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CNBC TRANSCRIPT: CNBC'S BECKY QUICK SITS DOWN WITH BILLIONAIRE INVESTOR WARREN BUFFETT TODAY ON CNBC'S "SQUAWK BOX"

Warren Buffet
Warren Buffet

WHEN: TODAY, MONDAY, MAY 4TH

WHERE: CNBC'S "SQUAWK BOX"

Following is the unofficial transcript of a CNBC interview with billionaire investor Warren Buffett today on CNBC's "Squawk Box."

All references must be sourced to CNBC.

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BECKY QUICK: GOOD MORNING CARL GOOD MORNING GUYS YES THIS MORNING WE'RE JOINED BY A SPECIAL GUEST WE'VE BEEN LISTENING TO WARREN BUFFETT AND CHARLIE MUNGER AND BILL GATES ALL MORNING LONG ALL WEEKEND LONG WE'VE PROBABLY ASKED THEM EVERY QUESTION WE COULD UNDER THE SUN BUT ANOTHER DAY MEANS ANOTHER SET OF HEADLINES SO WE THOUGHT WHILE WE WERE IN OMAHA COULDN'T HELP BUT TRY AND GET THE ORACLE OF OMAHA, OMAHA'S MOST FAMOUS SON TO MAYBE SIT DOWN WITH US SO MR BUFFETT THANK YOU SO MUCH FOR SITTING DOWN WITH US

BUFFETT: MY PLEASURE

QUICK: YOU SAID AT THE MEETING THAT YOU READ FIVE PAPERS A DAY

BUFFETT: AT LEAST

QUICK: YEAH AT LEAST FIVE PAPERS A DAY I KNOW WE'VE PROBABLY ASKED YOU EVERY QUESTION UNDER THE SUN BUT I THOUGHT WITH THESE NEW HEADLINES WE COULD GO THROUGH SOME OF THEM AND GET YOUR THOUGHTS

BUFFETT: OKAY

QUICK: OKAY LET'S START THINGS OFF WITH THE WALL STREET JOURNAL I BROUGHT FIVE OR SIX PAPERS TO GIVE YOU A QUICK QUIZ OFF OF SOME OF THESE THINGS FIRST OF ALL YOU ARE ALL OVER THE PAPERS WITH THE MEETING A LOT OF PAPERS HAVE COME OUT THIS ONE ON THE FRONT OF THE JOURNAL SAYS SLUMP HAS DEALT BUFFETT A RATHER ROUGH HAND INSIDE IT SAYS BUFFETT IT SAYS BUFFETT PLAYS DOWN HOOPLA AND HOPE BUT THE THING THAT I SAW WAS THAT DEPENDING ON WHICH PAPER YOU PICK UP AND WHICH HEADLINE YOU READ SOME SAY THAT YOU ARE VERY OPTIMISTIC ABOUT THE FUTURE OTHERS SAY YOU ARE VERY CONCERNED WHAT'S THE RIGHT TAKE

BUFFETT: MAYBE THEY BOTH HAVE GOT IT RIGHT I'M 100% ENORMOUSLY OPTIMISTIC OF THE FUTURE OF THE COUNTRY OVER TIME THERE IS NO WAY YOU CAN BET AGAINST AMERICA AND WIN AND YOU KNOW JUST LOOK BACK AT A COUPLE HUNDRED YEARS AGO THE WAY PEOPLE WERE LIVING AND HOW THEY LIVE NOW WE ARE NOT ANY SMARTER THAN A COUPLE HUNDRED YEARS AGO WE HAVE THE SAME LAND AND EVERYTHING ELSE BUT WE'VE UNLEASHED HUMAN POTENTIAL AND WE CONTINUE TO DO SO TWENTY YEARS FROM NOW FIFTY YEARS FROM NOW YOUR CHILDREN AND GRANDCHILDREN WILL LIVE FAR BETTER THAN YOU LIVE BUT ON THE SHORT TERM THINGS ARE GOING TO BE TOUGH FOR A WHILE AND WE SEE NO REAL PICK UP IN A WHOLE VARIETY OF BUSINESSES WE HAVE BUT THEY'LL BE DOING FINE IN A FEW YEARS I DON'T WHETHER THEY WILL BE DOING FINE IN THREE MONTHS, SIX MONTHS, TWO YEARS I KNOW THEY'LL BE DOING FINE IN FIVE YEARS AND I HOPE THEY WILL BE DOING FINE IN FIVE MONTHS BUT I DON'T KNOW THE ANSWER OF EXACTLY WHEN

QUICK: YOU SAY YOU DON'T SEE ANY REAL SIGN OF PICK UP HAVE YOU SEEN ANY SIGN OF A SLOWING IN THE RATE OF DECLINE OR ANY SIGNS OF A BOTTOM I GUESS

BUFFETT: WELL CERTAINLY IN RESIDENTIAL REAL ESTATE IN IMPORTANT PARTS OF THE COUNTRY LIKE CALIFORNIA WHERE THEY HAVE BEEN IN A NOSEDIVE A YEAR AGO AND SIX MONTHS AGO SEEING A LOT MORE ACTIVITY PARTICULARLY IN MEDIUM TO LOWER PRICED HOMES LOWER MORTGAGE RATES HELP CALIFORNIA HAD A SPECIAL PROGRAM TO HELP HOUSES ARE MOVING AND NOW CALIFORNIA IS A VERY BIG AREA SO STOCKTON IS NOT THE SAME AS SAN FRANCISCO BUT THERE'S A LOT OF ACTIVITY AND I WOULD SAY THAT THE PRICES HAVE TENDED TO STABILIZE IN PLACES LIKE THAT WHEREAS IN SOUTH FLORIDA YOU STILL HAVE A HUGE SUPPLY SO BUT IT'S GETTING BETTER

QUICK: OK IN THE FINANCIAL TIMES THIS MORNING THE LEAD STORY IS ABOUT CITIGROUP AND BANK OF AMERICA HOW THEY ARE EACH WORKING ON PLANS TO RAISE 10 BILLION DOLLARS IN ADDITIONAL CAPITAL TODAY WAS SUPPOSED TO BE THE DAY WE'D BE GETTING THE STRESS TEST RESULTS YOU HAVE STAKES IN THREE OUT OF THE NINETEEN BANKS UNDERGOING THE STRESS TEST WELLS FARGO SUN TRUST US BANK CORP

BUFFETT: RIGHT

QUICK: DO YOU KNOW THE OUTCOME OF THE STRESS TEST FOR ANY OF THEM

BUFFETT: NO

QUICK: WHAT DO YOU YOU'VE SAID IN THE PAST THAT YOU'VE DONE YOUR OWN STRESS TEST

BUFFETT: YEAH WE'VE GOT VERY APPRECIABLE MONEY IN THEM SO WE KNOW THE BUSINESS MODEL OF TWO OF THOSE THREE QUITE WELL THE THIRD I DON'T KNOW THAT WELL

QUICK: WHICH DON'T YOU KNOW

BUFFETT: I KNOW US BANK AND WELLS FARGO I DON'T KNOW THE BUSINESS MODEL OF SUN TRUST THAT WELL SO I CAN'T TALK ABOUT SUN TRUST INTELLIGENTLY BUT I CAN TELL YOU THAT US BANK CORP AND WELLS FARGO ARE EXTREMELY STRONG BANKS THEY HAVE TERRIFIC EARNING POWER AND EARNING POWERS IS ENORMOUSLY IMPORTANT IN WHAT HAPPENS TO A BUSINESS IN THE FUTURE AND YOU COULDN'T HAVE TWO BETTER BANKS VIRTUALLY POSITIONED THAN THOSE TWO FOR FUTURE EARNINGS THINGS COULD GET A LOT LOT WORSE AND THOSE COMPANIES WOULD COME THROUGH FINE

QUICK: DOES THAT MEAN YOU DON'T THINK THE GOVERNMENT WILL MAKE THEM RAISE ADDITIONAL FUNDS OR ONCE THINGS END UP IN WASHINGTON YOU DON'T KNOW WHAT'S GOING TO HAPPEN

BUFFETT: I DON'T KNOW WHAT'S GOING TO HAPPEN

QUICK: RIGHT OK LET'S TALK ABOUT THE FRONT PAGE THIS MORNING OR AT LEAST THE BUSINESS SECTION OF THE NEW YORK TIMES IT'S GOT TALK ABOUT HOW OVER THE WEEKEND DESPITE OBAMA TRYING TO GET PEOPLE TO GO OUT AND BUY CARS MADE IN DETROIT THEY SAW LITTLE SIGNS OF A BUMP IN CHRYSLERS SALES OVER THE WEEKEND CHRYSLER OBVOUSLY AT THIS POINT IN BANKRUPTCY WHAT ARE SOME OF THE AFTERSHOCKS SOME OF THE UNINTENDED CONSEQUENCES THAT COULD COME UP FROM PUTTING CHRYSLER IN BANKRUPTCY AND THEN WHAT HAPPENS TO GM

BUFFETT: WELL I THINK YOU KNOW IT IS TOUGH TO BE IN BANKRUPTCY IF YOU ARE NOT IN IT VERY LONG AND THAT IS THE HOPE OF EVERYBODY 60 DAYS OR SOMETHING LIKE THAT THE DISRUPTION IS LESS BUT IT OBVIOUSLY HAS TO WORRY DEALERS IT WORRIES CONSUMERS AND NOW THE GOVERNMENT THEY'D STANDBY THE WARRANTIES AND EVERYTHING SO I DON'T THINK PEOPLE SHOULD BE WORRIED BUT THEY MAY WORRY EVEN THOUGH THEY STAND BY THE WARRANTIES THAT THE FELLOW THAT HAS BEEN SERVICING THEIR CAR OVER THE YEARS WON'T BE AROUND SO IT'S VERY IMPORTANT FOR CHRYSLER TO GET OUT OF BANKRUPTCY VERY QUICKLY AND THAT DEPENDS ON THE BANKRUPTCY JUDGE

QUICK: THERE ARE SOME TALK OUT THERE THAT THE BONDHOLDERS SHOULD ACCEPT THE DEAL THAT HAS BEEN PUSHED DOWN ARE YOU SYMPATHETIC TO THAT

BUFFETT: WELL I AM SYMPATHETIC TO BOTH SIDES THE BONDHOLDERS BOUGHT A SECURE BOND IF I HAVE A FIRST MORTGAGE ON MY HOUSE THERE AND THE FIRST MORTGAGE IS FOR HALF WHAT THE HOUSE IS WORTH AND SOMEBODY SAYS I WANT YOU TO TAKE A BIG HAIRCUT BECAUSE I'VE GOT SOME CREDIT CARD DEBT SOMEWHERE ELSE THAT'S GOT PROBLEMS IN TERMS OF FUTURE LENDING I MEAN IF PRIORITIES DON'T MEAN ANYTHING THAT'S GOING TO DISRUPT LENDING PRACTICES IN THE FUTURE ON THE OTHER HAND THEY HAVE A FEW PEOPLE STANDING IN THE WAY OF SOMETHING THAT HAS SO MUCH IMPORTANCE TO THE WHOLE COUNTRY I CAN SEE WHY PEOPLE ON THE OTHER SIDE WOULD BE VERY UPSET GIVING UP PRIORITIES IN LENDING ABANDONING THAT PRINCIPAL WOULD HAVE A WHOLE LOT OF CONSEQUENCES

QUICK: A LOT OF BAD CONSEQUENCES DOWN THE ROAD

BUFFETT: I THINK IT WOULD IF WE WANT TO ENCOURAGE LENDING IN THIS COUNTRY WE DON'T WANT TO SAY TO SOMEBODY WHO LENDS AND GETS A SECURED POSITION THAT THAT SECURED POSITION DOESN'T MEAN ANYTHING SO IT'S A TOUGH PROBLEM BOTH WAYS

QUICK: BACK IN STUDIO JOE AND CARL ARE BOTH STANDING BY AND OUR GUEST HOST IS SENATOR JUDD GREGG, JOE YOU HAVE A QUESTION AS WELL

KERNEN: I DO LET'S KEEP DOING THIS WITH THE NEWSPAPERS I AM LOOKING AT THE WALL STREET JOURNAL I SEE THE CHERRY COKE THAT LOOKS TO BE YOURS I CAN SEE YOUR HAND YOUR BRIDGE HAND AND I SEE THE WAY YOU'VE GOT A SEVEN AND AN EIGHT OF HEARTS AND THEN YOU'VE GOT EVERYTHING GOING SORT OF IN SEQUENCE I WONDER A. DO YOU REMEMBER IF YOU DID WELL WITH THAT HAND AND B. THE ARTICLE ABOVE IT WARREN

BUFFETT: WELL IF YOU DON'T KNOW WHETHER I DID WELL OR NOT I AM GOING TO TELL YOU THAT I DID WELL REGARDLESS

KERNEN: YEAH I DON'T KNOW IN THE PAST YOU HAVE SAID TO RETURN TO SOME OF THE CAPITAL GAINS RATES AND THE DIVIDEND RATES AND THE MARGINAL RATES OF THE 90S NOT A BIG DEAL FOR THE CORPORATIONS YOU ARE OK WITH THAT THIS LATEST PROPOSAL TO TAX CORPORTATIONS CISCO FOR EXAMPLE THINKS THIS IS NOT A GREAT IDEA AND IT IS GOING TO HURT US CORPORATIONS CAN YOU WEIGH IN ON WHETHER YOU HAVE A PROBLEM WITH THIS MOVE

BUFFETT: WELL BUT I CAN'T TALK ABOUT ALL OF THE DETAILS OF THIS BILL BECAUSE I DON'T KNOW IT BUT I WOULD SAY THIS WE ARE GOING TO RAISE PROBABLY AT MOST 2.3 TRILLION AT THE FEDERAL LEVEL IN TAXES SO WE WERE RAISING CLOSE TO 2.6 TRILLION JUST A COUPLE OF YEARS AGO AND YOU KNOW WHAT WE ARE GOING TO SPEND SO ONE WAY OR ANOTHER WE ARE GOING TO NEED MORE TAXES DOWN THE ROAD THERE'S NO MAGIC WAND ON THIS AND THE QUESTION IS WHERE SHOULD THEY COME FROM AND ANYBODY WHO IS THE TARGET OFANY INCREASES WILL BE BACK IN WASHINGTON SCREAMING SO THE COUNTRY CAN TAKE HIGHER TAX RATES WE DID EXTREMELY WELL IN THE 60S AND THE 90S WITH TAX RATES CONSIDERABLY HIGHER IN MANY AREAS THAN NOW SO I THINK IT IS A QUESTION OF WHO GETS SOCKED AND WHEN THE ONE THING I KNOW IS IF WE KEEP RAISING 2.3 TRILION A YEAR WE ARE GOING TO HAVE A MASSIVE DEFICITS FOR A LONG LONG TIME AND THOSE HAVE CONSEQUENCES AS WELL

GREGG: MR BUFFETT IF I COULD ASK YOU WHAT DO YOU DO ABOUT THE DEBT IF YOU ARE GOING TO EXPLODE THE DEBT HERE IT IS REALLY LIKE CHASING YOUR TAIL TO TRY TO CATCH UP WITH REVENUES WHEN YOU HAVE A DEBT RATIO GOING UP TO 80% OF GDP IS THAT SUSTAINABLE AND IF WE'RE LOOKING AT 5-6% 4-5% IN DEFICITS FOR THE NEXT TEN YEARS AND THE DEBT RATIO JUMPING FROM 40% TO 80% IN THE LONG RUN HOW DO YOU GET YOURSELF OUT FROM UNDERNEATH THAT TYPE OF A DEBT SITUATION AND THE SPENDING THAT IS DRIVING THAT DEBT

BUFFETT: WELL AT SOME POINT YOU HAVE TO HAVE TAX REVENUES THAT ARE A WHOLE LOT CLOSER TO EXPENDITURES AND YOU CAN GET THAT IN TWO WAYS AND BOTH WAYS ARE UNPLEASANT BUT THE IF YOU DON'T GET IT THE CONSEQUENCES ARE UNPLEASANT AS WELL YOU MENTIONED GOING TO 80% IT WILL GO A LOT HIGHER THAN THAT UNLESS AT SOME POINT YOU GET MORE OF A BALANCE BETWEEN REVENUES AND EXPENDITURES AND WE STARTED FROM A FAIRLY LOW DEBT POSITION AND OF COURSE WE CAME OUT OF WWII WITH WELL OVER 100% A COUNTRY THAT CONTINUOUSLY EXPANDS ITS DEBT AS A PERCENTAGE OF GDP AND RAISES MUCH OF THE MONEY ABROAD TO FINANCE THAT AT SOME POINT IT IS GOING TO INFLATE ITS WAY OUT OF THE BURDEN OF THAT DEBT I MEAN EVERY COUNTRY THAT'S DENOMINATED ITS DEBT IN ITS OWN CURRENCY AND FOUND ITSELF WITH UNCOMFORTABLE AMOUNTS OF DEBT RELATIVE TO THE REST OF THE WORLD IN THE END INFLATE AND THAT BECOMES A TAX ON EVERBODY THAT HAS FIX DOLLAR INVESTMENTS

QUINTANILLA: ONE QUICK QUESTION ON EMPLOYMENT THE CHRYSLER BANKRUPTCY LAST WEEK THIS MORNING FILENES BASEMENT IS SAID TO BE FILING CHAPTER 11 THE BOSTON GLOBE MAY SHUT DOWN IN THE COMING DAYS I WONDER IF YOU THINK THOSE TYPE OF ACTIONS WILL POSE A RENEWED THREAT TO THE ECONOMY OR WHETHER WE CAN GRIND THROUGH SOME SORT OF JOBLESS RECOVERY LIKE WE HAD IN THE 90S

BUFFETT: WELL WE'RE GOING TO FACE MORE UNEMPLOYMENT AND WHO KNOWS WHERE IT IS GOING TO TOP OUT IT WILL TOP OUT EVENTUALLY YOU KNOW WE HAVE HIT DOUBLE DIGITS IN THE PAST WE HAVE A WONDERFUL ECONOMY OVER TIME THE MARKETS OVER SHOOT PEOPLE MAKE MISTAKES IT'S NOT PERFECT AT ALL TIME BUT WE HAVE 6 PANICS IN THE 19TH CENTURY AND THE GREAT DEPRESSION IN THE 20TH CENTURY AND ALL KINDS OF RECESSIONS WE DO COME OUT OF THEM HOW FAST WE COME OUT OF THEM DEPENDS TO SOME EXTENT ON THE WISDOM OF THE POLICIES IN WASHINGTON BUT THE BIGGEST THING THAT BRINGS US OUT OF THEM IS THAT WE HAVE A SYSTEM THAT WORKS VERY WELL OVER TIME EVEN THOUGH IT GETS DUMBED UP PERIODICALLY IT IS DUMBED UP RIGHT NOW BUT WE WILL COME OUT OF IT WELL WHETHER THE GOVERNMENT DOES IT EXECTLY RIGHT OR NOT BUT GOVERNEMNT POLICY IS ENORMOUSLY IMPORTANT WE WILL HAVE MORE UNEMPLOYMENT WE WON'T HAVE MORE UNEMPLOYMENT FIVE YEARS FROM NOW I'LL GUARANTEE THAT I THINK IT WILL APPRECIABLY LESS WHEN IT TURNS I DONT KNOW

QUICK: WE HAVE THAT JOBS NUMBER COMING UP ON FRIDAY HARD TO SAY EXACTLY WHAT HAPPENS THERE IF THAT NUMBER FALLS BELOW 500,000 I BELIEVE THE ESTIMATES SOMEWHERE BETWEEN 500 AND 700 THOUSAND JOBS THAT WILL HAVE BEEN STRIPPED FROM THE ECONOMY AGAIN OVER THAT LAST MONTH IF IT IS BELOW 500,000 IS IT TOO SOON TO START CELEBRATING THE IDEA THAT WE ARE REACHING THE END

BUFFETT: YEAH IT WOULD BE TOO SOON WE'RE NOT REACHING THE END AT SOME POINT WE ARE GOING TO REACH THE END AND I DON'T KNOW WHEN THAT WILL BE BUT I KNOW THAT MAY 4TH IN TERMS OF THE FIGURES WE ARE GETTING ON ALL OF OUR BUSINESSES YOU KNOW THE AMERICAN ECONOMY IS SLOW VERY SLOW AND AT THE MOMENT STILL GETTING SLOWER BUT THAT WILL TURN AND I CAN'T PREDICT WHEN I HOPE IT WILL BE VERY SOON

QUICK: ANOTHER STORY OVER THE WEEKEND IN BARRONS RON BARRON WAS INTERVIEWED HE SAID THIS IS THE MOST ATTRACTIVE TIME IN HIS LIFE TO BE AN INVESTOR DO YOU AGREE WITH THAT

BUFFETT: WELL I WOULD SAY IT IS AMONG THE MORE ATTRACTIVE BUT 1974 AND 1975 THE STOCKS WE FAR CHEAPER THEN INCIDENTLY THE BEST YEAR THE DOW THE S&P EVER HAD IN MY INVESTING LIFETIME WAS THE YEAR OF RECESSION IN 1954 PEOPLE DON'T REMEMBER THESE THINGS SO YOU DON'T NOT BUY STOCKS JUST BECAUSE BUSINESS IS LOUSY AT THE TIME THAT MAY BE THE VERY BEST TIME TO BUY STOCKS IN 1954 THE DOW WAS UP 50% AND THE COUNTRY WAS IN A RECESSION IT WAS THE BEST YEAR I HAD IN MY LIFE AND I HAVE HAD OTHER GOOD YEARS IN A RECESSION SO IT IS A BIG MISTAKE TO SAY BUSINESS IS BAD THEREFORE I SHOULDN'T BUY STOCKS IT IS USUALLY THE TIME TO BUY STOCKS AND WHEN EVERYTHING WAS WONDERFUL IT IS NOT USUALLY A VERY GOOD TIME TO BUY STOCKS BUT I DON'T KNOW WHEN IT WILL TURN AND THE UNEMPLOYMENT NUMBER THE JOB LAYOFFS THIS MONTH OR THE REPORT WE GET ABOUT LAST MONTH IT IS AN INTERESTING STATISTIC BUT IT WON'T TELL YOU WHAT'S GOING TO HAPPEN IN THE FOLLOWING MONTHS

QUICK: WHAT DO YOU WATCH IF THE JOBS NUMBER IS A LACKING INDICATOR WHATS THE NUMBER THAT YOU WATCH MOST CLOSELY OUT OF ALL YOUR LINES OF BUSINESSES

BUFFETT: HOUSING IS SO IMPORTANT IT LED US INTO THIS IT WAS THE HOUSING BUBBLE THAT PRICKED A LOT OF OTHER BUBBLES BUT IT WAS A HUGE BUBBLE I AM VERY INTERESTED IN SOMETHING LIKE HOUSING STARTS BECAUSE WE ARE GOING TO FORM MAYBE A MILLION 300.000 HOUSEHOLDS A YEAR AND THEY'RE GOING TO LIVE SOMEPLACE AND IF WE ARE BUILDING 2 MILLION HOUSEHOLDS A YEAR WE ARE GOING TO HAVE TROUBLE DOWN THE ROAD THAT'S EXACTLY WHAT WE WERE DOING A FEW YEARS AGO IF WE'RE BUILDING 500,000 WE ARE HEATING UP THAT INVENTORY AND THE FASTER WE HEAT UP THAT INVENTORY THE BETTER OFF WE ARE THAT'S WHY IT IS REALLY NOT A GOOD IDEA TO HAVE ANY BIG PREMIUM TO INDUCE PEOPLE TO BUY NEW HOUSES WE DON'T NEED NEW HOUSES WE NEED TO MOVE THE HOUSES WE'VE GOT AROUND WHEN THAT GETS DONE AND WE HIT EQUILIBRIUM THE WORLD WILL CHANGE IN A BIG WAY

KERNEN: MR BUFFETT I THINK A LOT OF BUSINESS PEOPLE TAKE A LOT OF SOLACE WHEN YOU TALK TO PRESIDENT OBAMA WHEN YOU TALK TO HIS PEOPLE AND I THINK PRESIDENT OBAMA APPRECIATED YOUR SUPPORT DURING THE ELECTION AND USES YOUR NAME AT TIMES TO SAY WELL WARREN BUFFETT WE'VE TALK TO HIM ABOUT THINGS AND HE AGREES WITH HOW WE FEEL ABOUT THIS BUT THEN THERE WAS A TIME WHEN HE MENTIONED WELLS FARGO AND HE SAID WELL WARREN BUFFETT HAS A BIG INVESTMENT IN WELLS FARGO I'M JUST WONDERING DO YOU STILL TALK TO THE PRESIDENT ON THINGS HAVE YOU SPOKEN TO HIM SINCE THE ELECTION

BUFFETT: I'VE WAVED AT HIM ONCE OR TWICE AT PUBLIC EVENTS AND I HAVE SPOKEN TO HIM ONCE

KERNEN: DO YOU FEEL LIKE YOU'RE A CONFIDANT ON

BUFFETT: I'M SORRY JOE I WILL CORRECT THAT YOU SAID SINCE THE ELECTION I HAVE SPOKEN TO HIM MORE OFTEN THAN THAT SINCE THE ELECTION I HAVE SPOKEN TO HIM ONCE SINCE HE HAS BEEN IN OFFICE

KERNEN: WHEN YOU DISAGREED WITH HIM ON TRYING TO DO TOO MUCH ON CAP AND TRADE OR WHATEVER OR THE WELLS FARGO COMMENT IS ONE THAT STICKS IN MY MIND WHEN HE SAID WARREN BUFFETT HAS A BIG INVESTMENT IN WELLS FARGO IMPLYING THAT YOU WERE TALKING YOUR BOOK WHEN YOU WERE TALKING THE BANKS DID THAT CAUSE ANY CONSERMATION IN YOU AT THAT POINT

