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D.Muthukrishnan (Muthu), Certified Financial Planner- Personal Financial Advisor

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Your thoughts on America

Posted by Muthu on September 17, 2010

Some have questioned my ability to analyse Buffett’s judgement on America’s future. Some others have mentioned how difficult it would have been for me to differ from Buffett.

I owe mainly to Warren Buffett what I am today. So I definitely hate taking side opposite to that of Buffett.

I’m no match for the intelligence and insights of Warren Buffett.

At the same time, I believe that I should not compromise my intellectual honesty, despite having a limited intellect.

Becoming the richest person in the world purely through investing, ethical and legal means is a very great achievement. Given the fact of his simple life style, excellent insights into human behaviour, has made him the ‘Sage of Omaha’. I revere the sage in him.

It is a sad fact that Buffett, like all of us, has his own share of follies. However please note that this has not reduced the respect I’ve for Buffett.

He is the first person to coin derivatives as ‘financial weapons of massive destruction’. However the greedy capitalist in him, made him to invest in ‘Goldman Sachs’, when it was in desperate need of capital. He has made a big money out of the same to his shareholders. But it is disheartening to note that he is publicly defending the excess of Goldman Sachs and says that they have done nothing wrong.

Nobody can forget the share of Wall Street investment banks in creating and aggravating the current financial mess in America. Goldman Sachs is no exception. Just because Buffett has invested in it does not sanctify its past.

Buffett warned last year that U.S. would become a banana republic. Sensing the increasing public’s hatred for America’s rich, he being the human face of American Capitalism, has started playing to the gallery. I’m able to understand his compulsion. When you become a personification of an American dream, you are forced to live up to it. His partner Charlie Munger, who is equally responsible for the success of ‘Berkshire Hathaway’ (Warren Buffett’s investment vehicle), but a hard core intellectual and rational person has already written about fall of America.

America is capable of bouncing back and has proved so in the past. This time, given the structural issues it is facing, it would be long before it, if it bounces back.

Couple of you has written to me that given the America’s cutting edge in knowledge, would it not be possible for it to recover soon, given the fact that it is knowledge which creates wealth.

Also you have highlighted America’s military might, which is its biggest strength.

In terms of knowledge, the America today is not America of yesterday.

Guggenheim, who won an Oscar for the Al Gore global warming documentary “An Inconvenient Truth,” said the decline in U.S. public schools has reached the crisis stage. According to the filmmakers, 1.2 million U.S. students drop out of high school each year and American teenagers rank toward the bottom in math and science among 30 developed nations.      

“We are failing millions of kids in America,” Guggenheim said. “The erosion of education has been going on for a long time. Incremental changes no longer can do it. We have to make fundamental changes.

“It’s harder to find these people in the U.S. than you would expect,” said Bill Gates, “If you look at the computer science department in the top (colleges), the majority of students are not U.S. born. That says something about our education system.”

Gates said the U.S. must improve the system to compete in the global economy. “Jobs out there are more demanding,” he said. “We have less and less jobs that are attractive to dropouts.”

Just spending more money won’t solve the problem. Over the past 30 years, the amount spent annually on each public school student has more than doubled. During the same period, however, reading and math scores have barely changed in the U.S. while rising in most other developed countries.

Gates said even if major changes were made today, it would take years to see the results.

“It takes two to three years to put a new approach into place,” he said, “and then it’s at least a decade before you have substantial benefits from improvements you make now.”

As far as military might is concerned, U.S. is far superior to any other country in the world.

But we have to taken into account, rising China’s military might, its hatred for U.S., nuclear weapon in Islamic countries which Al-Qaeda may be able to lay its hand on, the growing hatred between the West and Islamic countries etc.

Who will emerge as the winner in the current clash of civilizations, well only God knows? What may be the stand of China and India in this regard would also influence the outcome.  

China is trying to make its currency as medium of exchange for trade in Asia and Africa. This would further undermine America’s power, dollar.

Given the scenario, this time it is going to be difficult for U.S. to rise back, though we can never under estimate the civilized institutions and entrepreneurism of U.S.

(with inputs from Bloomberg)

2 Responses to “Your thoughts on America”

  1. navin said


    why are you so anti-american ? any personal anger ?

  2. Muthu said

    Absolutely not. I’m saddened that a country has forgotten the way which made it prosperous and continues to do things which may take it towards downward spiral.

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