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CNBC TRANSCRIPT: CNBC'S BECKY QUICK SITS DOWN WITH WARREN BUFFETT, BERKSHIRE HATHAWAY CHAIRMAN & CEO, TODAY ON CNBC

FRANCIS: THE ANNUAL CHARITY AUCTION AND LUNCH WITH BILLIONAIRE WARREN BUFFETT IS UNDER WAY RIGHT NOW. YOU HAVE UNTIL SUNDAY TO MAKE YOUR BID ON THE EBAY AUCTION.IT'S CURRENTLY $135,000. LAST YEAR'S WINNER PONIED UP MORE THAN $2 MILLION AND THAT BID PAYS OFF TODAY WHERE THAT WINNER HAS LUNCH WITH WARREN BUFFETT TODAY IN NEW YORK. AHEAD OF THAT, OUR BECKY QUICK IS STANDING BY WITH WARREN BUFFETT RIGHT NOW.

QUICK: THANK YOU. WE'RE HERE AT SMITH AND WOLLENSKY WHERE WARREN BUFFETT IS PAYING OFF LAST YEAR'S WINNER FOR THIS AUCTION. RIGHT NOW, THERE IS ANOTHER AUCTION UNDER WAY, AND THIS IS THE TENTH YEAR IN A ROW HE HAS BEEN DOING THIS. WE WANT TO THANK YOU FOR JOINING US TODAY.

BUFFETT: IT'S A PLEASURE.

QUICK: YOU'VE BEEN DOING THIS FOR TEN YEARS, RAISING MONEY FOR THE GLIDE FOUNDATION.WHY THE GLIDE FOUNDATION?

BUFFETT: I THINK IT'S PROBABLY AS REMARKABLE A SOCIAL ORGANIZATION AS THERE IS IN THE COUNTRY, AND IT'S RUN BY CECIL WILLIAMS, WHO FOR 45 YEARS HAS TAKEN PEOPLE WHO HAVE HIT BOTTOM AND SAID YOU'RE STILL A WORTHWHILE INDIVIDUAL. AND WE'RE GOING TO DO WHAT WE CAN FOR YOU IN TERMS OF HOUSING, MEDICINE, VOCATIONAL TRAINING AND YOU'RE GOING TO BECOME THE KIND OF PERSON THAT YOU CAN BECOME. HE BELIEVES IN PEOPLE, AND HE CARRIES IT OUT EVERY DAY, AND I'VE NEVER FOUND A MORE EFFECTIVE PLACE AT REALLY LIFTING PEOPLE FROM BOTTOM.

QUICK: THIS YEAR'S WINNER OR LAST YEAR'S WINNER IS SHOWING UP TODAY, SOMEONE WHO PAID $2.1 MILLION, A REMARKABLE AMOUNT OF MONEY OUT THERE. LAST YEAR, OBVIOUSLY, THE MARKETS WERE IN A VERY DIFFERENT PLACE THAN THEY ARE THIS YEAR. THAT AUCTION IS UNDER WAY. AND I KNOW THE BIDDING GOES THROUGH SUNDAY. DO YOU THINK SOMEONE CAN BID AS MUCH AS YOU SAW LAST YEAR?

BUFFETT: WELL, IT SURPRISED ME LAST YEAR, BUT THEY HAVE QUALIFIED A NUMBER OF BIDDERS THAT ARE GOOD FOR VERY BIG FIGURES. THEY MAKE SURE OF THAT BEFOREHAND. SO WE'LL SEE WHAT HAPPENS. BUT $2.1 MILLION IS A PRETTY GOOD NUMBER TO SHOOT FOR. I HOPE I DON'T HAVE TO LEAVE A 10% TIP AT THE END OF THE LUNCH.

QUICK: YOU KNOW, YOU -- THE LAST TIME WE SAT DOWN TO TALK WITH YOU WAS ON MAY 4th AND YOU TOLD US YOU THINK WE'RE IN AN ECONOMIC WAR RIGHT NOW. HOW MUCH PROGRESS DO YOU THINK WE'VE MADE IN THAT WAR?

