In an interview on U.S. television on Monday week, Buffett said that the U.S. economy dived, but it will bounce back, although the recovery this time may cause inflation to be bad worse than what happened the 70s of last century.
78-year-old investor, said that the U.S. economy has nearly collapsed in September last year when credit markets are clogged, Lehman Brothers Holdings Inc. bankrupt and the insurance company American International Group Inc. to invoked for first aid. "At that time, the whole world almost completely stalling," he recalls.
The interview was done 9 days after Buffett sent letters to the shareholders of the insurance company and Berkshire Hathaway Inc. investment that an economy of this world are in a state of confusion and will continue place until 2009.
"America will face an 'economic Pearl Harbor', a scenario almost the worst drop in business activity and rising unemployment rate," Buffett said.
He called on lawmakers from both Republican and Democrat go flat aside partisan differences, come together under the leadership of President Barack Obama to restore confidence in the system banks, heal the economy and the realization of their efforts more effectively.
"People are confused and scared. Unable to people worried about the banking system, while in reality, many people are feeling it, "Buffett said.
According to Buffett, the American people, including himself, did not predict the severity of the drop in home prices, which led to the implications of the securitization of debt instruments and that their values side attached to the house prices continue to rise, or at least will not decline.
Economic recovery accompanied by rising inflation
Berkshire stock has fallen by about half since September 2008. Growth in a number of subsidiary companies such as automobile insurance company offset the weakness of the other member companies, including retail chain jewelry that Buffett has called "cleared up" .
Position Chairman and CEO said that Berkshire will participate less in the insurance market after the disaster has invested nearly 1 / 3 of cash available to the high profitability of securities issued by General Electric Co., Goldman Sachs Group Inc. and other companies.
Still have the optimism of the long term, Buffett said that the economy "can not turn your head in an overnight" and after 5 years "engine will operate smoothly."
He added: "We really have a major economic engine that most humans have ever created," but an economic recovery can pull inflation by then, demand will increase .
"In economics, there is no free lunch. But we're trying to have a lunch in the sense that we will pay later. "
Banks should "go back to banking"
Buffett calls on banks to "return to the banking activities" and a large number of banks will "escape from the flood crisis," even when not getting abreast of the shareholders.
That "a bank going bankrupt, the public should be allowed bankrupt" but Buffett also noted, "the indifference to the faith" in the banking sector is often a "stupid".
He said Wells Fargo & Co. and U.S. Bancorp, the holding company that Berkshire shares will perform better than ever after three years, while Finance Group banks are Citigroup Inc. Shedding that Berkshire shares do not have any, will continue to trend downward.
Finally, Buffett continues to affirm his pro school of long term investment and still reserve the comments made back in October last year that it was time to buy stocks in the United States, although he also expressed, prices could undo time spokesman later months.
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