Quote of the Day: Warren Buffett

Warren Buffett has accused major investment banks of
creating their own downfalls:
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"It’s sort of a little poetic justice, in that the people that brewed this toxic Kool-Aid found themselves drinking a lot of it in the end"

"I wouldn’t quite call it a credit crunch. Money is available, and it’s really quite cheap because of the lowering of rates that has taken place.”
…he said what had taken place was "a re-pricing of risk,"  leading to an "unavailability of what I might call ‘dumb money’, of which there was plenty around a year ago."

Warren Buffett

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Poetic justice, indeed. Full video below.

 

I would have liked to see a less edited version of this . . . 

 

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Source:
Warren Buffett blames banks for meltdown
James Quinn
Telegraph, 9:27am GMT 07/02/2008
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/02/07/cnbuffet107.xml

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What's been said:

Discussions found on the web:
  1. Dave commented on Feb 8

    You forgot to mention in the same talk he said he was very bullish on the US.

    ~~~

    BR: That is not evident in the article I cite. Can you please source that? Many thanks . . .

    He did reiterate his negative views on the dollar . . .

  2. Ross commented on Feb 8

    By golly, I think the boy’s on to something here…

    The banks remind me of J. Wellington Wimpy. “I’d gladly pay you Tuesday for a hamburger today.”

    It’s Tuesday and here is the bill for all the free lunches.

  3. muckdog commented on Feb 8

    Greed is good until the game changes. There’s always greed somewhere, and Cramer will help you find it.

    I’m sure those folks signing documents stating their income was $20K a month to qualify for the $500K homes are losing their homes and going back to renting apartments. Which is probably where they should be anyways.

    Interest rates going down will help the banks. And it will help those who are not upside down in their mortgages to refinance. I’ve seen quite a pick-up in folks looking at homes in my ‘hood the past 2 weeks. Compared to no lookers the past 2 months.

  4. Barry Ritholtz commented on Feb 8

    I found the video — I’ll post above

  5. bonghiteric commented on Feb 8

    I will puke if I hear another pundit/tv trader say that the dollar will strengthen because the weak dollar trade is crowded.

  6. DEREK DeCLOET commented on Feb 8

    Buffett sitting on his wallet:
    Equity markets are not yet bargain-priced
    7-Feb-08 12:42 pm

    Buffett sitting on his wallet

    Equity markets are not yet bargain-priced and there’s more pain to come on Wall Street because of the debacle in U.S. mortgages, says Warren Buffett, the world’s second-richest man.

    “I was 370 points giddier yesterday at the end of the day than at the start of the day,” he said, referring to Tuesday’s 2.9-per-cent decline in the Dow. But, he added, “I’m not giddy yet. Things are not ridiculously cheap.”

    The iconic chairman of Berkshire Hathaway Inc. told an audience in Toronto that he’ll support the Democratic candidate for U.S.
    president, no matter who wins the nomination – “I think they’re both outstanding candidates” – and said it’s “poetic justice” that some big-name U.S. banks are getting hurt by the complicated packages of debt securities they helped create and sell.

    “The people who brewed this toxic Kool-Aid found themselves drinking a lot of it in the end,” Mr. Buffett said.

    Warren Buffett is sitting on his wallet, waiting for the right opportunities He also said he was not optimistic the housing bust would work its way quickly through the financial system.

    “It’s going to take a while, because there’s all these secondary and tertiary effects. It isn’t just subprime. When housing prices go down, it affects the prime stuff [too].”

    The Standard & Poor’s 500 index has dropped 9.7 per cent this year, while the Nasdaq ended Wednesday’s session some 20.3 per cent below its October closing highs, signalling that a bull market run that had begun in October, 2002, is officially over.

  7. Justin commented on Feb 8

    Oh please! when is this fricking bond insurance deal going to get done? Dam’it! Bernanke, costing this short big money, New York Government, costing this short big money, and Local Government, costing this short big money. Gee, I guess it doesn’t pay to be ahead of the game anymore. Kids out there don’t listen to your little league coach, your dance instuctor, or your parents…they’re full of shit! Due diligence means zero!!!

  8. drey commented on Feb 8

    Buffett is a national treasure. The line about ‘why did the banks feel like they had to find new ways to lose money when the old ways were working so well?’ is the best.

  9. Rodrigo commented on Feb 8

    A couple other interesting tidbits from the Q&A session:

    The only currency Berkshire currently holds is the Brazilian Real.

    He also mentioned there are currently 4 remaining candidates for the Berkshire CIO position and 3 for the Berkshire CEO position.

    Cheers!

  10. Rodrigo commented on Feb 8

    I should clarify: The only foreign currency Berkshire currently holds is the Brazilian Real.

  11. jtest commented on Feb 8

    Last sentence: I am a huge bull on the American economy. Ah yes. But what kind of time frame ? I doubt he meant this year.

  12. blam commented on Feb 8

    The whole conversation is about the banks when the real losers are the American savers and working people.

    The crimne family banks, with the aid of the US treasury and white house, and the Fed reserve have ripped this country off.

    Now they’re looking for a tax payer bailout. Europe is just as bad if not worse.

  13. techy commented on Feb 8

    i would say, i am bullish about USA.

    the reason being, i can see that when USA goes into recession everyone else will be in depression.

    and when money becomes plenty/cheap, and it does not return much being in a emerging market(high risk), it has to be invested in usa….

    that does not mean its going to happen in the next six months, or stock market in usa will go up.

  14. Pat G. commented on Feb 8

    “when the real losers are the American savers and working people.”

    I agree! They are the collateral damage.

  15. PeterR commented on Feb 8

    Let’s not forget about Buffett’s “Hair Trigger” warning — as well as cautions about the housing bubble — from 2005 (ancient history? – !!!):

    http://money.cnn.com/2005/05/01/news/fortune500/buffett_talks/

    [“Hair Trigger” quote under first chart via my link.]

    The man does appear to have pretty good perspective and precience IMO.

    Cheers

  16. RedcutiMat commented on Feb 8

    Techy, do you honestly believe that everyone will be going into a depression if the US goes into a recession?

  17. OkieLawyer commented on Feb 8

    RedcutiMat:

    It may be an extension of the old saw:

    “When America sneezes, the rest of the world catches a cold.”

  18. techy commented on Feb 8

    redcut..

    those guys already live in a condition of recession (barely able to feed themself) and unemployment as high as 10%, imagine what will happen if their economy slows down.

    in other words, usa is in such a shape, that a small slowdown will not hurt it much, but emerging markets may melt down leading to exodus of funds to usa.

  19. Joe Klein’s conscience commented on Feb 8

    PeterR:
    Remember when Buffett was buying boat loads of silver and other precious metals(and people were laughing and thinking Buffett has lost his mind)?

  20. Karl K commented on Feb 9

    Warren Buffet isn’t a “national treasure.” Give me a break.

    There is one thing Warren Buffet is indisputably: a flaming hypocrite.

    From his complaining about Bush tax cuts, even as he benefits from lower capital gains taxes, to advocating estate/death taxes, even as he gives away via trusts vast amounts of wealth to avoid those taxes, from complaining about how credit markets are transparent, even as he gets an exemption from 13F filing requirements, from keeping his investment in PetroChina even as the company turns a blind eye to genocide in exchange for oil (really, how do you think THAT decision would go over if Warren were a Bush supporter)…

    This slavish worship of Buffet is, frankly, disgusting.

  21. tom a taxpayer commented on Feb 9

    Here would be a real steaming pile of poetic justice: Ambac and MBIA tell Deutsche Bank, Citigroup, Goldman Sachs, and all the other Mismanagers of the Universe to go pound sand.
Why? Because like any insurer, the insurer does not have pay claims when the claimant has acted recklessly or fraudulently.

  22. Street Creds commented on Feb 9

    To get it right, Buffet bought into Petro China as a petroleum investment, who drilled in the Sudan. PetroChina, had a group who drilled in the Sudan. The dumb ass press built the story that Berkshire Hathaway was involved in the genocide in Sudan. Buffet sold his investment with a huge profit. I still assume he holds it in another company name. Its one of the best oil investments out there. Our dumbass energy policy still prohibits drilling in ANWAR, and the outer continental shelf. The Chinese are drilling 45 miles from Florida as I type this.

