp as of today.  For oil to make up 15% of gdp prices would need to go up above 450$ a barrel w/ no drop in demand, for 30% we'd need to see 900$.  Thats one hell of a shock...

Also has trade ever come close to being 25% of GDP in the U.S? 

 

 

Why would we get to 900$, why wouldn't people STOP purchasing it when it goes to 450$??? There will be reduced demand.

 

Also - if oil gets to 900$, how the hell does China or the rest of the world grow?  If the US is screwed on 900$ oil, then so are the rest of the world besides the exporters.

 

At 900$, we will ride bikes and get healthier.

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
 Share

×
×
  • Create New...