Tuesday, January 20, 2009

Tom Brokaw Interviews Warren Buffett

In case you missed it, here is the transcript of NBC's January 18, 2009 interview with Warren Buffett.

Every time I read what Warren says, I relax. America is lucky to have such an articulate, honorable spokesman. Excerpts from the interview are below.

Warren on public pensions:

[T]he pension plans of states and cities...have been decimated in the last year. And the costs from that, the lack of revenue they're going to face as the economy slows, means that you are going to see a parade of mayors and governors to Washington like you've never seen it. And they're gonna say, "If you can help out General Motors, and you can help out Citicorp, you can certainly help out, you know, this state or that state." So I think it's gonna make inauguration day look like nothing in terms of the public officials that come in here and say, "We need help." Their revenues are gonna be down. Their expenses, particularly including pension expenses, are going to be up. And you're going to have unbalanced budgets just all over the country with states and cities.

Warren on economic stimulus:

[E]very time you read about 523,000, or whatever, those people losing their jobs in December, those are 523,000 human tragedies. I mean, I can think of nothing worse than going home and saying, you know, to a family that, "I've lost my job and we've got mortgage payments and food to buy." And so we need to solve that one. And we will have consequences to the kind of deficits we're running up. And some of them will be unpleasant. But I would rather face those consequences than to face the consequences of doing nothing.

Warren on investing:

[Investors] have to look to the business, the asset itself. If you own an apartment house you wouldn't get a [price] quote on it every day. You'd just look at the rent, and what your taxes were and expenses were. And if they all came in line with what you expected when you bought it, you'd feel you'd made a satisfactory investment, and you'd never get a quote on it. So I don't look at quotes. Mostly-- I can't tell you what Berkshire Hathaway [BRK.A, BRK.B] is selling for today.

Warren on bailouts:

Well, that's [bank, auto bailouts] exactly what we did in 1933. I mean, in 1933, when Roosevelt came in, there was something called the Reconstruction Finance Corp, RFC. Actually, It got enacted under Hoover in '32. But Roosevelt appointed Jesse Jones in 1933. And they put preferred stocks into the banks. They concentrated on banks, but they went into other things. Incidentally, when [Jesse Jones] put that money in, he told 'em what the compensation rate was gonna be too. I mean, he was a tough tsar. And it helped take the United States out of a depression. I mean, the RFC was an important component. And I'm sure they got criticized at the start. And they said, "People, you're throwing money into the wrong things and all that." ...But you can't separate Wall Street, Main Street, side streets. We are connected. This is one big community. And you better have credit flowing.

I knew that Congress authorized loans in 1979 to prevent a Chrysler bankruptcy, and J.P. Morgan once bailed out the Treasury, but this is the first time I've heard about the RFC and Jesse Jones. I shouldn't be so surprised--as I wrote here, the more things change, the more they stay the same.

No comments: