Warren Buffett to CNBC: U.S. Economy In “Shambles” .. No Signs of Recovery Yet

Warren Buffett to CNBC: U.S. Economy In “Shambles” .. No Signs of Recovery Yet

In a live interview on CNBC today, Warren Buffett said there has been little progress over the past few months in the “economic war” being fought by the country.  “We haven’t got the economy moving yet.”

While the economy is a “shambles” and likely to stay that way for some time, he remains optimistic there will eventually be a recovery over a period of years.

BECKY:  The last time we sat down to talk to you was on May 4, and at that point you told us that you think we’re in an economic war right now.  How much progress do you think we’ve made in that war?

BUFFETT:  Well, it’s been pretty flat.  I get figures on 70-odd businesses, a lot of them daily.  Everything that I see about the economy is that we’ve had no bounce.  The financial system was really where the crisis was last September and October, and that’s been surmounted and that’s enormously important.   But in terms of the economy coming back, it takes a while.  There were a lot of excesses to be wrung out and that process is still underway and it looks to me like it will be underway for quite a while.  In the (Berkshire Hathaway) annual report I said the economy would be in a shambles this year and probably well beyond.  I’m afraid that’s true.

Buffett also noted that he had a cataract operation on his left eye about a month ago.  He joked that he thought it might help him see “green shoots” for the economy, but so far he hasn’t seen any hopeful signs.

Taking a firm position in an ongoing debate in the financial markets, Buffett says he’s not concerned about deflation, but thinks inflation will be a problem in coming years.

Despite his negative view on the economy, Buffett still believes the stock market is attractive “over the next 10 years” when compared to alternatives like Treasury bonds.

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Buffett endorsed Ben Bernanke’s reappointment as Federal Reserve Chairman, saying “you couldn’t do better.”  He also praised Treasury Secretary Tim Geithner.

Asked about how Apple handled Steve Jobs’ liver transplant, Buffett said it is a “material fact” when the CEO of a company is facing major surgery.  He thinks criticism of Apple over the matter is appropriate.

Buffett repeated his criticism of “cap and trade” as a method to control pollution, saying it would be a huge, regressive tax.

Looking bonds ,as a signal of market direction—-19/06/2009

Steep Yield Curve: Sign of Economic Recovery?
A closer looks at the steepening bond yield curve reveals why “this time, it’s different.”

The recent sell-off in the 30-year US Treasury bond has created a very steep yield curve that, in normal times, would seemingly help stimulate increased borrowing, lending and economic activity. But, today’s times are anything but normal, as a Grand Supercycle decline in US equities (which reflects the concurrent decline in social mood) creates more than a few “once in a lifetime” occurrences. We’ll examine the yield curve and the signals it’s giving Elliotticians now.

Typically, an inverted yield curve is a harbinger of a recession. When longer term rates are lower than shorter term rates, banks aren’t encouraged to attract depositors or to lend because there isn’t much “spread” between their costs (interest paid on deposits) and their profits (interest received from lending activities). When a yield curve is inverted — as it was in 1969, 1973, 1979, 1981, 1989, 2000 and 2006-7 — a significant equity and economic decline results about half of the time.

Conversely, when a yield curve is very steep, as is the case today, banks are encouraged to lend because profit margins are high. Current short-term interest rates on the 13-week T-bill are at 0.17% while the 10-year Treasury note is at 3.86%. This spread suggests that banks should be more inclined to lend today because of the difference between borrowing short and lending long.  The trouble is that most banks don’t have the excess capital to lend now because their balance sheets and capital ratios have been impaired dramatically by the housing and credit crises.  In addition, since frugality is now in style (notice that former “fashionistas” are becoming ”recessionistas”), banks’ customers are less inclined to borrow.

Those looking to believe that the worst of the economic turmoil is behind us can point to the steep yield curve as evidence that blue skies are ahead. But, in this instance, the low yield on the 13-week T-bill suggests something entirely different. It suggests that investors’ desire for safe, liquid, AAA assets hasn’t subsided, and that demand for T-bills is overwhelming the supply.

The 0% Fed Funds and T-bill rates have helped create a Treasury yield curve that, in this case, is misleading — as it has sometimes been in the past. Towards the end of 2001, the United States also had a steep yield curve, similar to the current environment. In swift fashion, the Fed had taken the overnight Fed Funds target from 6.5% at the beginning of 2001 to 1.75% by year’s end to combat a potential recession. On December 31, 2001, the 10-year T-note closed at 5.03%, which meant that a steep yield curve was in effect. Even though a steep curve existed, the S&P 500 didn’t bottom until 10 months later in October 2002, and it had another 31% to decline. So, the steepness of the yield curve couldn’t prevent another leg of a bear market during most of 2002.

