A few nuggets from the beginning of the interview:
- Buffett admits he believed that home prices could never fall.
- He said Barrack Obama (whom he supported for president) should focus all effort on the current "economic Pearl Harbor," rather than trying to push through a lot of unrelated, controversial legislation.
- He said America's upcoming inflation could be worse than the inflation of the 1970s, depending on how policymakers respond to it.
- He said the U.S. economy almost collapsed in September.
- There are 1.5 million too many houses in the U.S. right now, but population growth will take care of that over time. A big difference between America's housing decline and Japan's is that America has population growth and Japan didn't.
- Once we get past the current crisis, it's a great time to be in banking because the yield spread between a bank's borrowing costs and it's lending rates is huge. Banks will make a lot of money on the new lending they are doing.
- Buffett favors mark-to-market accounting, because he's seen what happens when CEOs get to choose their own numbers. However, mark-to-market accounting has been "gasoline on the fire" during the current crisis. He'd love to buy the banks' toxic assets at their current mark-to-market prices.
- He favors secret ballots for unionization, and opposes the Democrats' plans for card check, which is part of the Employee Free Choice Act currently before Congress. He thinks card check is a mistake.
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Where's the snide partisan swipe at Buffett like you had for Glassman? Buffett believed that housing prices would never (snicker!) fall. That's as dumb, if not dumber than DOW 36,000. He's also blind on the newspaper decline.
ReplyDeleteMy remark regarding Glassman and Hassett was not a "partisan remark," it was a factual remark. They DID get jobs at the American Enterprise Institute, a right-wing think tank. If you think I'm making that up, go look at their bio pages on the aei.org web site.
ReplyDeleteI'm sure plenty of Bubble Meter readers will give Buffett a hard time for his stupid belief about home prices.
For the record, I have also been accused on this blog of having a conservative bias.
Population growth isn't a panacea either however. In fact, I would view Japan's lack of population growth as an asset and not a liability.
ReplyDeleteYou might as well argue that we should just open up the borders and allow 1.5 million people in.
Errr... I remember Buffet stating that housing was overpriced well before the burst began.
ReplyDelete"Population growth isn't a panacea either however."
ReplyDeleteYou aint kidding. Letting in millions upon millions of uneducated 3rd world people isnt going to bring up home prices one bit.
Japan only lets you in if you are either married to a national or have a phd.
Anonymous said...
ReplyDelete"Errr... I remember Buffet stating that housing was overpriced well before the burst began."
He may have. Housing prices tend to be sticky on the downside, so often prices just sit flat for years rather than fall. That is, if prices are just a little overvalued, homeowners prefer to wait, rather than sell at a loss.
However, it appears that if housing prices are overvalued enough, then they will fall.
Anonymous said...
ReplyDelete"Errr... I remember Buffet stating that housing was overpriced well before the burst began."
He may have. Housing prices tend to be sticky on the downside, so often prices just sit flat for years rather than fall. That is, if prices are just a little overvalued, homeowners prefer to wait, rather than sell at a loss.
However, it appears that if housing prices are overvalued enough, then they will fall.
Where's the snide partisan swipe at Buffett like you had for Glassman? Buffett believed that housing prices would never (snicker!) fall. That's as dumb, if not dumber than DOW 36,000. He's also blind on the newspaper decline.
ReplyDelete