BECKY: Something along those lines.
BUFFETT: ...that’s always going to be the case.
BECKY: Although we get something like number 89, control room. This is a little bit tongue-in-cheek. But is there a tax you don’t like? This was a Twitter that came — a tweet that came through. “When did this start and you’re aware there’s another side of the balance sheet?” What do you say to people like that?
BUFFETT: I don’t like any tax. I’ve got my tax return here from when I was 13 and I paid $7 and I can tell you that I did not like paying the $7 at that time. The — no — but the reality is that we are going to have to raise 18.5 or 19 percent of GDP and revenues and I certainly think that the people who are very wealthy should do more than the people like my cleaning lady. And I’m not going to like it. You know, when I sit down and write the check for whatever it may be I’m not going to like it. But I also like this country and I think that what this country offers is wonderful and I think a very rich country should take care of the people that get the short straws in life. So I believe in things like Social Security, which is paid for by taxes. I believe in a good public school system, which is paid for by taxes. Even people who have no children, I think, should be paying, particularly if they’re well to do, I think they should be paying for the — for a good school system for society as a whole. I believe in good medical systems. So, you know, that does not come free. And taxes are what we pay.
BECKY: There are a lot of people who are trying to figure out the economy, and we could talk more about this in a just a minute. But, overall, your view of the economy is that it continues to improve.
BUFFETT: The economy has been getting better since late summer of 2009. I said it was getting better then, and it’s been getting better. And we see it in all our — we have 70 plus businesses, and we’re seeing it in every place except those related to home construction.
BECKY: OK. Joe, we’re going to talk more about that in just a moment, but I figure this is a good time to kind of look at what the economy is seeing and what Mr. Buffett sees in the stock market and other arenas, too.
JOE: All right, sounds good, Beck. A lot more with Warren Buffett right after break.
Let’s check on the futures this morning. They’ve been trading lower most of the session, the market session, a little bit better than they were, down about 50 points.
Now making headlines, US economists seeing more reasons for optimism this year. A new survey from the National Association for Business Economics, that as forecasters have raised their expectations for employment. Also for new home construction and business spending this year. We’re going to have more headlines and some stocks to watch coming up in just a bit. SQUAWK BOX with three hours of Warren Buffett will be right back.
BECKY: Welcome back to SQUAWK BOX. We are live in Omaha this morning at the World Herald Freedom Center. This is the printing presses for the Omaha World Herald. We’re speaking to Warren Buffett, who’s the chairman and CEO of Berkshire Hathaway.
And, Warren, for people who are just tuning in, we should tell them we’re here because the Omaha World Herald is an acquisition that Berkshire Hathaway recently made.
BUFFETT: Yeah. In December of last year, just a couple months ago, Berkshire bought the Omaha World Herald. I’ve been reading it since I was about six. I study these things a while before I write a check and, you know, it’s a terrific newspaper. I’ve read it every day, you know, throughout my lifetime, and it was employee-owned and there were some cash problems in terms of redemption of stock that was built into the system, so it become advisable to look for a new owner, and I’m glad they looked for me.
BECKY: Someone did write in and wanted to know if you had any say over the editorial content.
BUFFETT: Zero, zero. No, my guess is that next year that they will probably endorse somebody for president, and I’ll probably vote for the other guy. But who knows?
BECKY: OK. Let’s get back to the economy. We have talked an awful lot about how you see things going along. And in Berkshire’s 70 businesses or 70 some businesses, you have continued to see slow and steady gains. Is there a sign in any of those businesses yet that there really will be a turn in housing or is that just something your gut tells you at this point?
BUFFETT: It — if you look — if you really were looking for it you might find some little flicker someplace. But the important thing is if you take our five largest businesses, and they’re big.
BECKY: Yeah.
BUFFETT: They all — you know the aggregate earning are over $9 billion. And they’re basic businesses, you know, whether it’s a...
BECKY: Outside of insurance.
BUFFETT: Outside of insurance, every one of them set an earnings record last year. I think it’s pretty likely that every one of them sets an earnings record this year. I mean, these — you know, they earned over $9 billion pretax last year. So these are big businesses. And, you know, the people — we’re hiring in those businesses. People don’t have to worry about their jobs in those businesses. So it — the economy is coming back every place except home construction, and it will come back in home construction, I can guarantee you that. I just don’t know when.
BECKY: There’s an impression that businesses are not investing in the United States, and that’s something a lot of people have said. But you point out in your annual letter that Berkshire is spending a lot of money on capital expenditures, $8 1/2 billion in 2011?
BUFFETT: Yeah. We spend — we spend 8.2 billion in — which was an all-time record by — it broke our record by $2 billion. Ninety-five percent of that was in the United States. And that 8.2 billion we spent last year, we’ll break that record again this year, and it’ll almost all be spent in the United States. There are all kinds of opportunities in the United States. And we have the cash to take advantage of those opportunities, and American business has the cash to take advantage of the opportunities. There is — there’s not a shortage of investment funds in the United States in any way, shape or form, and there’s not a shortage of opportunities.
BECKY: Do you believe the recent jobs numbers that we’ve been getting a look at, that indicate that hiring is starting to pick up a little bit and the unemployment rate is starting to come down?
BUFFETT: Yeah. Hiring is picking up but — it’s picked up in our businesses unless they’re related to housing construction. I pointed out in the report our housing businesses are down from their peak of 58,000 people to 45,000 people. When housing comes back, we’ll be hiring at those five companies. But a lot of jobs that aren’t called construction jobs in the United States are tied to construction. So when we go down 8,000 people or so at our carpet business, those are not called construction jobs, but they’re related to construction. Same thing with insulation and other things.
BECKY: You know, Warren, we talked to the CEO of the Gallup organization, and he pointed out some things that they’ve seen in their weekly and monthly polls that they run. They’re constantly talking to people. His concern is that we will see the jobless rate or the unemployment rate pick back up to about 9 percent when we get the next monthly report for jobs. Would that surprise you?
