WHEN: TODAY, WEDNESDAY, OCTOBER 16TH AT 6AM ET
WHERE: CNBC'S "SQUAWK BOX"
Following are excerpts from the unofficial transcript of a CNBC interview with billionaire investor Warren Buffett today, Wednesday, October 16th on CNBC's "Squawk Box"(M-F, 6AM-9AM ET). Video from the interview can be found on CNBC.com.
All references must be sourced to CNBC.
BUFFETT ON IDIOCY
You know, I used to tell my children when they were young, it takes 20 years to build a reputation and 20 minutes to ruin it. We've been building a reputation for proper fiscal behavior, with our currency at least, for 237 years. That the United States – we have become the reserve currency of the world and the process, people all over the world hold our paper. So to give up or to do anything that damages 237 year period of good behavior is idiocy.
BUFFETT ON THE DOLLAR
WARREN BUFFETT: Well, I don't think it's the case quite yet, but it could be done very, very quickly. She's on the brink.
BECKY QUICK: By next week you think?
BUFFETT: I don't think there's another reserve currency that would jump in next week, but it would produce chaos over time.
BUFFETT ON PAYING BILLS ON TIME
It is not showing up. But what will show up is if the world, United States, citizens, lose some faith in the full faith and credit promise of the United States. That would be a momentous event. Even if we said well, we're stalling it for a week or we are putting out script or whatever it may be, that would be huge. I mean, we have spent 237 years building up our reputation for paying our bills time. It would be asinine.
BUFFETT ON POLITICAL WEAPONS OF MASS DESTRUCTION
The threat – to not raise the debt ceiling after you've spent the money – it's really a political weapon of mass destruction.
There are certain things that shouldn't be used and I know that it has been used in the past. But we used the atomic bomb in back 1945 but, we decided that we were not going to use something like that again. So, as frustrated as we may have become in Vietnam or all kinds of things – and the Russians the same way and the Soviets the same way. There are certain weapons that are just improper to use against humanity. And to use this against the American public, it is a political weapon of mass destruction and both sides should say were not going to touch it.
BUFFETT ON MARMON
It's liquid dispensing machines, all kinds of – like the machine we have at our office where I can get a Coke and also cooling equipment. But all designed for beverage cooling and dispensing.
BUFFETT ON JAMIE DIMON
They loved it when Jamie took over WaMu and Bear Stearns. You can say they should have written different contracts that protected them against all the things that happened in the past. But the government wanted to get a deal done and you needed to get a deal done very properly or other dominos were going to fall. So I think it is a little tough to be in the situation. But Jamie will survive it fine he knows how to run a bank.
BUFFETT ON JAMIE DIMON 2
You cannot be active in a big business without making some mistakes. And sometimes they will be big ones, but you've got to look at the overall record. You know, Babe Ruth hit 60 hit homes runs that one year, I don't know how many times he struck out and I don't care.
BUFFETT ON JAMIE DIMON 3
If a cop follows you for 500 miles you'll get a ticket. believe me, a lot of cops have been following for a long time, and they're going to write some tickets.
BUFFETT ON BANKS
What really counts is the future. In the future, banks will have to carry – particularly the larger banks -- heavier capital, which hurts their earnings on equity. But the banks are in best shape I can remember. They've built up capital enormously, the loan losses have calmed down dramatically and the portfolios are in good shape. The big problem they have now is getting out money. They all have more money around than they would like and they are not reluctant to loan.
BUFFETT ON SLOW GROWTH DOES WONDERS
2% of your growth with less than 1% population gains means 1% real growth per capita. In 20 years, that's 20%. if every generation lives 20% better than the generation before, that's not terrible. I'd much rather have 3% growth or 3.5% like we had. But 1% real GDP growth per capita over a long period of time, it does wonders.
BUFFETT ON BENJAMIN MOORE
BUFFETT: RECENTLY WE HAD TO MAKE A CHANGE FOR A REASON I CAN'T GET INTO.
QUICK: YOU CAN'T DISCUSS MORE ABOUT IT AT THIS POINT. YOU HAVE SEEN THE PRESS COVERAGE AND STORIES OUT THERE CIRCULATING ABOUT THIS?
BUFFETT: YEAH. WE'VE GOT A NEW MANAGER IN THERE IT'S WORKING FINE. INCIDENTALLY, BENJAMIN MOORE IS MAKING A LOT OF MONEY.
BUFFETT ON BRIAN MOYNIHAN
BRIAN HAS DONE A TERRIFIC JOB. YOU MENTIONED 1.6 BILLION OF CHARGE OFFS FOR THE QUARTER. THAT'S BEFORE THE RESERVE RELEASE IT SOUNDS LIKE. THAT'S AN ANNUALIZED RATE OF 6.5 BILLION OR SOMETHING LIKE THAT OF CHARGE OFFS. NOW YOU'RE GETTING DOWN TO 70 BASIS POINTS A YEAR OR SOMETHING IN THAT AREA. WELLS WAS UNDER 50 BASIS POINTS. THIS ECONOMY HAS REALLY COME BACK IN THAT RESPECT. I DON'T THINK ANYBODY EXPECTED CHARGEOFFS A FEW YEARS AGO TO BE AS LOW AS THEY ARE NOW.
