WARREN BUFFETT: "It's FALLEN OFF A CLIFF."
Warren Buffett to CNBC: Economy Has
"Fallen Off a Cliff"
Posted By: Tim Tompkins, Lex Rex The Invisible Hand.
Topics:Warren Buffett
Companies:American Express Co |
Warren Buffett tells CNBC's Becky Quick the U.S.
economy has "fallen off a cliff."
During a three-hour appearance on Squawk Box this
morning (Monday), Buffett said economic developments
have been very "close to the worst case"
that he had imagined, although conditions would be far
worse if the Federal Reserve hadn't stepped
in last September.
Other highlights:
The economy "can't turn around on a dime" and a
turnaround "won't happen fast."
Predicts unemployment rate in U.S. will go well above
its current levels before the downturn ends.
But, five years from now, the economy will be running
fine. The strength of the American system will pull it
through, just as it has many times in the past.
Democrats and Republicans should work together and
not try to take advantage of the economic situation
to achieve partisan goals.Inflation has the "potential" to be
worse than the 1970s.
Most banks are in "pretty good shape" and can
"earn their way out"
of the current problems given the low cost of funds.
Banks, however, "need to get back to banking."
Extremely important that the government make clear
depositors won't lose their money if banks fail.
Obama needs to make a
"clear statement" in support of the banking system.
AXP 10.64
0.38 (+3.7%)
]stock, but that doesn't


mean it is not a "hell of a buy" at $10 a share.
a few months later, but stands by the basic argument
that you'll do better over a ten-year period with stocks
that you will with Treasuries.
He said in the article he wasn't calling the bottom of the stock market,
and he still isn't.
Buffett says derivatives are not "evil" and to be avoided
at all costs, but they are "dangerous" and should
be used very carefully.
He still expects to make money on the long-term "put option"
equity derivative contracts Berkshire has written.
Housing market could work through, or "sop up," its
excess supply in as little as three years if new construction
is reduced to a level below natural population growth.
The U.S. economy was not a "house of cards" over the
past ten years, but mistakes were made when
it came to borrowing money.
Mark-to-market accounting should be retained,
but regulators shouldn't use it so much to require insitutions
to increase their reserves.
"Probably the uptick rule" is a good idea.
Mistake to "demonize" corporate executives for using
private jets. Having a jet has helped Berkshire make deals
in the past.
Praises Ben Bernanke's leadership as Federal Reserve Chairman.
The Oracle Speaks . . . is Obama listening, or
do we really care?
-Posted by Lex Rex
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