munger says prepare for harder world as buying power slides - bloomberg business14

3/26/2015 Munger Says Prepare for Harder World as Buying Power Slides - Bloomberg Business

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Munger Says Prepare for Harder World asBuying Power Slides

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by Noah Buhayar and Sonali Basak

2:50 PM EDT

March 25, 2015

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Charles Munger, vice chairman of Berkshire Hathaway Inc.

Photographer: Jonathan Alcorn/Bloomberg

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(Bloomberg) -- Charles Munger, who became a billionaire while helping Warren Buffett

build Berkshire Hathaway Inc., predicted its going to get tougher for consumers to

maintain their standard of living in coming decades.

We should all be prepared for adjusting to a world that is harder, Munger, 91, said

Wednesday at an event in Los Angeles, in response to a question about the increase in the

size of the Federal Reserves balance sheet since the 2008 financial crisis. You can count on

the purchasing power of money to go down over time. And you can almost count that youll

have more trouble in the next 50 years than the last.

The cost of living in the U.S. excluding food and fuel rose more than forecast in February,

climbing 1.7 percent from a year earlier. The Feds preferred measure of inflation

expectations - - the five-year, five-year forward break-even rate -- now projects consumer

prices will increase at a 1.91 percent rate starting in 2020. Thats up from 1.75 percent on

Jan. 30.

Munger spoke at the annual meeting for Daily Journal Corp., a Los Angeles-based

newspaper publisher where he serves as chairman. After inflation, investors in common

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newspaper publisher where he serves as chairman. After inflation, investors in common

stocks averaged unbelievably good returns over the last five decades, he said.

Best Times

Somebody my age has lived through the best and easiest period that ever happened in the

history of the world -- the lowest death rates, the highest investment production, biggest

increases in most peoples standards of living, Munger said. If youre unhappy with what

youve had over the last 50 years, you have an unfortunate misappraisal of life.

Recalling an era when people paid 5 cents for a cup of coffee and new automobiles cost

$600, he said the declining value of money in past decades didnt turn out to be as severe as

he had anticipated.

The comments echo remarks that Buffett made last month in his annual letter to Berkshire

shareholders. He pointed out how investors in stocks had far outperformed those who stuck

with currency-related investments like Treasuries over the last 50 years. A similar outcome

is likely to be repeated in the next century, Buffett wrote.

To contact the reporters on this story: Noah Buhayar in Seattle at

[email protected]; Sonali Basak in New York at [email protected]

To contact the editors responsible for this story: Dan Kraut at [email protected] Dan

Reichl, David Scheer

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Germanwings Co-Pilot Sought to Destroy Planein French Crash

by Mark Deen and Arne Delfs

4:24 AM EDT March 26, 2015

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(Bloomberg) -- The co-pilot of the Germanwings flight that crashed in the French Alps

appears to have deliberately flown the aircraft into a mountainside, killing 150 people, after

locking the captain out of the cockpit, French prosecutors said.

Audio files from the last minutes on the flight-deck of the Barcelona-Dusseldorf flight show

the co-pilot took the aircraft into a descent after the captain left and denied him re-entry,

prosecutor Brice Robin said at a press conference in Marseille. The co-pilot could be heard

breathing and remained otherwise silent right until the plane slammed into a slope at full

speed.

The findings suggest that the destruction of the Airbus A320 aircraft, the worst-ever

aviation accident for Deutsche Lufthansa AG and its Germanwings unit, was deliberate

rather than due to a technical fault. The co-pilot was named by Robin as Andreas Lubitz, a

28-year-old German citizen who Lufthansa said had been deemed completely fit to fly

following tests.

The most plausible interpretation is that the co-pilot voluntarily refused to open the door

for the captain and activated the button controlling the planes altitude for a reason we

dont know, Robin said. The action can be interpreted as a desire to destroy the plane, he

added.

Pulverized

The crash on Tuesday had mystified investigators because the plane was flying in normal

daylight conditions and had undergone all required maintenance checks. While the planes

voice recorder was found and provided the audio evidence, a second black-box, which stores

Germanwings Crash Was a `Voluntary Act: Prosecutor



voice recorder was found and provided the audio evidence, a second black-box, which stores

data on the planes performance, has not yet been recovered from the field of debris, Robin

said.

Salvage crews on site have begun recovering bodies from the wreck, which was largely

pulverized because of the speed of an impact that Robin put at 700 kilometers an hour (435

miles an hour). It will be the week after next before all of the bodies are recovered from the

steep terrain, he said.

Lufthansa Chief Executive Officer Carsten Spohr said Lubitz had passed all medical tests

and checks, and had started training in 2008, both in Bremen in northern Germany and in

Phoenix, Arizona, before joining the airline in late 2013. Cockpit personnel undergo

thorough examination, said Spohr, calling the incident a tragic, isolated case.

The co-pilot had interrupted his pilot training for several months, though Spohr said he

couldnt give a reason. Pilots undergo medical tests once a year, and a psychological

examination occurs at the beginning of their career, Spohr said.

Fortified Door

Germanwings said it cannot comment further because the investigation is a matter for the

authorities. Frances BEA air-accident investigator is leading the probe into the tragedy,

which killed 144 passengers and six crew.

Lufthansa, which operated the A320 before it was handed to Germanwings in early 2014,

said the cockpit had a fortified door with video surveillance to prevent unauthorized entry,

a measure that became mandatory after the 9/11 terror attacks. While pilots have a security

code that lets them open the door from the outside, the person in the cockpit can still deny

access.

Some airlines require two people on the flight-deck when one pilot steps out, making it

necessary for cabin crew to stand in, though Lufthansa said theres no uniform rule on this.

Norwegian Air Shuttle ASA said today that it would adopt that rule once the switch has

been approved by local regulators.



been approved by local regulators.

Richard Healing, a former member of the U.S. National Transportation Safety Board, said

the events disclosed today leave some room for alternative interpretation.

Incapacitated

You cant rule out the possibility at this point of the pilot who was remaining in the cockpit

becoming incapacitated simultaneous with when the other pilot walked out, he said. Its

more likely that the pilot may have done something intentionally, but you cant conclude

that until the flight data recorder is recovered.

The recorder should help determine what pilot inputs were made, including whether the

autopilot was switched off and how the altitude selector was programmed, as well as

whether any flight systems failed, said Healing, who now runs R Cubed Consulting LLC in

Washington.

The captain was very experienced and had flown for charter carrier Condor and

Lufthansas main brand for about 10 years before joining Germanwings in May 2014, the

budget airline said. He had logged more than 6,000 flight hours.

Germanwings declined to provide the pilots' personal details, adding that both were trained

to Lufthansa standards.

Lubitz came from Montabaur, about an hour north of Frankfurt, according to the local

mayors office, and had been part of the local aviation club, which said on its website that it

was horrified to learn that a member was among the dead.

To contact the reporters on this story: Mark Deen in Paris at [email protected];

Arne Delfs in Berlin at [email protected]

To contact the editors responsible for this story: Benedikt Kammel at

mailto:[email protected]:[email protected]



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Read More Aviation, Barcelona, Airbus A320, Germany, Arizona, Career,

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