Warren Buffett tells CNBC's Becky Quick the U.S. economy has "fallen off a cliff."
During a three-hour appearance on Squawk Boxthis morning (Monday), Buffett said economic developments have been very "close to the worst case" that he had imagined, although conditions would be far worse if the Federal Reserve hadn't stepped in last September.
- The economy "can't turn around on a dime" and a turnaround "won't happen fast."
- Predicts unemployment rate in U.S. will go well above its current levels before the downturn ends
- But, five years from now, the economy will be running fine. The strength of the American system will pull it through, just as it has many times in the past.
- Democrats and Republicans should work together and not try to take advantage of the economic situation to achieve partisan goals.
- Inflation has the "potential" to be worse than the 1970s.
- Most banks are in "pretty good shape" and can "earn their way out" of the current problems given the low cost of funds. Banks, however, "need to get back to banking."
- Extremely important that the government make clear depositors won't lose their money if banks fail. Obama needs to make a "clear statement" in support of the banking system. (Slideshow: World's Safest Banks)
- Berkshire is restricted from buying more American Express stock, but that doesn't mean it is not a "hell of a buy" at $10 a share.
- Wishes he had written the New York Times "Buy American" piece a few months later, but stands by the basic argument that you'll do better over a ten-year period with stocks that you will with Treasuries. He said in the article he wasn't calling the bottom of the stock market, and he still isn't.