BUFFETT: Well, it would surprise me. But what counts is over the next year, two years and three years. We’ve been coming back. I mean, we — you know, it was — it was September of 2008 when I was on CNBC. I called it an economic Pearl Harbor. I’d never used that term before. I mean, that — it isn’t that I come up with that all the time. I mean, we went through something that this country hasn’t seen before in the way of a financial panic. The country almost stopped. And that financial panic bled over into the general economy very quickly and very severely. And we’ve been coming back now for three years from that, and we continue to come back. But I will predict that our businesses will have more people working for them at the end of this year than at the start of the year.
BECKY: Joe, you have a question, too?
JOE: I do. I’m amazed at how much mail we’re getting on a lot of this. Go back one more second, Warren, and we’ll get back to this current line of thinking. This gentleman writes in, pretty interesting, “Why would I ever consider sending more money to Washington, given the inept policies and investments of our government? Would Warren continue to send money into a business black hole if it had a similar track record?” And I was thinking, if the government was a business and Berkshire was looking at it, there’s no way Berkshire would even take a 1 percent stake in the government with their track record of investments. And I’ve gotten you to admit in the past that one of the reasons you think the Gates Foundation will do a lot better with your 50 or 60 billion is because even charities have a better — a much better reputation for watching how money is spend and for doing more good. So with all that in mind, can you at least see how someone might be sort of just, on an intellectual basis, opposed to just giving a blank check to such a profligate entity?
BUFFETT: Anytime an organization is as big as the US government or any other government, they are not going to be as efficient, obviously, as smaller organizations. But I’ve heard that argument since the late 1930s when my two sisters and I sat around the dinner — the dining room table and my dad presented it day after day. And it was true then, too. It’s been true every year that I’ve been alive. On the other hand, we have successfully defended the country, we’ve built the greatest industrial machine the world’s ever seen, we’ve built the richest population the world’s ever seen. We’ve done that with the government...
JOE: The government didn’t — the government didn’t do that, though. In that I think the...
BUFFETT: Oh, no. Having — I think the government...
JOE: But the question, Warren, if there’s only so much capital, there’s only so much capital in the world, and you look at where it’s going to do the most good or where it’s going to be treated best, shouldn’t we, at least in the back of our mind, think that the private sector’s a better place to keep it than in — than in the government sector? Because every dime that you give to the government, it’s not necessarily going to help the people that are in need that you’re talking about, Warren, for education. It’s going for political decisions benefiting cronies or benefiting ill-conceived venture capital-type Solyndra investments. I mean, they’re — there’s just a vast amount of waste.
BUFFETT: And, Joe, that’s been true throughout your lifetime. And you take — you take the 60 years or so since World War II, and we have sent 18 to 19 percent of our resources to Washington and they’ve been treated just like you described.
JOE: Right.
BUFFETT: And we have had — we have had an economy that’s been wonderful. It has a market system. Capitalism works.
JOE: But is it in spite of — in spite of — in spite of or because of?
BUFFETT: Both, both, both.
JOE: Right.
BUFFETT: No, I’m not kidding. It’s both. I mean, you know, you would not — you would have — you would have loved what the government was doing, you know, on December 8, 1941. You would have not seen...
JOE: I agree.
BUFFETT: ...less money to Washington.
JOE: I agree.
BUFFETT: And so it’s in spite of and because. And — but the truth is, we can have a country that works wonderfully with 19 percent or so of revenues going to Washington and spending 21 percent.
JOE: It’s just that there’s so many different ways to get there. I mean, we were there a couple — we were there in 18 or 19 percent in 2006 and 2007 even after what you said decimated our revenue 10 years ago. So there was, even under the current — even under the current, when we had a good economy and low — you know, everybody was working at 4, 5 percent back in ’06 and ’07, we were getting 18 or 19 percent.
BUFFETT: The point is to average — the point is to average around 19 and spend around 21.
JOE: Right, right.
BUFFETT: And to have policies in place that do that with the greatest degree — I mean, one way or another you’re going to get it — with the greatest degree of fairness on the revenue side and the greatest degree of efficiency on the expenditure side.
JOE: Right.
BUFFETT: And there’s going to be a lot of slippage on both.
JOE: Ooh, slippage. That’s like shrinkage or leakage. None of those are good.
BUFFETT: Well, that’s true. Listen, Berkshire has some ways to — you know, it kills me but it does. The bigger you get, generally speaking, you know, the less efficient you get in many ways. Now, there’s certain advantages to scale in other respects.
JOE: You’re not — Andrew’s got another — you’re not going to want to...
ANDREW: I was going to...
JOE: You’re not going to ask him if we should to go 100 percent, are you?
ANDREW: No. I was going to...
JOE: Seventy’s not high enough for you.
ANDREW: I was going to save Warren — I was going to save Warren from you and change the entire direction of the conversation.
JOE: Save him from me? How can you — you don’t need to save a guy — you know what? Never be — never feel sorry for someone who has a private jet. That was someone that — someone told me that long ago and I — and it’s what I live by.
BUFFETT: Yeah, yeah.
JOE: Never feel sorry for someone who flies private.
ANDREW: OK. Warren, we don’t have much time...
BUFFETT: Keep preaching — keep preaching that, Joe, I’m with you on that.
ANDREW: Warren, I wanted to get some thoughts about the banking business, and I know we don’t have that much time here, so I’ll start with one question, maybe we can bleed into the next hour on this. But as I was reading your letter and some of your comments about Bank of America, I also noticed that you — and you’ve done this now several times, you’ve praised Jamie Dimon at JPMorgan, and yet I realize that you are not an investor in JPMorgan. And I’m curious why not.
BUFFETT: Well, we own stock in Wells Fargo, we got the Bank of America situation. And I’ll let you in on a little secret. I own some shares of JPMorgan.
BECKY: Personally, right?
BUFFETT: Personally, right, right. You just — you just got some news from me, Andrew. But what I — what I specifically reference, and this is important, Jamie Dimon, I think, writes the best annual letter in corporate America. I think you will learn — I think every viewer will learn something by reading his annual — they’ll learn a lot by reading his annual report. He is a — he thinks well, and he writes extremely well. And he works a lot on the report, he’s told me that. And that’s an annual report worth reading. Most annual reports aren’t worth reading, but that one is.
