Warren Speaks Out

Finance guru Warren Buffett was recently quoted as saying: "we were justified in using any means necessary (last year) to stave off another Great Depression. Now that the economy is beginning to recover, however, we need to curtail our out-of-control spending, or we'll destroy the value of the dollar and many Americans' life savings."



Pretty sobering words from a key player in the world finance sector. He also noted these key points in an editorial in the New York Times:

• Congress is now spending 185% of what it takes in


• Our deficit is a post WWII record of 13% of GDP


• Our debt is growing by 1% a month


• We are borrowing $1.8 trillion a year

To illustrate these figures, Buffett elaborates on the last one:

$1.8 trillion is a lot of money. Even if the Chinese lend us $400 billion a year
and Americans save a remarkable $500 billion and lend it to the government,
we'll still need another $900 billion. So, where's it going to come from? Most
likely the printing press. And, ultimately, Buffett says, that will destroy the
value of the dollar.

I thought this editorial was very illustrative and painted a clear problem the citizens of the US will face if government spending is not reigned in in light of last year's crisis.

#2 on the "Most Abandoned" list

This is never how you want to be distinguished by Forbes, but certainly provides a lagging indication of how the Bay Area has fared through the recession. Some figures of note from the article:

• Rental vacancy rates swelled from 4.7% to 7.1%
  
• Homeowner vacancies more than tripled from 1.1% to 3.4%. Why the dramatic change?
  
• According to the Bureau of Labor Statistics' latest reports, Bay Area unemployment has more than doubled since last year, up from 4.6% to 9.4% as of April. Many laid-off workers aren't sticking around.

The article is basically noting the two factors that have defined the economy of our area for some time--1)High cost of living (housing in particular here); and 2)The transient nature of a workforce fueld by innovation. There are pockets of Bay Area real estate that have taken their lumps in the bursting of the housing bubble. The fact that the Bay Area is a center for entrepreneurship and innovation influences the transient nature of the workforce as much as anything else does. An surge in innovation will help lead our area out of recession.