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  • The Giving Pledge

    Reuters: Buffett, Gates ask billionaires to give away wealth

    Investor Warren Buffett and Microsoft founder Bill Gates announced on Wednesday that they are asking hundreds of billionaire Americans to give away at least 50 percent of their wealth to charity.

    Buffett, who made his fortune with insurance and investment company Berkshire Hathaway Inc (BRKa.N) (BRKb.N), Gates and his wife, Melinda, have held a series of dinners with a couple dozen rich Americans in the past year to urge them to make a philanthropic pledge.

    They have named the campaign the Giving Pledge and are asking those who commit to giving away at least half their fortune during their lifetime or after their death to publicly state their intention with a letter explaining their decision.
    Warren Buffett had this to say:

    My luck was accentuated by my living in a market system that sometimes produces distorted results, though overall it serves our country well, Buffett wrote. Ive worked in an economy that rewards someone who saves the lives of others on a battlefield with a medal, rewards a great teacher with thank-you notes from parents, but rewards those who can detect the mispricing of securities with sums reaching into the billions. In short, fates distribution of long straws is wildly capricious. Business Week
    Loosely translated version:

    I made a crapload of money in the Big Casino, Wall Street. Some of the time trading securities, wich are a bit reckless and have little benefit to the US economy overall. But, I did it really well and became the richest man in the world until 2009, where I was the 2nd richest man in the world. I see now that I might have exploited the system and was maybe part of the problem. And, that the people in society that do the most good are often forgotten about, while greedy guys like me are celebrated. The money I made didn't really make me happy, and I'm a bit envious to those who chose to do something profound for the world instead of seeking wealth. I'm really old now, 79, and don't want to be remembered as a really rich guy who didn't care about the rest of humanity, so I think I'll give most of my money away now. Maybe God will see fit to forgive me for being an exploitive capitalist who once said this about the tobacco industry.

    Ill tell you why I like the cigarette business. It costs a penny to make. Sell it for a dollar. Its addictive. And theres fantastic brand loyalty. Source.
    I'm just taking a shot at him and having fun with it of course, I actually like the The Giving Pledge and think it's a good idea. Hopefully more billionaires - wich the US has the most of in the world, some 403 - will think about donating some or all of their wealth to charity. God knows the American people could use a leg up at this point in time, as the future does not look so bright.
    |TG-X| mp40x



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  • #2
    Re: The Giving Pledge

    I'm curious to know where people think these billions are right now. Sitting in a shoe box somewhere? Not too many billions, I'd say. Considering most of them are being used by somebody somewhere right now - giving them to charity isn't going to solve any long-term economic problems. To create jobs there must be capital to work with. For lots of jobs you need lots of capital.

    And what's the definition of "exploitative" capitalist? One who sells more products/services? People desire things like cigarettes and derivatives. Would it be better to tell people you will not provide them what they want?

    I know a number of people look at those who've made tons of money and think they've exploited the system. If they have not gained it dishonestly, I say their wealth is evidence of the service they've already done for humanity.

    sigpic
    "The true genius shudders at incompleteness - and usually prefers silence to saying
    something which is not everything it should be." Edgar Allan Poe

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    • #3
      Re: The Giving Pledge

      What service to mankind is performed by securities traders ?
      Speculators are some of the scummiest people alive today.
      You have to be trusted by the people that you lie to,
      So that when they turn their backs on you,
      You'll get the chance to put the knife in.Pink Floyd "Dogs"

      Comment


      • #4
        Re: The Giving Pledge

        Originally posted by CallousDisregard View Post
        What service to mankind is performed by securities traders ?
        Speculators are some of the scummiest people alive today.
        Theoretically they direct the flow of capital to where it is best used and most demanded. Speculation is necessary and healthy. Some may be scum but Buffet is a counter-example.

        Comment


        • #5
          Re: The Giving Pledge

          "speculation" is generally a term used to denote when a company or person wants to make a big hit quick and are willing to do so on the backs of the stupid.

          Lets say I'm a fund manager for Buffet, and I manage a $1B fund. I find a stock property that has been fairly stable for say 2 years trading @ $5.00/share that has 10 million shares outstanding. I decide to jump in and purchase 1M shares, but just from my demand, the price shoots up to $5.50/share. Other people see my transaction, so they want to jump on board and start offering to purchase the shares @$6.00/share just so they can get in on the action. At $6.00/share, I start unloading my shares for a nice 20% return on investment for the what, week I held the shares? Of course, the price fluctuation of the stock was due to my purchasing the issue, and the further upwards fluctuation was due to my reporting that I purchased the stock and people immediately jumped to the conclusion that "I knew something they didn't" and didn't want to be left behind. Of course, after the artificial demand I created for the stock drops off, it returns to it's initial value of $5.00/share. Now those suckers are out $1.00 due to the "readjustment" of the stocks value, so maybe they just want to get that stock out of their portfolio. I offer to buy up those remaining shares @ $4.50/share now, so they take the hit just to wash their hands of the entire affair. Of course, I'll regain that $ .50/share as the real value (a.k.a. equity value) of the stock is $5.00/share, I will just need to be patient and wait say a year.


