CNBC Excerpts: CNBC's Becky Quick Speaks with Charlie Munger, Berkshire Hathaway Vice Chairman, Today



Following are excerpts from the unofficial transcript of a CNBC interview with Charlie Munger, Berkshire Hathaway Vice Chairman, today, Friday, May 3. Following is a link to the full interview on CNBC.com: http://video.cnbc.com/gallery/?video=3000166059&play=1. All references must be sourced to CNBC.


MUNGER: I think it's to the credit of Alan Greenspan that he now sort of recognizes that maybe he was wrong in his kind of extreme free market approach - let it run, baby, let it run - I think that was wrong. China actually is wiser than we are at nipping crazy booms in the bud.

QUICK: How so?

MUNGER: Well they are willing to step in and intervene- they are willing to take the punch bowl away in the middle of the party. I like people like that

QUICK: But how is what ben Bernanke and the fed doing now different than what Alan Greenspan did? In terms of trying to prop up asset classes again?

MUNGER: Well but he's doing it in a crisis as an antidote to crisis. Bernanke and of course to some extent Greenspan did it to make the boom a little bigger.


Well partly there was a time they felt foolish if you didn't buy a house because you weren't making all the money everybody else is making. So it was a typical crazy boom. And now people have learned that house prices can go down as well as up. It's like a fellow goes rabbit hunting and thoroughly enjoys himself. And the rabbits hog guns and start firing back. It would dim your enthusiasm for rabbit hunting. And that's what happened in the housing market.


What Cyprus demonstrates is an old truth. You can't trust bankers to govern themselves. A banker who's allowed to borrow money at x, and loan it out at x y, they'll just go crazy and do too much of it if the civilization doesn't have rules that prevent it. What happened in Cyprus is very similar to what happened in Iceland. It was stark raving mad in both cases. And the bankers, they'd be doing even more if the thing hadn't blown up. I do not think you can trust bankers to control themselves. They're like heroin addicts.


I think the long term investor is not much affected by things like the flash crash. That said, I think it is very stupid to allow a system to evolve where half the trading is a bunch of short term people trying to get information one-one millionth of a nanosecond ahead of somebody else and it's legalized front-running. So I think it's basically evil and I don't think it ever should have been allowed to reach the size that it did and I now see that people are starting to talk about cutting it back. Why should all of us pay a little group of people to engage in legalized front-running of our orders.

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