BUFFETT: WELL, IT'S BEEN PRETTY FLAT. NO, I -- I GET FIGURES ON 70-ODD BUSINESSES AND A LOT OF THEM DAILY. EVERYTHING I SEE ABOUT THE ECONOMY IS THAT WE HAVE HAD NO BOUNCE. THE FINANCIAL SYSTEM WAS REALLY WHERE THE CRISIS WAS, YOU KNOW, LAST SEPTEMBER AND OCTOBER. AND THAT'S BEEN SURMOUNTED AND THAT'S ENORMOUSLY IMPORTANT. BUT IN TERMS OF THE ECONOMY COMING BACK, IT TAKES A WHILE. THERE WERE A LOT OF EXCESSES TO BE WRUNG OUT, AND THAT PROCESS IS STILL UNDER WAY. AND IT LOOKS TO ME LIKE IT WILL BE UNDER WAY FOR QUITE A WHILE. IN THE ANNUAL REPORT, I SAID THE ECONOMY WILL BE IN A SHAMBLES THIS YEAR AND PROBABLY WELL BEYOND IT. AND I'M AFRAID THAT'S TRUE.

QUICK: WE HEAR PEOPLE ALL OF THE TIME ON AIR WHO TALK ABOUT THE GREEN CHUTES THAT THEY'RE SEEING. ARE YOU SEEING ANY OF THOSE GREEN CHUTES?

BUFFETT: I LOOKED -- I WASN'T SEEING ANYTHING -- I HAD A CATARACT OPERATION ON MY LEFT EYE ABOUT A MONTH AGO, AND MAYBE NOW I'LL BE ABLE TO SEE GREEN CHUTES. WE'RE NOT SEEING THEM, WHETHER IT'S RETAILING, MANUFACTURING, WHEREVER. WE HAVE A BIG OPERATION, A UTILITY OPERATION. INDUSTRIAL DEMAND IS DOWN LIKE WE'VE NEVER SEEN IT FOR A SIMPLE THING LIKE ELECTRICITY. SO IT HASN'T HAPPENED YET. IT WILL HAPPEN. I WANT TO EMPHASIZE THAT BUT HASN'T HAPPENED YET.

QUICK: EARLIER YOU TOLD US THAT YOU THINK WASHINGTON AND THE OBAMA ADMINISTRATION SHOULD BE PAYING ATTENTION TO JOBS, THAT'S THE NUMBER ONE. JOBS AND THE ECONOMY. IT'S THE NUMBER ONE AND THE NUMBER TWO AND NUMBER THREE JOBS THEY SHOULD BE DOING. HAS PROGRESS BEEN MADE AT ALL ON THAT FRONT?

BUFFET: THEY'RE DOING THINGS, BUT THEY TAKE A WHILE TO HAVE AN EFFECT. THEY'RE DOING THINGS ON A LOT OF FRONTS. BUT, YOU KNOW, YOU CAN'T PRODUCE A BABY IN ONE MONTH BY GETTING NINE WOMEN PREGNANT. IT DOESN'T WORK THAT WAY. SO YOU CAN BE THROWING THINGS AT THE ECONOMY, AND THEY WILL HAVE AN IMPACT. BUT THEY HAVEN'T HAD MUCH IMPACT YET. AND UNEMPLOYMENT WILL GO HIGH, AND IT WILL LAG THE TURN-UP OF THE ECONOMY.

QUICK: BUT HAS WASHINGTON DONE ENOUGH THAT YOU THINK THEY CAN TURN THEIR SIGHTS TO OTHER PROBLEMS THAT EXIST?

BUFFETT: WELL, THEY TURNED THEIR SIGHTS TO OTHER PROBLEMS, BUT THIS PROBLEM IS NOT YET SOLVED, AND IT'S THE MOST IMPORTANT PROBLEM WE HAVE.

QUICK: IT CONTINUES TO BE. YOU DON'T THINK ANY OF THE URGENCY HAS COME AWAY?

