Warren Buffet Claims People Won’t Find Debt Relief Any Time Soon
Warren Buffet seems to believe that, despite what other experts are saying, consumers won’t find debt relief any time in the near future.
“Everything I see about the economy is that we have had no bounce,” says Buffet. “There were a lot of excesses to be wrung out and that process is still underway and it looks to me that it will be underway for quite a while. In the annual report I said that that economy would be in shambles this year and probably well beyond, and I think that is true.”
Buffet claims the biggest contributor to the lagging economy will be unemployment. Buffet believes that this unemployment spike will continue to “depress consumer demand for everything from energy to cars and homes.” Unfortunately, much of the economy’s turnaround is dependent on consumers getting back into spending. The signs are showing that this is unlikely to happen.
The economic turnaround
Ben Bernanke, chairman of the Federal Reserve, has cited nascent signs of economic recovery abounding throughout the market. He has been a strong proponent of consumer anticipation of better times on the horizon. However, Buffet’s argument is based on some telling facts about the market. The decline in home building dashed many hopes that the economy and credit industry turned around enough to once again push people to start buying big ticket items.
Buffet claims that debt relief for the masses is a long way off because of the seemingly unstoppable unemployment rate. “It looks like we’re going to need more medicine, not less,” he stated recently, implying that the country will need a second stimulus if it is ever to recover.
Cautions for the future
Despite some changes and government intercession, Buffet claims that more is needed. He also believes that the stimulus and programs the government has already introduced will impact the economy in adverse ways. “We have done things that raise the probability of high rates of inflation at some point,” he added. He stated that some of the government’s movements have been necessary, but could push the value of cash to record lows.
So people are left to wait it out and see what results the stimulus really will bring. Many people have seen the fall of large corporations and bankruptcy filings by huge companies. They take this as signs that they must continue to be cautious about their own finances and make due, rather than go out and start buying again. However, everyone agrees that consumer buying is key to true economic resurgence. Without some confidence in the market, however, that buying seems to be an impossibility. Consumers are opting to do without rather than stretch their budgets in an unknown economy.
Despite Buffet’s words
Despite what Warren Buffet is professing to the public, people are going to have to make their own judgments on what their future holds. They will have to be vigilant with their finances to find debt relief and still be able to save for retirement, college and emergencies. In the end, only time will tell how well the economy will bounce back and what state it will be in once it does.