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Warren Buffett's Monday Morning CNBC Interview: The Transcript

Here is a (somewhat rough) transcript of Warren Buffett's live interview with Becky Quick on Squawk Box this morning, following this weekend's Berkshire Hathaway Annual Shareholders Meeting.

Becky: Joe, Hi, thank you very much. Wasn't sure if this was going to work or not, but we're live here with Warren Buffett. May we grab you for a few minutes. I know you're on your way out the door. Just wanted to catch up with you to reflect on everything that's happened over the weekend. End of the meeting. What do you think? What was your highlight of the weekend?

Buffett: Well, 31,000 people coming. Losing my voice. Having 31,000 people, maybe more than 31,000 people come and join us here. It's been a lot of fun.

Becky: Your voice does sound hoarse. You did a lot of talking over the weekend?

Buffett: I did a lot of talking, We had a three-hour press conference yesterday. And then we went to dinner and talked a lot there, and talked afterwards.

Becky: About 5-1/2 hours of shareholder questions at the meeting itself.

Buffett: Right, right.

Becky: So here I'll be a total pain and ask you to use your voice a little bit more, if that works out for you. Now, Mr. Buffett, I know a lot of times .. we talked to you last week about the Wrigley-Mars deal, and we got to ask you a lot of questions. Basically, at Squawk Box, we've thrown everything we could at you. We've come up with our best questions and tossed them at you. We had our viewers write in questions and you were gracious enough to answer all of those. I'm wondering if you wouldn't mind playing a new game with me this morning.

Buffett: Whatever you want to play.

Becky: Let's do a little bit of role player here. Since you've already answered questions from everybody else, I was trying to figure out how to do this a little differently. My thought was, well, if I was a world leader I couldn't think o f a better person to ask advice from than the Oracle of Omaha. So, if I'm a world leader and I could get about a minute of your time, I might have a question for you. Alright? So, I'll be the world leader, you be Warren Buffett.

Buffett: OK.

Becky: Deal?

Buffett: Next time I get to be the world leader. (Laughter.)

Becky: Alright, first up, briiing, briiing, hello Mr. Buffett, this is Ben Bernanke. I am the chairman of the Federal Reserve.

Buffett: I've heard of you.

Becky: Oh? Thank you, sir, very much. Do you think I went too far with that last rate cut?

Buffett: Well, I don't think there's much need for more rate cuts. They've played that out, and if you get rates down too low you've got a real problem. So I think I'd quit now.

Becky: You would quit now?

Buffett: Sure.

Becky: That's pretty abrupt. OK, sir, thank you for your time, I appreciate it. (Laughter.) OK, let's try another one. Excuse me, excuse me, my name is Hank Paulson. I'm the Secretary of the Treasury. You know, we just got this great stimulus package together for the United States. Do you think it's enough, or do I need to come up with a second stimulus package and fast?

Buffett: Well, I think there are downside to economic stimulus. I don't think its necessarily going to do an enormous amount of good. In fact, I think most people, when they get it, really should pay down their credit card bills, if they owe money on that. But, instead of dropping $600 from the sky you could drop $6000 from the sky, but it has consequences later on in the inflationary area. So I think you have to be a little bit careful about dropping money on people and the economy.

Becky: So you don't think ..

Buffett: You don't look like Hank. Have you changed your hair?

Becky: Just a little bit. But, you don't think it's a good idea, Mr. Buffett, to send out the checks we just started sending out last week.

Buffett: Well, it's got pluses and minuses. You can obviously stimulate an economy by mailing money to people. And if you want to mail them $6000 instead of $600 you'll get more stimulus. But it can't be a free lunch in terms of monetary policy and the eventual economic consequences. I think you want to be careful using that tool.

Becky: Do you prefer that people really go and spend down their credit card debt? Because what we all had been thinking they would go out and do some spending and that would help the economy. If they just pay down their credit card debt, they're not necessarily doing what we wanted.

Buffett: Well that may be. But I think that anybody that's paying 15 to 18 percent on credit card debt is out of their mind if they don't use the stimulus to pay down the credit card debt. Because they're not going to be earning 15 or 18 percent with money. And to the extent that they're in a hole now because they over-borrowed in the past they should pay down debt. If I owed money at 15 to 18 percent and I got $600 or $6000, I would use it to pay down the debt.

Becky: OK, let's try another one. My name is John McCain, and Mr. Buffett, you are on record saying you'd support either Obama or Hillary Clinton, both of my opponents, and I just have question for you, sir. Is there anything I can do, any economic issue I can get behind, that would actually make you think twice about potentially supporting me.

Buffett: I would say that if you felt the tax burden should be shifted in a significant way to the super-rich and away from the middle class, I would say that would make me reevaluate you.

Becky: So I could eventually gain your support come November?

Buffett: Well,, in the end I vote on issues now. I think it's pretty clear in many major areas what all three candidates would do. And I think nit's unlikely, unless he has a serious change, a lobotomy or something like that (laughs) .. I don't think McCord is going to change his views to be in accord with mine. I admire him a lot. I think he's an absolutely first-class human being, and if the Republicans are going to elect somebody I hope it's John McCain. But he has too many ideas that are different than I do, particular in terms of what I would call social justice.

Becky: OK, let me try one more for you. I am going to ask you, my name is (Microsoft CEO) Steve Ballmer, and I come to you this morning ..

Buffett: You've shrunk. (Laughter.)

Becky: A little, but I come to you this morning because you are known as the negotiator, the man who knows the art of the deal better than anyone else. I'm not asking you about technology, but I've decided to walk away from Yahoo. Was that the right decision, was that a good negotiating tactic?

Buffett: Well, I don't know if it's a negotiating tactic. I think he may have decided he simply had gone as far as he could go. You do have to have some sort of a limit. You can want something badly, but it's not worth any price to the buyer. I don't know that much about Yahoo, so I don't know where his choking point would be, but he evidently hit it. And if you hit your choking point, you quit.

Becky: And you don't come back for more? Do I walk away for good?

Buffett: No, you may come back later on. I mean, he may have some shareholders of Yahoo coming to him in six months, a year from now. Who knows how all that plays out? But you have to decide how much something's worth. I've walked away from deals, and I mean it when I walk away. The seller has occasionally come back. It happened with See's Candy in 1972. They wanted 30 million. We were going to pay 25 million. And we walked. They walked after us, fortunately. (Laughter.)

Becky: OK, so you could be convinced eventually to come back. OK, let's try one more. I'm Jean-Claude Trichet. I'm the head of the ECB. I'm the European central banker. I have been standing pat on interest rates. Am I doing the right thing, or is there a risk that this flue virus that the American economy appears to have picked up will actually come over to Europe?

Buffett: Well, I think it causes problems in the United States, with the currency problems we already have. Interest rates in Europe are significantly higher than the U.S. I don't think he's exactly playing ball, but I think he has a different responsibility in life and may b e much more worried about inflation than Bernanke is. Or Bernanke may feel like he'll be like Scarlett O'Hara and worry about inflation tomorrow, or something. But he has to decide, in terms of his obligations, his obligations are to the European Union and he obviously feels that if he drops rates a whole lot that he's going to pay a price in terms of possibly igniting inflation that he's not willing to pay.

Becky: But is there a chance that I, Jean-Claude Trichet, will wake up tomorrow and find that I'm behind the curve, just like the Fed found itself last year.

Buffett: I'm glad you're asking these questions in English, actually. It's kind of you to do that. (Laughs.)

Becky: Anything for you, Mr. Buffett.

Buffett: Any central banker is going to make a few mistakes. So there's always a chance he's making a mistake. But I'm sure that the facts that he's got, to him, when he weighs them, say to him, I don't want to drop rates way down and if the Americans do, well, they've got their own problems. I've seen inflation before, I know how hard it is once it gets ignited to put it out. But he could be wrong, sure.

Becky: OK, that's probably not very reassuring, but thank you very much for your time Mr. Buffett. OK, new call, briiing, I'm (JPMorgan Chase CEO) Jamie Dimon and Mr. Buffett, you said that two days was not enough time to evaluate the risk of buying Bear Stearns. That's why you didn't do the deal. But now it's been eight weeks since that deal, so do you think I made the right move by stepping in for Bear Stearns.