BECKY: Why would you buy that stock for your personal account and not for Berkshire?
BUFFETT: Well, because Berkshire doesn’t own it, and it’s one that I can buy without having any possible problems about conflict.
BECKY: All right. We’re going to take a quick break here. When we come back, we’ll have more from Warren Buffett after this very quick break. By the way, keep your emails coming. We are going through them, taking — looking at all of them. Don’t forget, you can also tweet your comments and questions. Make sure, though, if you do, that you include the hashtag askwarren. Right now, Warren is a trending topic on Twitter. Wow. I didn’t know that. As you’ve been talking, we’ve been picking it up and apparently lighting up the Twitter universe. By the way, tomorrow on SQUAWK BOX, we have another big lineup for you, including Pimco’s Mohamed El-Arian, who’ll be sitting down with us for two hours. Also, Roger Altman of Evercore. And a new segment that we’re rolling out, Trump Tuesday. Donald Trump joins us to talk markets, politics and much more. SQUAWK BOX will be right back.
ANDREW: Let’s get back to Becky who is live in Omaha. Becky, I have got stolen Joe’s read. He’s giving me a look.
JOE: Thanks, Joe. Thanks, Joe.
ANDREW: Thanks, Joe. It’s great.
JOE: You’re here, it does...
BECKY: Thank you, Andrew. Thank you, Joe.
JOE: You’re out there he does it, you’re he does it. It’s just...
ANDREW: It all ran together. I apologize.
BECKY: Oh, we’re a big family. We all share. We all share, it’s all good.
JOE: This is Freud — this is Freudian, though. This is — I mean, it’s not really a slip. I mean, you know, I’m just wondering whether it’s accidental at this point, Becky. But OK.
BECKY: No. He’s doing it just to rattle you for the morning.
Anyway, guys, we are back with Warren Buffett and Warren, we’ve gotten a chance to ask you about a lot of different things that have been going on. Andrew just picked up with a line about some of the banks and this is a good time to ask you about Wells Fargo, which you own a major, major stake.
BUFFETT: Yeah.
BECKY: How’s big the — what’s the percent of the shares outstanding you have?
BUFFETT: Well, we have — we have a little over 400 million shares, so we’re well over 7 percent of the company.
BECKY: We had John Stumpf in — John Stumpf in recently to talk about how things are going at the bank, and a lot of people have said that they think that is the best run bank in the country. We have analysts who were on that day that said that as well. You own now a stake in Bank of America, too. If you had to match all these banks up, what do you think is the best run bank?
BUFFETT: Well, banks are not going to earn as good of return on equity in the future as they had — that they did about five years ago. Their leverage is being restrained, for good reason in many cases. So banks earn on assets, but the ratio of assets to equity, the leverage they have determines what they earn on equity. And if you reduce leverage, you reduce earnings on equity. It’s still a good business. And the American banks are really probably, in many cases, in the best shape they’ve ever been in. Around the world, banks are not in good shape, but the American banking system has really had a remarkable comeback in the last three years.
BECKY: You didn’t answer my question.
BUFFETT: What’s your question?
BECKY: Which bank do you like the best? You invest in many of them.
BUFFETT: Which bank — you mean of the ones we own?
BECKY: Yeah, of the ones you own.
BUFFETT: Well, I would say that if I had to just own one bank, I would probably own Wells.
BECKY: OK. Wells Fargo is in the news today. There’s a story in the Financial Times that says that the company is looking for acquisitions in terms of wealth management, that they’re looking to get into some of that higher income gain. Is that a good move from your perspective?
BUFFETT: Well, if they execute it well, it’s good. And what Wells has done very well is to sell a wide variety of services to a huge deposit base. The biggest single asset that Wells has is its deposit banks, as is true with the Bank of America.
BECKY: Mm-hmm.
BUFFETT: They have a consumer-based small business type base that’s just huge, more so than will be the case with Morgan or Citigroup. So that’s a terrific asset. It really isn’t a big value now because you can’t put money on it at any rate. But over time, it’s a terrific asset. And they sell other products to that group, and the more products they have that they effectively can deliver to those clients, the better.
BECKY: Well, that brings us to a question that we got from our viewers. Again, we have a lot of questions that have come in from our viewers. This one comes from Charles in New York, New York. Control room, it’s number 84. And he picks up on this idea about the low rates. He says, “If the employment picks up substantially this year, do you think it will prompt the Fed to reconsider its considerably low rates policy?” And would that, in turn, end up helping those financials?
BUFFETT: Well, if it picks up enough.
BECKY: Mm-hmm.
BUFFETT: I mean, if the economy really started roaring, the Fed would act sooner than 2014. They will respond to what they — what they see in the economy. I doubt that it picks up at that rate. I think it will get better as the year goes along, but who knows? You get a lot of surprises in economics.
BECKY: So you don’t necessarily worry about inflation before that? I guess the Feds looking at its best forecast and it says 2014. Does that jibe with what you see?
BUFFETT: Not necessarily. But I just — I don’t think I’m great on some crystal ball.
BECKY: Mm-hmm.
BUFFETT: I can tell you that business is getting better. Now, it’s been getting better for the last three years, and I think it’ll keep getting better, barring some, you know, bolt out of the blue. But I don’t think anybody knows the pace at which — it’ll really start improving when housing construction picks up significantly.
BECKY: If you had to bet, again, you don’t have a crystal ball in this, but if you had to bet, do you think that it would pick up enough if you had to bet earlier or later, that you’d say 2013 or 2015?
BUFFETT: I think it’ll — I think it’ll look strong before 2014.
BECKY: OK.
BUFFETT: And interest rates will pick up some, but we have, you know, we have — we have sown the seeds of a lot of inflation for the future. Now, whether we can unsow those seeds and dig them up again, that’s not so easy to do. It’s easy to talk about, but it’s a lot easier to sow the seeds than it is to replant.
BECKY: I know you said that you don’t like gold or a lot of other places to put your money, but John Merrill writes in with a pretty good question. He says, “Would you rather have, if you had to have one of the two, all the gold ever mined or all the paper dollars ever printed? The choice is between two monetary assets, either of which could be used to buy Exxon or farmland.” And what’s your answer on that?
BUFFETT: I definitely don’t like paper money. I like physical assets. So I would — I — but I wouldn’t buy gold or I wouldn’t buy rare stamps, although I was a stamp collector. I wouldn’t buy paintings, although, you know, a number of them I appreciate. I would buy something that’s productive. I bought a farm in the mid-1980s. You know, I mean, that farm is more productive now in terms of it actually — farming techniques have improved somewhat, fertilizers and all that, and then prices are somewhat higher. That farm will always be a good asset, and I don’t get a quote. I’ve never had a quote on it in 25 years. I’ve never turned into the farm channel, you know. But it will be a productive asset. I would rather own that than own some asset that just looks at me.
BECKY: Andrew, you have a question, too?
ANDREW: Hey, Warren. I — just going back to banking because I was listening to some of your comments about Wells Fargo and some of your praise for Bank of America, reading some of the things you said about Brian Moynihan. And one of the companies that wasn’t in there, though — I don’t know, actually you may still be a little bit invested in some of the...
BECKY: Mm-hm.
ANDREW: Well, the preferreds that were paid back. Goldman Sachs. I was curious to sort of — how you see that business model and how you look at Lloyd Blankfein. I know you’ve praised him in the past.
BUFFETT: I’m unequivocal in my praise of Lloyd. I think he did a terrific job in bringing the company through a crisis. I — he’s a fine human being. He’s very smart. He’s straightforward, he’s decent.
ANDREW: But what’s your take on the larger business model?
BUFFETT: And we own — the business model is not as good as it was five years ago. And that’s true for all the investment banks, and it’s true for the commercial banks. You know, they are subject to much more scrutiny and particularly in terms of leverage and in terms of the activities they can engage in and that will reduce the profitability, the return on equities that they get now compared to what they can earn five or six or seven years ago. Our position is that we own warrants on about 43 million shares or there about at 115 that are good in — for about a year and a half, or just a little more.
JOE: Warren, why haven’t — why haven’t you just bought a whole fertilizer company?
BUFFETT: Well, no one’s offered...
JOE: I mean, not that — not that you don’t manufacture enough yourself, as we’ve seen today.
BUFFETT: Yeah.
JOE: But...
BUFFETT: I understand that one. I do.
ANDREW: Oh wow. Wow.
BUFFETT: I knew there was a reason for that question. Well, I...
JOE: No, no, no, no, no, no. That came out — I really wasn’t planning on saying that, but I listen to you...
BUFFETT: Oh, I know that. But, listen, why don’t — I’m in the factory.
JOE: No, but honestly, you look at everything I read and I’m back to that Grantham piece in Barron’s, I mean, you think about the long-term trends and demos for fertilizer companies or any kind of ag-related company. I’m just wondering, you know, you got all — you never know what to do. You have — money keeps building up and you buy a whole railroad. I mean, I’m just surprised that at some point you haven’t decided to just do something like that.
BUFFETT: I don’t rule it out. None has ever been offered to us. We tend to buy businesses that are offered to us. I do not go out prospecting very often. But it is — it’s a commodity business, but it’s a commodity business that it takes a long time to bring on additional supply. The demand overall — but the demand overall for corn, the demand for wheat and soy beans and all kinds of things. The real question is whether the supply grows faster. That will determine the pricing. And as you know, fertilizer prices have moved around a lot over the last 10 years.
BECKY: Mm-hmm. Warren, why don’t we talk about something you’ve talked to us about the last time you were on, IBM, a new company that you’ve been making major acquisitions in. I believe you own about 5 1/2 percent?
BUFFETT: Five and a half — we call it HAL around the office, yeah.
BECKY: So...
BUFFETT: Five and a half percent, yeah.
BECKY: ...have you continued to buy shares of IBM since we spoke with you?
BUFFETT: Oh, we bought just the tiniest bit. We — you’ll see in the first quarter, we just bought a few shares. I was willing to buy a lot, and then it moved up. But anything we own, with the few exceptions, we can’t buy more American Express because it’s a bank holding company and it’s against the rules. But anything we own is at the top of our mind in terms of when we buy something additionally. In other words, I measure any new purchase against what I like least in our portfolio now and unless it — unless it meets that test, I’ll just buy more of something in the portfolio.
BECKY: So have you been buying more of Wells?
BUFFETT: And we bought more Wells — we bought more Wells. Yeah. We bought more Wells just year after year. And we bought...
BECKY: Coca-Cola?
BUFFETT: We bought more Wells since year end, as a matter of fact. And we bought just a few shares of IBM. But if we like something, you know, we’re going to — the money does keep coming in, so we will — we’ll look first at the things we own.
BECKY: The new CEO of IBM, management changed.
BUFFETT: Yeah.
BECKY: Even since you began buying that stake.
BUFFETT: Right.
BECKY: Ginni Rometty, have you met with her or talked with her?
BUFFETT: Yeah. She was out here for lunch about a month ago, but she was also making sales calls.
BECKY: And what did you think after meeting with her?
BUFFETT: I think she’s terrific, you know. But I would expect that. I mean, you know, IBM is a very well-run organization. I didn’t know who she was, you know, a year or 18 months ago. And I knew that Sam Palisanto was going — they tend to retire early there. So I knew he was going to retire fairly early. I did not sit there and, you know, write to Sam and say, `I can’t buy this stock unless I know who your successor is going to be,′ or anything of the sort. I knew they’d make a good choice, and they did.
BECKY: Are there any other new companies you’ve been delving into?
BUFFETT: There are always things on the horizon.
BECKY: Would I be wrong in assuming — well, is IBM a one-off in the technology field? Because there are a lot of people who did not expect that. You’ve never really invested in technology companies. Is that still — does that standard still apply for the most part?
