CNBC: Billionaire Buffett Says US in Recession, Long-Haul Will be Fine
Speaking on CNBC this morning, billionaire investor Warren Buffett said that the U.S. economy is in recession , however, in his view over the long-run the U.S. economy will do fine and that each generation will live better than the one before it.
He also said he is no longer offering to guarantee $800 billion of municipal bonds backed by MBIA Inc, Ambac Financial Group Inc, and FGIC Corp, three large bond insurers.
Buffett said that "from a common-sense standpoint right now, we're in a recession," though the U.S. economy has not yet recorded two straight quarters of declining gross domestic product, a traditional indicator of recession.
He said the environment is "nothing like '73 or '74 yet," referring to a deep economic downturn also marked by rising oil prices, higher inflation and falling stocks.
Still, he said investors should not rule out a significant economic downturn, and that Federal Reserve Chairman Ben Bernanke has a "very tough balancing act" in trying to boost economic growth without kindling inflation. Buffett said there is a fair chance that inflation may ignite in a "serious way."
Buffett said he is finding more buying opportunities in stocks following a 16 percent decline in the Standard & Poor's 500 .SPX stock index from its recent high in October.
"I find more things to look at now than I did six months or a year ago," Buffett said. But he acknowledged that conditions have changed "more dramatically" in the bond market. Berkshire last year spent $19.11 billion on stocks and $13.39 billion on bonds.
Published on March 3, 2008
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