The Buffett Rebuff

By Bill Glynn
Stimulus Success = Consumption

I will say it again: the U.S. is a consumption economy. This is a rock solid fact. Even Berkshire Hathaway is feeling the impact. Buffett said it will get worse before it gets better. I think I have heard this before. Hmm, in fact, I even said it! The stimulus packages - and there's certain to be more of them - are not getting to the street. In fact, even if money does get to the street, it will be stepped on so much that it won't stimulate consumers to consume.

Worse, if you see all these programs, they mostly target low-income families. Another fact is the consumption power of these families is not close to the consumption power of the rich and upper middle class that represent a large percentage of consumption worldwide and definitely in the U.S. I frankly don't see the entitlement consumers shopping at Dillard's, Nordstrom, airlines, fancy new cars, etc.... Even if they did, the money they will get in stimulus may not even pay for one month of their utilities. It wouldn't even pay my electric bill! So, here we go again, bailing out large businesses only to face a marketplace that is devastated and can't or won't consume their products, goods and services. [more...]