BUFFETT: It — probably for the most part, but if I think I understand enough about the future of the business and I like the management and I like the price and it’s big, because we need sizeable ones, we would buy it. But, as I’ve told you in the past, Microsoft is off limits because people would think I had some kind of inside information if anything good happens, so it’s a no-win situation from our standpoint. But it’s unlikely we do a lot in that area, but if I — if I felt a strong enough conviction on something, and I liked the management and price, I would do it.
BECKY: OK. When you take a look at Bank of America, people have written in wondering what you think about Brian Moynihan’s performance there since you’ve stepped into the stock.
BUFFETT: I think he got — he got handed a — it was a terrible situation he got handed. I mean, it — you know, with the — all of the problems — particularly of Countrywide more than anything else, but some of their own, too. So he was handed a mess. And, fortunately, he was also handed, you know, as great a deposit basis as exists in the world, and that deposit base continues to exist. You know, they have a contact with a significant percentage of all of American homes, and that’s a huge asset. And what he has done is he’s working through the problems he inherited, and you can’t do them in a day or in a week or a month, particularly ones that involve litigation. He’s pared off some of the assets that aren’t central to it. He’s done exactly what I would do if I was in there, and it’s going to take him a significant amount of time from this point forward. Litigation can’t be pushed. If you just say, `I’m willing to settle with anybody,′ you’re going to be a patsy, you know, so he has to — he has to weigh the costs of diversion of time and all that’s involved in litigation against just being a patsy in terms of lawsuits.
BECKY: That stock right now, we just saw, is at $7.85. You bought in at 6 percent preferred, but you’ve also got warrants.
BUFFETT: Yeah.
BECKY: Seven hundred million?
BUFFETT: Seven hundred million, yeah.
BECKY: To buy at below 7.50, I believe.
BUFFETT: Seven fourteen.
BECKY: Seven fourteen, anytime between now and 2021?
BUFFETT: Yeah. They were 10 years from the time we got them.
BECKY: OK. So, again, you feel pretty confident in that investment, not necessarily because you’re buying on the open market, but because you have a different deal.
BUFFETT: No. We like the preferred and we like the warrants, and we will be there for a long time. Now, you know, we are prohibited from selling. I mean, we do not have something that we can turn around and sell tomorrow. Like somebody buys a stock in the market, they can change their mind tomorrow if the stock goes up a point, they can sell and make a quick profit. We can’t do any of that. We have to make our money out of the fact that the business really does well over time.
BECKY: Mm-hmm.
BUFFETT: And I think it will.
BECKY: You brought up Apple a little earlier today when you were talking about Tim Cook as the successor there. You’re not somebody who’s ever bought Apple shares, correct?
BUFFETT: No, I’ve never bought Apple.
BECKY: But you...
BUFFETT: I wish I had.
BECKY: But you have talked to Steve Jobs in the past.
BUFFETT: Yeah, Steve — I got — Steve went on the board of Grinnell College when I...
BECKY: Mm-hmm.
BUFFETT: He was in his early 20s. He was a big admirer of Bob Noyce’s, and Bob was connected there. And so I saw him just a few times over time, but he called me — he did call me a couple of years ago. It was an interesting conversation because I hadn’t talked to him for a long time, and he said `We’ve got all this cash, Warren,′ and he says, `what should we do with it?′ So we went over the alternatives, and it was kind of interesting.
BECKY: What were the alternatives that you laid out? Stock buybacks, dividends?
BUFFETT: There’s only four things you could do.
BECKY: Stock buybacks, dividends, acquisitions? What am I forgetting?
BUFFETT: And sitting with it.
BECKY: And sitting with it.
BUFFETT: And sitting with it, and he had many, many, many, many billions. And I said — I went through the logic of each thing. Now, the — he told me they would not have the chance to make big acquisitions that required lots of money. I mean, they were internally, and that’s exactly what they should be. And then I asked him the question, I said, you know, `I would use it for acquisitions if I thought my stock was undervalued.′ I mean, `I would use it for repurchases if I thought my stock was undervalued.′ And I said how do you feel about that? Stock was around 200 and something. He said, `I think our stock’s really undervalued.′ I said, `Well, you know, what better can you do with your money?′ And then we talked a while, and he didn’t do anything. And, of course, he didn’t want to do anything. He just liked having the cash. It was very interesting to me because I later learned that he said that I agreed with him to do nothing with the cash. But he just didn’t want to — he didn’t want to repurchase stocks, although he absolutely thought his stock was significantly underpriced at 200 and whatever it was.
BECKY: Well, he was right, it’s over 500.
BUFFETT: Yeah. I said, look, you can buy dollar bills for 80 cents or 70 cents and you know the dollar bill. I mean, it’s not a counterfeit, it’s your dollar bill. I said go to it, and the truth was he didn’t. He just didn’t want to repurchase stock. But he was certainly right about his stock being undervalued.
BECKY: You’ve said in the past that you would never do stock buybacks and you would never issue a dividend at Berkshire. Last year you broke the idea of the stock buybacks by laying out how and when you would buy back stock from Berkshire and actually starting to buy some back.
BUFFETT: Yeah, and I — but I never said we’d never buy stock back. As a matter of fact, in the 2000 annual report, we announced we’d buy stock back. I’ve always said buying stock back makes great sense when you’re buying it at a significant discount. Now there is that ethical question about you’re buying it from your partners. I mean, the first line we have in our economic principle is that although our form is corporate, our attitude is partner — partnership. So we want to be sure if we’re buying it back from our partners at a discount from what it’s worth that they understand what it’s worth and why we’re doing it. But there’s nothing like buying your own stock back at a big discount. I mean, one of the things I like about IBM is the fact that they have aggressively bought their stock back over time. That’s made their shareholders richer.
BECKY: Mm-hmm.
BUFFETT: And they’ve announced they’ll continue to buy their stock back big time and that will make their stockholders even richer. I love it.
BECKY: There is a viewer who wrote in on this exact question. Chris Sales from Freeland, Michigan. He says “in the letter released on the 25th you indicate that you don’t enjoy cashing out partners at a discount when you rebought — when you repurchase Berkshire shares, yet at the same letter you prefer IBM buying stock from your fellow IBM partners at the lower — and he lower prices the better.” Why do you have the different views?