BUFFETT ON APPLE
I THINK THE APPLE MANAGEMENT AND DIRECTORS HAVE DONE A PRETTY GOOD JOB OF RUNNING THE COMPANY. I WISH I BOUGHT THE STOCK YEARS AGO. I DID ADVISE APPLE TO BUY THE STOCK A FEW YEARS AGO. AND THEY'RE BUYING IT. THEY'VE GOT A LOT OF MONEY IT'S NOT TRAPPED OVER SEAS. THEY'D JUST THAT THEY'D HAVE TO PAY A BIG TAX TO BRING IT BACK. AND OF COURSE THEY'RE HOPING THEY'LL BE SOME REPATRIATION AT SOME POINT SO THEY WON'T HAVE TO PAY THAT TAX.
BUFFETT ON CARL ICAHN
BUFFETT: I THINK THE APPLE MANAGEMENT AND DIRECTORS HAVE DONE A PRETTY DARN GOOD JOB OF RUNNING THE COMPANY. MY VOTE WOULD BE WITH THEM.
QUICK: VERSUS WHAT CARL IS SAYING?
BUFFETT: I DO NOT THINK THAT COMPANIES SHOULD BE RUN PRIMARILY TO PLEASE WALL STREET AND LARGELY SHAREHOLDERS WHO ARE GOING TO SELL. I BELIEVE IN RUNNING BERKSHIRE FOR THE SHAREHOLDERS WHO ARE GOING TO STAY AND NOT OR THE ONES THAT ARE GOING TO LEAVE.
BUFFETT ON PEPSI
IF I OWNED PEPSI, IF I owned CONTROL OF THE COMPANY, I'D KEEP BOTH.ONE OF THEM IS A TERRIFIC BUSINESS. THE OTHER IS PERFECTLY GOOD BUSBESS. WHY BREAK THEM UP? I BELIEVE IN RUNNING A COMPANY FOR THE SHAREHOLDERS THAT ARE GOING TO STAY RATHER THAN THE ONES WHO ARE GOING TO LEAVE. AND IF YOU'RE GOING TO STAY AS A SHAREHOLDER OF PEPSI, I THINK YOU LIKE THE IDEA OF THEM HAVING TWO VERY GOOD BUSINESSES.
BUFFETT ON OBAMACARE
I'm glad I wasn't in charge. Healthcare is the tapeworm of the American economy. When u get up to 17-18 percent and other countries have 10%, You've got 7 or 8 cents out of the dollar that we are at a disadvantage – I mean we think we are at a disadvantage and we are because we talked about the $500 billion spent on foreign oil but $500 billion is 3% of GDP. We're talking about a huge cost disadvantage versus rest of world, and we need to address it.
BUFFETT ON U.S. ECONOMY
It has come back - our furniture stores, we've got them in Houston, Boston, Utah, California, Nevada, Idaho, Nebraska - they've been very strong lately sort of across the board. So businesses continue to get better – I can't tell you about the last couple of days – but businesses continue to get better and I think it will continue to get better unless we totally mess it up here in Washington.
BUFFETT ON HOUSING
THE MEDIAN PRICES WE SEE AND WE'RE IN ALL KINDS OF MARKETS. I'VE LOOKED AT PRICE FOR SEPTEMBER ON OUR SALES. THEY'RE UP. VOLUME PENDING SALES ARE UP. IT MAY HAVE SLOWED DOWN A LITTLE. WHO KNOWS IN ANY GIVEN MARKET. WE'RE A LOT BETTER OFF IN RESIDENTIAL HOUSING AND THE DEMAND KEEPS GROWING.
BUFFETT ON THE AMERICAN DREAM
IT'S MORE ATTAINABLE FOR SOME THAN OTHERS. I MEAN YOUR ZIP CODE IS STILL A VERY BIG PREDICTOR OF YOUR DESTINY. IT ISN'T THE TOTAL PREDICTOR.THERE ARE STILL HORATIO ALGER STORIES. THERE ARE MORE STORIES THAT COME OUT OF DIFFERENT ZIP CODES THAN THERE'S OPPORTUNITY IN THIS COUNTRY. THERE ARE A LOT OF PEOPLE THAT AREN'T GOING TO SHARE IT. AND IT'S TERRIBLE. WE ARE A VERY RICH COUNTRY. THE BOTTOM 20% DO NOT HAVE A GREAT CHANCE IN THIS COUNTRY.
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