True to form, Warren Buffett made the headlines yesterday.
Here’s the story from his appearance on CNBC Monday morning with Becky Quick.
From AP by Josh Funk entitled: Warren Buffett says economy fell off a cliff
“Billionaire Warren Buffett said unemployment will likely climb a lot higher depending upon how effective the nation’s policies are, but he remains optimistic over the long term.
Buffett said the nation’s leaders need to support President Barack Obama’s efforts to repair the economy because fear is dominating Americans’ behavior and the economy has basically followed the worst-case scenario he envisioned.
“It’s fallen off a cliff,” Buffett said Monday during a live appearance on CNBC. “Not only has the economy slowed down a lot, but people have really changed their habits like I haven’t seen.”
He predicted that unemployment will likely climb a lot higher before the recession is done, but he also reiterated his optimistic long-term view: “Everything will be all right. We do have the greatest economic machine that’s ever been created.” Fear and confusion have been driving consumer and investor behavior in recent months, Buffett said.
The nation’s leaders need to clear up the confusion before anyone will become more confident, and he said all 535 members of Congress should stop the partisan bickering about solutions. Buffett said he believes patriotic Republicans and Democrats will realize the nation is engaged in an economic war.
“What is required is a commander in chief that’s looked at like a commander in chief in a time of war,” Buffett said.Whatever the government does to help the economy will likely benefit some people who made poor financial decisions, but Buffett said Americans should realize that everyone is in the same boat.
“The people that behaved well are no doubt going to find themselves taking care of the people who didn’t behave well,” Buffett said.
Buffett said he doesn’t regret writing an editorial last fall encouraging people to buy U.S. stocks, but he joked that in hindsight he wishes he’d waited a few months to publish the piece. Since that editorial appeared on Oct. 17, the Dow Jones industrial average has fallen from 8,852.22 to close at 6,626.94 on Friday.
Buffett stands by his overall advice that over time owning stocks will be better than so-called safe investments. “Overall, equities are going to do far better than U.S. government bonds at these prices,” he said.”
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