The crisis in the euro zone has exposed the flaws of the 17-member currency union, and its leaders will need to take urgent action if they want the euro to survive, veteran investor Warren Buffett told CNBC on Monday.
“The system as presently designed has revealed a major flaw. And that flaw won’t be corrected just by words. Europe will either have to come closer together or there will have to be some other rearrangement because this system is not working,” Buffett said in an interview.
Asked whether the union would survive this crisis, Buffett said: “That’s in doubt now.”
Buffett, chairman and chief executive of conglomerate Berkshire Hathaway said he did not see many parallels between the crisis in the euro zone and concerns over debt in the United States, adding that the euro system has a major flaw.
“17 countries in the world gave up the right to issue bonds in their own currency. That is 100 degrees away from being able to issue them in your own currency like the United States,” he said. “The situation there is fundamentally different.”
The debt crisis has pushed sovereign debt yields higher in Europe but Buffett said he wanted to steer clear of debt in the region.
European stocks on the other hand were attractive, he said.
“When I left Omaha I left an order to buy one European stock which we will undoubtedly be buying today and we’ll probably be buying it tomorrow and the next day and next week and next month,” Buffett said.
“I can think of a dozen European stocks that are quite attractive. Whether they’re more attractive than something else I can find in the United States depends on the prices on any given day or given week but there are European stocks I like,” Buffett said.
“There are some wonderful businesses in Europe, and the prices have come down on some of them,” he said.
European stock markets tumbled to a six-week lowearly Monday, on recurrent fears that the debt crisis will spread further in the euro zone.