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Varchild2008 (84.06)

Frightening Truth: Why Buffet *really* bought Burlington Northern

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November 09, 2009 – Comments (8)

Let's say you are 100% Bearish on the U.S. Economy...

You expect:

A)  No Job Creation Improvement at all.. in fact it gets worse all through 2010.

B)  Durable Goods + Manufacturing could collapse under the lack of consumer spending.

Now let's say you are a Multi-Billion...perhaps Trillion $  Corporation.....  Why Buy a Railroad company?  Why?

What good will it be if America's Businesses are falling off a cliff and you know it for a fact that at least 2010 is an absolute disaster.  You could not be more pessimistic....

. . . . . .  Answer?

Well.... Let's analyze something....

What Goods would the railroad company ship around country if America's Businesses in America are falling off a cliff?  

The answer is simple....

PRECIOUS METALS................GOLD...............  Plenty of it to ship around and the price keeps going higher.

But that's not all to look forward to....

CHINA is BUYING  America!   Not just China.... All Sorts of Foreign companys are eyeballing America as a level playing field as so many of America's company's are stuck having to kill thousands of jobs...

(ERTS)  1,500 more jobs going to be cut
(S)   2,500 mroe jobs to be cut...

America is floundering around....   This means that it is the BEST opportunity for Foreign Corporations to come to America and scoop up the mess left behind by the American Company's filing for Chapter 11 Bankruptcy.

Foreign Company's aren't burdened with the American Tax System and Healthcare Costs and so on as the bulk of their business will always be within their own country's much friendlier atmosphere....  So they can deal with America's Atrocious High Cost of Doing Business much better than well..... America can!

So You're Railroad will need to be around to ship Goods Made by Foreign Competitor Nation's Company's.... 

Need Railroads to ship (CYOU) Video Games... and soon (GAME) Shanda Game's is going to come to America....

need Railroads to ship Chrysler Vehicles.... that in which are owned by FIAT....

China's GEELY is going to own VOLVO and you can bet they have plans to sell VOLVO here in the U.S. at some point....

It all makes sense....  Buy a Railroad now while they are cheap and earn BIG $$$$$ when Foreign Competition starts flooding the American Markets.

Warren Buffet betting on America?    Huh!   Not Hardly.

8 Comments – Post Your Own

#1) On November 09, 2009 at 8:10 PM, anticitrade (99.61) wrote:

When railroads start shipping massive amounts of gold again, I might find a new life as a train robber.

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#2) On November 09, 2009 at 8:18 PM, russiangambit (29.42) wrote:

> China's GEELY is going to own VOLVO and you can bet they have plans to sell VOLVO here in the U.S. at some point....

Listen, I was just thinking today. There were days when Euro was cheap and people were buying BMWs, then Euro got to expensive and epople switched to Lexus. Now Yen got expensive too. Bye, bye Lexus. Good thing we still have cheap Chinese stuff to buy at Wal-Mart, so we don't feel the dollar slide as much. And we'll be able to buy Volvo again soon even though we can't afford BMW anymore. Now , what happens if Chinese stuff is not cheap anymore? What are we going to buy then?

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#3) On November 09, 2009 at 9:00 PM, Imperial1964 (97.87) wrote:

If Buffet were that bearish on the US he'd be investing in foreign companies.

That said, railroads are a way to play the falling dollar.  Rising fuel costs make rail more cost-effective.  And the lower the dollar gets the more we export coal and agricultural commodities.


Disclosure: long NSC

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#4) On November 09, 2009 at 9:55 PM, IvanKapulica (< 20) wrote:

In my opinion a bit of overexaggeration. I think it's all about fuel costs and less environmental destruction. I cannot see why he would bet against US. America will eventually overcome the problem of foreign companys buying "america". America had a similar economic problem back in late 80s and as you know america survived. It's still the largest economy in the world and americans still live better that the rest of the world and I bealive that future brings more good stuff that bad for the american citizens. The only two problems the US has is 16% of GDP going on poor managed health care.  And the trade deficit. Annual trade deficit now exceeds 5% of GDP and that a serous problem. Goodbye

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#5) On November 09, 2009 at 10:12 PM, russiangambit (29.42) wrote:

> The only two problems the US has is 16% of GDP going on poor managed health care.  And the trade deficit. Annual trade deficit now exceeds 5% of GDP and that a serous problem.

And more than 50% of income going to ever increasing taxes, and inflation in healthcare and education costs, and (if FED has its say) continuing inflation in housing, leading to even higher property taxes, and increasing energy costs with no alternatives. I could continue for a long time. However, I have to stop here and say that it is still true that quality of life in the US is higher than anywhere in the world. But much of it is on borrowed money. I see worse times ahead for an average american, not better. No big deal, it will be like living back in the 60-70s, I imagine - smaller houses, smaller cars, less stuff. People just need to adjust their expectations.

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#6) On November 09, 2009 at 11:26 PM, ajm101 (32.12) wrote:

If Warren Buffet wanted to invest in gold, he would buy gold or a gold mine.  This is what he thinks of gold:

"It gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head."

And this is BNI's network:

http://www.bnsf.com/tools/reference/division_maps/?menu=5&submenu=0

It's not ideal for your 'foreign companies flooding US markets with foreign goods' hypothesis.  CSX would be better for its heavy east coast coverag.  It's a great network to ship Midwest coal, though.  And nevermind that you previously wrote that the US will be in terrible shape and therefore an unattractive market to target.

Total fail.

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#7) On November 10, 2009 at 9:23 AM, jstegma (29.47) wrote:

If we have enough gold around here that we need a whole railroad worth of freight trains to move it, then we have no worries.

That's the most ridiculous thing I've heard in a while.  This is an embarrassingly bad post.  

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#8) On November 11, 2009 at 7:38 PM, Varchild2008 (84.06) wrote:

"If Buffet were that bearish on the US he'd be investing in foreign companies.

Warren Buffet does invest in foreign company's.   Particularly China.

Correct me if I am wrong.

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