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Buffett makes billions betting against dollar { March 5 2005 } Original Source Link: (May no longer be active)    http://news.ft.com/cms/s/14d1fb9c-8da0-11d9-a4d2-00000e2511c8.html http://news.ft.com/cms/s/14d1fb9c-8da0-11d9-a4d2-00000e2511c8.html Buffett deepens dollar worries By Dan Roberts in New York Published: March 5 2005 18:22 | Last updated: March 6 2005 22:47 Warren Buffett has warned that the US trade deficit risks creating a ÒsharecropperÕs societyÓ as his letter to shareholders sounded an increasingly bearish tone about the value of the dollar. The billionaire fund manager said his own performance as chairman of Berkshire Hathaway was ÒlacklustreÓ because he struck out in his quest for new investments. Annual results showed the book value of Berkshire shares underperformed the stock market for the second year in a row while full-year profits fell 10 per cent. But his sceptical view of current market valuations continued as BerkshireÕs holdings of cash rose from $36bn in 2003 to $43bn by the end of December Ð equivalent to nearly all the ÒfloatÓ, or excess cash, generated by its insurance businesses. Mr BuffettÕs bet against the dollar also grew. Foreign exchange contracts Ð mostly short positions against the US dollar Ð nearly doubled over the year to $21.4bn, generating $1.8bn in gains as the greenback fell against other major currencies. These currency profits were partly responsible for a sharper than expected rise in fourth quarter earnings from $2.39bn to $3.34bn, although Berkshire earnings are notoriously volatile due to the timing of investment gains. Mr Buffett stepped up his warning about the US trade deficit and the need to finance it with foreign investment, devoting more than two full pages of the annual report to the topic. ÒThis force-feeding of American wealth to the rest of the world is now proceeding at the rate of $1.8bn daily, an increase of 20 per cent since I wrote you last year,Ó he said. ÒConsequently, other countries and their citizens now own a net of about $3,000bn of the USÓ In particular, he warned that this meant a sizeable portion of what US citizens earned in future would have to be paid to foreign landlords. ÒA country that is now aspiring to an ÒOwnership SocietyÓ will not find happiness in Ð and IÕll use hyperbole here for emphasis Ð a ÒSharecropperÕs Society,Ó added Mr Buffett. ÒBut thatÕs precisely where our trade policies, supported by Republicans and Democrats alike, are taking us.Ó Nevertheless, BerkshireÕs chairman and chief executive conceded he did not do his job very well last year in finding ways to profit from the unusual market conditions ÒMy hope was to make several multi-billion dollar acquisitions that would add new and significant streams of earnings to the many we already have. But I struck out,Ó he said ÒAdditionally, I found very few attractive securities to buy. Berkshire therefore ended the year with $43 billion of cash equivalents, not a happy position.Ó BerkshireÕs net earnings, which are subject to volatile swings in realised investment gains, fell from $8.15bn to $7.31bn for the year. Total assets rose from $181bn to $189bn and shareholder equity increased from $77.6bn to $85.9bn. Mr Buffett added little new information about an ongoing investigation into potentially illegal trading practices in the insurance industry. ÒBerkshire cannot at this time predict the outcome of these investigations, is unable to estimate a range of possible loss, if any, and cannot predict whether or not that outcome will have a material adverse effect on BerkshireÕs results,Ó said the report.

Billions in federal lands sold off { December 3 2007 } Budget deficit hits 374b { October 20 2003 } Buffett attacks america as rich spending junkies { March 7 2005 } Buffett makes billions betting against dollar { March 5 2005 } Bush presides over biggest spending since 1990 Cheney says deficits dont matter { January 12 2004 } China holds the mortgage to the dollar { August 31 2005 } China loses faith in dollar Congress approves 1tr debt { May 27 2003 } Debt near ceiling again { February 20 2003 } Fd chair blames long term rates on world savings glut { March 20 2006 } Federal deficit estimated almost another trillion { January 25 2005 } Financial crisis if foreign investors pull out { November 21 2005 } Foreign investors finance US debt by 2b a day Government borrows billion a day { October 8 2004 } Greenspan leaves us with record debt { January 23 2006 } Greenspan warns not to pay down debt { March 22 2001 } Raise debt limit Raises debt limit { June 27 2001 } Republicans raise debt limits to 9 trillion { March 17 2006 } Short term yields above long term in reinversion Snowballing debt awaits taxpayers { December 1 2003 } Treasury needs to raise 8 trillion debt limit { February 2006 } UN calls for asian help US deficits { January 26 2005 } US debt tops 9 trillion for first time { October 2007 } War spending drives record deficit estimate Whitehouse urges raise debt ceiling { May 20 2003 } Files Listed: 27

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