Buffett: From a social standpoint, I do think he made the right move. The Fed made the right move in getting somebody to do it. I don't think he'll know the answer to that for quite awhile. But I will say this. A very high percentage of Jamie Dimon's moves have been the right moves.

Becky: For now, you say .. when you say socially, what do you mean?

Buffett: I mean that if the Fed hadn't moved in on that Sunday the following week could well have been something like Wall Street has never seen.

Becky: OK, that's the end of my role playing. That's all I came up with. But I do have a couple of other quick questions. You told us a week ago that this recession could be longer and deeper than a lot of people are expecting at this point. Yet when you come to the midwest, there was just a report out Friday that said this nine-state area is in better shape than a lot of other places because of the biofuel situation, because of the price of commodities, because the housing bubble didn't inflate as much as it did in other areas. Are you seeing things here? Do you think things are better here in the midwest than in other parts of the economy.

Buffett: Yeah, it is. We've been hit a lot less harder by the fall of house prices than a place like California or Nevada or Arizona. They never went up remotely as high, so they didn't have as far to come back. And we're relatively prosperous here. Our unemployment rate is less. At our (Nebraska) Furniture Mart Saturday, we did 7-1/4 million dollars worth of business. It was a record, about 10 percent higher than any day we've done in the history of the company. Any retailer will tell you 7-1/4 in one day at a furniture store is a lot of business. People are relatively prosperous here. I would say the recession has not hit in any big way here.

Becky: What else did you find this weekend, just in terms of the sales, because I know you have a different companies that were selling? What other numbers can you tell us about what Berkshire Hathaway shareholders were spending this weekend?

Buffett: They were buying 1-1/2 pairs of boots a minute. They were buying jewelry, every nine seconds we were writing a ticket. Almost all of the places broke the records.

Becky: Was it up to your expectations? Did it exceed your expectations?

Buffett: It exceeded expectations. I don't like to be in the guidance game, so I didn't give out a lot of numbers before, but it exceeded expectations.

Becky: When you look at grains and commodities, do you worry that those prices have reached a bubble and that will be the next bubble we hear the sound of hissing come out of?

Buffett: I don't know if it's a bubble, but they certainly have moved up a lot. Steel is up a huge amount. I think you've got a lot of inflationary pressure, which is not wage pressure yet. When and if it gets to that, then the fun begins. (Laughs).

Becky: I know you have a meeting with your directors later in this morning. What's on the agenda?

Buffett: We'll talk about succession. Not immediate succession, I might add. (Laughs.) But we always talk about that. We talk about the same candidates, their pluses and minuses. The same way with the investment officer. There's not a whole lot .. We'll talk briefly about the Mars-Wrigley deal, but we don't have a lot to talk about. We don't do time-filling activities. We don't go through a lot of ritual. We really talk about the guts of the business and they'll ask me about specific businesses, but they're very well informed. I send out a lot of materials to them all the time. So, we don't need a lot of time in directors meetings.

Becky: Aside from the 31,000, was there any one moment that jumped out at you this weekend, where you thought this has never happened before?

Buffett: Well, when Susan Lucci took over the CEO post, I ended it quickly, but ..

Becky: We should just point out for everybody who didn't know about this already, Susan Lucci, who plays Erica Kane on All My Children came .. and there's always some surprise at the shareholders meeting, and this time around she was the surprise. She took the stage and pretended that she was taking your job.

Buffett: For awhile it was a little too good, the acting was too good. The crowd seemed to like her better than me, so I got out there fast.

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Becky: One last question ... the cover of Barron's over the weekend mentioned that Mr. Sokol will be the heir apparent when it comes to succession. What can you tell us about that? ..

Buffett: I was going to tell you who is going to be the editor of Barron's next, but (laughs) since they broke that story won't give you the story. But they have no, and I think they mentioned it in the article, they have no knowledge of it at all, but they have a lot of fun speculating. And we will see, but I hope not sometime soon.

Current Berkshire price:

CNBC's one-hour behind-the-scenes look at the annual shareholders meeting, The Billionaire Next Door: All Access, premieres tonight, Monday, May 5 at 9pm ET.

Questions? Comments? Email me at buffettwatch@cnbc.com