BUFFETT: I DON'T THINK I'LL EVER TALK ABOUT WHAT I TALK TO THE PRESIDENT ABOUT BUT I WILL CONFIRM I HAD ONE CONVERSATION WITH HIM LOOK THE TRUTH IS WE DO HAVE A BIG INVESTMENT IN WELLS FARGO I HAVE OWNED WELLS FARGO SINCE 1991 I'LL OWN IT PROBABLY 5 TO 10 YEARS FROM NOW SO IT DOESN'T REALLY MAKE ANY DIFFERENCE TO ME WHETHER WELLS FARGO STOCK GOES UP OR DOWN IN A DAY OR A WEEK OR A MONTH IT IS ENORMOUSLY IMPORTANT TO ME HOW THEY CONDUCT THEIR BUSINESS AND I THINK THEY HAVE DONE AN INCREDIBLY GOOD JOB OF RUNNING THEIR BUSINESS THEY'VE GOT THE LOWEST COST MONEY IN THE COUNTRY THEY'VE GOT THE GREATEST COMMUNITY BANKING SYSTEM THAT THE WORLD'S EVER SEEN AND INCIDENTALLY ONE THE GOVERNMENT NEEDED TO DO SOMETHING WITH PROBABLY THE FOURTH LARGEST BANK IN DEPOSITS WITH WACHOVIA THEY TRANSFERRED IT OVER TO WELLS FARGO AND THEY DIDN'T HAVE TO PUT UP A DIME OF GUARANTEES OR MONEY BY THE FDIC SO THE GOVERNMENT OBVIOUSLY HAD TO THINK PRETTY WELL OF WELLS FARGO AT THE TIME

GREGG: MR BUFFETT YOU MENTIONED THIS ISSUE OF PRIORITIZATION OF DEBT WHICH IS A HUGE ISSUE AND AS YOU KNOW THE CONGRESS IS DEALING WITH THIS ISSUE OF CRAMDOWN WHICH BASICALLY ALLOWS BANKRUPTCY COURTS TO REWRITE THE PRIORITIZATION OF DEBT I WOULD BE INTERESTED IN YOUR THOUGHTS ON THAT IT SEEMS TO MEAN THAT FOLLOWING UP ON YOUR BASIC THEORY THE CRAMDOWN WOULD UNDERMINE THE PRIORITIZATION OF DEBT SUBSTANTIALLY

BUFFETT: WELL IF I WERE LENDING MONEY IN ANY FORM BUT CERTAINLY IF I WERE LENDING MONEY IN HOUSING AND I HAVE SEEN PEOPLE COURTS UNILATERALLY CHANGE A LOT OF THE DEBT I WOULD BE A LITTLE MORE CAREFUL ABOUT HOW I LENT MONEY SO IT ANY TIME YOU GET INVOLVED AND THE SANCTITY OF CONTRACTS YOU ARE GOING TO MAKE PEOPLE RELUNCTANT TO ENGAGE IN THOSE CONTRACTS IN THE FUTURE AND YOU ARE GOING TO MAKE THOSE KIND OF CONTRACTS MORE EXPENSIVE BECAUSE SOMEBODY HAS TO BUILD IN THE COST OF LEGISLATION OR A COURT LATER FOOLING AROUND WITH THEM

GREGG: OF COURSE THAT WAS THE POINT MADE BY DANIEL WEBSTER IN THE DARTMOUTH COLLEGE CASE AS I RECALL SO I THINK THAT'S NICE TO HEAR

BUFFETT: WELL I AM GLAD I GOT AUTHORITY ON MY SIDE

QUINTANILLA: ONE LAST QUESTION I DON'T WANT TO GIVE YOU TOO HARD OF A TIME ABOUT THE OP-ED THAT YOU WROTE IN THE TIMES LAST FALL BUT WE ALL REMEMBER IT BUY AMERICAN I AM I WONDER IF YOU STAND BY WHAT YOU WROTE FIRST OF ALL AND SECOND IF YOU FELT ANY PERSONAL OBLIGATION OR RESPONSIBILITY TO TALK PEOPLE OFF THE LEDGE AT THE TIME IF ANY PART OF THAT YOU TRYING TO DO SOME GREATER GOOD IF THAT MAKES ANY SENSE

BUFFETT: NO I WAS SAYING WHAT I WAS DOING AND I SAID I DON'T KNOW WHAT THE STOCK MARKET IS GOING TO DO IN A WEEK OR A MONTH OR A YEAR BUT THE TRUTH IS THAT I DID FEEL THAT EQUITIES OVER A TEN YEAR PERIOD WE ALMOST CERTAIN TO BEAT A POLICY OF BUYING EITHER 10 YEAR BONDS OR BUYING SHORT-TERM BONDS AND CONTINUING ROLL THEM WHICH A LOT PEOPLE WERE DOING SO I THOUGHT PEOPLE WERE FOLLOWING FOOLISH POLICIES IF THEY REALLY WERE COMMITTED TO BUYING LIKE I SAY THE 10 YEAR GOVERNMENT OR BUYING SHORT-TERM BONDS AND ROLLING THEM THEY WERE GOING TO LOSE PURCHASING POWER OVER TIME AND EQUITIES WERE GOING TO DO FINE OVER TIME I HAD NO IDEA WHAT THEY'D DO IN THE SHORT TERM AND I STILL SAY THE SAME THING

QUICK: I WAS GOING TO ASK AS WE GOT INTO MARCH AND WE SAW SOME OF THOSE LOWS DID THAT MAKE YOU FEEL EVEN MORE STRONGLY ABOUT THOSE POSITIONS

BUFFETT: OH SURE

QUICK: DID YOU CONTINUE BUYING

BUFFETT: THE CHEAPER THINGS GO THE BETTER I LIKE IT IF I COULD BUY THE WHOLE AMERICAN ECONOMY AT THREE QUARTERS OF X INSTEAD OF X I FEEL BETTER OFF PARTICULARLY WHEN I CAN PAIR IT WITH ROLLING IN TREASURY BILLS AT A QUARTER PERCENT OR A HALF A PERCENT OR BUYING THE 10 YEAR AT 3% I KNOW BUYING THE 10 YEAR AT 3% IS NOT GOING TO WORK OUT THAT WELL IN TERMS OF PURCHASING POWER I KNOW THAT ROLLING TREASURY BILLS IS NOT GOING TO WORK OUT IN TERMS OF PURCHASING POWER AND I THINK I KNOW THAT IF YOU BUY THE AMERICAN ECONOMY AT 60% OF WHAT IT WAS SELLING FOR A FEW YEARS AGO AND YOU GET A CROSS-SECTION OF COMPANIES THAT ARE NOT HIGHLY LEVERAGED OR SOMETHING OF THAT SORT YOU ARE GOING TO DO WELL

QUICK: DOES THAT MEAN AS YOU GOT INTO MARCH YOU STEPPED UP OR CONTINUED YOUR BUYING EITHER IN YOUR PERSONAL PORTFOLIO OR THROUGH BERKSHIRE

BUFFETT: THE CHEAPER THINGS HAVE BECOME THE MORE I WANTED TO BUY NOW IF I RUN OUT OF GAS I RUN OUT OF GAS

QUICK: IN TERMS OF HOW MUCH CASH YOU HAVE ON HAND TO DO THOSE THINGS

BUFFETT: I LIKE MCDONALDS REDUCES THE PRICE OF HAMBURGERS TODAY I AM GOING TO FEEL GOOD EVEN THOUGH I BOUGHT HAMBURGERS AT A DIFFERENT PRICE YESTERDAY I MEAN I AM GOING TO BE BUYING HAMBURGERS EVERYDAY FOR THE REST OF MY LIFE AND THE CHEAPER THEY GET THE BETTER I LIKE IT NOW THERE'S NOTHING WRONG WITH AMERICAN BUSINESS OVER THE LONG TERM I MEAN THE CONDITIONS THAT MADE IT WONDERFUL CONTINUE TO THE DOW JONES AVERAGE STARTED THE 20TH CENTURY AT 66 AND ENDED AT 11,400 WE HAD A GREAT DEPRESSION WORLD WARS ALL KINDS OF THINGS IT DOESN'T WORK PERFECTLY EVERYDAY BUT IT WORKS OVER TIME

QUICK: ONE THING YOU ARE NOT GOING TO BE GETTING CHEAPER IS YOUR NEW YORK TIMES THERE'S A STORY IN THE FINANCIAL TIMES TODAY TALKING ABOUT HOW THE NEW YORK TIMES IS EXPECTED TO RAISE ITS NEWSTAND PRICES TO TWO DOLLARS UP FROM A DOLLAR FIFTY DURING THE WEEK AND SIX DOLLARS FROM FIVE DOLLARS OVER THE WEEKEND DO NEWSPAPERS HAVE A FUTURE YOU HAVE A STAKE IN WASHINGTON POST

BUFFETT: UNFORTUNATELY THEY DON'T I LOVE NEWSPAPERS BUT IF THE NEW YORK TIMES IS GOING TO SELL FOR TWO DOLLARS THE PRINT EDITION AND BE FREE ON THE INTERNET THEN THAT'S A VERY UNSUSTAINABLE MODEL OVER TIME AND I STILL READ THE PRINT EDITION BECAUSE I LIKE TO BUT IF I WAS A YOUNG PERSON MAKING SOME LUSCIUOS SUM WHY WOULDN'T I GO TO THE INTERNET AND READ IT FREE INSTEAD OF THE PRINT EDITION SO THEY ARE GOING TO HAVE TO ANSWER THAT AT SOME POINT AND SO FAR IT HASN'T BEEN ANSWERED

QUICK: BUT YOU STILL ARE KEEPING A STAKE IN THE WASHINGTON POST

BUFFETT: YEAH I HAVE HAD THE WASHINGTON POST STOCK SINCE 1973 SO YOU KNOW I AM IN THERE FOR KEEPS AND YOU KNOW THEY HAVE GOOD EDUCATIONAL BUSINESS THEY HAVE A GOOD CABLE TV BUSINESS BUT NEWSPAPERS I MEAN IF MR GUTTENBERG HAD COME UP WITH THE INTERNET INSTEAD OF MOVABLE TYPE BACK IN THE LATE 15TH CENTURY AND FOR 400 YEARS WE HAD USED THE INTERNET FOR NEWS AND ALL TYPES OF ENTERTAINMENT AND ALL KINDS OF EVERYTHING ELSE AND I CAME ALONG ONE DAY AND SAID I HAVE GOT THIS WONDERFUL IDEA WE ARE GOING TO CHOP DOWN SOME TREES UP IN CANADA AND SHIP THEM TO A PAPER MILL WHICH WILL COST US A FORTUNE TO RUN THROUGH AND DELIVER NEWSPRINT AND THEN WE'LL SHIP THAT DOWN TO SOME NEWSPAPER AND WE'LL HAVE A WHOLE BUNCH OF PEOPLE STAYING UP ALL NIGHT WRITING UP THINGS AND THEN WE'LL SEND A BUNCH OF KIDS OUT THE NEXT DAY ALL OVER TOWN DELIVERING THIS THING AND WE ARE GOING TO REALLY WIPE OUT THE INTERNET WITH THIS IT AIN'T GOING TO HAPPEN

QUICK: OK THERE'S A STORY TODAY IN THE WALL STREET JOURNAL ABOUT AIG TALK ABOUT HOW IT IS CLOSE TO THE SALE OF ITS JAPANESE HEADQUARTERS BUILDING FOR ABOUT A BILLION DOLLARS THIS IS SIGNIFICANT BECAUSE THE PAPER POINTS OUT THIS IS KIND OF SHOW OF THE DECLINE OF AIG IN ASIA YOU KNOW AIG WELL HANK GREENBERG WHAT DO YOU THINK ABOUT WHAT'S HAPPENED TO AIG OVER THE COURSE OF THE LAST FEW YEARS

BUFFETT: WELL ITS TRAGEDY I MEAN IT STARTED IN THE FINANCIAL PRODUCTS BUSINESS THERE IS NOTHING WRONG WITH THEIR PROPERTY CASUALTY INSURANCE BUSINESS WE WORK WITH THEM AND THEIR LIFE BUSINESS THEY PROBABLY HAD MORE MISTAKES ON THE ASSET SIDE BUT THEY STILL HAVE A BIG POWERFUL LIFE DISTRIBUTION SYSTEM THEY HAD A BLACK BOX AND THE BLACK BOX DELIVERED LITTLE NUMBERS TO THEM THAT THEY LOVED YOU KNOW AND QUARTER BY QUARTER AND THEN SOMEBODY LOOKED IN THE BLACK BOX AND THEY FOUND OUT IT WAS A BLACK HOLE AND TENS AND TENS OF BILLIONS I WAS THERE IN SEPTEMBER WHEN THEY THOUGHT THEIR PROBLEMS WERE 18 BILLION I THINK WAS THE EXACT NUMBER THEY REALLY HAD NO CONCEPT OF HOW BIG THE TROUBLES WERE AND IT WAS A HUGE HUGE BLACK HOLE AND THEY WERE MAKING BETS THEY DIDN'T UNDERSTAND

QUICK: WE HAVE JUST GOTTEN CONTACTED BY BANK OF AMERICA JUST CALLED IN TO POINT OUT THAT THEY ARE DENYING THE FINANCIAL TIMES ARTICLE THAT WE POINTED OUT BEFORE SAYING THAT THEY ARE DENYING THEY ARE SEEKING FRESH CAPITAL GOT ANY THOUGHTS ON THAT

BUFFETT: WELL THE THING ABOUT BANK OF AMERICA IT HAS A WONDERFUL DEPOSIT GATHERING SYSTEMN IT IS NOT QUITE AS WONDERFUL IN MY VIEW AS WELLS BUT BANK OF AMERICA MIGHT DISAGREE WITH ME THEIR MONEY COSTS MORE THAN WELLS BUT IT IS VERY CHEAP COMPARED TO SOME OF THE OTHER VERY LARGE BANKS BANK OF AMERICA WAS BUILT ON THAT IF YOU GO BACK DECADES SO THEY'VE GOT A WONDERFUL SYSTEM AND THEN THEY'VE GOT SOME ACTIVITIES THAT MAYBE ARE LESS WONDERFUL BUT THEY DO HAVE A TERRIFIC BASE I DON'T WANT TO COMMENT BEYOND THAT ON THAT I DON'T LOOK TO THE SPECIFICS OF BOFA AS HARD AS I LOOK AT THE SPECIFICS OF WELLS BUT THERE IS A VERY GOOD FUNDAMENTAL ASSET UNDERLYING BANK OF AMERICA

QUICK: IN YOUR OPINION WHAT HAPPENED THIS WEEKEND YOU HAD 35,00 SHAREHOLDERS FROM AROUND THE GLOBE MOST THAT HAVE EVER COME TO ONE OF YOUR MEETINGS WHAT WAS THE MOST IMPORTANT TAKEAWAY FOR YOU

BUFFETT: WELL WE HAD A LOT OF FUN AND WE SOLD THEM A LOT OF GOODS WE SELL THEM $180,000 WORTH OF CANDY WHICH WAS A RECORD WE HAD RECORD NUMBERS AND I THINK PEOPLE HAD A GOOD TIME WE HAD GOOD WEATHER WE GOT LUCKY ON THAT WE HAD A MUCH BETTER QUESTIONING SYSTEM THIS YEAR SO WE HAD A MUCH HIGHER QUALITY OF BERKSHIRE RELATED QUESTIONS AND WE ARE GOING TO FOLLOW THAT FORMAT NEXT YEAR AND I HOPE WE TOP 35,000 PEOPLE HAVE A LOT OF FUN I HAVE A LOT OF FUN

QUICK: WARREN DID ANY OF THE QUESTIONS SURPRISE YOU WERE ANY OF THEM TOUGHER THAN YOU WERE EXPECTING

BUFFETT: WELL WE LIKE TOUGH QUESTIONS I MEAN IT MAKES IT MORE INTERESTING WE'D FALL ASLEEP CHARLIE AND I WOULD IF EVERYBODY JUST SAID YOU LIKE HAMBURGERS AS WELL AS YOU USED TO OR SOMETHING SO TOUGH QUESTIONS ARE FINE AND IF WE DON'T KNOW THE ANSWER WE WILL SAY WE DON'T KNOW IT AND IF WE THINK WE KNOW THE ANSWER WE WILL TRY AND RESPOND

QUICK: WELL WARREN WE WANT TO THANK YOU VERY MUCH FOR BEING SO GENEROUS WITH YOUR TIME THIS MORNING AND WE APPRECIATE YOU GOING THROUGH THE PAPERS JUST A QUICK HEADSTART I WILL LEAVE THESE WITH YOU

BUFFETT: THAT'S TERRIFIC IT WILL SAVE ME SOME MONEY

QUICK: WARREN BUFFETT THANK YOU VERY MUCH





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