WHEN: Today, Tuesday, March 31st
WHERE: CNBC's "Power Lunch"
Following is the unofficial transcript of a CNBC interview with Berkshire Hathaway Chairman & CEO Warren Buffett and Berkshire Hathaway Automotive Chairman Larry Van Tuyl today, Tuesday, March 31st, on CNBC's "Power Lunch" with Becky Quick. Video from the interview is available on CNBC.com.
All references must be sourced to CNBC.
BECKY QUICK: GENTLEMEN, THANK YOU FOR JOINING US HERE TODAY. IT IS GREAT TO SEE YOU HERE TODAY.
WARREN BUFFETT: THANK YOU.
LARRY VAN TUYL: THANK YOU.
QUICK: WE HAVE A LOT OF PEOPLE WHO ARE WAITING TO HEAR FROM YOU HERE AT THE NADA. THERE ARE PROBABLY ABOUT 700 PEOPLE OR SO WHO ARE HERE AND WARREN, IT JUST RAISES THE QUESTION. THIS WAS A HUGE MOVE FOR YOU TO GO IN WITH THE VAN TUYL AUTO GROUP. 78 DEALERSHIPS, 240,000 VEHICLES SOLD A YEAR AND ABOUT 8 BILLION DOLLARS IN REVENUE BACK IN 2013. BUT A LOT OF PEOPLE ARE WONDERING, ARE YOU LOOKING TO EXPAND THAT POOL? ARE YOU GOING TO BE EXPANDING IN TERMS OF THE NUMBER OF AUTO DEALERSHIPS YOU OWN?
BUFFETT: VERY MUCH SO. IN FACT I THINK THE 78 IS WHAT? 81 NOW?
VAN TUYL: YES.
BUFFETT: YEAH AND WE HAVE HEARD FROM A LOT OF DEALERS, WE WILL HEAR FROM MORE I'M SURE, AND I'D BE VERY SURPRISED IF FIVE YEARS FROM NOW WE AREN'T A WHOLE LOT BIGGER.
QUICK: YOU KNOW, LARRY, THIS IS A COMPANY THAT YOU AND YOUR FATHER BUILT OVER 60 YEARS. VAN TUYL IS A NAME THAT IS WELL KNOWN IN THE INDUSTRY, BUT BERKSHIRE HATHAWAY IS ALSO A PRETTY GOOD BRAND. AND I JUST WONDER, ARE YOU GOING TO TAKE THAT BRAND AND USE IT NATIONWIDE, LIKE WE HAVE SEEN AUTONATION DO?
VAN TUYL: WELL, YES. CORRECTLY. YEAH. IT IS A GREAT NAME, A GREAT REPUTATION. WE WANT TO MAKE SURE THAT WE KEEP IT THAT WAY. SO WE WILL DO IT CORRECTLY AND EXPAND WITH IT.
QUICK: ARE YOU ALREADY ON THE PROWL? ARE YOU ALREADY LOOKING AT OTHER TARGETS?
VAN TUYL: OH YEAH. THE MINUTE THAT WE MET THE PHONES STARTED RINGING. SO, YEAH.
QUICK: SO DO YOU HAVE KIND OF A METHOD TO YOUR MADNESS? ARE THERE CERTAIN DEALERSHIPS YOU ARE LOOKING FOR? ARE THERE CERTAIN GEOGRAPHIC AREAS? ARE THERE CERTAIN BRANDS – CAR BRANDS THAT YOU ARE INTERESTED IN? OR IS THIS KIND OF JUST DEPENDING ON WHO YOU RUN INTO AND WHAT THE PRICE IS?
VAN TUYL: WELL, IT IS IN THE U.S. PRIMARILY. BUT WE WILL LOOK THROUGH – WITH VOLUME. WE LIKE VOLUME DEALERSHIPS. SO YOU KNOW, IT NEEDS TO BE REASONABLY PRICED, BUT A GOOD BUSINESS AND SOMEBODY THAT WANTS TO PUT IT IN GOOD HANDS. AND WE THAT KNOW WE ARE GOOD HANDS TO PUT IT INTO AND WE WILL PAY A FAIR PRICE. AND WE ARE INTERESTED IN THE REAL ESTATE AS WELL AS THE DEALERSHIP AND WE WILL TAKE GOOD CARE OF THEIR PEOPLE AND WE THINK THERE IS A LOT OF OPPORTUNITY TO DO THAT.