          At some point Mr. Buffet comes to my office and tells me I have done a fantastic job on that deal, and tells me I'll be getting a new 60 foot yacht as part of my bonus this year along with 5,000 stock options worth an estimated $250,000 just for my actions on this deal, and if I do more deals like this, I can increase that bonus.

          Was I not just rewarded for what is essentially running a bluff? Welcome to a day on wall street, don't think that doesn't happen every day. Sure, some of the "bluff's" get called and the "bluffer" looses, but this is how they "create wealth" in the "Big Casino". Mp40x, for being a guy who can't spell "which" correctly, calling wall street the big casino is so accurate.

          Comment


          • #6
            Re: The Giving Pledge

            Originally posted by SilentSunshine View Post
            I'm curious to know where people think these billions are right now. Sitting in a shoe box somewhere? Not too many billions, I'd say. Considering most of them are being used by somebody somewhere right now - giving them to charity isn't going to solve any long-term economic problems. To create jobs there must be capital to work with. For lots of jobs you need lots of capital.
            I don't care how much capital you can generate, it will not create many meaningful jobs in the US in it's current economic model. American companies and corporations have moved their manufacturing base and services to other countries. Any new investment into those companies will not create many new good paying jobs here in America. In essence, we have US corporations and bad government trade policy to blame for the loss of jobs and the destruction of the middle class.

            Originally posted by SilentSunshine View Post
            And what's the definition of "exploitative" capitalist? One who sells more products/services? People desire things like cigarettes and derivatives. Would it be better to tell people you will not provide them what they want?
            The average American citizen does not desire derivatives, in fact derivatives do very little to help the US economy, if anything at all. US venture capital investment is where it's at, it drives new technologies, creates American jobs, establishes new companies, and typically comes from cash savings instead of debt. Exotic and risky financial instruments, such as OTC derivaties, do nothing to stimulate the economy and create new jobs. Unfortunately, venture capital makes up only a very small percentage of overall investment in the US.

            Originally posted by SilentSunshine View Post
            I know a number of people look at those who've made tons of money and think they've exploited the system. If they have not gained it dishonestly, I say their wealth is evidence of the service they've already done for humanity.
            Accumulating wealth is not a service to humanity, and worshiping Wall Street bankers is also very unhealthy for society. A perfect example of doing a service for humanity would be Jonas Salk giving away the Polio vaccine so the rest of humanity could benefit from it.
            |TG-X| mp40x



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            Comment


            • #7
              Re: The Giving Pledge

              http://www.rollingstone.com/politics/news/12697/64796
              I can't find the humanity in any of that.
              You have to be trusted by the people that you lie to,
              So that when they turn their backs on you,
              You'll get the chance to put the knife in.Pink Floyd "Dogs"

              Comment


              • #8
                Re: The Giving Pledge

                Originally posted by mp40x View Post
                I don't care how much capital you can generate, it will not create many meaningful jobs in the US ...
                Ugh, unfortunately, that's true. My state has some of the worst taxes for businesses and we hear all the time about another company ready to leave (if not out of the country, at least to another state). I don't think this pledge would concern taxes or regulation very much. But, just for a moment, let's think what would happen if every billionaire willingly gave away everything. There would be a lot of good, right? The first effects would look good. Then we have the secondary, etc. effects to watch for. Much of the "wealth" given away would be consumed. There would be less capital, so the remainder's value would increase. Loans would be on harder terms, naturally, since the demand for them remains basically stable while the supply is diminished. Here or there, the world economy would suffer, while the good is being done.

                The correlation between Wall Street practices and cigarettes is a particularly good one as well, I wanted to mention. I'm certainly not supporting either when I say they're supplying someone's demand. Just because the "average American" may or may not want them, does not mean they should be illegal. Now, when any product encroaches on the health or whatever of a third party, then it's unquestionable that they should be regulated.

                The only way to accumulate wealth other than by plunder is to perform a service or create a product. Therefore, said accumulation is not a service, but the justly proportional other side of the equation. I do you some service, and instead of doing some service for me you give me money - the equivalent of a service I can gain in the future. It's fine and well if I just want to do something for you out of friendship or love... but I will not hold up the person who gives all their life, like a slave, for nothing, as a hero. Similarly, but on a different strain, I don't hold up the men who satisfy wants like cigarettes or securities trading as heroes, for the reason that I don't personally recognize inherent value in those services.

                sigpic
                "The true genius shudders at incompleteness - and usually prefers silence to saying
                something which is not everything it should be." Edgar Allan Poe

                Comment


                • #9
                  Re: The Giving Pledge

                  The correlation between Wall Street practices and cigarettes is a particularly good one as well, I wanted to mention. I'm certainly not supporting either when I say they're supplying someone's demand. Just because the "average American" may or may not want them, does not mean they should be illegal. Now, when any product encroaches on the health or whatever of a third party, then it's unquestionable that they should be regulated.
                  By that logic, all drugs should be legal.
                  Nicotine has no medicinal value, is highly addictive and deadly if overdosed.
                  But some people make huge amounts of money from them so the dichotomy between tobacco and the war on drugs continues unabated.
                  And the tax on tobacco goes up and up....
                  But at least when you start smoking, you have a choice.
                  But if I want to put money away for retirement, I don't really have a choice, I have to play in the big casino.
                  Where the big losers get bailed out with my tax money while my retirement fund disappears.
                  But hey, Warren made out and he is goign to give some away so who am I to complain ?
                  You have to be trusted by the people that you lie to,
                  So that when they turn their backs on you,
                  You'll get the chance to put the knife in.Pink Floyd "Dogs"

