Warren Buffett was a guest on the Charlie Rose show yesterday and made many cogent and interesting observations from his vantage point of CEO over scores of businesses in various forms of business.
1) He is convinced that we are in a recovery, albeit very slow. He sees increased profitability and expansion in a number of areas.
2) The Obama Administration in general has done a good job over the past years. The main mistake President Barack Obama has made was not emphasizing from the outset the seriousness and likely duration of the recession.
3) He does not think that either fiscal or monetary stimulus will accomplish much. In the first case, the 10% annual budget deficit is significant stimulus in itself. In the latter circumstances, with interest rates virtually zero for short term bank borrowing and long term interest rates relatively inexpensive, there is little more the Federal Reserve can do.
4) The economic turmoil in Europe over potential default on sovereign loans by Greece and possibly others is the result of a questionable joining together of such disparate economies. He commented that the EU can no longer “kick the can down the road” because the “can” will likely fall off a cliff. (We infer that Buffett anticipates the EU to come up with massive reserves to assure debt payment and governance and regulations impacting the hitherto freedom of nations to follow their own fiscal courses.)
5) He sees the current high unemployment as part of the natural order of cycles, however made much greater due to the excesses that brought it about.
6) Close to full recovery will follow a pickup in home building. That will occur only when family formations exceed the supply of houses.
7) He favors either a minimum tax on the “super-rich” which would cause them to pay at the top bracket level or a five-percent increase in the top bracket. (This willlbe verified or clarified when the interview is posted on line.) He estimates that this will bring in around $20 billion in added annual revenue which he considers to be not inconsequential. He also believes it is important for our democracy that there is a sense of fairness in the load sharing.
8) Buffett says class warfare has been going on for years with the result that taxes on the very rich have dropped from 29% to 21%. “As for class warfare…it has been going on for years and my class is winning!”
Visit the Charlie Rose web site in a couple of days at which time the interview will be posted. It is well worth the half hour. The show also is twice re-broadcast on the Bloomberg channel the following day.