QUICK: WARREN, I KNOW THAT YOU HAVE SPENT A LOT OF TIME WITH SEVERAL OF THE BIG CAR COMPANIES, THE CEOS. PEOPLE LIKE MARK FIELDS FROM FORD, PEOPLE LIKE MARY BARRA FROM GM. AND I JUST WONDER WHAT THEIR REACTION HAS BEEN TO YOU BUYING THE VAN TUYL GROUP.
BUFFETT: WELL, THEY APPROVED OF THE TRANSFER, SO. BOTH OF THE ONES YOU MENTIONED SAID WELCOME TO THE CAR BUSINESS AND I THINK THEY MEANT IT. AND WE LOOK FORWARD TO DOING A LOT OF BUSINESS WITH FORD AND A LOT OF BUSINESS WITH GM AND A LOT OF BUSINESS WITH SOME OTHER PEOPLE.
QUICK: WHAT KIND OF IMPEDIMENTS ARE THERE TO GETTING BIG IN THIS INDUSTRY?
BUFFETT: WELL, THE MANUFACTURER HAS TO APPROVE EVERY TRANSFER. SO THERE ARE SOME MANUFACTURERS THAT HAVE AN ABSOLUTE NUMBER THAT THEY DON'T WANT ANY DEALER TO GO ABOVE. SO, THEY ARE GOING TO SEE HOW WE PERFORM AND THEY ARE QUITE INTERESTED IN HAVING THE GOOD DEALERS EXPAND THEIR OPERATION BECAUSE THERE IS A BIG DIFFERENCE BETWEEN A GOOD DEALER AND A SO-SO DEALER IN TERMS OF ANY GIVEN MARKET. SO THEY WILL LOOK AT PERFORMANCE MORE THAN ANYTHING ELSE.
QUICK: HOW DO YOU ALL RATE IN TERMS OF YOUR SATISFACTION LEVELS WITH SOME OF THESE DEALERS?
VAN TUYL: VERY GOOD. WE HAVE NEVER BEEN TURNED DOWN FOR A DEAL. EVER. BY THE MANUFACTURERS.
QUICK: IS THAT UNCOMMON?
VAN TUYL: YOU KNOW, I DON'T KNOW. BUT I THINK THAT SPEAKS WELL FOR US. HOWEVER, IT ALSO SAYS WE'VE GOT TO KEEP MOVING, WE'VE GOT TO KEEP GROWING, WE'VE GOT TO KEEP DOING THE RIGHT THING. I PERSONALLY THINK THAT BERKSHIRE HATHAWAY JUST MOVES THE BAR AND SO WE WANT TO CONTINUE TO DO THAT AND WE THINK THAT WE CAN.
BUFFETT: LARRY CAN TELL YOU MORE ABOUT THIS, BUT THERE IS SUCH A THING AS SOMETHING CALLED OPEN POINTS. AND TO SOME EXTENT, THEY REFLECT MANUFACTURERS' VIEW OF THE JOB THAT A DEALER IS DOING. IF THEY GIVE YOU OPEN POINTS, THEY ARE PROBABLY HAPPY WITH HOW YOU ARE PERFORMING, AND I THINK LARRY HAS GOT A GOOD RECORD OF THAT.
QUICK: IT IS KIND OF LIKE THE MICHELIN STARS FOR RESTAURANTS?
VAN TUYL: IT IS, YEAH. YES.
QUICK: LARRY LET ME ASK YOU ABOUT SOME OF THE BIG NEWS ISSUES THAT ARE HITTING YOUR INDUSTRY RIGHT NOW. FIRST OF ALL, LOWER OIL PRICES AND IN TURN LOWER GASOLINE PRICES AT THE PUMP. HOW HAS THAT CHANGED AMERICAN BEHAVIOR WHEN IT COMES TO BUYING CARS?
VAN TUYL: WELL IT IS GREAT. IT GIVES THEM MORE ROOM TO – ON A CAR PAYMENT. IT GIVES THEM THE ABILITY TO GO BUY A BIGGER VEHICLE IF THEY WANT TO. AND A LOT OF AMERICANS LIKE TRUCKS AND BIG SUVs. SO THAT HAS BEEN VERY, VERY HELPFUL.
QUICK: IS IT AN INSTANTANEOUS TURN AS GAS PRICES DROP AT THE PUMP?
VAN TUYL: IT IS INSTANTANEOUS ON SOME MODELS. YEAH. YOU SEE A FULL SIZE SUVs, TRUCKS, BIGGER POWER PLANTS ABSOLUTELY PICK UP QUICKLY.