                  Comment


                  • #10
                    Re: The Giving Pledge

                    Originally posted by CallousDisregard View Post
                    But at least when you start smoking, you have a choice.
                    But if I want to put money away for retirement, I don't really have a choice, I have to play in the big casino.
                    Where the big losers get bailed out with my tax money while my retirement fund disappears.
                    But hey, Warren made out and he is goign to give some away so who am I to complain ?
                    That's a total myth. People typically invest their retirements in the "big casino" as you call it because, despite all the complaints about evil speculators, your investment there typically does pretty well over the long term. But it's certainly not the only option. There are plenty of alternatives for people who aren't dreaming of getting speculator-like returns themselves.

                    If you want your retirement income to be safe and secure, there are ways to do that. The trick is, lower risk promises lower returns. If you don't want to put your money at risk, you will have to be satisfied with a relatively low interest rate.
                    Last edited by Kerostasis; 06-18-2010, 04:15 PM.

                    Comment


                    • #11
                      Re: The Giving Pledge

                      Maybe I was using too wide of a definition for "speculation". It seems to have a more specific meaning in terms of investing.

                      Originally posted by Morganan View Post
                      Other people see my transaction, so they want to jump on board and start offering to purchase the shares @$6.00/share just so they can get in on the action.
                      Those blinded by greed usually lose. I don't have a lot of sympathy for them.

                      Originally posted by Morganan View Post
                      At some point Mr. Buffet comes to my office and tells me I have done a fantastic job on that deal
                      Your dealings would be contratry to Berkshire Hathaway's stated policies so I can only hope you would be fired for overpaying in the first place.

                      Comment


                      • #12
                        Re: The Giving Pledge

                        Originally posted by Kerostasis View Post
                        That's a total myth. People typically invest their retirements in the "big casino" as you call it because, despite all the complaints about evil speculators, your investment there typically does pretty well over the long term. But it's certainly not the only option. There are plenty of alternatives for people who aren't dreaming of getting speculator-like returns themselves.

                        If you want your retirement income to be safe and secure, there are ways to do that. The trick is, lower risk promises lower returns. If you don't want to put your money at risk, you will have to be satisfied with a relatively low interest rate.
                        So when the market just lose a trillion dollars or whatever, my pension is safe ?
                        That is not what they are reporting now and I think it was Orangae County in CA that went bankrupt because the market tanked and took down their pension funds some years back.
                        I want to understand this.
                        If I have money in some safe, low risk-low return investment and the market drops like it did in '08, I won't lose any money or value ?
                        You have to be trusted by the people that you lie to,
                        So that when they turn their backs on you,
                        You'll get the chance to put the knife in.Pink Floyd "Dogs"

                        Comment


                        • #13
                          Re: The Giving Pledge

                          Originally posted by CallousDisregard View Post
                          So when the market just lose a trillion dollars or whatever, my pension is safe ?That is not what they are reporting now and I think it was Orangae County in CA that went bankrupt because the market tanked and took down their pension funds some years back.
                          I want to understand this.
                          If I have money in some safe, low risk-low return investment and the market drops like it did in '08, I won't lose any money or value ?
                          Correct, if its in a safe low-risk low-return investment, you will not lose your value when the market tanks. You may even gain value as people run from risky investments towards safer ones.

                          Of course, the problem with pension funds is that while they are usually technically supposed to invest in safe, low-return investments, they usually don't actually do that. They usually try to cheat by putting less money in the fund than it actually needs, and then investing that in risky high-return investments to make up for it. So those pension funds often wind up totally screwed when the market drops -- but not because the plan is bad, its because they didn't follow the plan.

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                          • #14
                            Re: The Giving Pledge

                            I think that there is something missing in the conversation about billionaires giving away billions.

                            The typically conversation comes down to tax them till they bleed vs they are creating wealth.

                            Taxing away billionaires wealth is counter productive. But I think having billionaires in the first place shows a flaw in the system.

                            The total amount of capital available shouldn't change. Jacking up taxes would change the amount of capital. But having so few actually having the capital makes it much less effective and creates the casino situation that we have today.
                            Last edited by El_Gringo_Grande; 06-20-2010, 12:46 AM.
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                            • #15
                              Re: The Giving Pledge

                              If you're saying it would be better for more people to be productive, I totally agree.
                              If you're thinking there should be limits on how much one person or corp can produce, I firmly disagree.

                              I would appreciate if anyone holding the second line of reasoning could explain the following: How providing a service or product which consumers willingly pay for is exploitative to them.

                              sigpic
                              "The true genius shudders at incompleteness - and usually prefers silence to saying
                              something which is not everything it should be." Edgar Allan Poe

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