Peter Kafka

Recent Posts by Peter Kafka

Buffett: Unemployment Going Past 8 Percent

Not technically a media story per se, but the folks at Fox Business Network want everyone to know that they’ve got an interview with Warren Buffett running at 4 p.m. Eastern time today. They’ve taped it already, so they’re handing out transcripts and excerpts, and they’re pretty interesting. Given that FBN is only available in about 40 million homes, reading them will be the only way many of you will be able to get to the interview. (FBN is owned by News Corp., which also owns this Web site. Phew).

FBN is describing the chat as an “exclusive,” which is true in the sense that it is the only one running an interview with Buffett at 4 p.m. Eastern today–he tends to be fairly visible these days. Still, there’s some good stuff here, and not all of it is depressing. Excerpts follow:

On Unemployment:

“There are going to be more people unemployed…but I’m not worried about how we come out in the end. I mean, I’m not worried about five years from now. Five months from now, can be very painful…it will be considerably higher…. It will happen eventually [surpassing 8%], and we will go on to new heights, but it will not turn around by mid-year next year.”

On Berkshire Hathaway’s Stock Plummeting:

“No, it doesn’t make any difference. I mean, if you don’t own it on margin, you own a business…. I look to the business to determine my results. I’ll say it’s happened to me three other times in my life, too. It happened when it went from 90 to 40 back in 1974, and it happened in 1987. It went down 50 percent in 1998 to 2000. I mean, I hope I live long enough so it happens a couple more times to me.”

On the Auto Bailouts:

“I would drive a deal like I would drive myself if I were buying a business. And I think, I would say there’s plan A or plan B.  And if you don’t want to do it this way, you know, then…take bankruptcy.

“I would make the CEOs buy in. I would say, you know, the United States government is willing to put in X dollars, but we’re going to have you put in a certain percentage of your net worth right along with us.  We’ll give you more upside, but you’re going to lose if we lose.”

On the Future of Goldman Sachs:

“Their businesses are all tough now, but they’re going to get around it…. This time, the institutions got very, very leveraged, and when the whole world tries to be leveraged at one time, I mean, there is a lot of pain that goes around. But you know, the Goldman’s of the world, they’re going to be around. Some of them needed, I mean, not Goldman specifically, but some of them needed the help of the TARP.”

On the President’s Role in the Bailouts:

“I think really only the president can do that effectively. I think it’s very difficult for the Congress, where you’ve got 535 people where each–you know, one guy has a plan for Chrysler and somebody else has another–and I think that–and you have to have somebody who can deliver, who can say, if you do these things, we will come up with a solution. But if you don’t have a business solution, they’ll just be putting money in every year for the–you know, as long as the federal government’s around.”

On Being the Next Treasury Secretary:

“Well, I haven’t been asked. And I won’t be asked. But the answer is I wouldn’t give up my job. I’m glad to help in any way I can, but I would not do it.

“So I think, you know, we’ll know in a few days, perhaps, who the Treasury secretary will be. And we’ll go from there.”

On President-Elect Barack Obama:

“I think that Barack–I think that Hillary would have made a good president too, and I think Barack will make a terrific president. I think he’s the right person for this time…you need a strong, decisive, smart leader, who can communicate very well with the American people at a time like this. They need somebody they believe in, and I think that he has the qualities that are right for this time.”

On Selling Investments:

“…I do sell stocks. Not very often…if we’re going to put the money in the Goldman Sachs preferred or the General Electric preferred, the Mars-Wrigley deal, to some extent, if we have the money around we’ll use the money that is in cash. But I like to keep a lot of money around, so I will sell some things if I need to sell them in order to buy something else…. We don’t sell businesses, though. Businesses we own we keep.”

On His Next Investment Pick:

Not right now.  But that could change tomorrow. Both GE and Goldman Sachs happened on a phone call I got in the morning and I said yes.  It was–that’s that, something like that.

On Henry Paulson:

“I think it’s a very, very tough situation. There are no silver bullets here. It’s not like some one idea or three ideas that’s all of a sudden going to turn around the economy and the markets. We are in a negative feedback cycle. It’s going to last for a while. I don’t know how long it’s going to last…. And I don’t think I could have done a better job, and I don’t think most of the congressmen could do a better job…. I think that putting the capital in the various financial institutions, probably you’ll get more mileage out of that dollar spent than in the mortgage repurchase program.”

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