In a global financial system, the collapse or even perceived weakness of a large economy such as Japan would be catastrophic. And Japan is not doing well. For a while now it has been coasting towards a crisis, flirting with its own financial ruin.

One way to...

Berkshire Hathaway just made its largest acquisition ever, buying Burlington Northern Santa Fe Corporation, a railroad company, for over $35 billion. This is a large bet by the most successful investor of all time that the US economy will improve and prosper.

Actions speak louder than words. What does that...

Asset allocation has been a vexing issue for investors recently.

Because of our expansionary monetary policy (low interest rates, printing money) and stimulative fiscal policy (unprecedented budget deficits), inflation is inevitable. Fixed income is not the place to be during inflationary cycles because bonds are pulverized under the pressures of...

Goldman Sachs reported its earnings today. For the quarter, profits from trading and principal investment were $10.03 billion, up from $2.7 billion for the same quarter last year.

A year ago the company was saved by Treasury Secretary Hank Paulson, who intervened on its behalf. So it is interesting,...

What happened at Citigroup last week was very interesting. They sold their Phibro commodities unit to Occidental Petroleum for $250m. That is a pittance. Phibro had average earnings of $371m in the past five years. The sale price is actually below Phibro's net asset value. So why would Citi give...

The US government will spend over $6 trillion this year, running a deficit of over $1.5 billion. Government expenditures are expected to be over 40% of GDP by next year, the budget deficit will be over 10% of GDP and our total debt will exceed our GDP for the first...

The economy is most likely not out of the woods yet. Credit remains tight, unemployment is rising, retailers are struggling and both commercial and residential real estate are still reeling. Yet, the country is much better off now than it was a year ago, during the crisis in the fall...

As you may have noticed, the Federal Reserve not only fueled the housing bubble, but then also transformed from central banker into a central planning agency, specializing in corporate welfare. Since the onset of the financial crisis the government has become the nation's biggest mortgage lender, guaranteed nearly $3 trillion...

Consensus seems to be that the housing market bottomed. The statistics on national home sales and prices are the key to consumer recovery, so it is hugely important.

But I have my doubts.

According to the analysis of Mark Hanson from the Field Check Group, 2009 existing home sales exceeded...

Emmanuel Saez just published his study on income inequality, and people are going ballistic about it.

Incomes may not be equal, but neither is the tax burden. Consider this: In 2007, the last year for which IRS data is available, the top 1% of incomes in the...

The Chinese economy is posting impressive growth of almost 8% annually, even as the rest of the world is going through excruciating economic pain.

How is that resilience possible? After all, China is dependent on selling to the US and Europe. Western consumers are in cash preservation mode, dramatically cutting...

In recent years, a confluence of factors created a new reality in the world of equity trading. The emergence of ultra sophisticated electronic trading methods, simultaneously with stock exchanges converting to for-profit and the SEC's Regulation NMS, have brought on an explosion in trading volume.

Compounded...

The Treasury Department continues to work out the details of its mammoth stimulus plan combating the financial crisis. Since its onset, the government has become the nation's biggest mortgage lender and taken equity stakes in nearly 600 banks, among other endeavors.

But now the stimulus strategy itself is becoming the...

Federal Reserve Chairman Ben Bernanke recently warned Congress:

Maintaining the confidence of the financial markets requires that we, as a nation, begin planning now for the restoration of fiscal balance...Unless we demonstrate a strong commitment to fiscal sustainability, we will have neither financial stability nor healthy economic growth.

The...

Since the beginning of the financial crisis, the government has become the nation's biggest mortgage lender, guaranteed nearly $3 trillion in money-market assets, restructured two car companies, taken equity stakes in almost 600 banks and lent more than $300 billion to the life-insurance industry as well as a variety of...

What we are now experiencing is unlike a normal recession. A normal recession is a contraction in GDP, usually brought on by tight monetary policy. What the world is going through now is economic contraction brought about by deleveraging and reinforced with fear. Businesses are cutting back on debt and...

The credit markets have markedly improved since the March bottom of the S&P 500. This development is significant because it is likely to boost banks' profits, helping them to exceed analyst expectations in the coming quarters and to raise capital independently. That in turn will enable the Treasury department to...

Last week President Obama declared: "I stand with Chrysler employees...I do not stand ...with a group of investment firms and hedge funds who decided to hold out for the prospect of an unjustified tax-payer funded bailout."

This was the first shot in the war against investors....

Treasury Secretary Timothy Geithner defended the decision to examine 19 of the nation's lenders by saying the goal of testing the banks was to "replace uncertainty with transparency."

I have two problems with the stress tests:

One, I don't trust them. These stress tests were probably designed to come up...

Thirty Five thousand Berkshire Hathaway shareholders descended on Omaha Saturday to bask in the wisdom of their Chairman and Vice Chairman, Warren Buffett and Charlie Munger. From the floor of Omaha's Qwest Center, here are my notes of some of the highlights, which I paraphrased in my own words: