Buffett Watch

Warren Buffett's Dateline Interview with NBC's Tom Brokaw: The Complete Transcript (Part 1)

aired portions tonight (Sunday) of an interview with Warren Buffett by Tom Brokaw.  The conversation was taped late last week while Buffett was in Washington.

Buffett tells Brokaw that Barack Obama is the right "commander in chief for the economy" but warns that no one should expect a "miracle" turnaround in the next few months.

Buffett and Brokaw also covered many other topics, including Obama's leadership style, excessive executive compensation, the challenges facing Detroit's automakers, China, and the role of greed in good times and bad.

This is the first part of complete transcript of that interview, as provided by NBC News.  CLICK HERE FOR PART TWO OF THE VIDEO AND TRANSCRIPT.

TOM BROKAW, NBC NEWS:

Last fall, Warren, a pollster told me that the election was between hope and fear. When it comes to the economy, who's winning, hope or fear?

WARREN BUFFETT:

Well, right now fear is. I mean, you're seeing it everyplace. You saw it at-- in the sales of almost every item at-- at Christmas. There's a lot of fear throughout the country. Even-- even with people whose jobs are fine, and who have money in the bank. But they-- they're worried.

VIDEO0:0000:00
Buffett & Brokaw, Pt. 1


BROKAW:

I've been describing this as the domestic equivalent of war. Is that an overstatement?

BUFFETT:

Well, actually, in September I said-- this is an economic Pearl Harbor. I-- that was the time Congress had made it in. It really is an economic Pearl Harbor. It-- the-- the country is facing something it hasn't faced since World War II.

And they're fearful about it. And they don't know quite what to do about it. And the point is-- and-- and it-- and temporarily it looks like we're losing. It has that-- that same aspect. Interestingly enough, we were losing for a while after Pearl Harbor. But the American people never doubted that we'd win. I mean, we had that attitude then. I think, right now, that they're sort of paralyzed.

BROKAW:

Is Barack Obama the right commander in chief for the economy?

BUFFETT:

He's the absolute right commander in chief. That-- you know, that's another thing the American people seem to do, occasionally, is that we elect people that are right for the times. You know, whether it was Lincoln, Roosevelt. And-- and I would say Obama-- you-- you couldn't have-- anybody better in charge.

BROKAW:

But why is he right for the times?

BUFFETT:

Well, he's-- he-- he's smart, he's got the right values, but he also-- he understands economics very well. He's cool. He's-- he's-- he's analytical. But then, when he gets it all thought through, and he's fast-- he can convey to American-- the American people what needs to be done. Not to expect miracles. That it's gonna take time. But that we're gonna get to the other end. And-- and I-- I-- I don't think there's anybody better for the job than-- than-- the president-elect.

BROKAW:

He often cites you as an advisor. And I know that you've been in touch with his economic team. But what often happens to somebody who gets elected to that office, particularly, they're more to you to tell you what they know than they are to listen. Does he listen?

BUFFETT:

He's a listener. I-- I first met him, maybe, four years ago, or something like that. He was a listener then, he's a listener now. But, on the other hand, he makes up his own mind. He will-- he will not be-- his team won't run him. He'll use his team, he'll use them very effectively. He'll synthesize, he'll-- he'll-- he'll analyze. But, in the end, it'll be his decision.

BROKAW:

Apart from his election, in your judgment, is there any other good news in the economy?

BUFFETT:

There's not much good new right now-- no. The-- we are-- we are in the middle of the economic Pearl Harbor right now. I mean, our ships have been sunk. Now-- (LAUGHTER) now we have to get mobilized-- to win the war, which we will.

BROKAW:

Your friend, and my boss, Jeff Immelt -- who is the CEO of General Electric , had a phrase that I thought, in many ways, not just because he's my boss, but I thought he summed it up pretty well when he said, "This is not a cycle, it's a reset."

BUFFETT:

Well, there's-- there-- there's some real truth to that. And-- we have lived in one way in one type of economy. And-- and-- we're now deleveraging that economy. We're-- we're gonna have to live without the same impetus from credit expansion that-- really helped propel the economic engine for a long period of time. The-- the-- that-- that wind will not be at our back. But there's all kinds of things that will be in our back. But that-- he's right about resetting with-- without credit expansion being the propellant for the economy.

BROKAW:

And the stimulus program, that-- the new president wants to have, and that Congress is cobbling together, in your judgment is it sound? Are there some things they're-- they should be doing they're not doing?

BUFFETT:

Well, they're doing-- they-- they-- they're gonna turn the fire hose on this-- on this fire. I mean, the-- the-- and-- and-- it's-- it's-- it's a blunt instrument, to some extent. At-- at-- but it's very, very big. We're-- we're-- we're gonna-- we're gonna have a medicine coming in a dosage we've never seen before. And-- it-- but it won't-- it won't-- it won't have immediate impact. It should-- it takes time for it to-- to hit the economy in real force. So people should not expect miracles in February or March or April. That isn't gonna happen.