BUFFETT: Well, I say if we buy our own stock the lower the price the better.
BECKY: Yeah.
BUFFETT: I mean, we are running the company for the shareholders and I don’t think there’s anything wrong with IBM buying their stock at all. And they have laid out a plan — they laid one out five years ago, a road map and they’ve laid out another road map. They’ve told their shareholders exactly what they expect to do and if the shareholders elect to sell the stock at a price that’s attractive for the company to buy it, there is no moral stigma in the least attached to them buying it. I’m — and I’m all for it.
BECKY: We’ve got a question from Hunts Point, Washington. A lot of people wrote in similar questions. This one comes, it’s number 31, control room. “Even though the book value, as well as incremental stock prices increasing, why not now give a dividend?”
BUFFETT: Why...
BECKY: Why not give a dividend?
BUFFETT: Well, a dividend essentially would have hurt Berkshire at any time since I’ve been there.
BECKY: Yeah.
BUFFETT: I mean, every dollar that’s been reinvested in Berkshire has turned out to have a greater than a $1 value. So what’s the sense of paying out somebody a dollar that’s worth $1.10 or more in the business? And we say that we’ll buy it at $1.10.
BECKY: All right, we’ve got more to get to. We’re going to take a very quick break. Guys, we’ll send it back to you in the studio. When we come back we’re going to talk a little bit more about Simpson-Bowles and some other issues, too.
ANDREW: And as Becky just said, coming up we’re going to get more from the Oracle of Omaha. He’s answering your emails and tweets and big news on the Twitter front. Warren Buffett, he’s trending in the US right now right behind “The Artist” and Meryl Streep. And today’s a very special day for our colleagues at “Squawk on the Street.” They’re unveiling their new set at the New York Stock Exchange. We’re going to get a sneak peek of it in the next half-hour. SQUAWK is coming right back after this.
BECKY: Welcome back to SQUAWK BOX, everyone. We are live this morning in Omaha with Warren Buffett.
And, Warren, one of the subjects we’ve discussed this morning is Simpson-Bowles and what needs to happen or what you think needs to happen. We’ve been talking to CEOs, to business leaders and to personalities over the last several months and asking them about Simpson-Bowles. I thought you might listen in for a moment when we hear what Clint Eastwood had to say about Simpson-Bowles just after that Super Bowl half-time ad that they had. Why don’t you listen in right here.
BECKY on tape: Have you seen Simpson-Bowles and some of the ideas that they had put forth, the panel that the president convened...
CLINT EASTWOOD: Yes. Yes.
BECKY: ...and then it’s kind of gone away since then.
EASTWOOD: Yeah. Well, likely I did. In fact, I was kind of amazed when they took the Simpson-Bowles and assigned them to this research and then they came back with a recommendation which was exactly stop spending and then everybody said that’s enough, you guys, go home. And I thought that’s a waste of money, waste of time, wasted effort from everybody. It wasn’t very spirited for the country when people would see that. I think Simpson — I think both those gentlemen are smart and they had — certainly worth listening to if you’ve gone ahead and assigned them to this project.
BECKY: Warren, Clint Eastwood has been a longtime Republican, he ran as a Republican for mayor of Carmel.
BUFFETT: Sure.
BECKY: But you’ve echoed some similar sentiments this morning.
BUFFETT: I agree with him 100 percent. I mean and I think that — I think that Simpson — I hope they put it into — draft it into legislation or legislative form and I think that — I think it ought to go to Congress and I think that Congress ought to take a vote on it and we can see whether they like it or not. But the American public, I think, are entitled to have that happen. And for Congress to say, you know, we can’t get anything done because it’s an election year, I would just say if they feel that way let’s just skip paying them this year and let them come back next year but — if they’re not going to work on it. So I would — I would love the idea of the American public, whether it’s through business leaders, whether it’s through Clint Eastwood or saying, you know, let’s just have a vote on this. These fellows worked for 10 months, they’re conscientious, they’re smart, they’re decent, they come from both sides. They got people on both sides to agree on it. Let’s have a vote on it and everybody’s going to dislike something in it but the question is, is it better than what we’re doing now?
BECKY: You think a vote like that would actually pass Congress?
BUFFETT: Yeah, I do. If there was enough pressure. If the motivation came because — for Congress to take it up, came about because virtually every CEO in the country, labor leaders, educators, everybody else was saying give us a vote on this and I think if it went up there next month I think it would probably pass. Yeah.
BECKY: So...
BUFFETT: I don’t — I don’t think they — I think they’d be thinking about the next election. They think if they voted against it, you know, maybe if the people wanted it and they voted against it they might not vote for those legislators.
BECKY: It sounded like you were blaming Congress just now for not bringing that bill to a vote to this point. Other people have blamed Obama and his administration for not forcing an issue.
BUFFETT: Well, Congress initiates legislation. That’s their function under the Constitution. You know, they take an oath to support the Constitution, it’s their job to bring forth legislation which they think is beneficial for the country. And here you couldn’t have had a better group work on it. They’ve come up with something. Congress certainly hasn’t come up with something, so let them take it up.
BECKY: OK. Is there anything that you would do to try and force that issue?
BUFFETT: Well, I think there may be some efforts going on in that. I’m not part of them, but I — but I would certainly sign on to anything. If Clint Eastwood presented something that said give us a vote, I’d sign it.
BECKY: OK. Let’s talk a little bit more about some of the issues coming up this November. I know that you are a supporter of President Obama’s. You’ve raised money for him. But you also told us when we sat down with you in November that among the Republican candidates you liked Mitt Romney the most. Is that still the way you feel?
BUFFETT: Yeah, I think — I would say that if I — among the four candidates the Republicans have up, if one of them’s going to be president I would probably prefer it would be Mitt Romney.
BECKY: Why is that?
BUFFETT: I’ve looked at his tax returns, I’ve got his tax returns here. They’re about six times as long as mine. The — I just think that he would be more likely to makes more sensible decisions and less — and less — fewer nonsensical decisions than any of the other three.
