Warren Buffett says the credit crunch has eased in the last month, but business has "really slowed down" as fearful U.S. consumers cut back on spending.
"They're bad, they're bad. The credit situation is getting a little better now. Things have loosened up from a month ago in the corporate debt market. But the rate of business descent is at a pretty alarming pace. I mean, there is no question things have really slowed down. People's buying habits have changed. Fear has taken over and fear is a tough thing to fight."
Buffett says the recession won't be short, but he's not predicting how long it will last. He repeats his confidence in the long-term ability of the American economy to recover and his optimism about the stock market. "We bought stocks today. If you tell me the economy is going to be terrible for 12 months, pick a number, and then if I find something that is attractive today, I am going to buy it today."
- When asked if Berkshire Hathaway might buy back shares of its depressed stock, Buffett says, "I'm not opposed to buying back stock." In general, "I think if your stock is undervalued, significantly undervalued, management should look at that as an alternative to every other activity." But he declined to name a buyback price for Berkshire. "If we ever get to the point where we're contemplated doing it, I would make a public announcement."
- The nation can't stand by and "do nothing" to stimulate the economy, even though there is the potential for "significant" inflationary consequences and much larger budget deficits. "The trade-off basically is that you risk setting in motion forces that will be very hard to stop in terms of inflation down the road and you are creating an imbalance between revenues and expenses in the government that is a lot easier to create than it will be to correct later on. But those are problems wirth taking on, but you don't get a free lunch."
- On those who trusted accused Ponzi-schemer Bernard Madoff: "Here is a guy who had a good reputation for 30 years or something, and the trust of a lot of people around him. So it’s very easy to draw assurances from the fact that if fifty other people that are prominent and intelligent trust the guy, that maybe you should trust him too. But I wouldn’t put my trust in a single individual like that. I would put my trust in a very good business."
Portions of the interview will be featured tonight (Thursday) as Nightly Business Report celebrates its 30th anniversary. On many PBS stations, including WNET in New York, the program airs at 6:30p. The PBS website has a handy tool for determining the airtime in your area.
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