Warren Buffett’s CNBC Appearance
Legendary stock investor Warren Buffett appeared on CNBC’s “Squawk Box” this morning. Reuters’ Jonathan Stempel and Euan Rocha covered the event and wrote:
Warren Buffett said the U.S. economy is unlikely to improve before 2009, and there was a “reasonable chance” that Fannie Mae and Freddie Mac shareholders would be wiped out though the companies themselves are too big to fail.
The “Oracle of Omaha” touched on a number of topics, including:
Credit Crisis
Referring to credit deterioration, Buffett said, “Right now the situation is still getting worse, and I would say that I don’t see any early end to that.”
U.S. Economy
He also said Federal Reserve Chairman Ben Bernanke “does not have any magic wand” to bolster an economy facing weak growth and mounting inflation. “In my judgment it won’t be any better five months from now,” he said.
U.S. Stocks
Buffett said U.S. stocks are broadly “more attractive” than they were a year ago, adding that Berkshire has no currency bets against the U.S. dollar.
U.S. Mortgage Giants
Fannie and Freddie shares have plummeted as speculation grows about a government bailout of the companies, which own or guarantee almost one-half of U.S. mortgages. Shares of both have fallen more than 90 percent in the last year.
“They’re too big to fail,” Buffett said. “That doesn’t mean that the equity can’t get wiped out, and it almost has. In a practical sense, as institutions, they don’t have any net worth.”
Buffett forecast that “you’ll see some action fairly soon” to support the companies, but that he has not been approached to assist in any bailout. He said “nothing is going to happen” to investors in the companies’ insured mortgages or debt, but “the equity and preferred stock is another question.”
Transcripts of his “Squawk Box” appearance can be found here at CNBC’s “Warren Buffett Watch.”
Source:
“Buffett sees economy weak into ‘09”
Euan Rocha, Jonathan Stempel
Reuters, August 22, 2008
