The Economy Guy

Oil, gasoline, gold and the Dollar just gave up a small amount of their recent gains/losses – so not much news there today.

In the meantime, Warren Buffett’s Berkshire Hathaway purchased $5B worth of Goldman Sachs – and this is a major vote of confidence in the US economy by Warren Buffett – and in my opinion, he purchased the one company least affected by all those lousy bets on the housing market.  Goldman Sachs came out of this mess fairly unscathed – but, they clearly needed some money too.

The markets are now worried that the Bernanke/Paulson bailout plan just won’t work.  After the Freddie/Fannie fiasco of giving Paulson all the money he needed, the current $700B seems like that last guess was fairly worthless regarding the crisis.  Do these guys really know what’s going on?  You decide.

I am worried when the President says we are fixing the “root cause” of the problem with this bailout.  In my opinion, the root cause of the problem is not the housing market, or a credit crisis – they are just symptoms of a much bigger problem – the US trade deficit which keeps pumping money into the US and causing bubbles that burst.  It is also causing a major deflation (cause of the liquidity crisis) and a major meltdown in the value of the US Dollar.