BUFFETT: NO, I DON'T THINK THE URGENCY HAS COME AWAY. THE URGENCY HAS MOVED AWAY FROM A TOTAL MELTDOWN OF THE FINANCIAL SECTOR, WHICH WE FACED LAST FALL. I'VE NEVER SEEN ANYTHING LIKE THAT. BUT I WILL GIVE ENORMOUS CREDIT TO THE PEOPLE THERE I MEAN, BERNANKE DID A FABULOUS JOB. WE WERE RIGHT AT THE POINT WHEN PEOPLE LOST FAITH IN MONEY MARKET FUNDS, COMMERCIAL PAPER STOPPED BEING ISSUED, PEOPLE WERE RUNNING WITH THE -- HAVING A PROBLEM MEETING THEIR PAYROLLS, VERY BIG COMPANIES IF THAT HADN'T GOTTEN ADDRESSED QUICKLY. AND I GIVE PEOPLE CREDIT FOR DOING THAT. SO THAT PART, WE HAVE MOVED PAST THAT PARTICULAR PERIOD. WE HAVEN'T GOTTEN THE ECONOMY GOING YET.

QUICK: YOU MENTION THAT YOU THINK BEN BERNANKE DID A GOOD JOB. TODAY IS AN FOMC MEETING DAY, WE'RE GOING TO BE HEARING MORE AT 2:15 TODAY. DO YOU THINK BEN BERNANKE SHOULD BE REAPPOINTED TO A SECOND TERM?

BUFFETT: I DON'T SEE HOW YOU COULD DO BETTER. HE HAS TAKEN DECISIVE ACTION AT A TIME WHEN REALLY DECISIVE ACTION WAS NEEDED. AND EXTRAORDINARY ACTION. THINGS WERE -- WE REALLY HADN'T DONE BEFORE. AND IF HE HADN'T DONE -- AND I GIVE THE BUSH ADMINISTRATION CREDIT ON THIS. HANK PAULSON. THEY DON'T DO EVERYTHING PERFECTLY, NOBODY DOES, AND WHEN YOU'RE GETTING BALLS THROWN AT YOUR HEAD BY THE HOUR, YOU'RE GOING TO MAKE SOME MISTAKES. BUT THEY GOT US THROUGH A PERIOD THAT IF YOU HAD HAD DIFFERENT PEOPLE IN THOSE JOBS, I'M NOT SO SURE WE WOULD HAVE GOTTEN THROUGH.

QUICK: NOW YOU DO HAVE PEOPLE IN THOSE JOBS, LARRY SUMMERS, WHO IS ADVISING THE PRESIDENT, TIM GEITHNER WHO'S THERE. YOU HAVE BEN BERNANKE. WHAT DO YOU THINK OF THE TRICA TODAY?

BUFFETT: I THINK THE PEOPLE YOU NAMED ARE VERY, VERY GOOD. AND I THINK BERNANKE IS VERY MUCH THE KEY. THE FED CAME THROUGH FOR US.

QUICK: YOU KNOW, YOU HAVEN'T COMMENTED SINCE THE OBAMA ADMINISTRATION RULED OUT THESE NEW REGULATORY OVERHAUL PLANS THEY HAVE BEEN LOOKING AT. WHAT DO YOU THINK OVERALL ABOUT IT? THERE IS A CONSUMER PROTECTION AGENCY THAT'S INVOLVED WITH THIS. THERE IS A LOT OF OTHER DIFFERENT ARENAS. BUT IS THIS A STEP IN THE RIGHT DIRECTION?

