AMERICA
Warren Buffett Puts His
Searching for signs that the country is not
capital into the United States. The
U.S. Treasury sold $100 billion worth
as economically hobbled as doomsayers
of T-bills in just two days following
would have us believe? For one, billionaire
the takeover of AIG, much of it to
investors abroad.
Warren Buffett is investing in a big way.
At one point, the yield for the
Truth is, there are many reasons to believe
three-month Treasury bill actually
dipped into negative territory for the
we can weather this economic storm.
fi rst time since 1940, signifying that
investors would accept zero return
— and even a loss — just to have
By David A. Patten ologist Immanuel Wallerstein told their money in a secure place.
the Christian Science Monitor. Investors and speculators dropped
A
N ODD THING HAPPENED ON THE WAY Dollar bear Peter Schiff, president risky assets and fl ed to the dollar. The
to the U.S. economic collapse: The of EuroPacifioPacifi c c Capital, offered anCapital, offered an greenback surprised doom-and-greenback surprised doom-and-
world’s richest man politely refused even stronger jeremiad, declaring,tronger jeremiad, declaring, gloomers by rising in value againstgloomers by rising in value against
to go along. “The U.S. dollar will be shatteredU.S. dollar will be shattered most other currencies, including a 15most other currencies, including a 15
/© 2008 JUPITERIMAGES CORP.
For a while it appeared the bears beyond repair.” And a Netherlandsrepair.” And a Netherlands percent boost in about 90 days rela-percent boost in about 90 days rela-
would run rampant. newspaper even declared that theper even declared that the tive to the Euro.tive to the Euro.
“Financial Crisis May Diminish economic downturn marked “the mic downturn marked “the Economic conditions in other Economic conditions in other
American Sway,” a Wall Street Journal end of the American century.”he American century.” countries grew even more perilous.countries grew even more perilous.
article warned in mid-October. Yet Warren Buffett, the billionaireWarren Buffett, the billionaire Iceland, whose banking system hadIceland, whose banking system had
ONG-HAK / CURRENCY
“What George Bush did was turn master of the countercyclical play,of the countercyclical play, outgrown its GDP, had to borrowoutgrown its GDP, had to borrow
/
JO Y
a slow decline [of America] into a pre- saw an entirely different picture.entirely different picture. $5.4 billion from Russia. In an $5.4 billion from Russia. In an
cipitous one,” Yale University soci- “Fears regarding the long-termrs regarding the long-term unprecedented step, the Europeanunprecedented step, the European
T
/REUTERS
prosperity of the nation’s many rity of the nation’s many Central Bank extended a $6.75 bil-Central Bank extended a $6.75 bil-
THE DOLLAR IS STILL FAVORED
/ BUFFET
sound companies make no sense,”companies make no sense,” lion emergency loan to Hungary.lion emergency loan to Hungary. T
O
Currencies that make
Buffett wrote in an October Buff wrote in an October NewNew Switzerland, justifi ably proud of its
up allocated Foreign
York TimesYork Timess op-ed column. Buffett,op-ed column. Buffett, “safe haven” banking system, stooped“safe haven” banking system, stooped
T
OCKPHO
Exchange Reserves named the world’s richest man innam the world’s richest man in to inject $6 billion in Swiss francs. Itto inject $6 billion in Swiss francs. It
(all nations)
March by Mar by Forbes Forbes magazine, added:magazine, added: also agreed to take over $60 billion
ERASER/IS
“These businesses will indeed suf-“Th businesses will indeed suf- in bad loans to save UBSin bad loans to save UBS
fer earnings hiccups, as they alwaysfer e nings hiccups, as they always from a bank run thatfrom a bank run that
have. But most major companiesh e. But most major companies saw over $43 billion
will be setting new profil be setting new profi t records in withdrawals inin withdrawals in
5, 10, and 20 years from now.”0, and 20 years from now.” the third quar-the third quar-
In some ways, ironically, then some ways, ironically, the ter alone.ter alone.
crisis seemed to demonstrate thatcri seemed to demonstrate that Expectations
the No. 1 safe haven for capital whenthe . 1 safe haven for capital when of a global of a global
U.S. Dollar: 62%
economic trouble hits the Unitedecon mic trouble hits the United downturndownturn
Euro: 26%
States is . Stat is . . . t. the United States. he United States.
Pounds/Swiss Francs/Yen: 8% Along with bank failures and risingAlon with bank failures and rising
All other currencies: 4 percent
unemployment fiune ployment fi gures came plentygures came plenty
of data to support Buffett’s bullishof d to support Buffett’s bullish
Even with the meltdown on Wall Street, the U.S. dollar
take on the worst fin the worst fi nnancial crash thisancial crash this
remains by far the world’s choice for allocated foreign
exchange reserves, according to the latest IMF fi gures.
side of the Great Depression:the Great Depression:
The $85 billion bailout of AIG$85 billion bailout of AIG
SOURCE: International Monetary Fund COFER database
was matched by a massive flatched by a massive fl ight ight ooff
22 NEWSMAX / DECEMBER 2008
0022_AM_AmericanStrength.indd 2222_AM_AmericanStrength.indd 22 111/6/08 6:11:17 PM1/6/08 6:11:17 PM
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