This example shows yet again that the tools that policy makers use are at the mercy of mass psychology. Social mood, which is EWI’s term for mass psychology, currently suggests that we should prepare for an even more glaring example of the steep yield curve’s inability to come to the economy’s rescue.

Today, a Grand Supercycle decline in US equities accompanies a massive supply of T-bonds coming to market. In the market forecasting business, we try to look around corners before reaching them. In this case, we’re suggesting that the United States is going to see an equity and bond decline, with a further steepening of the yield curve, because the demand for US T-bills will continue to be high. As such, many market watchers will incorrectly suggest that markets are ready to bottom due to something that “should” allow an economy to function properly: a steep yield curve.

In this instance, though, the steeper the curve, the larger the problems are likely to be.

The 16 Guidelines to a Happy & Meaningful Life

I believe that every person, regardless of whatever occupation you are in, seeks happiness in his or her life. This is an interesting and useful article which I came upon in Lilian Too’s Fengshui Magazine and would like to reflect my thoughts and share with all.  If you a trader, this article will benefit you by improving your mindset to success trading. If you are not, this article will also benefit you by helping you find clarity and the right values to happiness in life. Cheers =D

HOW YOU THINK

1) Humility

Humility is quiet strength. In some cultures it is considered quite normal to be loud and assertive about what we think and what we want. Yet there is something dignified about people who are sincerely humble. Even if they are prominent and successful, they have the wisdom and experience to understand their limitations. A person with humility can see beyond their own viewpoint and interests. He inspires us to believe that we can each make a worthwhile contribution of our own, acknowledges that each of us has a unique and sometimes unexpected role to play in life. How can one develop if he thinks that he has nothing to learn? Therefore humility is the first value.

2) Patience

Patience is the ability to control our actions and retain our peace of mind. It gives us the flexibility and strength not to be a victim of circumstance. It is like having a protective suit of armour. It doesn’t make us passive or resigned.  On the contrary, it gives us time to respond in an appropriate way, because we retain the ability to think clearly.
There are some who are born patient and others who are born with a tendency to get angry easily. It is possible to cultivate patience by reminding ourselves of the damage that is caused by uncontrolled anger. Patience is a learning curve that lays the foundations for a happy life. As the Dalai Lama says, “Many people think that patience is a sign of weakness. I think that is a mistake. It is anger that is a sign of weakness.“

3) Contentment

Contentment has nothing to do with money, objects, or other people. Nor does it concern itself with how much we have, or how little. Instead, it’s about finding a point of stillness within ourselves which allows us to be quietly happy whatever our situation might be, and to be at peace with who we are. How do you experience contentment? It can be as easy – and yet as radical – as taking a breath in, and deciding to release everything that makes us feel anxious and dissatisfied as you breathe out. Unless we learn to live in the moment, and to accept it as it is, we may never function well or feel fully alive. Contentment releases us from the restless desires that drive us blindly forward, and which prevent us from being open to the needs and gifts of others. It frees us up to direct our energy in fresh and more conscious ways. Gandhi puts it very nicely, “There is enought in the world for everyone’s need, but not for anyone’s greed.“  In my opinion, you don’t need to be a millionaire, a billionaire to survive, to enjoy life. But being a millionaire or a billionaire will be useful if you have a vision of helping a million or a billion people in life. There’s a distinct difference between greed and need. If your blueprint relates to greed, then you are unlikely to be contented and happy with life even if you succeed.

4) Delight

Delight is the delicious taste we get when something good happens. Delight can change our minds and change our lives. It relieves the pain of envy and brings us closer to the people we love. It makes such good sense to practise the art of rejoicing that it is strange we often overlook it. Why is bad news sometimes more compelling than good news? Why are we tempted to dwell on what is going wrong rather than what is going right? One drags us down, the other lifts us up.We have a choice about what to feed our heart and mind. If we can learn to dwell on positive stories and accomplishments we can quickly bring more happiness into the lives of ourselves and others. Totally agreed, I see many people in their lives wanting to seek happiness, yet they ironically choose to spend their time focusing so much on the downs of their life than the ups, which lead to stress and frustation. If you really want to be happy in life, you must first learn how to appreciate and see the positive side of every thing that has happened, is happening, will happen in life.

