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Charlie Munger Analyzes Current mess
Old 02-11-2009, 11:58 PM   #1
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Charlie Munger Analyzes Current mess

Charlie Munger is guy worth listening to. Even Warren Buffett thinks so.

washingtonpost.com
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Old 02-12-2009, 07:24 AM   #2
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Interesting article, Ha. I like his discussion of and identification of the causes of the financial crisis. His discussion of WHY there will be opposition from academia to specific efforts to reform is very realistic, IMO.

His comparison with the Marshall Plan is mind-boggling. Do we really have that much time to consider and form these emergency measures for financial recovery? We are told no, but possibly we do.

I am not so sure that bipartisan support of the financial recovery bills would more quickly result by following along the lines of the deliberative rules of Constitutional Convention of 1787, though. I am not too familiar with them, but that sounds pretty cumbersome and might take longer than desired as well.

Thanks for pointing out the article. Munger's analysis is particularly astute, and his idea of modeling the recovery efforts along the lines of the Marshall Plan or the Constitutional Convention of 1787 are interesting, though they imply such a lengthy time frame that I almost wonder if he wrote this tongue-in-cheek.
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Old 02-12-2009, 07:45 AM   #3
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I'm always entertained by listening to Charlie Munger. As he once famously remarked, "you can mix raisins with turds, but you still have turds."
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Old 02-12-2009, 08:38 AM   #4
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The note at the end surprised me. Is Charlie Munger really a Republican? I've always assumed he was more or less in agreement with Buffett.
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Old 02-12-2009, 09:34 AM   #5
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Go get em Charlie - sic em!

Munger is Munger.

heh heh heh -
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Old 02-12-2009, 02:31 PM   #6
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The note at the end surprised me. Is Charlie Munger really a Republican? I've always assumed he was more or less in agreement with Buffett.

He has written a lot of checks to Republicans over the years. AFAIK, he is a classic Wall St. Republican not a social conservative. Although he may have share social convervative views.

Buffett would be a Republican if it wasnt for his late wife, and the Washington Post's Katherine Graham
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Old 02-12-2009, 03:13 PM   #7
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His comparison with the Marshall Plan is mind-boggling. Do we really have that much time to consider and form these emergency measures for financial recovery? We are told no, but possibly we do...
Perhaps the economic turnaround comes first, then the needed reforms / safeguards.

I have not read too much of him or Buffett. Both of those guys use little words but their conversation is deep in meaning.

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Old 02-12-2009, 07:22 PM   #8
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His comparison with the Marshall Plan is mind-boggling. Do we really have that much time to consider and form these emergency measures for financial recovery? We are told no, but possibly we do.
No way, W2R! This bill is MUCH too important to think about or discuss. Not to mention reading the ~1420 pages of it. If they were to take time to actually read the thing there's a good possibility the daggone crisis would be over and they'd have lost the chance to pass every spending project they've ever thought of. I mean, the Republicrats got the Patriot Act, so the Dems deserve this one!
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Old 02-13-2009, 07:00 AM   #9
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I, for one, am appalled at the speed in which duly elected representatives are willing to increase umpteen-fold the spending of my, my future and the future generations' money without even demonstrating some deliberation regarding the 'audacity' of this action. I read an analogy by an economist that likened the economy to a ship being controlled by a large lag 'rubber-band' - the control system is not tightly coupled to the response of the ship. This is like the difference between driving a Honda and Porsche - the response time to my pushing on the accelerator and receiving/demonstrating torque is much more quickly translated in the Porsche than in the Honda. That means I have to wait a bit to determine if my input is getting the output I desire when driving the Honda - now magnify that much more in time and that's the way government works - since they set the dials initially, they don't know exactly where they'll end up - the problem with that is a tendency to 'oversteer' due to not understanding a compensation for the time lag. This 'government input' is so large, that the future repercussions may be way beyond what was initially intended. Usually what one does in a large lag time system is slowly adjust the input while allowing for the lag time to elapse getting better output information to then more correctly direct any further input if needed.

