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LIVE BLOG ARCHIVE: Three Hours with Warren Buffett Live from Omaha

Friday, 22 Aug 2008 | 6:02 AM ET

THIS IS A LIVE BLOG ARCHIVE OF WARREN BUFFETT'S APPEARANCES ON CNBC'S SQUAWK BOX THIS MORNING. BUFFETT SPOKE WITH BECKY QUICK LIVE AT THE HOLLAND PERFORMING ARTS CENTER IN OMAHA, NEBRASKA.

ALL TIMES ARE EASTERN.

EXECUTIVE SUMMARY, TRANSCRIPT/VIDEO

6:01 AM: Becky Quick introduces Warren Buffett and plays a clip from the documentary I.O.U.S.A, which premiered last night in hundreds of movie theaters around the country. Buffett says he doesn't think the problem of the national debt is as bad as portrayed in the film, but he admires the people who made the film and thinks its good that people are thinking about the situation.

6:03 AM: Buffett says "things have rippled out" in the U.S. economy, as one might expect.

6:06 AM: Asked about Fannie Mae and Freddie Mac , Buffett says due to implicit government backing, the two GSEs could borrow without the usual checks and balances. Then needed to keep earnings growing to keep stock market happy and turned to accounting to do it. Agrees they are "too big to fail." Buffett says they would have been gone a long time ago if the government hadn't been behind them. He thinks Freddie and Fannie will survive but shareholders could "lose a lot of money."

6:05 AM: Still thinks the economic problems will be deeper than longer than expected. He expects things will be better five years from now, but not five months from now. "Troubles feed on themselves."

6:10 AM: Buffett says problems of GSEs illustrate how difficult it is for government to regulate companies where management is trying to deceive or simply doesn't know what's going on.

Dave Grogan

6:12 AM: Buffett says that while Fannie and Freddie have looked for cash from the private sector, it won't be enough to save them. Government will have to step in. His comments raise the possibility that he and Berkshire had been approached to provide capital to Freddie and Fannie, although he does not address that directly.

6:13 AM: Buffett says derivatives aren't evil, but can be misused. "They are dangerous things." Says he knows every derivatives contract Berkshire Hathaway has bought.

6:17 AM: After returning from a commercial break, Becky brings in Carl Quintanilla, who is co-anchoring from the Summer Olympics in Beijing. Becky asks about Coca-Cola's sponsorship of the Olympics. (Berkshire has a big stake in Coca-Cola: .) Buffett says Olympic sponsorship is good for a company like Coca-Cola that wants to be associated in people's minds with happiness, competition, and nations coming together. Buffett says he's been enjoying watching the Olympics on television, but he hasn't gone to China himself to see any of them.

6:22 AM: Buffett reveals that Berkshire made a half-billion dollar bid on a Chinese stock that wasn't accepted. He wouldn't say what stock or what industry. He did say that under the right circumstances he could have a lot of money in China, but noted that there are government restrictions on foreign ownership that must be overcome.

6:34 AM: Becky introduces Dave Walker, CEO of the Pete Peterson Foundation, whose campaign to raise awareness about the nation's national debt forms the basis of the film I.O.U.S.A. While Buffett doesn't agree with Walker on just how bad the problem is, he says he does admire Walker's work and thinks it's always better to try to get politicians to think longer-term.

6:44 AM: Becky and Warren have moved from the stage of the auditorium to a couple of the seats in the audience. Becky plays taped questions from some of the people who attended the movie premiere last night. The first question is about the American character and debt. Buffett says there's nothing wrong with having some debt, it just becomes a problem when it gets too bid. "Berkshire can expect to have debt forever" and shareholders wouldn't want it to operate debt-free. You worry when debt begins to spiral higher, because it then becomes more difficult to keep borrowing money from around the world.

6:46 AM: Buffett says "investing in yourself" is always the best thing.

6:48 AM: Is Fannie Mae going under? Buffett says in a sense they already have because they wouldn't survive without government backing. "They priced risk wrong."

6:53 AM: Buffett talks about the trip he made this week with Bill Gates and some others to see the oil sands in northeastern Alberta, Canada. Buffett says he and Bill wanted to see what it looks like rather than just read about it. He confirms the trip was arranged by Omaha-based Kiewit Corp, which is doing some construction work connected with oil sands development. Asked if he's interested in investing in oil sands, he said no, but that the information he learned about the industry has been filed away and could become useful at some point in the future.

6:56 AM: Buffett says he does not have a "buy order" right now for any oil sand companies.

7:03 AM: Becky asks again about the economy and he repeats his view that the negative ripples will continue to spread for awhile. He sees no "early end" to the problems although they will end eventually.

7:05 AM: Buffett confirms that he sold 60 percent of his Anheuser-Busch shares at prices around $61-$62 before the company agreed to a friendly merger with InBev at a sweetened price of $70. Buffett says at the time he wasn't sure the deal would go through given Anheuser's strong resistance to InBev's original bid. "In retrospect, I was wrong," but he says that often happens.

7:07 AM: Becky notes that in Berkshire's latest SEC filing, the company keeps information about its holdings of Conoco-Phillips secret. She can't get Buffett to say anything about whether he's been buying or selling the stock recently.