  23. dogcatcher commented on Feb 9

    anyone know where we can see the whole program?

  24. Doug Watts commented on Feb 9

    Our dumbass energy policy still prohibits drilling in ANWAR, and the outer continental shelf. The Chinese are drilling 45 miles from Florida as I type this.

    National policy also prohibits turning national parks into landfills and hazardous waste sites. It also frowns upon digging up cemeteries and throwing corpses into piles. The entire world is not obligated to revolve around your childish, crack-addict tantrum-like demands for more oil.

  25. RichardN commented on Feb 9

    Karl K,

    I agree that Buffett worshiping is often overdone, but your specific criticism is undeserved.
    Being honest/wise does not imply you also have to be stupid. You can advocate higher taxes on the rich on the grounds that it makes sense if _everyone in that bracket_ pays those higher taxes. The extra millions he would ‘donate’ would make no difference whatsoever. In fact, they make a much bigger difference reinvested by him than through the public sector.
    Transparency in the credit markets has very little to do with his 13F exemption. Transparency in the credit markets relates mostly to transparency in the _products_ themselves, not who owns them. The exposure of banks is now relatively well known, the value of their exposure is what lacks transparency. Whether or not the market knows that Buffett has acquired 100M of some stock, is frankly not a big source of opaqueness and uncertainty.

  26. wunsacon commented on Feb 9

    Why the ad hominem attacks on Warren’s positions?

    >> From his complaining about Bush tax cuts, even as he benefits from lower capital gains taxes,

    Do you mean that no one can advocate a change that would hurt their own position? That makes someone a “hypocrite”?? (Whether you know it or not, that’s the assumption underlying your criticism.) By your reasoning, anyone who doesn’t advocate policies to further their own self-interest is a person you condemn.

    So, what I learned from you is:
    “less selfish” = “hypocrite”

    >> to advocating estate/death taxes, even as he gives away via trusts vast amounts of wealth to avoid those taxes,

    Repeat my last blurb here.

    Plus, there’s what Richard said. Warren has a great track record at allocating capital. Warren said he wants to be as good at “spending” money as he has at “collecting” it. He’s not spending it on yachts, mega mansions, and Ferrari’s. He’s spending it on R&D at Glaxo for “unprofitable” diseases and much more. You would prefer he pay it into the national treasury for more bombs or for Medicare entitlements??

    So, what I learned from you is:
    “humanitarian” = “hypocrite”

    >> from keeping his investment in PetroChina even as the company turns a blind eye to genocide in exchange for oil (really, how do you think THAT decision would go over if Warren were a Bush supporter)…

    There’s genocide there? Why aren’t we doing something about it? Oh, yeah, the US dragged our feet on mayhem in Sudan and caused mayhem in Iraq. Where 500k civilians died and a million were displaced. I guess we should all disinvest from any US company that was somehow a part of this. Would that change US policy?

    No, it would not. Similarly, Warren’s response on this issue was: his disinvestment would not change a thing. If you want to make a political change, it has to be done politically. In the meantime, there’s no reason for him to sacrifice his own position in PTR to another party.

    So, what I learned from you is:
    “not engaging in futility” = “hypocrite” ??

    More generally, I’m tired of the conservative definition of “hypocrisy”. It’s not hypocrisy to operate (very successfully) within the confines of the law but recommend changes to laws. But, that’s how the Right ad-hominem-attacks a rich liberal.

    And when the Right wants to attack a poor liberal, there are ad hominem attacks for that, too.

    Damned if we do, damned if we don’t, heh?

    Nice…

  27. wunsacon commented on Feb 9

    As for Warren being “bullish on America”, it’s the very last statement he makes in the video in BR’s post.

  28. CaptiousNut commented on Feb 10

    Joe Klein,

    I believe Buffet did load up on silver – right before digital photography started killing industrial demand for the metal.

    I found a link,

    Buffett said Berkshire didn’t make any money on his silver investment because he “bought it very early and sold it very early. Other than that, everything I did was perfect.”

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