Warren Buffett says the federal deficit is less of a problem than it’s made out to be.
NEW YORK (MarketWatch) — Billionaire Warren Buffett believes the federal deficit should be stabilized in relation to U.S. economic growth, but that the nation’s $16.4 trillion in red ink is not trouble in and of itself.
“It is not a good thing to have it going up in relation to GDP, that should be stabilized, but the debt itself is not a problem,” the CEO of Berkshire Hathaway BRK.A +0.01% said in an interview broadcast Sunday on the CBS “Sunday Morning” news show.
“What is right about America just totally dwarfs what’s wrong with Washington. 535 people are not going to mess up 315 million over time. I know it.”
Warren Buffett, CEO of Berkshire Hathaway
The nation’s debt is “a lower percent of GDP [gross domestic product] than it was when we came out of World War II. You’ve got to think about it in relation to GDP,” added Buffett, a vocal advocate for increased taxes on the nation’s wealthiest, a stance he alluded to in the broadcast.
“I would say in a country with $50,000 of GDP per person, that nobody should be hungry, nobody should lack a good education, nobody should be worried about medical care, you know, nobody should be worried about their old age.”
http://www.marketwatch.com/story/buffett-us-debt-on-its-own-not-a-problem-2013-01-20
Uncertainty on Batteries May Weigh on Boeing
Stuart Isett for The New York TimesBoeing’s Everett, Wash., factory is producing five 787 Dreamliners a month. One possible cause of battery fires has been ruled out.By CHRISTOPHER DREW
Published: January 20, 2013
But the grounding, prompted by a battery fire on one jet and the emergency landing of another, has knocked Boeing off stride. Now, investors as well as government officials are paying close attention to see how big the issue becomes for the company, which is one of the nation’s biggest exporters.Until smoldering batteries forced safety regulators to ground Boeing’s new 787 Dreamliner jets last week, the aircraft manufacturer was flying high, with soaring profits and a recently regained No. 1 ranking in jet deliveries over Airbus.
Although company officials said they expected to find a solution quickly, federal regulators on Sunday ruled out one simple explanation — that the battery was overcharged. If the problems prove more complicated, they could threaten Boeing’s plans to expand production of the planes, and the jobs that go with them.
“Boeing has a lot at stake, for its headlining airliner and for the company brand,” said Scott Hamilton, the managing director of the Leeham Company, an aviation consulting firm in Issaquah, Wash.
Mr. Hamilton said he had no doubt that Boeing would “work its way through this.” But until more is known about the batteries, he said, “it’s impossible to draw conclusions about what went wrong, what the fix is, how long it will take and what the long-term damage to the 787 and to the Boeing brands will be.”
In what would seem to be the worst possible outcome right now, Boeing might also have to redesign its powerful new lithium-ion battery system, or even switch back to older, safer models. Aviation experts said such changes could cost hundreds of millions of dollars and shave off some of the 20 percent savings in fuel costs that the new jets have delivered.
Analysts say Boeing, which has about $80 billion a year in sales, has the financial muscle to weather the problems and make production of the next generation of airliners succeed in an industry familiar with outsize bets.
But the recent incidents were a reminder of the manufacturing and testing mishaps that had delayed the development of the planes. And any lengthy new delay could tax the patience of airlines and investors who thought the Chicago-based company had put the problems behind ithttp://www.nytimes.com/2013/01/21/business/battery-fire-resolution-may-weigh-on-boeing.html?_r=0
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Hostess union hires investment bank
NEW YORK — The pension fund for one of Hostess Brands' unions has hired an investment bank to represent workers and pensioners as the maker of Twinkies and Wonder Bread sells off its brands.In a statement posted Sunday on its website, the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union – which represents around 6,000 Hostess bakers – said Gordian Group LLC will represent the fund.Gordian, a New York investment banking firm that specializes in distressed cases, has represented unionized workers at American Airlines, which is undergoing restructuring in bankruptcy. It's also an adviser in the ongoing liquidation of disgraced investor Bernard Madoff's firm.Earlier this month, Irving, Texas-based Hostess selected Flower Foods Inc. to buy its six bread brands, including Wonder Bread, along with 20 bakeries and 38 depots, for $390 million.Flower Foods, based in Thomasville, Ga., was selected as the "stalking horse" bidder for the bread brands. That means higher competing bids can still be made and the final deal must be approved in bankruptcy court.Hostess is expected to find buyers for its dessert cakes, which include its iconic Twinkies and Ding Dongs, along with the Drake's Cakes and Dolly Madison brands, in the coming weeks.Gordian President Peter Kaufman said his company will try to ensure that potential buyers hire former Hostess workers and honor Hostess' pension obligations."Given the sale process that is under way, we believe the bakers working with a buyer create the opportunity to increase value and are pivotal to the success of the business," Kaufman said in a statement. "Buyers should know that the Bakers are very interested in having direct discussions with them."The Bakery and Confectionary Union and Industry International Pension Fund pays out $42 million in benefits per month to 52,000 pensioners, according to its website. Hostess told a bankruptcy judge in November that it was no longer able to pay its retiree benefit, which total $1.1 million per month, and that it stopped contributing to its union pension plans more than a year ago.Hostess filed for bankruptcy protection in January 2012, after years of management turmoil and turnover. A bankruptcy judge approved its plan to liquidate its assets in November after it failed to reach a new contract agreement with the bakers' union.
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