According to Buffet, US trade imbalances are the source of SWF

**tidus1203** · March 1st, 2008 06:56 PM

March 1 (Bloomberg) -- Billionaire investor Warren Buffett stepped into a debate about the emergence of sovereign wealth funds, saying the government-controlled firms are fueled by U.S. spending overseas, not political motives.
``This is our doing, not some nefarious plot by foreign governments,'' Buffett, the chairman of Berkshire Hathaway Inc., said yesterday in his annual letter to shareholders. ``Our trade equation guarantees massive foreign investment in the U.S. When we force-feed $2 billion daily to the rest of the world, they must invest in something here.''
Countries including China, Russia and Dubai have deployed record central bank reserves to set up funds wielding as much as $2.9 trillion. Firms from Singapore, Korea, Kuwait and Abu Dhabi bought stakes during the past four months in Citigroup Inc., the biggest U.S. bank by assets, and Merrill Lynch & Co., the world's biggest brokerage. Officials from the U.S. Treasury Department and the Securities and Exchange Commission have said there's a risk government-controlled funds may invest to achieve political, rather than commercial, ends.
``He's right that we're the ones that created the problem in the first place,'' said Mohnish Pabrai, who manages $600 million at Pabrai Investment Funds in Irvine, California. ``The U.S. is better off if foreign governments buy Treasuries, because we have a printing press for them, but if I were running China's money, I'd be buying U.S. companies, oil reserves, hard assets too.''
Pabrai and a friend paid $650,100 last year in an annual charity auction to have lunch with Buffett.

http://www.bloomberg.com/apps/news?p...AgA&refer=home

Now because of the US overconsuming and over levearged. The foreigners are now taking pieces of America....

**uls** · March 1st, 2008 11:47 PM

Ya the reason why those countries have so much dollars is coz the US imported so much stuff from them.

But the US didnt export much stuff to them.

So there's this great trade imbalance.

The foreigners have soooo much dollars...

But those dollars eventually go back to the States...

How?

Bush is spending like crazy since he became president...

But Bush also cut taxes...

So where does Bush get his spending money?

He borrows it...

Bush needs a lot of money to fight two wars, and to keep his huge monster of a bureaucracy functioning...

So he asks the Fed to print T-bills.

Bush uses those T-bills as collateral to borrow dollars from the foreigners who exported oil and goods to the US.

So now those foreigners are holding on to more than 2 trillion dollars of US govt debt.

--------------------

Top holders of US treasury securities at the end of 2007: http://www.treas.gov/tic/mfh.txt

-------------------

Mautak talaga mga Kano no?

Hindi tama ito.

Pakiramdam ko hindi talaga tama ito...

The US is screwing the world...

-----------

This is nothing but a freakin character loan.

There's no collateral.

All the US has backing up it's debt is it's reputation.

this is gonna end badly.

this cant go on forever.

the US just can keep on printing stuff...

One day the US wont be able to pay it's debt.

Gulo yan.

it will be game over.