BUFFETT: WE'LL SEE HOW THE STATUTE READS. BUT BASICALLY, WE GOT WAY OVERLEVERAGED IN THE FINANCIAL ARENA AND THE AMERICAN PUBLIC GOT OVERLEVERAGED, TOO. SO WE DO NEED SOMETHING TO ADDRESS THAT. WE DO NEED SOMETHING TO ADDRESS INSTITUTIONS WHO ARE THE WRONG INCENTIVES ARE IN PLACE SO THAT THEIR PERSONAL INCENTIVES ARE REALLY WHAT OUR NATIONAL INCENTIVES SHOULD BE WRONG SO WE NEED SOMETHING TO MAKE SURE WE DON'T GET INTO THE SITUATION AGAIN THAT WE WERE IN LAST SEPTEMBER. AND LEVERAGE IS A BIG KEY. NOW, THAT'S A HUGE PROBLEM TO ATTACK. AND HOW ITS WRITTEN AND HOW ITS ADMINISTERED IS NOT AN EASY JOB.

QUICK: BUT CAN YOU LAY THAT DOWN AS A RULE? I MEAN, SHOULD IT BE THAT YOU CAN'T BE LEVERAGED MORE THAN 10 TO 1, YOU CAN'T BE LEVERAGED UP MORE THAN 20 TO 1? HOW DO YOU FIGURE IT OUT?

BUFFETT: YOU CAN'T LAY DOWN A RULE LIKE THAT, UNFORTUNATELY, BECAUSE JUST THROUGH DERIVATIVES, YOU CAN HAVE AN ENORMOUS AMOUNT OF LEVERAGE THAT DOESN'T SHOW, AND YOU CAN HAVE AN INTERCONNECTEDNESS THAT BECAUSE OF ONE DOMINO TO HIT THE NEXT. IT IS NOT A SIMPLE PROBLEM. YOU DON'T JUST WRITE DOWN LEVERAGE OF 10 OR 20 TO 1 OR THE SORT. THERE IS ALL KINDS OF DIFFERENT LEVERAGE. YOU CAN LEVERAGE AGAINST -- AGAINST HOME MORTGAGES WITH BIG DOWN PAYMENTS, AND THAT WILL BE RELATIVELY SAFE. YOU CAN LEVERAGE AGAINST SOMEBODY ELSE WHO HAS LEVERAGED, AND YOU'VE GOT TROUBLES GETTING COMPOUNDED. SO IT'S NOT A SIMPLE PROBLEM. IT'S AN IMPORTANT PROBLEM.

QUICK: IS IT ONE THAT CAN BE TACKLED? IS THERE A SOLUTION, A POTENTIAL SOLUTION?

BUFFETT: IT'S NOT EASY. YOU NEED SOMEBODY -- YOU NEED REASONABLE RULES, AND YOU NEED A VERY, VERY GOOD ADMINISTRATOR OR GROUP OF ADMINISTRATORS. IT'S NOT AN EASY PROBLEM. PEOPLE LIKE TO GO TO EXCESSES, AND IS THE INCENTIVES ARE IN A MARKET SYSTEM TO OVERSHOOT. AND IT'S HAPPENED OVER THE YEARS. AMERICA'S GENIUS HAS NOT BEEN IN AVOIDING PROBLEMS, IT'S BEEN IN SURMOUNTING THEM ONCE THEY HAPPEN. AND UNFORTUNATELY WE'VE COME THROUGH AGAIN ON THAT.

QUICK: SO YOU'RE NOT SAYING IT'S AN IMPOSSIBLE TASK, BUT IT DOESN'T SOUND LIKE YOU'RE VERY HOPEFUL THAT WE CAN PREVENT SOMETHING LIKE THIS FROM HAPPENING AGAIN.

BUFFETT: I THINK LET'S START IT OUT WITH THE TULIP MANIA 400 YEARS AGO AND CONTINUED TO THE SOUTH SEA BUBBLE AND ALL OF THOSE SORTS OF THINGS. IT'S IN HUMAN NATURE TO GO TO EXCESS, AND IT'S VERY HARD IN THE COUNTRY OF 300 MILLION PEOPLE AND A $14 TRILLION GDP AND ALL OF THAT, TO SET UP A SET OF RULES THAT WILL PREVENT EXCESSES IN A MARKET SYSTEM. BUT I THINK THERE CAN BE IMPROVEMENTS MADE, AND I THINK THAT'S WHAT WE'RE SHOOTING FOR.

