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March 9, 2009

Warren Buffett: Congress Should Unite Behind President Obama

warren-buffett-tips-for-getting-rich Billionaire Warren Buffett whose Berkshire Hathaway Inc. posted its worst results ever in 2008, said the economy “has fallen off a cliff” and that efforts to stimulate recovery may lead to inflation higher than the 1970s.

During an appearance on the CNBC television network Buffett said that the American public is fearful, confused and changing their buying habits which is showing up at Berkshire’s operating units. While the recession will end and future generations will live better than their parents, the economy “can’t turn around on a dime,” Buffett said, adding that some inflation is appropriate right now.

“We are doing things now that are potentially very inflationary,” he said. Buffett called on Congress to unite behind President Barack Obama, comparing the economic crisis to a military conflict that needs a commander-in-chief. “Patriotic Americans will realize this is a war,” he said.

Berkshire’s shares have lost almost half their value in the past year as the bear market dragged down financial assets and the recession put pressure on profit from the company’s more than 70 operating businesses. The Geico insurance unit and Dairy Queen ice cream business have gained ground while the jewelry units are “just getting killed,” he said.

Bailouts of the banking system and “quasi-banks” such as American International Group (AIG) were necessary, even if everyone dislikes what’s been done to salvage the New York-based insurer, Buffett said. He favored insuring all bank deposits, and in response to a question about nationalizing lenders, Buffett said he doesn’t see any moral hazard in the U.S. seizing an institution when shareholders are already almost wiped out.

Buffett believes that companies used too much leverage and “played games” such as creating special investment vehicles to keep producing earnings growth. “Corporate America has a lot of room to behave better,” Buffett said.

The nation’s richest people don’t need a tax cut, he said, although chief executive officers shouldn’t be “demonized” for using corporate jets that help them be more efficient. Berkshire owns NetJets which leases private aircraft to corporate customers.

Buffett was ranked the richest man in America by Forbes magazine in October. He transformed Berkshire — based in Omaha, Nebraska, from a failing textile maker into an enterprise with businesses ranging from ice cream and underwear to insurance and utilities.

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8 Comments »

  1. Geico, of course is going to do well. They are government owned. Dairy Queen doing well is a surprise to me. Just like Warren Buffet said these companies were using to much leveraging. So when things went sour these big companies went to asking. GM is just such an example.

    Comment by moneycometh — March 9, 2009 @ 3:31 pm | Reply

  2. Obviously this article is a liberal spin on what Buffett said this morning. I heard that Obama needs to STOP demonizing industries and individuals. He needs to stop pointing fingers. The majority democrats need to stop filling bills with pork and ear marks. We need to make priority one the economy, priority two the economy ,and priority three the economy.

    Comment by matt — March 9, 2009 @ 6:05 pm | Reply

  3. I agree with Mark about the priorities. Of course the financial sector is the foundation for the economy; and energy could be a growth area.

    But I must be the contrarian and say this: Well then the GOP must stop applying for pork projects. Well then the GOP must stop demonizing and pointing fingers.

    Both parties are lobbying organizations themselves as they apply pressure to their members. To me, the real question is who are the members that can break from the party in order to work on constructive, bipartisan solutions over simply casting a party-based yes or no.

    Thanks for the post Paulette! Mr Buffett is a voice to be heard.

    Comment by afrankangle — March 10, 2009 @ 11:05 am | Reply

  4. Companies like GM aren’t even really in control of their own company. With the unions basically running the company how can you hold GM completely responsible?

    Comment by National Directory Search — March 13, 2009 @ 12:55 pm | Reply

  5. I think that priority number one has to be JOBS… The economy cannot rebound without Americans spending money here, in America and not by sending jobs and money over to China and India. Without jobs, there is no spending. Jobs is the economy. It’s not all Wall Street. There are many small industries, at least in Pennsylvania, that are still creating jobs. For a look at some of these industries, check out http://pennportal.wordpress.com
    Let’s start buying American and let’s start looking for the Union Label. These were the mantras of the ’70’s and then Reaganonmics began to dismantle the Unions and encourage outsourcing of our jobs so that CEO’s of corporations could benefit and Wall Street could remain Fat Cats.

    Comment by Cats r Flyfishn — March 14, 2009 @ 2:28 pm | Reply

    • Cats your words could not be truer. We need jobs, jobs, jobs! I want my taxes prepared by an American in America. When I call customer service I want to talk to an American in America. America has to start looking out for America – that’s what made us a prosperous ‘America’. Where is the loyalty to Americans? I have no problems helping other countries but we have to be able to help ourself before we can help anyone else. Thanks for the link Cats.

      Comment by Paulette — March 15, 2009 @ 7:55 am | Reply

  6. Nice post! Keep it real.I have looked over your blog a few times and I love it.

    Comment by Our Insurance — March 17, 2009 @ 12:47 pm | Reply

    • Hi Our Insurance – Thanks so much for stopping by. I’m glad that you’re enjoying the posts. I do try to ‘keep it real’. 🙂

      Talk with you soon!

      Cheers!

      Comment by Paulette — March 17, 2009 @ 12:53 pm | Reply


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