QUICK: WOW. WE KNOW THAT CONSUMERS HAVEN'T NECESSARILY BEEN SPENDING ALL THAT THEY HAVE SAVED AT THE PUMP. IT HAS BEEN AN ISSUE FOR RETAIL SALES AND IT HAS KIND OF CONFOUNDED SOME – ALONG THE WAY. BUT HAVE YOU SEEN IT, AT THE DEALERSHIPS, PEOPLE KIND OF PLOWING IT RIGHT BACK INTO BIGGER AND NEWER CARS?
VAN TUYL: WE HAVE AND I THINK THAT IS BECAUSE WE'VE GOT SO MANY NEW PRODUCTS, SO MUCH NEW TECHNOLOGY THAT'S VERY SMART. THERE ARE A LOT OF OLDER CARS ON THE ROAD WITH HIGHER MILEAGES SO THAT IT ONLY MAKES ECONOMIC SENSE TO BE ABLE TO MAKE A MOVE TO A NEW VEHICLE. AND FINANCING IS AT AN ALL-TIME LOW. SO, I THINK THOSE ARE THE FACTORS THAT CONTINUE TO CONTRIBUTE TO OUR SALES.
QUICK:THERE HAD BEEN SOME REAL CONCERNS THOUGH WHEN IT COMES TO THE QUALITY OF AUTO LOANS THAT ARE OUT THERE. PEOPLE ARE WORRIED THAT WE ARE GETTING BACK TO THE KIND OF LOOSE CREDIT STANDARDS THAT WE SAW BEFORE THE BUBBLE BURST IN THE HOUSING MARKET. AND WE HAD THE GREAT RECESSION. WHAT IS HAPPENING RIGHT NOW FROM YOUR PERSPECTIVE WHEN IT COMES TO AUTO LOANS?
VAN TUYL: I DON'T SEE IT YET. THAT IS ALWAYS A CONCERN – IS THAT GOING TO START UP AGAIN. BUT I DON'T SEE IT YET. I THINK THEY ARE ALL STILL BEING VERY CAUTIOUS ABOUT WHAT THEY BUY, WHAT KIND OF CARS THAT THEY ALLOW THE CONSUMERS TO GO INTO – THE LENDERS, I'M TALKING ABOUT. THE KIND OF DOWN PAYMENTS AND ET CETERA THEY ARE LOOKING FOR. I THINK IT IS STILL PRETTY MUCH IN CHECK. SO WE ARE CONCERNED ABOUT THAT HAPPENING, SO HOPEFULLY WE WILL KEEP THOSE CONCERNS AND NOT HAVE THAT BEHAVIOR.
QUICK: JUST IN TERMS OF THE CREDIT STANDARDS THAT YOU HAVE AT YOUR OWN DEALERSHIPS, HAVE THEY LOOSENED? WE KNOW THAT THERE IS A PENDULUM SWING, THAT IF THINGS GOT A LITTLE TOO TIGHT FOR AWHILE, IT'S TOO HARD TO GET A LOAN.
VAN TUYL: NO. AND THE DEALERSHIPS THAT WE MANAGE WE DON'T DO MUCH SECONDARY – WHAT THEY CALL SECONDARY BUSINESS. WE JUST DON'T DO MUCH OF IT. SO WE ARE NOT SEEING ANY CHANGE WITH THE PRIMARY LENDERS. THE WELLS FARGOs, THE CHASE BANKS, WE AREN'T SEEING MUCH CHANGE IN HOW THEY LOOK AT CREDIT SCORES AND QUALITY OF PAPER.
QUICK: THIS IS A QUESTION FOR BOTH OF YOU. WE KNOW THAT TESLA HAS COME ON STRONG. THIS IS AN AUTOMOBILE COMPANY THAT PLANS ON DIRECT SALES TO CONSUMERS. DO YOU EXPECT THAT SORT OF MODEL TO PICK UP STEAM AND WHAT DOES THAT MEAN FOR YOUR BUSINESS?
BUFFETT: I WOULD DOUBT IF IT PICKS UP MUCH STEAM. I MEAN, WHAT TESLA DOES WITH IT, WE WILL FIND OUT, BUT I DO NOT SEE THE DISTRIBUTION SYSTEM CHANGING IN ANY MAJOR WAY. ONE THING YOU MENTIONED EARLIER, MILES DRIVEN HAVE GONE UP QUITE SUBSTANTIALLY IN THE LAST COUPLE OF MONTHS, WHICH MAY BE GOOD FOR HIS BUSINESS, BAD FOR OUR INSURANCE BUSINESS. HOWEVER SO, I CAN NEVER FIGURE OUT WHETHER THESE THINGS ARE GOOD OR BAD AS THEY HAPPEN.
QUICK: YOU THINK THAT IS A DIRECT RELATION TO THE LOWER GAS PRICES?
BUFFETT: I WOULD THINK SO, YEAH.
QUICK: YEAH, STRAIGHT THROUGH. WELL GENTLEMEN, I WANT TO THANK YOU BOTH FOR BEING HERE. LARRY, THANK YOU AND I WILL BE WITH YOU IN JUST A MOMENT ON STAGE. WARREN, IF YOU DON'T MIND STICKING AROUND, WE WILL HAVE MORE WITH YOU IN JUST A MOMENT WHEN WE COME BACK.
BUFFETT: FINE.
VAN TUYL: GREAT.
QUICK: SO FOLKS STICK AROUND. WE WILL HAVE MORE FROM WARREN BUFFETT RIGHT HERE ON "POWER LUNCH" WHEN WE RETURN.
QUICK: WELCOME BACK EVERYBODY AGAIN WE ARE LIVE WITH WARREN BUFFETT IN NYC TODAY TALKING TO HIM ABOUT A LOT OF DIFFERENT ISSUES AND WARREN I WANT TO THANK YOU FOR BEING HERE. THIS IS YOUR FIRST ON-CAMERA INTERVIEW SINCE THE HEINZ KRAFT MERGER ANNOUNCEMENT. WE GOT THE CHANCE TO TALK WITH YOU ABOUT THIS ON THE PHONE SOME LAST WEEK BUT WITH A LITTLE MORE TIME TO KIND OF DIGEST THINGS AND THE ONE THING THAT PEOPLE ARE TAKING AWAY IS THAT THIS IS A MASSIVE PLATFORM FOR YOU TO DO ALL KINDS OF OTHER ROLL UPS OF OTHER COMPANIES GO AFTER OTHER FOOD COMPANIES. IS THAT THE CLEAR INTENTION THAT YOU GUYS HAVE WITH THIS?
BUFFETT: WELL CERTAINLY WE WOULD HOPE THAT IT WOULD NOT BE THE LAST MAJOR TRANSACTION BUT WE WILL ONLY DO TRANSACTIONS THAT ARE FRIENDLY SO IT REALLY DEPENDS ON WHETHER THERE ARE WILLING SELLERS OF SOMETHING THAT WE WOULD LIKE TO BUY AT A PRICE WE WOULD LIKE TO BUY IT. BUT THERE IS NO FINISH LINE.
QUICK: HAVING SAID THAT ARE YOU TARGETING ANYTHING YET? HAVE YOU AND 3G TALKED ABOUT OTHER POTENTIAL TARGETS?
BUFFETT: NO WE HAVEN'T AND WE MAY TALK ABOUT DIFFERENT PEOPLE'S BUSINESSES BUT IT WOULD PROBABLY BE A QUESTION OF SOMEBODY COMING TO US.
QUICK: WE TALKED A LITTLE BIT ABOUT PRIVATE EQUITY LAST WEEK JUST THE IDEA THAT YOU HAVE COME DOWN VERY TOUGH ON PRIVATE EQUITY IN YOUR SHARE HOLDERS LETTER THIS YEAR BUT ALSO IN THE PAST YOU OFTEN REMARKED THAT PRIVATE EQUITY IS NOT A GOOD THING. NOW YOU MADE THE DISTINCTION LAST WEEK WHEN WE TALKED TO YOU THAT 3G IS VERY DIFFERENT FROM OTHER PRVATE EQUITY PLACES BECAUSE THEY DON'T LOAD IT UP WITH DEBT AND PLAN ON SELLING IT TO SOMEONE AND WALKING AWAYBUT THAT'S NOT THE ONLY RUB THAT PEOPLE HAVE WHEN IT COMES TO PRIVATE EQUITY. ANOTHER IS JOB LOSSES THAT COME ALONG WITH THAT. PRIVATE EQUITY IN GENERAL KNOWN AS REALLY RUNNING A TIGHT SHIP AND OFTEN THAT MEANS JOB LOSSES. THAT HAS DEFINITELY BEEN THE CASE WITH 3G AND HEINZ. THERE HAVE BEEN THOUSANDS OF JOBS LOST. WHAT DO YOU SAY TO CRITICS THAT SAY THIS IS NOT GREAT FOR AMERICA?
