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Munger Says Prepare for Harder World as Buying Power Slides - Bloomberg Business

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Munger Says Prepare for Harder World as

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by Noah Buhayar and Sonali Basak

2:50 PM EDT
March 25, 2015

f t h

Charles Munger, vice chairman of Berkshire Hathaway Inc.

Photographer: Jonathan Alcorn/Bloomberg

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Munger Says Prepare for Harder World as Buying Power Slides - Bloomberg Business

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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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Munger Says Prepare for Harder World as Buying Power Slides - Bloomberg Business

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

nbuhayar@bloomberg.net; Sonali Basak in New York at sbasak7@bloomberg.net

To contact the editors responsible for this story: Dan Kraut at dkraut2@bloomberg.net Dan
Reichl, David Scheer

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Germanwings Co-Pilot Sought to Destroy Plane

in French Crash
Don't Miss Out

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by Mark Deen and Arne Delfs

4:24 AM EDT
March 26, 2015

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Munger Says Prepare for Harder World as Buying Power Slides - Bloomberg Business

Germanwings Crash Was a `Voluntary Act: Prosecutor

(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
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Prepare for Harder World as Buying Power Slides - Bloomberg Business

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

3/26/2015

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.

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Munger Says Prepare for Harder World as Buying Power Slides - Bloomberg Business

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 markdeen@bloomberg.net;

Arne Delfs in Berlin at adelfs@bloomberg.net

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

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Munger Says Prepare for Harder World as Buying Power Slides - Bloomberg Business

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

bkammel@bloomberg.net Christopher Jasper

Read More

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

National Transportation Safety Board, Washington, Frankfurt

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