HOW YOU ACT?

5) Kindness

To be kind means to be friendly, caring, generous, benevolent, considerate, respectful, fair and affectionate. We all know in our hearts when we have received or offered kindness because of the warm feeling it brings. Is there anyone who does not want to experience kindness from another person? There are times whereby we know that if we act in a kind way, it may seem that we are putting someone else’s happiness ahead of ours, but the truth is in practice it doesn’t work that way. Being kind invariably feels good, lifts our own spirits, and nourishes us in ways that we don’t always acknowledge. Everyone benefits.Is it possible to imagine a world in which everyone shows kindness to each other? Kindness is a great antidote for it strengthens our connection with others. Cultivating kindess is one of the simplest ways to our own happiness. Heard of this chinese phrase before? “对别人好就是对自己残酷。” (Treat others nicely is to harm yourself). You always have a choice. You can choose to cultivate happiness from the kindest you shown to others, or you can also choose to be be jealous of others well-being and  focus on the problems that may appear by helping others. One will lead you to happiness, the later to unhappiness. Remember, no one can make you happy or sad except you.

6) Honesty

Honesty is an opportunity to move through the world gracefully without harming other people. To speak or act dishonestly is to put our own interests ahead of someone else’s. To distort what they experience to fit our needs, or to take their possessions for ourselves. This is why dishonesty causes such disappointment and pain. Honesty is a personal choice that arises every time that human beings connect with one another. Each individual has the opportunity to be straightforward and honest in their dealings with other people. By being honest, you help to create a culture of honesty for everyone. Whatever has happened in the past, there is always the option to let go, to make amends and to move beyond a pattern of living dictated by dishonesty. Honesty starts with each one of us. Do you want to live in a world of honesty?

7) Generousity

Generosity is defined by the wish to benefit someone else. It is a fundamental shift away from the limited world of ‘me’ and ‘mine.’  Generousity is one of the most practical methods that exists for bringing happiness into the world. You don’t need to be smart or rich to do it. Furthermore generousity comes in many forms, such as simply by offering a friendly word to others or an understanding glance. We taste the uneasiness when a gift has an ulterior motive, and save our real admiration for the person who can give without seeking a return.To some degree, everyone on the planet is likely to demonstrate generosity in some way, whether to a member of their family, a friend, or a beloved animal. The question is simply whether we choose to go further than that. Whether we want to learn how to open our hearts and hands more widely, and to share more generously whatever time, energy, talents and possessions we have. It is a critical decision about the direction that we want our lives to take.

Rights Speech

Words! Love them or hate them. They create friendships and make enemies. They can gain us great wealth and lose us everything we possess. Countless daily choices come next. What words to use. When to speak or to be silent. We learn how to use our speech through trial and error, and in doing so create an image and style that will define our personality and shape our lives.Right speech is a commitment to use words skilfully, in a way that will bring peace and happiness to ourselves and the people around us. It is about using our speech to take away fear, to bring hope, to make people laugh and feel good. This is how we share who we are and what is in our heart. Of course, it is definitely mentally tiring to plan and think everytime before you speak. This is why we all have emotions. Those who are wise, compassionate will naturally have positive thoughts, and thus positive speeches. Build happiness within you, let it be an innate ability and you will realise your speech are always music to the ears of others.

HOW YOU RELATE TO OTHERS?

9) Respect

Everyone wants and needs respect. Respect acknowledges that we have the same basic needs, and that other people’s experience and wisdom can be helpful to us. From our earliest years, we learn and grow through admiring and copying other people.In traditional societies this was and is a well-ordered process. Wisdom and life experience are seen as a form of wealth to be passed down the generations. ‘Elder’ does not just mean ‘old.’ Why is there now often a tendency to be disrespectful towards people who are older and have more life experience than ourselves? All around us there are people we can respect and learn from, if we choose to do so, and if we have the necessary humility. Respect is something that we have to give rather than to demand. Respecting someone, intuitively knowing that you are being respected, warms the heart and lifts the spirits. Albert Einstein: ‘A hundred times every day I remind myself that my inner and outer life are based on the labours of other men, living and dead.‘

10) Forgiveness

Forgiveness is the capacity to reclaim our peace of mind when something has happened to disturb us. As we go through life it is inevitable that we are going to hurt one another. As the world becomes more complex and interconnected, the opportunities for conflict increase. We have the choice whether to respond to these hurts and conflicts with anger and bitterness, or with forgiveness. When our desire for reconciliation and peace is stronger than our anger, disappointment or pain, then forgiveness offers the opportunity to make a new start. Forgiveness can seem insurmountable, but in fact, it is nothing more than a shift of mind. To forgive is to acknowledge that life is in flux, It admits that there is a wider perspective which we may not be able to see ourselves. Once again, it’s back to focus and choice. Do you choose to focus on the sad or angry past, or do you choose to let go and forgive the past, then focus on what’s right, have a fresh and bright start? Which will make you and others happier, you decide for yourself.

