6:22 AM: Buffett
reveals that Berkshire made a half-billion dollar bid on a Chinese
stock that wasn't accepted. He wouldn't say what
stock or what industry. He did say that under the
right circumstances he could have a lot of money in China, but
noted that there are government restrictions on foreign ownership
that must be overcome.
Three Hours with Warren
Buffett
Published on Fri, Aug 22 at 17:56 , Updated at Mon, Aug 25 at
14:32
Source : CNBC
http://www.moneycontrol.com/india/news/fii-view/three-hourswarren-buffett-/14/35/353080
Warren Buffet Watch is a live blog of
Warren Buffett's appearances on CNBC's Squawk
Box. Buffett spoke with Becky Quick live at the
Holland performing arts center in Omaha, Nebraska.
All times are eastern.
8:17 AM: Buffett
repeats his belief that a windfall profits tax on oil doesn't make
any sense, despite the fact that his favored candidate, Barack
Obama, has expressed support for such a tax. He notes that no one
is calling for a tax on other commodities that have gone up in
price like soybeans. The oil companies are an
easy target.
8:15 AM: Buffett
says he didn't give any money to the John Edwards campaign, but if
he did he might be asking for his money back.
Buffett muses that there should be a class-action suit brought by
contributors who want their money back because Edwards was
soliciting funds while lying about an extra-marital affair that
would prevent him from ever becoming President.
8:10 AM: Buffett says he was late
getting into railroad stocks, like Burlington Northern. He can't
believe he didn't realize how cheap the stocks were ten years
ago.
8:06 AM: Would Buffett buy additional shares in
the financials he already owns like American Express and Wells
Fargo if prices come down? Is he buying shares
now? Buffett replies that he has indeed been
buying shares in one of those two names lately, but won't say which
one. He points out that both companies were both
started by the same people.
8:01 AM: Are
there bargains in the stock market? Buffett says yes, there are
companies that are better today than they were a year ago selling
for lower prices. When he gets calls from someone
who has just lost billion of dollars and wants to be replenished,
he doesn't get that excited. He points out that when someone tries
to sell something to you, like an investment, it probably isn't
worth buying. The best ideas come from your own ideas and
digging.
7:55 AM: Buffett reveals that on
September 9 at Boston's Fenway Park, he will be throwing out the
first pitch with former General Electric CEO Jack Welch as his
catcher. He jokes that whatever pitch Welch calls
for, even if it is the pitch that bounces several times before it
reaches the plate, he "will throw that pitch."
7:53 AM: Buffett: The Fed "has
real problems on inflation." Some Berkshire
businesses are being squeezed on prices. For
example, carpet manufacturing involves a lot of
oil. The price of making carpets keeps going up,
but it's hard to pass those costs on to consumers due to weak
spending. Wholesale prices will "have to" show up
in consumer prices. Once inflation is "ignited" it gets difficult
to bring it under control.
7:45 AM: Real
test for a politician is whether they will support something their
constituents oppose. He says both sides in the campaign are not
addressing some issues because it would cost them votes.
7:42 AM: Buffett
says he has no bets against the U.S. dollar right now and no direct
currency plays. He also notes that stocks are generally more
attractive now than they were a year ago.
7:40 AM: Buffett
says there's a "reasonable chance" that Fannie and Freddie's equity
will be wiped out. They keep existing because they're backed by the
government, and the government should continue to support them,
expect for the equity portion. He notes that Berkshire had been a
big holder of the GSEs before selling the entire stake around 2000
and 2001.
7:38 AM: After an interview from
Beijing with a GE executive, Squawk returns to Becky and Buffett in
Omaha. She asks what grade he would give to the
Federal Reserve. He says he admires anyone who
takes on a very difficult job. He might not
always agree with Fed Chairman Ben Bernanke but he admires that
Bernanke is taking tough problems with no obvious
answers.
7:22 AM:
Peterson says his foundation is looking at new media, including
websites like Facebook, to try to get young people energized about
doing something about continued deficits.
7:15 AM: Dave
Walker returns and is joined by Pete Peterson, whose foundation
provided financial backing for the I.O.U.S.A film and AARP CEO Bill
Novelli. They all participated in last night's
live panel discussion after the premiere of
I.O.U.S.A. Walker says the cost of health care is
the biggest problem contributing to the nation's bleak financial
future. Buffett says he believes the economy will
continue to grow and "unleash human potential" so he isn't as
worried about the future as Walker and Peterson
are. "The pie will grow."
Still, he says, you always need to be thinking about the
future. He fears large current account deficits
could be dangerous politically years down the road, even if they
don't stop the economy from growing.
7:10 AM: Asked
about the oil market, Buffett says demand and supply for crude has
changed significantly in the past five years. He thinks Boone
Picken's energy plan is "on the right track" and warns that the
world can not keep increasing its demand for oil.
