AN INFLATIONARY DEPRESSION...OUCH!!!!!

From MarketWatch:

SAN FRANCISCO (MarketWatch) -- Berkshire Hathaway Chairman Warren Buffett told CNBC Wednesday that he has trouble seeing so-called green shoots of economic recovery in the U.S. The risk of a collapse in the financial system has past, but "we haven't got the economy moving again," he explained. When asked whether Ben Bernanke should be re-appointed as Federal Reserve Chairman, Buffett said "I don't see how you could do better." He also said the stock market is attractive versus other types of investments over a long-term period such as 10 years. Fixed-dollar investments will be eaten away by inflation over the long term, Buffett added. "We could see a lot of inflation," Buffett warned.

The data today supports Mr. Buffet's perspective about NO green shoots:

NEW YORK (MarketWatch) -- Supervalu Inc.said Wednesday that earnings for the first quarter would be substantially below "First Call consensus earnings for the quarter." Analysts polled by FactSet Research estimated, on average, earnings of 65 cents a share for the grocer. Chief Executive Craig Herkert stated, "Consumers have become more value focused and cautious in their spending which has pressured sales and margins greater than anticipated. We currently estimate our identical store sales will be approximately negative 3%."

Supervalu is a national grocer and groceries are the last spend a consumer cuts. Sales tend to be more resilient due to tens of billions in food stamps the government hands out each year.

It is clear that the strain on the consumer is getting much more severe. Credit card delinquencies are increasing to historically high levels. We are now seeing Health Care and Government start to ramp up layoffs and pay cuts making the economic prognosis very negative at the current time.

The city of Sacramento has cut off talks with the fire union - and as many as 68 firefighters will lose their jobs next week as a result.

http://www.sacbee.com/topstories/story/1971509.html

One city......68 Firefighters!

Hospitals are starting to cut staff in material numbers in addition to hundreds of thousands of teachers and professors whose careers are in jeopardy due to lack of funding.


Prepare for lots of downward revisions as the summer progresses...like the following:

(MarketWatch) -- Monsanto Co. said Wednesday its third-quarter profit slipped 14% on fewer sales of Roundup herbicide as low-cost competition eroded its market share, leading to a reorganization of the company and the dismissal of about 900 employees.

NO GREEN SHOOTS AND INFLATION???? THIS COULD BE DEVASTATING!!!! BUT WHAT DOES MR. BUFFETT KNOW;)