BROKAW:

I'm very interested in that. And the conditioning of the American consumer. We've been through some downturns here in the last 40 years. But we've always made a snappy recovery. The first two years of the Reagan administration, that was a very sharp recession. At the end of George Bush 41's administration, very sharp recession. But then we made a big comeback with the information technology. I-- I wonder if the American people don't, in the back of their minds, say, "Well, we'll come out of this one pretty quickly."

TRUTH AND CONSEQUENCES

BUFFETT:

Well, if they do, I-- I hope they don't get-- (LAUGHTER) feel that way too strongly. And, incidentally, in the-- in the way it was technically-- described, you could describe the 80s as being a fairly quick recession. But if you think of the period from the oil shock all the way through 'til (Paul) Volcker got done, that whole period was one of stagflation and general-- the stock market did nothing. People didn't trust-- money, you know, cash is trash, and they were running from it 'cause they thought--

VIDEO0:0000:00
Buffett & Brokaw, Pt. 2

(OVERTALK)

BROKAW:

Twenty percent interest rates--

(OVERTALK)

BUFFETT:

Sure. And all of that. So-- so I would say that you really had-- a ten year period there where the American economy did not make much progress. I'm not predicting that this time. But I-- that-- that was-- that was a period that most people didn't feel great about the economy. They didn't feel as depressed as they feel right now though.

BROKAW:

We know, or we have a pretty good idea, what the stimulus program will mean to the economy in terms of raw dollars and so on. The economists can't seem to come to a judgment about how long it will take for it to have an effect. Some are saying a year, others are saying it may be up to five years. Do you have a position on that?

BUFFETT:

Well, I-- I don't think it'll be five years Tom. But I-- I don't have the answer to that. I-- I-- I don't know what the stock market will do in the next year. What I do know is that, if you go back to the 20th century, 100 years, you had two great wars, you had other very large wars, you had the Great Depression, you had the flu epidemic, you had a dozen recessions and panics, you had all kinds of things.

At the end of that century the amer-- the average American was living seven times as well as-- the start of the century. The DOW Jones average went from 66 to 11,497. With all those problems. This is a country that has the ingredients that-- that-- well, it unleashes the potential of humans. And-- and they're still here. I mean-- so five years-- you can put me down on that one. You can't put me down on one year. (LAUGHTER)

BROKAW:

And how important is the new president to all of that in terms of instilling confidence, and talking bluntly to the American people saying, "There is gonna be some pain here. And you may have to make some sacrifices."

BUFFETT:

That's exactly what he's gonna say, 'cause it's the truth. And-- and he's-- he's smart enough to know it's the truth, and he-- and he's the kind of person who's going to tell you the truth. So-- I think he's the ideal president for it. But that's not because I think he can wave a magic wand.

It's because I think he can, in a sense, figure, once again, how to get these basic strengths of the American economy in gear again. I mean, we-- we have a wonderful economy that's gummed up at present. And it's gotten gummed in the past many times.

And it is important who's president. It's important that the American people believe in him. It's important that we take the right policy actions. But there are no miracles in a month or two months or three months. And he's going to tell the American people that.

BROKAW:

Has he--

BUFFETT:

He always has.

BROKAW:

You're very good with words. Has he asked you if-- at all for any advice on his inaugural address? (LAUGHTER)

BUFFETT:

No-- no. No. I have not been sitting around writing four score and-- (LAUGHTER) any of that sort. No, he doesn't need-- he doesn't need any help--

(OVERTALK)

BROKAW:

We have nothing to fear but fear itself.

BUFFETT:

That's right. Nothing to fear but fear itself, right.

BROKAW:

But does it have to be in that tone? Like FDR, "We have nothing to fear?" Or John Kennedy saying, "Ask not what your country can do for you, but what-- you can do for your country?" Are we ready for that again?

BUFFETT:

Well, I don't-- I don't have any specific knowledge. But my guess is it will be inspirational. It'll-- it'll be-- it-- it-- it-- it will be asking something of the American people. I mean, he-- he has every right to expect something of the American people.

I-- I think the American people want something to be asked of-- of them. So I think it will have-- it will-- it-- it'll-- it'll have that same tone, I'm sure, as-- as-- as Kennedy, in that respect. And I think it'll have some tones of-- of Roosevelt in saying that-- you know, we still have 305 or ten million people, whatever it is, who have all the abilities.

We still have a rule of law and a market system and-- and we believe, you know, in-- in-- in-- in everybody reaching their potent-- all of these things are going for us. And I think he will convey that a lot better than I just have. (LAUGHTER)

"FAILURE GOES TO THEIR HEAD"

BROKAW:

But, at the same time Warren, we have-- new systems in play too. And the ripple effect seems to happen a lot faster now, and goes a lot deeper. Part of the reason we got in trouble this time is the system is so complex, and no one seems to know what's going on just below the surface.