QUICK: ALL RIGHT.WARREN, IF YOU DON'T MIND, WE'RE GOING TO SNEAK IN A QUICK COMMERCIAL BREAK, BUT WE'LL HAVE MORE IN JUST A MOMENT.

BUFFETT: OKAY.

QUICK: WELCOME BACK TO "THE CALL," EVERYONE, WE ARE LIVE AT SMITH AND WOLLENSKY TODAY WITH WARREN BUFFETT, WHO IS HERE TO PAY OFF HIS CHARITY AUCTION BET FROM LAST YEAR ON A LUNCH THAT ONE MAN IS PAYING $2.1 MILLION TO SIT DOWN AND HAVE LUNCH WITH HIM. IT'S A BENEFIT THAT GOES TO THE GLIDE FOUNDATION. MR. BUFFETT, THANK YOU AGAIN FOR YOUR TIME TODAY.

BUFFETT: MY PLEASURE.

QUICK: WHEN WE SAT DOWN LAST YEAR, YOU SAID INFLATION WAS A VERY BIG WORRY FOR YOU. WHAT ARE YOU WORRIED ABOUT TODAY? DEFLATION OR INFLATION?

BUFFETT: I DON'T WORRY ABOUT DEFLATION AT ALL. WE WON'T SEE DEFLATION IN ANY SIGNIFICANT AMOUNT IN YOUR LIFETIME, WHICH IS MORE RELEVANT THAN MY LIFETIME. WE HAVE TAKEN ACTION IN FIGHTING THE ECONOMIC WAR THAT WE FACE. THAT CERTAINLY SEWS THE SEEDS OF SUBSTANTIAL INFLATION DOWN THE ROAD, NOT IN THE NEXT SIX MONTHS OR YEAR OR TWO YEARS. BUT WE HAVE DONE THINGS THAT HAVE RAISED THE PROBABILITY OF HIGH RATES OF INFLATION AT SOME POINT. WE ARE FLOODING THE SYSTEM, WERE MONITIZING DEBT. DOING ALL THE THINGS THAT LEAD TO THAT. THOSE ARE APPROPRIATE THINGS TO DO. I MEAN, OUR ECONOMY WAS LIKE A FELLOW GOING DOWN IN QUICK SAND LAST SEPTEMBER. AND UP TO KIND OF HIS SHOULDERS, AND SOMEBODY TOSSES A ROPE. WELL, IF YOU TIE IT AROUND AND YANK HIM OUT WITH A TRUCK, YOU MAY DISLOCATE A COUPLE SHOULDERS, BUT IT STILL PAYS TO GET HIM OUT. AND WE MAY DISLOCATE THE ECONOMY IN CERTAIN WAYS. THERE IS REALLY NO CHOICE, BUT WE CAN SEE A LOT OF INFLATION.

QUICK: YOU MENTION THAT THE FINANCIAL SYSTEM WAS IN TATTERS, JUST THE LAST YEAR.IT'S TURNED AROUND QUITE A BIT. IN FACT, SOME OF THE BIG BANKS HAVE BEEN PAYING BACK T.A.R.P. MONEY OR HAVE MADE PLANS TO PAY BACK THAT T.A.R.P. MONEY. ONE OF YOUR BIG INVESTMENTS, THOUGH, WELLS FARGO DOES NOT. DOES THAT PUT WELLS FARGO AT A DISADVANTAGE?

BUFFETT: WELL, IT DOESN'T PUT THEM AT A DISADVANTAGE WITH THE PERSON ON THE STREET WHO IS PUTTING IN DEPOSITS. THEY HAVE THE WIDEST SPREADS REALLY IN TERMS OF INTEREST INCOME OR ANYBODY. I'M SURE THEY WOULD LIKE TO GET OUT OF T.A.R.P. THERE HAS BEEN UNANIMITY WITH PEOPLE, THEY WANT TO GET OUT AS FAST AS POSSIBLE. SO IM SURE THEY'D LIKE TO GET OUT AT WELLS, BUT FROM MY STANDPOINT, THE EARNING POWER OF WELLS IS DRAMATIC, WITH OR WITHOUT THE T.A.R.P. MONEY.