BUFFETT: WELL I WOULD SAY THAT IT CERTAINLY A PART OF CAPITALISM THAT A FEW HAVE HAD EXCESS EMPLOYEES OR EXCESS COSTS OF ANY KIND THAT YOU DON'T PERPETUATE THOSE. I MEAN YOU TALK ABOUT THE AUTOMOTIVE INDUSTRY I MEAN THEY ARE TRYING TO TAKE COST OUT OF THE CARS AT THE SAME TIME THEY ARE TRYING TO MAKE THEM BETTER BUT HAVING EXCESS COST IS NOT A RECIPE FOR SUCCESS IN ANY BUSINESS UNLESS YOU HAVE A MONOPOLY. AND YOU CERTAINLY DON'T HAVE IT IN FOOD. AND THE OTHER THING ABOUT 3G IS THAT THEY BUY TO KEEP, THEY ARE BUYING TO BUILD BASICALLY. THEY BUILT BURGER KING THEY BUILT ANHEISER BUSH IT STARTED WITH A SMALL BREWERY IN BRAZIL AND BUILT IT TO THE LARGEST BREWING OPERATION IN THE WORLD SO THEY ARE ALL ABOUT BUILDING BUSINESSES BUT THEY ARE ALSO ABOUT BUILDING EFFICIENT BUSINESSES. UNLESS YOUR PROFITABILITY IS DECENT YOU ARE NOT GOING ANYTHING PROBABLY.
QUICK: WARREN I WOULD LIKE TO TALK ABOUT NEWS OF THE DAY IF YOU DON'T MIND. I KNOW THAT SEVERAL YEARS ABOUT YOU WROTE A CHECK FOR $50 MILLION TO THE NUCLEAR THREAT INITIATIVE THAT YOU HAVE BEEN VERY CONCERNED ABOUT WEAPONS OF MASS DESTRUCTION FOR DECADES SO I JUST WONDER WHAT YOU THINK ABOUT THESE TALKS WITH IRAN RIGHT NOW?
BUFFETT: WELL I HAVE BEEN CONCERNED SINCE AUGUST OF 1945 WHEN THEY DELIVERED A SPECIAL NEWSPAPER THE WASHINGTON POST ANNOUNCING THEY ARE ISSUING A BOMB. I MEAN EINSTEIN SAID FOUR DAYS LATER THIS CHANGES EVERYTHING IN THE WORLD EXCEPT HOW MEN THINK AND THERE'S NO QUESTION LIVING IN A NUCLEAR WORLD IS DANGEROUS FOR 7 BILLION PEOPLE AND CERTAINLY LIVING IN A WORLD WHERE IRAN HAS A NUCLEAR WEAPON GETS A WHOLE LOT MORE DANGEROUS. I DON'T KNOW THE DETAILS OF THE AGREEMENT I DON'T KNOW THE OPTIONS OTHERWISE BUT I DO KNOW THAT IT IS VERY IMPORTANT FOR THE WORLD THAT IRAN DOES NOT HAVE A NUCLEAR WEAPON OR THE ABILITY TO DEVELOP ONE IN A VERY SHORT PERIOD.
QUICK: WE ARE GETTING DOWN TO THE WIRE THOUGH TODAY IS THE DEADLINE, THE EXTENDED DEADLINE, THAT WE ARE FACING WITH THESE TALKS AND LATEST THAT WE HAD HEARD AT NBC THIS MORNING IS THAT THERE WERE 3 ISSUES THAT WERE KIND OF STICKING POINTS. THE FIRST IS THAT IRAN WANTS THE SANCTIONS LIFTED IMMEDIATELY, THE SECOND IS THAT THEY ARE NOT VERY WILLING TO GIVE US MUCH OVERSIGHT WHEN IT COMES TO RESEARCH AND DEVELOPMENT ON THEIR NUCLEAR ACTIONS IN THE FUTURE. AND THE THIRD IS THAT THEY ARE NOT WILLING TO EXPORT THE URANIUM THAT THEY HAVE ALREADY ENRICHED.
BUFFETT: HIGHLY ENRICHED, YEAH.
QUICK: YOU SET UP – PART OF THE 50 MILLION DOLLARS WAS TO GO TO SET UP A BANK WHERE PEOPLE COULD OR COUNTRIES COULD PUT THIS ENRICHED URANIUM. IF THAT IS THE SITUATION, IF THOSE ARE THE CONDITIONS, DOES THAT SOUND LIKE A GOOD DEAL FOR US?
