Worthless Dollars and Carbon Credits
It appears Buffett knows or believes dollars will not be worth much going forward and appreciates the economics of the rail business in a carbon credit world. Rail is a much "greener" form of transportation than trucking. If we are all going to get taxed on our emissions going forward.....Buffett is well positioned to take advantage of a new business paradigm with BN.
A key issue affecting CAPs players is the falling dollar.....we all go to work to get dollars, we pay for gasoline in dollars, and we measure our success in dollars. This morning, Oil is back over $80 even though demand is falling.
As a nation, we are running a $2 Trillion dollar deficit which is the only thing sustaining our contracting economy right now....the trade off is that our currency will evaporate in value if we don't do anything to stem the bleed.
An interesting trend is going on in business right now....businesses are simply liquidating inventory to stay afloat. Many of those businesses are not replenishing the lower inventory levels.....as a result, the working capital is being reduced.
The problem is with lower working capital, and little in savings, it will be very difficult for those businesses to replenish inventory and grow in a slow sales tight credit environment. We shall start to see the impact of this as we move thorugh this quarter and into next year.
Without inventory, businesses can't sell.....no matter how many orders they get. And right now inventory is as low as its been for a long long while........
The analysts know this, Wall Street knows this, and the bankers know this.....now CAPs players know it as well.
2010 could be very interesting indeed if credit tightens due to a crashing dollar and rising rates.
Imagine if the NEW WORLD CURRENCY is no longer dollars, yen, or euros.......but Carbon Credits? The currency to breathe??? How much is gold/silver worth in that environment?????? How much will BN be worth in that environment????
This blog is just a glimpse of the future of Alstrynomic blogging......in the mean time, the old economy is shutting down.
Baker Hughes net income falls 87%
Devon profit falls 81%, but beats target
Private-sector jobs fall 203,000, ADP says