7:07 AM: Becky
notes that in Berkshire's latest SEC filing, the company keeps
information about its holdings of Conoco-Phillips
secret. She can't get Buffett to say anything
about whether he's been buying or selling the stock
recently.
7:05 AM: Buffett
confirms that he sold 60 percent of his Anheuser-Busch shares at
prices around $61-$62 before the company agreed to a friendly
merger with InBev at a sweetened price of $70.
Buffett says at the time he wasn't sure the deal would go through
given Anheuser's strong resistance to InBev's original
bid. "In retrospect, I was wrong," but he says
that often happens.
7:03 AM: Becky
asks again about the economy and he repeats his view that the
negative ripples will continue to spread for
awhile. He sees no "early end" to the problems
although they will end eventually.
6:56 AM: Buffett
says he does not have a "buy order" right now for any oil sand
companies.
6:53 AM: Buffett
talks about the trip he made this week with Bill Gates and some
others to see the oil sands in northeastern Alberta,
Canada. Buffett says he and Bill wanted to see
what it looks like rather than just read about
it. He confirms the trip was arranged by
Omaha-based Kiewit Corp, which is doing some construction work
connected with oil sands development. Asked if
he's interested in investing in oil sands, he said no, but that the
information he learned about the industry has been filed away and
could become useful at some point in the future.
6:48 AM: Is
Fannie Mae going under? Buffett says in a sense
they already have because they wouldn't survive without government
backing. "They priced risk wrong."
6:46 AM: Buffett
says "investing in yourself" is always the best thing.
6:44 AM: Becky and Warren have
moved from the stage of the auditorium to a couple of the seats in
the audience. Becky plays taped questions from
some of the people who attended the movie premiere last
night. The first question is about the American
character and debt. Buffett says there's nothing
wrong with having some debt, it just becomes a problem when it gets
too bid. "Berkshire can expect to have debt
forever" and shareholders wouldn't want it to operate
debt-free. You worry when debt begins to spiral
higher, because it then becomes more difficult to keep borrowing
money from around the world.
6:34 AM: Becky
introduces Dave Walker, CEO of the Pete Peterson Foundation, whose
campaign to raise awareness about the nation's national debt forms
the basis of the film I.O.U.S.A. While Buffett doesn't agree with
Walker on just how bad the problem is, he says he does admire
Walker's work and thinks it's always better to try to get
politicians to think longer-term.
6:22 AM: Buffett
reveals that Berkshire made a half-billion dollar bid on a Chinese
stock that wasn't accepted. He wouldn't say what
stock or what industry. He did say that under the
right circumstances he could have a lot of money in China, but
noted that there are government restrictions on foreign ownership
that must be overcome.
6:17 AM: After
returning from a commercial break, Becky brings in Carl
Quintanilla, who is co-anchoring from the Summer Olympics in
Beijing. Becky asks about Coca-Cola's sponsorship
of the Olympics. (Berkshire has a big stake in
Coca-Cola: Buffett says Olympic spnsorship is
good for a company like Coca-Cola that wants to be associated in
people's minds with happiness, competetition, and nations coming
together. Buffett says he's been enjoying
watching the Olympics on television, but he hasn't gone to China
himself to see any of them.
6:13 AM: Buffett
says derivatives aren't evil, but can be misused.
"They are dangerous things." Says he knows every
derivatives contract Berkshire Hathaway has bought.
6:12 AM: Buffett
says that while Fannie and Freddie have looked for cash from the
private sector, it won't be enough to save them.
Government will have to step in. His comments
raise the possibility that he and Berkshire had been approached to
provide capital to Freddie and Fannie, although he does not address
that directly.
6:10 AM: Buffett says problems of
GSEs illustrate how difficult it is for government to regulate
companies where management is trying to deceive or simply doesn't
know what's going on.
6:06 AM: Asked about Fannie Mae
and Freddie Mac, Buffett says due to implicit government backing,
the two GSEs could borrow without the usual checks and
balances. Then needed to keep earnings growing to
keep stock market happy and turned to accounting to do
it. Agrees they are "too big to
fail." Buffett says they would have been gone a
long time ago if the government hadn't been behind
them. He thinks Freddie and Fannie will survive
but shareholders could "lose a lot of money."
6:05 AM: Still
thinks the economic problems will be deeper than longer than
expected. He expects things will be better five
years from now, but not five months from now.
"Troubles feed on themselves."
6:03 AM: Buffett
says "things have rippled out" in the U.S. economy, as one might
expect.
6:01 AM: Becky
Quick introduces Warren Buffett and plays a clip from the
documentary I.O.U.S.A, which premiered last night in hundreds of
movie theaters around the country.
Buffett says he doesn't think the
problem of the national debt is as bad as portrayed in the film,
but he admires the people who made the film and thinks its good
that people are thinking about the situation.
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