BUFFETT: WELL, USUALLY DEALS GET MADE AT THE LAST MINUTE SO WHO KNOWS WHO CAVES ON WHICH POINTS. LIFTING THE SANCTIONS WOULD NOT BE A PROBLEM IF YOU'VE GOT ASSURANCES ON THE OTHER. I MEAN, THE WHOLE IDEA IS THAT YOU WOULD LIKE TO LIFT THE SANCTIONS BECAUSE YOU WOULD LIKE TO GET ASSURANCES THAT IRAN WILL NOT EITHER HAVE A BOMB OR BE VERY CLOSE TO DEVELOPING ONE. THE IDEA FOR THE FUEL BANK WAS THAT IT TOOK AWAY THE EXCUSE THAT A COUNTRY LIKE IRAN MIGHT HAVE IF THEY SAID THEY WERE DEVELOPING IT FOR PEACEFUL PURPOSES BUT THEY WANTED TO STOCKPILE A LOT OF URANIUM THEMSELVES. IN EFFECT YOU WOULD HAVE A FEDERAL RESERVE BANK TO GO TO OTHERWISE THE COUNTRIES SAY WELL MAYBE WE CAN'T GET IT FOR OUR POWER PLANTS THEREFORE WE HAVE TO HAVE A LOT OF IT AROUND. WE WILL SEE WHAT HAPPENS. ALMOST ALL DEALS DO GET MADE AT THE LAST MINUTE THAT'S WHEN PEOPLE GIVE UP ON POSITIONS AND THEY DON'T WANT TO GIVE UP EARLY. BUT IT WOULD NOT BOTHER ME TO GIVE UP THE SANCTIONS IF WE REALLY WERE SURE THAT IRAN WAS NOT GOING TO HAVE THE BOMB OR HAVE THE ABILITY TO GET A BOMB VERY SOON BUT THE WORLD WITH IRAN HAVING A NUCLEAR WEAPON IS A LOT MORE DANGEROUS WORLD THAN HAS EXISTED IN THE PAST.
QUICK: YOUR VICE CHAIRMAN OF BERKSHIRE HATHAWAY CHARLIE MUNGER HAS BEEN MAKING SOME COMMENTS RECENTLY. I THINK LAST WEEK HE MADE SOME COMMENTS THAT GOT PICKED UP IN THE MEDIA WHERE HE TALKED ABOUT WHAT HAS BEEN HAPPENING IN GREECE. AND HE SAID HIS GREEK NOTION THAT YOU CAN VOTE YOURSELF RICH HIS WORDS EXACTLY AND I KNOW CHARLIE SOMETIMES MINCES HIS WORDS. HE SAID THAT THIS IS AN IDIOTIC IDEA. WHAT DO YOU THINK ABOUT WHAT IS HAPPENING WITH THE EURO.
BUFFETT: WELL I'VE THOUGHT THAT THE EURO HAD STRUCTURAL PROBLEMS RIGHT FROM THE MOMENT IT WAS PUT IN WHICH DOES NOT MEAN IT WILL NECESSARILY FAIL I MEAN YOU CAN ADAPT TO THOSE STRUCTURAL PROBLEMS. MAYBE SOME COUNTRIES WON'T ADAPT AND THEY WON'T BE IN IT. IT IS NOT ORDAINED THAT THE EURO HAS TO HAVE EXACTLY THE MEMBERS IT HAS TODAY BUT IT IS ORDAINED THAT OVER TIME THE COUNTRIES IN THE EURO ZONE HAVE TO HAVE SOMEWHAT COMPATIBLE LABOR LAWS, FISCAL DEFICITS, GENERAL MANAGEMENT OF THEIR ECONOMY THAT DON'T RESULT IN OUTLIERS THAT REALLY AREN'T PLAYING THE GAME THE WAY THE RULES ARE SUPPOSED TO BE AND WE MAY FIND OUT VERY SOON ABOUT GREECE. THIS COULD BE A GOOD THING I MEAN IF IT SHOWS IF IT CAUSES THE MEMBERS OF THE EURO ZONE TO PUT REAL TEETH IN VARIOUS ITEMS THEY HAVE THEY HAD AN ITEM IN THERE ORIGINALLY ABOUT FISCAL DEFICITS WERE ALLOWED AND THEN THEY LET IT GO BY WHEN FRANCE AND GERMANY I THINK BOTH BROKE IT. SO THE EURO IS NOT DEAD AND IT MAY NEVER BE DEAD BUT IT DOES HAVE TO WORK IN GREATER HARMINIZATION OF FINANCIAL MATTERS IN ITS CONSTITUENT COUNTRIES CAUSE IT CAN'T LIVE WITH PEOPLE GOING IN DRAMATICALLY DIFFERENT DIRECTIONS. THE GERMANS ARE NOT GOING TO FUND THE GREEKS FOREVER.
QUICK: WHEN YOU SAY THAT THIS COULD BE A GOOD THING ARE YOU TALKING ABOUT THE IDEA THAT THE GREEKS POTENTIALLY FALL OUT?
BUFFETT: WELL IT COULD BE A GOOD IDEA SEVERAL WAYS IF EVERYBODY LEARNS THAT THE RULES MEAN SOMETHING AND THAT IF THEY COME TO A GENERAL AGREEMENT ABOUT FISCAL POLICY AMONG MEMBERS OR SOMETHING OF THE SORT THAT THEY MEAN BUSINESS THAT COULD BE A GOOD THING BECAUSE THE RAP ON THEM IS THAT THEY DIDN'T MEAN BUSINESS WHEN THEY DID IT EARLIER OR IF IT TURNS OUT THAT THE GREEKS LEAVE THAT MAY NOT BE A BAD THING FOR THE EURO.
QUICK: DO YOU HAVE A BET ABOUT WHERE YOU THINK THINGS ARE MOST LIKELY TO HEAD?
BUFFETT: I DON'T HAVE A DIME ON IT. I HAVE NO IDEA. MAYBE CHARLIE DOES BUT I DON'T.
QUICK: HAVE YOU BEEN SURPRISED BY THE RAPID APPRECIATION OF THE DOLLAR VERSUS THE EURO OVER THE LAST COUPLE OF QUARTERS?
BUFFETT: IT HAS BEEN REALLY INTERESTING WHAT HAS HAPPENED THERE. BUT WHEN YOU START GETTING TO NEGATIVE INTEREST RATE SOMETHING VERY INTERESTING HAPPENS. WE HAVE ABOUT $5 BILLION OR SO IN EUROS IN AN INSURANCE COMPANY THAT HAS TO BE INVESTED IN FIXED INCOME OBLIGATIONS SO IF WE PUT IT OUT TODAY WE PUT IT OUT SHORT TERM IN HIGH-GRADE OBLIGATIONS WE PAY THE PEOPLE THAT BORROW FROM US WE ACTUALLY PAY THEM 12-15 MILLION EUROS A YEAR JUST FOR THE PRIVELEDGE OF LENDING IT TO THEM SO THAT'S KIND OF CRAZY. AND IN EFFECT WE DON'T WANT PEOPLE TO PAY THEIR BILLS BECAUSE IF SOMEBODY OWES US SOME MONEY IF THEY PAY TO US WE PUT IT OUT ON A MINUS RATE. IT IS MUCH BETTER IF THEY DON'T PAY US. SO IF YOU WORKED FOR A GERMAN CABLE SYSTEM YOU SHOULD LIVE ON YOUR SAVINGS AND AS LONG AS THE RECEIVABLE IS GOOD FROM YOUR CABLE SYSTEM YOU ARE BETTER OFF HAVING A RECEIVABLE PAYING NO INTEREST THAN ACTUALLY HAVING THEM PAY YOU. IT IS PRETTY UNUSUAL.
QUICK: THAT IS A LITTLE WHACKY.
BUFFETT: IT IS A LITTLE WHACKY BUT I CAN TELL YOU RIGHT NOW IF I PUT THE EUROS UNDER MY MATTRESS I WOULD BE MAYBE 12 OR 13 MILLION EUROS BETTER OFF AT THE END OF THE YEAR THAN I AM IF I LEND IT TO SOMEBODY.
QUICK: WOW. WARREN CAN I ALSO ASK YOU ABOUT SOMETHING THAT HAS CAUSED A HUGE UPROAR OVER THE LAST WEEK. IN INDIANA THE RELIGIOUS FREEDOM LAW HAS SPARKED QUITE A BACKLASH FROM BUSINESS LEADERS. WHAT DO YOU THINK ABOUT IT?
BUFFETT: WELL I HAVEN'T READ THE LAW BUT IF IT IN ANY WAY RESULTS IN DISCRIMINATION AGAINST GAYS AND LESBIANS I WOULD BE 100% OPPOSED.
QUICK: IT DOESN'T SEEM LIKE IT MAKES DISCRIMINATION EXPLICITLY LEGAL BUT IT DOES SEEM LIKE THERE IS SOMETHING THERE WHERE IT COULD BE USED AS A DEFENSE IN A COURT OF LAW IF A BUSINESS WERE TO DISCRIMINATE AGAINST IT.
BUFFETT: WELL IF IT IS DONE WITH A WINK I AM AGAINST IT. I MEAN THAT DAY HAS PASSED AND LIKE I SAID I DON'T KNOW THE STATUTE AND I DON'T KNOW HOW IT WOULD BE INTERPRETED OR ANYTHING BUT IF THAT'S A POSSIBILITY I WOULD SAY THEY BETTER GET RID OF IT.
QUICK: DOES BERKSHIRE HAVE OPERATIONS IN INDIANA?
BUFFETT: OH YEAH WE HAVE FOUR HOME COMPANIES IN INDIANA.
QUICK: AND IS THAT SOMETHING WHERE YOU WOULD BE JOINING UP WITH THE RANKS OF OTHER CEOS WHO HAVE SAID THEY WOULDN'T DO BUSINESS THERE OR ARE YOU GOING TO JUST LET THIS PLAY OUT?
BUFFETT: WELL I AM GLAD TO SPEAK OUT ON MY OWN FEELINGS BUT I DO NOT TELL THE MANAGERS OF OUR COMPANIES WHAT TO DO THERE OR ANY OTHER PLACE.
QUICK: BEN BERNANKE STARTED BLOGGING AND TWEETING I BELIEVE. HE JUST STARTED BLOGGING AND I JUST WONDER WHAT YOU THOUGHT ABOUT THE IDEA OF A FORMER FEDERAL RESERVE CHAIRMAN BLOGGING?
BUFFETT: LIKE A FORMER PRESIDENT OR SOMETHING I DON'T THINK IT IS GOOD TO COMMENT ON YOUR SUCCESSORS ACTIONS BUT I AM NOT SURE HE IS DOING THAT. BUT IN FACT I WOULD BET AGAINST THE FACT THAT BERNANKE IN ANY WAY WOULD BE COMMENTING ON WHAT YELLEN IS DOING AND I ADMIRE GEORGE W BUSH VERY MUCH FOR THE WAY HE HAS HANDLED POST PRESIDENCY PERIOD. SO I THINK BERNANKE WILL BE THE SAME WAY. MAYBE HE WILL BE COMMENTING ON WHAT MOVIES HE LIKES OR SOMETHING OF THE SORT.
QUICK: WELL ONE THING HE DID DO IS HE PUT UP A LITTLE BIT OF A DEFENSE AGAINST THE IDEA THAT CRITICS OF HIS FEDERAL RESERVE HAS SAID THAT HE REALLY HURT THE SAVERS ALONG THE WAY. THAT ANYBODY WHO IS A SAVER HAS GOTTEN PUNISHED. HIS POINT IS THEY WOULD HAVE BEEN HURT MUCH WORSE IF THE FED DIDN'T DO WHAT IT DID TO STEP IN.
BUFFETT: WELL IN ECONOMICS YOU CAN NEVER DO ONE THING I MEAN IT IS JUST LIKE PHYSICS. IF YOU DO CERTAIN THINGS THAT HE WAS DOING IN HIS VIEW TO SAVE THE ECONOMY AND I AGREE WITH HIM IT HURTS SOME OTHER PEOPLE. IT HURT FORD YOU CAN ARGUE WHEN HE SAVED CHRYSLER AND GENERAL MOTORS. MAYBE IT DIDN'T BECAUSE FORD MIGHT HAVE BEEN NEXT BUT YOU CAN'T DO ONE THING. HE HAD A HUGE RESPONSIBILITY TO OVERALL FOR THE ECONOMY AND I THINK HE IS AN AMERICAN HERO IN TERMS OF HOW HE CARRIED OUT THAT JOB BUT THERE IS NO QUESTION THAT LOW INTEREST RATES JUST KILL PEOPLE WHO ARE LIVING ON A FIXED INCOME AND HAD BEEN COUNTING ON THAT INCOME TO TAKE CARE OF THEM.
About CNBC:
With CNBC in the U.S., CNBC in Asia Pacific, CNBC in Europe, Middle East and Africa, CNBC World and CNBC HD , CNBC is the recognized world leader in business news and provides real-time financial market coverage and business information to approximately 371 million homes worldwide, including more than 100 million households in the United States and Canada. CNBC also provides daily business updates to 400 million households across China. The network's 15 live hours a day of business programming in North America (weekdays from 4:00 a.m. - 7:00 p.m. ET) is produced at CNBC's global headquarters in Englewood Cliffs, N.J., and includes reports from CNBC News bureaus worldwide. CNBC at night features a mix of new reality programming, CNBC's highly successful series produced exclusively for CNBC and a number of distinctive in-house documentaries.
CNBC also has a vast portfolio of digital products which deliver real-time financial market news and information across a variety of platforms. These include CNBC.com, the online destination for global business; CNBC PRO, the premium, integrated desktop/mobile service that provides real-time global market data and live access to CNBC global programming; and a suite of CNBC Mobile products including the CNBC Real-Time iPhone and iPad Apps.
Members of the media can receive more information about CNBC and its programming on the NBC Universal Media Village Web site at http://www.nbcumv.com/mediavillage/networks/cnbc/.