Warren Buffett has made no secret of his opposition to President George W. Bush's policies and actions during his eight years in the White House.

But Buffett said today that after reading former Treasury Secretary Henry Paulson's new book on the credit crisis, he has a greater appreciation of Mr. Bush's understanding of the crisis and the president's willingness to do what was needed to prevent a complete economic collapse.

Buffett also admiringly recalled Mr. Bush's concise and simple summary of the situation at the height of the crisis: "If money doesn't loosen up, this sucker could go down."

Buffett and Paulson appeared before the Greater Omaha Chamber this afternoon for an informal 50-minute "conversation" that focused on Paulson and the events he writes about in his book, On the Brink: Inside the Race to Stop the Collapse of the Global Financial System.

Video clips of the entire event are available in a separate Warren Buffett Watch post.

Paulson told Buffett that he expected the economic fallout from the crisis would be bad, but didn't expects things to get as bad as they did.   Still, Paulson said, if the government hadn't done anything the damage would have been even more severe.  He also said things could have been worse if the U.S. dollar had collapsed or if China and Russia had sold their holdings of U.S. debt.

Paulson said the U.S. will get back all the money it pumped into the nation's banks, and may even made a profit.  Buffett agreed.

On the controversial question of executive pay, Paulson said Wall Street's compensation systems are "out of whack" and "restraint is very much in order."

Asked by Buffett how he is investing his money now that he isn't a government official with a blind trust, Paulson replied he's not a "great investor" like Buffett, but he's mostly in fixed income investments and cash.  He explained that at his advanced age he's more interested in preserving capital than making more money.

But Paulson said if he was a younger person, he would certainly be a long-term buyer of stocks in solid companies.

And while he thinks the U.S. faces enormous problems, including a "fiscal challenge," he thinks "every other major economy has more challenges than we do."

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