Warren Buffett Speaking On The Nation’s Debt Limit

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“Credit worthiness is like virginity, it can be preserved but not restored  very easily, so it is crazy to play around with it,” Warren Buffett said while speaking on CNBC…

 

Warren Buffett said Wednesday the threat to not raise the nation’s debt limit  “after you’ve already spent the money” is a “political weapon of mass  destruction” comparable to poison gas and shouldn’t be used by either party.

“I know it’s been used in the past, but we used the atomic bomb back in 1945  but we decided we weren’t going to do something like that again,” he said hours  before the government’s midnight deadline to raise the debt  limit or possibly default.

Buffett called on both sides to pledge not to use the debt limit as a weapon.  “There are plenty of weapons that can be used,” like filibusters, he said.

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In a live interview on CNBC’s “Squawk Box, the Berkshire Hathaway  chairman said he doesn’t expect the U.S. will do anything to damage its 237-year  reputation of paying its bills on time, but if it does it would be a “pure act  of idiocy” and “asinine.”

“Credit worthiness is like virginity, it can be preserved but not restored  very easily, so it is crazy to play around with it,” he said.

Buffett said Berkshire owns short-term Treasury securities but he isn’t  worried about getting paid.

He also said the ongoing crisis in Washington over spending and the debt  limit is no reason to avoid buying securities, pointing out that Berkshire  subsidiary Marmon Group just paid $1.1 billion for a British drinks dispensing  business. “We did not buy it with a condition that we could call off the deal”  if there was no vote to raise the debt limit, he said.

He added that in his long career, he has never put off a deal by a few weeks  to see what might happen in Washington.

When it was pointed out to him that he may be “unique” because he is a  long-term investor, he replied that “most people are.”

“If you take the people I meet in Omaha, you take the people who own farms,  you take the people who own apartment houses, most people are long-term  investors, thank heavens,” he said.

Buffett rejected the idea that investors should be worried about a bull  market “bubble” for stocks. He said, “We could at some point, but no, stocks are  not selling at bubble levels. What do you diversify in? You want to diversify  into cash? I think it’s a terrible investment compared to equities. You want to  diversify into long-term bonds? I think it’s a terrible investment compared to  equities.”

Buffett also said Berkshire’s spending rate on acquisitions this year is as  “high as ever.”

He told Becky Quick he had been working on a big acquisition, a $12 billion  “elephant,” but the deal didn’t come together.

Moments after Bank of  America announced better than expected earnings, Buffett said “the  banks are in the best shape I can remember.”

He also defended JPMorgan Chase CEO Jamie  Dimon amid the bank’s many legal problems, some of which are the result of its  acquisition of Washington Mutual at the height of the financial crisis in 2008.  “If a cop follows you for 500 miles, you’re going to get a ticket. And believe  me, you’ve had a lot of cops” following JPMorgan, he said.

Responding to activist investor Carl Icahn’s public calls for a large Apple stock buyback,  Buffett said, “I think Apple’s management has done a pretty good job of running  the company… and my vote would be with them.” He joked, “I just wish I’d  bought the stock many years ago.”

“I do not think companies should be run primarily to please Wall Street and  largely shareholders who are going to sell. I believe in running Berkshire for  the shareholders who are going to stay and not for the ones who are going to  leave,” he added.

Buffett said he has a “rooting interest” for the troubled retailer J.C. Penney because he  worked in one of their stores when he was younger, but acknowledged it’s “very,  very tough” to compete against competitors who are always moving. “Coming from  behind in retailing is just plain tough,” he said.

Berkshire companies are still selling a “significant” amount of goods to  Penney under “normal terms,” he said and he’s not worried about the retailer’s  survival.

In response to a question about the Obamacare health exchange rollout,  Buffett said with a chuckle that he’s glad he wasn’t in charge, but argued that  something is going to have to be done to control medical costs. They are the  “tapeworm” of the American economy, he said.

On the economy, Buffett said he continues to see slow improvement and pointed  out that “two percent a year growth with less than one percent population gains  means one percent real growth per capita. In 20 years that’s 20 percent. If  every generation lives 20 percent better than the generation before them, that’s  not terrible.”

Buffett wouldn’t comment on reports the CEO of Berkshire subsidiary Benjamin  Moore was fired due to sexual harassment. “Recently we had to make a change for  reasons I can’t get into,” he said, but pointed out the paint company is still  making a lot of money.

 

source: NBC News

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