BECKY: What did you find in his tax returns?
BUFFETT: I found that he was paying a very low tax rate. His tax return and my tax return are the only two that are out there...
BECKY: We knew that though.
BUFFETT: ...from the super-rich, so it’s kind of a limited sample at the moment. And his return, kind of interesting. We printed it on both sides of the paper. So here’s — this is on both sides of and take a look at it. It’s a — it’s a — it’s a lot of pages. And I don’t fault him for anything in this tax return. He is doing exactly what the US Congress told him to do. I do fault the US Congress for writing a tax code that allows that kind of a return to be filed.
BECKY: And, again, this is some ground that we’ve covered earlier today already, but your point is that the tax laws should be changed, especially for the very richest Americans?
BUFFETT: Yeah. And if I don’t fault him, though. But he is paying a much lower tax rate counting payroll taxes than anybody in my office except for me, yeah.
BECKY: And...
BUFFETT: We will have people working on these presses here at the World Herald and they will be paying a higher tax rate — they’ll come here in the middle of the night — they’ll be paying a higher tax rate than Governor Romney or me.
BECKY: And that’s what you would like to see changed.
BUFFETT: I think that should be changed. And these people have no voice in getting that changed.
BECKY: All right, let’s talk about some other issues, too. We have touched on a lot of the different companies that you hold. Another major one is Johnson & Johnson. And that’s another company that you’ve been a shareholder in for a long time that’s also seen a management change recently. Bill Weldon...
BUFFETT: Right.
BECKY: ...is going to be the chairman but not the CEO. Alex Gorsky’s going to be stepping in there. How do you feel about that particular change and how do you feel about Johnson & Johnson lately?
BUFFETT: Well, Johnson & Johnson obviously is — has messed up in a lot of ways in the last few years. You know, my friend Jim Burke used to run that and it does not have the reputation now that it had, you know, a few years back. It’s still got a lot of wonderful products and it’s got a wonderful balance sheet and all of that, but there have been too many mistakes made at Johnson & Johnson.
BECKY: What went wrong?
BUFFETT: I don’t know. I wasn’t — but clearly they have not lived up to their own standards.
BECKY: You have not been selling your stake though.
BUFFETT: No, we haven’t been buying more, though, either.
BECKY: But why haven’t you sold them?
BUFFETT: Well, we might. I mean, there are things I like better than J&J. The four biggest ones I’ve named. And conceivably we’ve got a lot of cash around so I don’t need to sell things. We’ve got — still got 30-something billion cash around and so I’ve got a lot of extra cash. So I don’t focus on selling things that are — Johnson & Johnson is still an attractive business at its price. But if I needed money that would be on my — on my sell list as opposed to Wells Fargo or the others I’ve named.
BECKY: You still on the prowl for a major acquisition above $10 billion?
BUFFETT: You bet. You bet. Yeah, we — yeah, that’s my job and the money does keep coming in, and I like buying businesses better than anything else. Lubrizol was a great buy for us, and you know, the best one we’ve made in recent years obviously is BNSF. But I love the idea of buying big businesses for Berkshire that we can own forever. As I mentioned in the annual report, we have — we know own eight companies that each by itself would be on the Fortune 500 as a stand-alone company. So there’s 492 to go and I’ve got the names of every one of them in my mind.
BECKY: OK. Andrew, you have a question?
ANDREW: Yeah. Warren, we’ve got a number of emails from people who’ve asked why you haven’t doubled down and bought more shares of Coca-Cola. You look at the way the shares have moved, you know, ever over the past couple of years since the financial crisis is actually — it’s obviously gone on a huge run. What’s the answer?
BUFFETT: It’s a wonderful company. And it’s our — at market it is our single biggest investment. At market we’ve got almost $14 billion in it. So it already — I mean, it is our number one investment. And it’s not inconceivable we would buy more but in the last year I bought primarily IBM. Among marketables I put almost $11 billion in that and I put about a billion in Wells Fargo. I regarded those both as more attractive then Coke last year, but that can change. I mean, I always think in terms of the ones we own presently as to whether we should add to them. And Coca-Cola, Muhtar Kent has done a terrific job at Coke. I mean, he’s been a fabulous manager and Pepsi’s giving us a little help.
BECKY: Hm. You know, Warren, let’s talk also about what’s happening in Europe. We’ve talked to you over the last year or so as we’ve watched the European situation play out and you noticed that very early that it was going to be a big problem. Are you convinced that Europe has turned the corner in terms of dealing with its financial crisis?
BUFFETT: Well, it turned the corner in terms of its funding crisis for its banks a few months ago when the ECB said they would give these three-year loans at 1 percent and they gave almost — well, it was 400 and something billion euros, which translates to maybe $600 billion.
I mean, they opened up their window. So they — the European banks were facing a funding problem and they get less of their money from deposits and more from, essentially, bonds...
BECKY: Mm-hmm.
BUFFETT: ...than the American banks, and they’re in far different shape than the American banks. So they had this huge funding problem that was really coming down the pike pretty fast. The ECB solved that temporarily. But that does not solve the solvency problems of European banks and it does not solve the imbalances of — fiscal imbalances of countries that cannot print their own money. The basic problem they have is they gave up their right to print their own money, the 17 countries that are part of the Euro Union. So — monetary union — so you can’t believe how fundamental it is. If you owe money — the difference between being able to print your own money to pay it and not being able to print is night and day. Now they are wrestling with that and this action by the ECB to stave off funding problems for the banks gives them more breathing space on that. But the problem hasn’t been solved yet.
BECKY: And the expectation is more money will be needed. This weekend the news was that the G-20 kind of gave them the stiff arm in terms of looking for more money there. They would like to see Germany and some of the other European countries raise more money first.
BUFFETT: When you’re spending more than you’re taking in, which is true for the European Monetary Union as a whole, big time, when you’re spending more than you’re taking in and you can’t print money, you have a problem. And you are dependent on the confidence of the world to keep lending you more and more money even though you don’t — you’re not able to print the stuff to pay them off. People are very happy giving the United States government money because we can print it to give it to them. How much it’s worth is another question when you get it. The danger is inflation, the danger is not getting back dollars. The danger in Europe is, you know, how does a country that’s spending more than it’s taking in and can’t print money, how can it — if it loses the confidence of the market, the game is over.
