An Indian Civilizational Perspective

Tokya Melt-down and Warren Buffett's activities

Tokyo Stock Exchange had a sort of “meltdown” yesterday.. due to a little known tech stock “Livedoor”!  Here is the news:

 Japan’s main stock market nose-dived for a second day Wednesday on growing investor jitters from “Livedoor shock,” the widening criminal investigation at an Internet startup that has sparked a sell-off, especially in technology shares. The benchmark for the Tokyo Stock Exchange plunged 2.9 percent Wednesday in a session that had to be shortened by 20 minutes because of a surge in transactions.

The Nikkei 225 index dropped 464.77 points to close at 15,341.18 points, its biggest drop since May 10, 2004.

Share prices extended losses from Tuesday, when the Nikkei fell 2.8 percent, following Japanese newspaper reports that the investigation begun Monday was expanding. The index has fallen nearly 6 percent the last two sessions.

“Individual and foreign investors are selling in a panic,” said Satoru Otsuka, senior economist at Mizuho Research Institute in Tokyo. “The problem is that we have no idea how the Livedoor problem will unfold.”

Investors and the Japanese public alike were stunned when prosecutors marched into the Tokyo headquarters of Livedoor late Monday on suspicion of violation of securities laws by giving false information.

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And by the way.. Warren Buffett is buying Businesswire in a new deal!

And while he is active.. Buffett also issues a warning on the trade deficit! 

The U.S. trade deficit is a bigger threat to the domestic economy than either the federal budget deficit or consumer debt and could lead to “political turmoil,” billionaire investor Warren Buffett warned. 

“Right now, the rest of the world owns $3 trillion more of us than we own of them,” Buffett told business students and faculty Tuesday at the University of Nevada, Reno. “In my view, it will create political turmoil at some point. … Pretty soon, I think there will be a big adjustment,” he said without elaborating.

Buffett, head of Omaha, Neb.-based Berkshire Hathaway Inc., was in Reno for the opening of the company’s R.C. Willey Home Furnishings store.

He spoke the same day Berkshire Hathaway disclosed its purchase of Business Wire, a privately held distributor of press releases, for an undisclosed amount.

San Francisco-based Business Wire will operate as a wholly owned subsidiary of Berkshire Hathaway, whose other holdings include the insurer Geico Corp. as well as stakes in American Express Co., Anheuser-Busch Cos. and The Coca-Cola Co. Business Wire competes with PR Newswire to distribute company regulatory filings and press releases to investors and the news media.

The U.S. trade deficit soared to a record $665.9 billion in 2004, and Buffett said he expects it to top $700 billion this year.

“That’s $2 billion a day. We are like a super rich family that owns a farm the size of Texas. You sell off a little bit of the farm and you don’t see it,” he said.

Fifteen years ago, the U.S. had no trade deficit with China, he said.

“Now it’s $200 billion. If we don’t change the course, the rest of the world could own $15 trillion of us. That’s pretty substantial. That’s equal to the value of all American stock,” Buffett said.

“That’s the big danger. Our national debt does not bother me. Our public debt is not at a crazy level,” he said.

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