Monday, November 17, 2008

Financial Intelligence – Part XVI

An exclusive conversation with Warren Buffett

Warren Buffett's views on the current economic crisis in the US. This interview between Buffett and Charlie Rose is dated October 1, 2008.

7 comments:

Damien Tan

This is the first time I've seen Warren Buffet in person. What a surprise. All this while I've always thought he was the same age of Tom Cruise!

What he said in the 1st half hour sounded rather different than my idea of a typical free market system. It was clearly an interventionist standpoint, where he saw the markets rise and fall primarily as a result of state involvement. Hearing him say how the US congress was a critical factor was kind of scary. And I thought mixing business and politics was dangerous.

But I guess he might have been talking in the context of jump-starting a failed economy. The referees of Wall St were clearly asleep at the wheel and probably nothing short of forced action (thru regulation) can put the rogues in check. The references to consequent US inflation from bailouts means was scary. He's saying the contagion might linger 5 years or more.

Maybe he's right, nothing short of a big stick can reign in financial lawlessness and bring the confidence back to the market. As the Lehmans and AIGs are floored, only the US lawmakers have the clout to move anything. Kinda like the national guard.

Avatar

Dear Damien,

Whatever gave you the idea that Buffett was so [relatively] young?

Buffett is really a person of great integrity, in the context of the corporate world. He has always been against some of the excesses of Wall Street but many people did not share his views, e.g. on derivatives. And frankly, he's honest and speaks clearly without pretensions. Don't let the homely, aw-shucks humility fool you... behind that persona is a brilliant, emotionally intelligent and wise mind. His analogy of Cinderella and the sub-prime crisis was spot on.

The free market system without any sort of intervention is susceptible to abuse and greed. The end result is the current US economic crisis. Yes, like you mentioned, only the US Federal Reserve has the clout the clean up the mess. I'm of the opinion that the global economy will take at least another two years to recover. At best, a real recovery will start only in 2010 onwards.

Rgds

Keong

fren, it's our 10th anniversaries in d workforce.... sometime find it good to have a downturn.. i'm looking for "something".

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Dear Ah Keong,

What a Life huh! When we first graduated, it was in the midst of a serious Asian economic crisis. Now, after a 10 year anniversary, we are in a Global economic crisis. Talk about coincidences.

As to looking for something, you and me both! :)

Rgds

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In my opinion that the global economy will take at least another two years to recover.

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