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Last Updated: Sunday, 6 March, 2005, 12:14 GMT
Buffett warns on US trade deficit
Warren Buffett
Warren Buffett is the world's second-richest man
Billionaire US investor Warren Buffett has warned about the extent of the US trade deficit.

Mr Buffett made the comments in his widely-read annual letter to shareholders of his Berkshire Hathaway holding company.

He warned that the US trade deficit, which totalled $672bn (484bn) last year, meant a knock-on over-reliance upon foreign investment into the US.

Mr Buffett said this foreign investment could become too dominant.

"Other countries and their citizens now own a net of about $3,000bn of the US," he said.


Using an analogy from the 1930s, Mr Buffett said this meant the US could be heading towards a "sharecropper's society", meaning that a great many Americans could have to pay a large proportion of their future incomes to absent, and in this case foreign, landlords.

"But that's precisely where our trade policies, supported by Republicans and Democrats alike, are taking us," said Mr Buffett.

The billionaire also used his letter to attack large shareholders who lose sight of corporate governance issues.

"The moves made by institutions have been less than awe-inspiring," he said.

"Usually, they've focused on minutiae and ignored the three questions that truly count.

"First, does the company have the right chief executive? Second, is he/she over-reaching in terms of compensation? Third, are proposed acquisitions more likely to create or destroy per-share value?"

Mr Buffett also criticised his current performance at Berkshire, describing it as "lacklustre", saying he hadn't made enough fresh investments this year.

However he did add that at present there were very few decent investment opportunities available.

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