QUICK: SO WITH OR WITHOUT IT, IT DOESN'T MATTER TO YOU AS AN INVESTOR?

BUFFETT: IT DOESN'T REALLY, NO. I WISH THEY DIDN'T HAVE THE WARRANTS OUTSTANDING THAT CAME WITH THE T.A.R.P. MONEY. BECAUSE THAT'S A CALL ON THE FUTURE PROFITS OF IT. BUT THE GOVERNMENT SET THE TERMS ON IT. THEY JUST SIGNED A BLANK PIECE OF PAPER.

QUICK: OVER THE LAST FEW DAYS, STEVE JOBS AND APPLE'S BOARD HAS GOTTEN A LOT OF ATTENTION BECAUSE OF THE DISCLOSURE OR LACK OF DISCLOSURE OF THE LIVER TRANSPLANT THAT HE HAD WHILE HE WAS OUT. YOU'RE SOMEONE WHO HAS ALSO GONE CRITICISM ABOUT YOUR SUCCESSION PLANS. WHAT DO YOU THINK ABOUT HOW THE APPLE BOARD WENT ABOUT IT, AND DO YOU THINK THAT CRITICISM THERE HAS BEEN FAIR?

BUFFETT: YEAH, I THINK IT PROBABLY HAS. I THINK THAT IF -- IF I HAVE ANY SERIOUS ILLNESS OR SOMETHING COMING UP OF AN IMPORTANT NATURE, OPERATION OR ANYTHING LIKE THAT, I THINK THE THING TO DO IS JUST TELL THE -- THE BERKSHIRE SHAREHOLDERS ABOUT IT. I WORK FOR THEM, AND SOME PEOPLE MIGHT THINK I'M IMPORTANT TO THE COMPANY AS STEVE JOBS IS IMPORTANT TO APPLE. IT'S A MATERIAL FACT. WHETHER HE IS FACING SERIOUS SURGERY OR NOT IS A MATERIAL FACT. WHETHER I'M FACING SERIOUS SURGERY IS A MATERIAL FACT. SO WHETHER JEFF IMMELT IS. SO I THINK THAT THAT'S IMPORTANT TO GET OUT. AND I DON'T -- YOU KNOW, THEY'RE GOING TO FIND OUT ABOUT IT ANYWAY. AND SO I DON'T SEE A BIG PRIVACY ISSUE OR ANYTHING OF THE SORT.

QUICK: JUST THIS PAST WEEK, THE CLASS B -- CLASS B SHARES OF BERKSHIRE WERE ABLE TO START TRADING OPTIONS ON THEM. WHAT HAPPENED? WHY DID YOU DO THAT? WHAT DOES IT MEAN?

BUFFETT: THEY DIDN'T ASK ME.

QUICK: WHAT DOES IT MEAN FOR THE STOCK, THOUGH?

BUFFETT: WELL, IT JUST MEANS THAT PEOPLE CAN SPECULATE ON IT INSTEAD OF GET DUST IN IT. I'M BASICALLY NOT FOR IT. WE HAVE THE LOWEST TURNOVER IN ANY STOCK IN THE NEW YORK STOCK EXCHANGE BY FAR. WE HAVE MORE REAL OWNERS. PEOPLE BUY OUR STOCK TO OWN A PIECE OF THE BUSINESS. THE PEOPLE THAT BUY PUTS OR CALLS OR SELL PUTS OR CALLS ARE JUST BETTING ON WHAT IT'S GOING TO DO IN THE SHORT TERM. ITS NO PLUS TO US, BUT THERE'S NO MINUS, EITHER. I DON'T THINK THEY'LL BE A LOT OF TRADING IN IT.

QUICK: IT DOESN'T BOTHER YOU?