As for more taxation - I don't necessarily agree with Mr Munger - however, his request, with analogies to Marshall Plan and Constitutional Convention, to slow down and deliberate what input truly should be put into the system, is one with which I agree.
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Old 02-13-2009, 10:06 AM   #10
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Good analogy deserat. Along that same line, I've also read that there really is no "feedback" mechanism in any of this. It's just "throw this out and see what happens". It would be possible to build feedback right into the bill, but they didn't. Granted, that feedback might be too slow, but some would be better than none.

It's like I mentioned before on a gas tax. If we really want to set a goal for oil consumption, have a gas tax based on a formula that self corrects. Americans using too much oil - raise the tax. Looks like we are ahead of goal - ease the tax down a bit. It could happen automatically, no voting from Congress required.

But since Congress often does not even put inflation adjustments in where they are critically needed (AMT), I don't think we can expect anything as "advanced" as applying centuries old control theories to economics.

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Old 02-13-2009, 12:39 PM   #11
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Originally Posted by clifp View Post
Buffett would be a Republican if it wasnt for his late wife, and the Washington Post's Katherine Graham
Or, maybe, he doesn't want to be a raisin...

Honestly, I don't see him as so easily influenced as that.
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Old 02-13-2009, 01:26 PM   #12
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Or, maybe, he doesn't want to be a raisin...

Honestly, I don't see him as so easily influenced as that.
Munger's a Republican, and Buffet's a Democrat, sounds like balance to me........

Actually, Buffet's son, Peter, has a house here in Milwaukee. I met him at a function at the Art Museum. Nice guy, and quite a musician from what I understand. No real interest in taking over Dad's business.....
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Old 02-13-2009, 02:29 PM   #13
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Or, maybe, he doesn't want to be a raisin...

Honestly, I don't see him as so easily influenced as that.
Buffett's dad was super conservative congressman, and stockbroker, so he started out life out as a Republican and Ayn Rand fan into his 20s. After reading the 900 pages of Snowball, I think marrying a bleeding heart liberal carrying and compassionate Susie and his long discussion with equally liberal Katherine Graham had big influence.

What would be your explanation for the conversion?
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Old 02-14-2009, 12:11 AM   #14
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Or, maybe, he doesn't want to be a raisin...
Honestly, I don't see him as so easily influenced as that.
Honestly, you need to read "The Snowball" to learn the effects those two women had on Buffett.

There's speculation that Warren Buffett was also rebelling against his father. Dad was so autocratically and righteously Republican that it got him voted right out of Congress, with the full endorsement of his fellow Republicans.
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Old 02-14-2009, 01:25 AM   #15
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One thing is for sure is that if Warren Buffett dad was alive today. He would be screaming at the top of his lungs about how bad the stimulus package. Of course none of today's reporters would ask such a question.
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Old 02-14-2009, 07:53 AM   #16
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none of today's reporters would ask such a question.
None of them? Wow! What an indicment. We should sue someone.
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Old 02-15-2009, 12:31 AM   #17
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I'm always entertained by listening to Charlie Munger. As he once famously remarked, "you can mix raisins with turds, but you still have turds."
Did you know that in this quote he was referring to indexing and to extreme diversification in general? While Buffett has recently recommended indexing to investors, he also has said that indexing is a wonderful thing for an investor who likes to think, as it creates a lot of money that will be invested in stocks regardless of their intrinsic attraction. In other words, a bottomless well of dumb money.

Ha
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Old 02-15-2009, 12:35 AM   #18
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Interesting, his reference to George C. Marshall, one of America's quiet giants. I credit Marshall with creating the (more or less) united Europe of today.
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Old 02-15-2009, 07:44 AM   #19
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Hmmm...

First they came for the Credit Default Swaps,
But I wasn't a Credit Default Swap, so I said nothing...
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Old 02-15-2009, 09:03 AM   #20
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"you can mix raisins with turds, but you still have turds."

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Originally Posted by haha View Post
Did you know that in this quote he was referring to indexing and to extreme diversification in general?

Ha
That also reminds me of a quote :

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