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On CNBC March 9, he wasn't as sanguine saying the economy has "fallen off a cliff. (It's) in a shambles. Not only has (it) slowed down, people have changed their behavior like nothing I have ever seen (and government policy or at least its message has been) muddled." Then commenting on the importance of personal housing wealth and how much of it's been lost, he went the old adage one better about "the emperor ha(ving) no clothes."
"On top of that," he said, "the emperor doesn't have any underwear either." As a result, "We are in a very, very vicious negative feedback cycle" because people are scared to death and with good reason.
But Buffett didn't do a lengthy Q & A to scare people. He was there as a pitchman, a hawker like in a carnival, and his product is his own company, Berkshire-Hathaway, and America. When asked "Will everything be all right," he responded:
"The machine works (and buying) equities (is) the way to (profit from it). If (you) buy the right businesses, (you'll) do very well....American business will be worth more over time....Stocks will be worth more over time. I guarantee you that the Dow will be a lot higher."
Last October in his New York Times op-ed, Buffett said he's "buying American stocks." On March 9, he repeated the message even though the economy "is a shambles." Serious enough to need "the Oracle of Omaha" to save it, or at least try by making a public spectacle of himself on TV, and it wasn't the first time although others were more focused on his business or general view of things.
-- a system so unstable, crisis-prone, exploitive, unfair, self-destructive, and corrupted it can't endure;
-- Keynes warning about the consequences of "enterprise becom(ing) the bubble on a whirlpool of speculation;"
-- the inevitable decay that Marx and others predicted;
-- the untenability of great wealth disparities with few having too much and many too little - something untenable in the long run;
-- Lincoln's June 16, 1858 message to the Illinois Republican State Convention - that "A house divided against itself cannot stand;" slavery was the issue then; today it's inequality, human need, and growing poverty under a fundamentally unworkable system favoring wealth over public welfare.
Something else bothered Buffett as well - that Berkshire Hathaway (B-H) stock lost half its value, and the company had its worst ever year in 2008 since Buffett took it over in 1965 when it was a family-run textile maker. He's also not immune to credit default swap (CDS) problems, having increased his position to $14 billion as of year end 2008, and last year took hundreds of millions in write-offs as a result.
Further, some question B-H's health going forward given the current environment, insurance being his main business, and the worrisome CDS spreads on his debt. According to Merrill Lynch's Michaels Hartnett and Penn, they trade at wider spreads than those for Vietnam. They point out that GE is no better off as their swaps are wider than Russia's at a time its economy is reeling like many others.
Through March 11, B-H and GE were two of the six remaining companies rated AAA by S & P, according to CreditGuru.com. The others are ExxonMobil, Toyota, J & J, and ADP. In the late 1970s, 58 companies had the rating. That was then. This is now as two more of the mighty have fallen.