BUFFETT: NO, IF I HAD MY CHOICE, IT WOULDN'T HAPPEN, BUT IT DOESN'T BOTHER ME.

QUICK: CAP AND TRADE IS SOMETHING WE TALKED ABOUT WHEN WE SPOKE WITH YOU BACK IN MAY, AS WELL. AND YOU RAISED SOME OF THE ISSUES AND CONCERNS YOU HAVE ABOUT CAP AND TRADE. IT DOES LOOK LIKE IT IS STILL ON THE AGENDA FOR RIGHT NOW. SO IS HEALTH CARE. DOES IT CONCERN YOU TO SEE WASHINGTON, CONGRESS AND THE ADMINISTRATION, MOVING ON SOME OF THESE BIG INITIATIVES WHILE YOU'RE STILL CONCERNED ABOUT THE ECONOMY?

BUFFETT: I THINK IF THEY'RE IMPORTANT ISSUES AND THEY GET WELL THOUGHT-OUT SOLUTIONS. IT IS IMPORTANT WE MOVE ON CARBON EMISSIONS AND IMPORTANT WE MOVE ON HEALTH CARE. BUT I DON'T THINK THEY SHOULD BE JAMMED THROUGH IN IT A HURRY. BUT I -- THOSE ARE -- THOSE ARE ISSUES THAT SHOULD BE ADDRESSED BY AMERICA. AND BUT I DO THINK ECONOMY IS NUMBER ONE.

QUICK: YOU SAID YOU DIDN'T LIKE CAP AND TRADE, ESPECIALLY IN THIS ECONOMY, THOUGH, BECAUSE IT PUTS A TAX ON PEOPLE.

BUFFETT: WELL, I THINK IF YOU GET INTO THE WAY IT WAS WRITTEN, IT'S A HUGE TAX. AND THERE IS NO SENSE CALLING IT ANYTHING ELSE.I MEAN, IT IS A TAX. SO -- AND IT'S A FAIRLY REGRESSIVE TAX. I MEAN, IF WE BUY -- IF WE BUY PERMITS, ESSENTIALLY, AT OUR UTILITIES, THAT GOES RIGHT INTO THE BILLS OF THE UTILITY CUSTOMERS, AND AN AWFUL LOT OF PEOPLE IN IOWA AND OREGON AND WASHINGTON AND UTAH AND PLACES WHERE WE ARE, THERE ARE VERY POOR PEOPLE THAT ARE GOING TO PAY A LOT MORE MONEY FOR ELECTRICITY. SO I THINK THAT CAN BE IMPROVED.

QUICK: FINALLY, LAST QUESTION. YOU HAVE WRITTEN ABOUT THE ECONOMY AND WHERE YOU SEE THE STOCK MARKET IN THE PAST. YOU WROTE AN OP-ED FOR THE "NEW YORK TIMES". HOW ARE YOUR THOUGHTS ON WHERE THE STOCK MARKET STANDS RIGHT NOW?

BUFFETT: I THINK IT'S ATTRACTIVE OVER THE NEXT TEN YEARS COMPARED TO ALTERNATIVES. IF YOUR ALTERNATIVE IS BUYING SOME FIXED-DOLLAR INVESTMENT, I THINK INFLATION WILL EAT AWAY AT THAT. I THINK IT'S ALMOST CERTAIN THAT OVER A TEN-YEAR PERIOD THAT THE EQUITIES WILL DO BETTER THAN FIXED DOLLAR INVESTMENTS. SO IF PEOPLE ARE KEEPING THEIR MONEY IN HAD CASH AND GETTING VIRTUALLY NOTHING FOR IT, THEY MAY FEEL COMFORTABLE. BUT IT WILL BE EXPENSIVE FOR THEM OVER TIME.

QUICK: ALL RIGHT, WARREN, WE WOULD LIKE TO THANK YOU VERY MUCH FOR YOUR TIME TODAY. WE APPRECIATE IT.

BUFFETT: THANK YOU.




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