11) Gratitude

Gratitude celebrates our connections with other beings and our capacity to offer mutual support. It is a form of openness and generosity that strengthens relationships and heals tension, resentment and anger. Gratitude brings peace and harmony. It is grounded in the wisdom which accepts that we are neither independent nor self-sufficient. Learning to appreciate every single thing that happens as a potential source of insight and growth is one of the key ingredients for a happy life. To receive gratitude from others is to strengthen our confidence that we have a positive role to play in the world. It makes us feel recognised, encouraged and inspired. When we are able to offer gratitude sincerely to someone else such as saying a simple “Thank You”, notice how it brings a pleasant taste in the mouth, a warm feeling in the heart and a surge of energy. Gratitude inspires both you and the people around you to be kind and happy. Ram Dass: “If you think you are enlightened, go and spend a week with your parents.”

12) Loyalty

In an uncertain world, a sense of loyalty and mutual responsibility is often the glue that holds families and friendships together. It can be the lifeline that helps us to feel safe and supported and enables us to function well. We all want to be accepted for who we are. Not for what we can buy, what we look like or who we know. When we cannot rely on the loyalty of each other, there is anxiety and insecurity, loneliness and heartbreak. Loyalty is the lifeline that helps us feel safe and supported, enabling us to function well. We have special friends who embrace us just as we are, through many phases of our lives, regardless of how we behave. They may not agree with all our principles and values, or the choices we make, but we know we can still count on them.

HOW YOU FIND MEANING?

13) Aspiration

Aspiration is the profound longing for purpose and fulfilmentIt is the voice inside that urges us to use our life well and to make the best of whatever gifts and passions we possess. The way we choose to respond to that voice will determine all the other choices we make in our lives. Aspiration is the fuel of change. It feeds on our hope that life could be better or more meaningful, and our willingness to do something differently to make this happen. It is a call to action. The happiest and most contented people are usually those who have found a way to put their aspirations for self and others into practice. They do so by the small choices they make, many of which possible for anyone. When we aspire to achieve a goal of some kind, we set out on a journey. This gives our life purpose. Woody Allen: “ I’ve often said, the only thing that stands between me and greatness is me.“

14) Principles

If we were each given a blank sheet of paper, how many of us would be able to list the principles that guide our lives? Yet most of us have plenty of principles, even if we are not aware of them. What is it that angers us or gets the fire churning in our gut? Getting upset is often the sign that a principle we hold strongly has been breached. It touches on something that says ‘No!’ We may be surprised by the passion and strength that is alive in us. Principles give us strength. They provide the foundations from which we get the power and energy to make a stand about the things that matter to us. They give stability to our lives and help us move forward in a purposeful way. The function of having principles is to be our inner compass. They prevents us from being a victim or circumstance. Following what we believe in helps us stay on track.

15) Service

Service is the outer expression of a wish to benefit others.  At its best, it is an expression of caring, sharing, and delighting in each other. In every moment there is an opportunity to make someone else’s life a little bit easier or nicer. Every thought, word and action that flows from us in a loving way has the potential to create happiness. Are we willing to find within ourselves the sensitivity and intelligence, the clarity and conviction that this will take? The rewards are huge. As we discover and deepen our wish for other people to be happy, we also find the key to our own happiness. Nobody gets left out of the equation. This is the golden rule of heart-felt service that underpins the great spiritual and wisdom traditions of the world. ‘Do unto others as you would have them do unto yourself.’

16) Courage

Courage is not defined by what we do, but what we overcome within ourselves. It comes in many forms. It is found in a steady approach to everyday difficulties as well as in the single spontaneous gesture. It is happening quietly all around us as well as in the news.Courage involves acknowledging our fears, but not being deterred from offering something that goes beyond our own immediate needs and comfort. Courage fuels our motivation to act on what we care about, what we believe in, however difficult or unpopular. Most courageous people have decided that the well-being of others is more important than their own, and have allowed this decision to drive their actions and the way they live. Invariably, they seem to find their own happiness in the process.

