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Billionaire Buffett: Worst Economic and Foreclosure Crises

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By : John Cutts    99 or more times read
The United States economy will get worse before it gets better is how Warren Buffet, the second richest man according to the October 2008 issue of the “Forbes” magazine, viewed the current economic scenario. He cited as indications of the worsening economic situation the declining business activity, increasing foreclosure homes and rising unemployment.

Speaking on a CNBC television program, billionaire Buffett pointed out that an economic recovery would trigger the worst kind of inflation that the country had not experienced since the late 1970s. This inflation, coupled with high rate of foreclosure homes, would cause consumer confidence and purchasing to take a dive.

However, he predicted that the economy would start to lift off after it has reached the bottom.

On this note, he urged Republican and Democratic legislators to show bipartisan support for programs that will revive the economy and prevent the flood of foreclosure homes. He called on legislators to support President Barack Obama’s campaign to repair the country’s economy and restore investors’ confidence on the banking sector. Buffett also called on legislators to let the public know about what is going on with the economy and the banking sector.

Meanwhile, Buffett explained that majority of Americans did not anticipate the rapid decline in home prices and increase in foreclosure homes.

Data from U.S. Foreclosure Index showed that nearly 1 million foreclosure homes were reported in 2008, representing a 63.5 percent increase from the 2007 data. Additionally, pre-filings for foreclosure homes in 2008 reached 2.1 million, a 62 percent increase from 2007.

In December of 2008, repossessed homes totaled 97,841 or 19.3 percent up from 82,033 foreclosure homes in November.

The current economic situation prompted Buffett to warn consumers not to allow again big institutions to remain uncheck to prevent another financial crisis.

Also, consumers should lessen their dependency on debt like credit cards. Buffet pointed out that consumers would not profit by borrowing money with up to 20 percent interest rate.

In addition, he praised the campaign of Federal Reserve Chairman Ben Bernanke to boost the economy but warned of possible higher inflation once the economy starts to rebound.

On the other hand, Buffett predicted that a great number of banks would survive the economic recession and the foreclosure crisis.

He echoed the suggestion of Senators Richard Shelby and John McCain to allow banks that are about to fail to close their operations.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.

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