The Huffington Post and Yahoo! interviewed Warren Buffet recently. He described this recession as a “particularly tough” recession because it was the “biggest bubble” he had ever seen and its effect “reverberates throughout the economy”. Mr. Buffet explained that “the American economy almost sputtered to a stop in September 2008” and people became afraid. “People get scared in crowds. Their confidence comes back one at a time.”
He says the stimulus is working and the economy will improve in the next 2-3 years. “We’re hiring,” he adds referring to many of his Berkshire Hathaway companies, another sign that the recovery is on track. Mr. Buffet disagrees with Nobel Prize winning economist Paul Krugman’s prediction of the economy “in the early stages of a third depression.”
In the interview, Mr. Buffett says “we’re on the right course” and encourages President Obama to speak with “enormous confidence” about the country’s economic future. As for the deficit, he believes that it is not a sustainable course to have the deficit equal to 10% of the GDP, but believed it was necessary to stimulate the economy.
He believes that the two most important items in the financial reform legislation should be changing the incentives for the CEO’s and Boards of the “really big financial institutions” and “reducing leverage where it exists in extreme amounts”.
The best slides to watch are #1, #2, #8 and #10. Click here for the link to the interviews.
Link:
http://www.huffingtonpost.com/2010/07/08/warren-buffet-on-the-econ_n_639165.html#s111449
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An economist I visited with last week warned of two to five years of deflation, followed by a period of inflation. The concern? Americans are carrying unprecedented (and unsustainable) debt loads due in large part to the housing market insanity from around 1999 through the first part of 2006, high unemployment and the fact that no sector of the economy is strong enough to provide the job growth necessary to pull us out of the recession.
Huge debt loads and the fact that we don’t make anything in this country anymore are major concerns.
Still, economic speculation runs rampant these days. Who’s right, who’s wrong and who’s just guessing in hopes of boosting consumer confidence? Guess we’ll find out…