7:10 AM: Asked about the oil market, Buffett says demand and supply for crude has changed significantly in the past five years. He thinks Boone Picken's energy plan is "on the right track" and warns that the world can not keep increasing its demand for oil.

7:15 AM: Dave Walker returns and is joined by Pete Peterson, whose foundation provided financial backing for the I.O.U.S.A film and AARP CEO Bill Novelli. They all participated in last night's live panel discussion after the premiere of I.O.U.S.A. Walker says the cost of health care is the biggest problem contributing to the nation's bleak financial future. Buffett says he believes the economy will continue to grow and "unleash human potential" so he isn't as worried about the future as Walker and Peterson are. "The pie will grow." Still, he says, you always need to be thinking about the future. He fears large current account deficits could be dangerous politically years down the road, even if they don't stop the economy from growing.

7:22 AM: Peterson says his foundation is looking at new media, including websites like Facebook, to try to get young people energized about doing something about continued deficits.

7:38 AM: After an interview from Beijing with a GE executive, Squawk returns to Becky and Buffett in Omaha. She asks what grade he would give to the Federal Reserve. He says he admires anyone who takes on a very difficult job. He might not always agree with Fed Chairman Ben Bernanke but he admires that Bernanke is taking tough problems with no obvious answers.

7:40 AM: Buffett says there's a "reasonable chance" that Fannie and Freddie's equity will be wiped out. They keep existing because they're backed by the government, and the government should continue to support them, expect for the equity portion. He notes that Berkshire had been a big holder of the GSEs before selling the entire stake around 2000 and 2001.

7:42 AM: Buffett says he has no bets against the U.S. dollar right now and no direct currency plays. he also notes that stocks are generally more attractive now than they were a year ago.

7:45 AM: Real test for a politician is whether they will support something their constituents oppose. He says both sides in the campaign are not addressing some issues because it would cost them votes.

7:53 AM: Buffett: The Fed "has real problems on inflation." Some Berkshire businesses are being squeezed on prices. For example, carpet manufacturing involves a lot of oil. The price of making carpets keeps going up, but it's hard to pass those costs on to consumers due to weak spending. Wholesale prices will "have to" show up in consumer prices. Once inflation is "ignited" it gets difficult to bring it under control.

7:55 AM: Buffett reveals that on September 9 at Boston's Fenway Park, he will be throwing out the first pitch with former General Electric CEO Jack Welch as his catcher. He jokes that whatever pitch Welch calls for, even if it is the pitch that bounces several times before it reaches the plate, he "will throw that pitch."

BARGAINS IN THE STOCK MARKET?

8:01 AM: Are there bargains in the stock market? Buffett says yes, there are companies that are better today than they were a year ago selling for lower prices. When he gets calls from someone who has just lost billion of dollars and wants to be replenished, he doesn't get that excited. He points out that when someone tries to sell something to you, like an investment, it probably isn't worth buying. The best ideas come from your own ideas and digging.

Dave Grogan

8:06 AM: Would Buffett buy additional shares in the financials he already owns like American Express and Wells Fargo if prices come down? Is he buying shares now? Buffett replies that he has indeed been buying shares in one of those two names lately, but won't say which one. He points out that both companies were both started by the same people.

8:10 AM: Buffett says he was late getting into railroad stocks, like Burlington Northern . He can't believe he didn't realize how cheap the stocks were ten years ago.

8:15 AM: Buffett says he didn't give any money to the John Edwards campaign, but if he did he might be asking for his money back. Buffett muses that there should be a class-action suit brought by contributors who want their money back because Edwards was soliciting funds while lying about an extra-marital affair that would prevent him from ever becoming President.

8:17 AM: Buffett repeats his belief that a windfall profits tax on oil doesn't make any sense, despite the fact that his favored candidate, Barack Obama, has expressed support for such a tax. He notes that no one is calling for a tax on other commodities that have gone up in price like soybeans. The oil companies are an easy target.

8:38 AM: Buffett says it's possible there could be another financial firm implosion along the lines of Bear Stearns, but it would be "inappropriate" to comment on any specific companies right now because it could undermine confidence. He notes that while it is hard to find the sources, rumor-mongers should be punished.

8:44 AM: Buffett predicts housing market recovery will take some time, probably years. "A lot of blame to go around." The market won't really come back until you get to a normal inventory of unsold homes.

8:46 AM: Buffett: No interest right now in buying any homebuilder stocks. They still have plenty of problems.

8:51 AM: Buffett says he would be surprised he Berkshire doesn't "do something" in China in the next few years. Any investment there would probably be an extension of his existing businesses. He says the U.S. will do well, but the Chinese will do better because they're starting from a lower base and have really learned how to unleash the potential of their people.

8:53 AM: Buffett says he worries about "what's important and what's knowable."

8:59 AM: Becky asks who Buffett would like to see as Barack Obama's vice-presidential pick. His reply: Senator Sam Nunn, although he has no idea who Obama will actually choose.

8:59 AM: The three hours with Buffett live from Omaha are over.

Current Berkshire stock prices:

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Class B:

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

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