Visit www.16guidelines.org for more information on the 16 Guidelines and this unique universal learning system that shows one how to be genuinely kind and wise and how to find true meaning in life.

What credit card legislation means for you?

WHY SHOULD YOU TRADE?

Introduction

Let me introduce first trading for all who are new to this term. Trading is simply the buying and selling of financial instruments such as stocks, bonds and derivatives, through the stock market, forex market, future market, real estate market and many more. Of course, you stand to make a profit in trading if you sell your financial instruments for a price greater than how much you bought it.

Benefits of Trading

So what are the benefits of trading? As Robert T. Kiyosaki puts it, it is the most important knowledge to riches, also known as financial quotient (FQ) or financial IQ. I am very sure everyone has goals in their life. Whether you like it or not, money is essential in achieving your goals. Based on the 80:20 golden ratio, 80% of the population in this world owns 20% of the wealth, while 20% of the population in this world owns 80% of the wealth. Let me tell you a secret. This is no coincidence. These 20% “rich” people know something that the other 80% don’t know. So do you want to unravel the secrets behind their success?

One of the most important secrets is to increase your FQ. They understand the importance of FQ. The government doesn’t teach you FQ, the schools don’t teach you FQ. Trading is the most advance subset of the FQ. Through trading, you get to learn the spending behaviors of others, business and investment concepts. Whether it is an economy boom or economy crisis, you will be able to spot finance opportunities within it. This is because you get to understand how to identify trends and opportunities through trading. And most importantly, you learn how to manage, grow and accumulate wealth.

How trading benefits you if your passion is not trading.

Perhaps your goal or dream is not to be a full-time professional trader. Maybe you want to do music, you want to do art. Yes, trading can play a part in accomplishing your goals as well. In my previous paragraphs, I stated that money is essential in any goal. Being a part-time trader allows you to make additional passive income to support your goals, without putting tremendous effort into it. Let trading become a necessity, a commitment to yourself, something that you need to do part-time in order to achieve your goals. Furthermore, you don’t need to work full-time daily in trading. Instead you can spend most of your time honing your art or music skills or doing your favorite stuff. Because you know how to manage your financials and build your wealth, “not enough money” problems will no longer be a problem. It will also no longer distract you from your goals. You will also have more awareness towards the economy which may in turn create a lot of business opportunity for you.

How trading benefits you if your passion is trading.

Whereas if you have a passion in trading like me, trading successfully will grant you lots of freedom in the future. Imagine yourself consistently making money through trading and investing. You can be at any part of the world anytime, enjoying your holidays and continue to trade and earn! Flexible and rewarding =D

How risky and dangerous is trading?

Now we come to one of the most common question. Is trading risky and dangerous? The rich usually tell you that it’s not. The middle and poor class will tell you yes. I urge you to keep an open-mind when you are reading this paragraph. Let me use a comparison example to illustrate my answer.

Recall the very very first time you started to learn how drive a car, did you think that it is risky and dangerous? Did you feel some fear in your heart? I bet you would! But after learning for weeks or months, getting your driving lesson and started driving often on the roads, how do you feel? Scared, risky, dangerous or confident? I supposed you have already mastered the skills of driving and have confidence in yourself. Alright, back to trading. You see, trading is just like driving a car, through training, practice, you will learn how to manage risks, how to trade confidently. Soon, trading successfully and confidently becomes a habit. However, if you do not practicing or go through proper training, you are no different from a “driver without a licence” and that’s…..RISKY!

Don’t worry even if you don’t have a passion in trading. By learning the basics of trading and increasing your financial quotient, you learn how to trust the right person or broker to assist you in trading. It is the same as finding a “reliable chauffeur”. You learn how to read financial statements, which is akin to “understanding road maps”. You can do some simple trading on your own and also find the right network and resource to help you which doesn’t consume too much of your “doing your favorite stuff” time.

Because the rich are so used to doing it (they already mastered how to drive the car), that’s why they will tell you that it is not risky. Think about it, everything is risked associated, but do you realize that you have a choice to learn how to manage that risk or completely avoid the subject?

In conclusion,

Everybody wakes up in bed worrying about one problem. It is MONEY. Do you want to worry about having too much money? Or do you want to worry about having too little money. You always have a choice, take control of your life now. =)

This article is written by Lu Jun Long, edited by Kang  Hao  Ooi.

www.ustradingdiary.com

Bridging the gap to financial success.

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