BECKY: All right. Joe, you have a question, too?
JOE: Yeah. You got the — we got the big primaries coming up and one’s in Michigan, Warren, and I know you’ve seen the — all the debate being reignited about the auto bailout, you’ve got, you know, Romney and Santorum talking about it in one respect, we had Steve Ratner, you can’t turn on the TV without seeing him somewhere defending it and saying there would have been no DIP financing. The Wall Street Journal weighed in over the weekend, I thought it was an interesting piece, the op-ed piece, just talking about that maybe the whole bailout made the auto industry — it’s still there, the stocks are above zero, they’re still running, but maybe didn’t set up the future that great for the auto industry here. Would you ever consider buying a stake in GM or Ford at this point?
BUFFETT: Well, I’ve always felt it’s too hard in the auto industry to predict who the winners are going to be. There were 2,000 auto companies established in the United States in the 20th century and what have we got left, you know, a couple. So it’s very hard to pick — to pick winners. I don’t — there will be a big auto industry five, 10, 20 years from now that we will be selling lots of cars, I just don’t know whose cars they’re going to be...
JOE: I mean, the...
BUFFETT: ...any more...
JOE: ...the Journal...
BUFFETT: But I would say this.
JOE: Yeah, go ahead.
BUFFETT: Well, I would say this, I was kind of on the fence about the auto bailout for quite a while. I mean, it kind of went against my instincts, but I will tell you, Steve Ratner is 100 percent right when he says there was not a dime of private capital that would have — would have been available for a managed bankruptcy absent government help. I mean, look, it’s very clear to me in hindsight, it wasn’t so clear to me at the time...
JOE: Right.
BUFFETT: ...but it’s very clear to me in hindsight that the auto bailout was one of the best things that have happened in this economy. The dominos that would have fallen — you know, we saw dominos fall in September of 2008, we saw them fall so fast and such big ones, you know, we did not need a repeat of that with what would have started with the auto industry. But I do not claim any great foresight on that.
JOE: Yeah. Yeah.
BUFFETT: I have really mixed emotions.
JOE: The Journal delicately dances around that and says that, you know, in hindsight it’s tough to say if the government hadn’t been there and there hadn’t been crowding out, nobody knows who might have come forward. They also go on to say — they also go on to say that some of the foreign automakers that now build cars in this country would have been interested in all of the assets if it had been done in a — in a normal way and they’d be making — they may have bought, you know, maybe we’d be making Toyotas in Detroit right now or something. But they make the point...
BUFFETT: Mm-hmm.
JOE: ...that the steel industry was able to come back after the normal paths were followed and it’s been rationalized and that the future is much brighter because they were able to deal with all the legacy issues. I guess Ratner and others say that a lot of legacy issues were dealt with, but the Journal’s point was that it would have even been — all these balance sheet issues would have been rationalized even more, in fact it may have had a better future. Now we’ve got CAFE standards that are going to go to 50 miles per gallon, you know, very quickly and it’s going to be a tough — very tough future for our automakers here to try and hit those and give Americans things they want to buy.
BUFFETT: I would just say this, Joe, if all of the steel — the big steelmakers, you know, if 90 percent of the American steel capacity — if in March of 2009 it was all running out of cash simultaneously, believe it, there would have been no private solution. And I got a call in the spring — or maybe it was late winter — of 2009 and — from one of the — one of the automakers and looking for capital, there wasn’t any place they were going to get a dime. I mean, it was — it would have been crazy to put capital in unless an overall solution was going to be engineered by somebody that really had the capacity to write checks, and that was the federal government. And like I said, I didn’t — that’s not a philosophical answer, that is just a pragmatic answer of what was going on in the world at that time. It would have been devastating. It would have unwound the progress that we’d been making from the fall of 2008.
JOE: Well, they’re still too big to fail then, Warren, I mean we would have to do it again. I mean, the precedent has been set, we will still — I mean they will never go under. I don’t know, you wonder — philosophically it’s not good to talk about...
BUFFETT: No, they’re...
JOE: ...but sometimes you do need to talk philosophically just because capitalism doesn’t work if we — if you know that it’s going to happen every time.
BUFFETT: It’s too big — it’s too big to fail all at once. I mean it...
JOE: Yeah.
BUFFETT: ...it’s just like — you know, General Electric was in line there...
JOE: I know.
BUFFETT: ...in September of 2008. Now they didn’t — they didn’t do anything themselves, they were just one great big domino and they were right next to other dominos that were toppling.
JOE: Yeah.
BUFFETT: But what we learned in 2008 is that when dominos topple in this society, when big ones do, and when you start off with the two biggest institutions, Freddie and Fannie, you know, of the United States government with 40 percent of the mortgages insured and they go under conservatorship, you will find out that there are an awful lot of dominos in line. And you’ve got to have a firewall someplace and the only person that — the only entity that can come up with a firewall at that time is the US government. And incidentally, there’s not great moral hazard in doing what they did. The shareholders of AIG, of Citi, of Freddie, of Fannie, you name it, they got creamed. I mean, it isn’t like they got rewarded for the fact that they had their investment in it, they got totally creamed. They are not there sitting, `Goody, goody, I want to do this again,′ you know. So the moral hazard thing can get misinterpreted.
BECKY: Joe, I think we have to sneak in a break here?
JOE: Oh, yeah, we definitely have to do that, or I will have moral hazard if we don’t — I’ve been told that personally.
Coming up, more from Warren Buffett. He’s answering your emails and tweets, and keep them coming, Warren Buffett is trending on — what does that mean?
ANDREW: It means that people are watching the show as we speak and they’re writing about this interview.
JOE: What does trending mean?
ANDREW: Trending means that there are thousands of people who are putting the word “Buffett” in their tweets, which means that people are tracking it...
JOE: They’re not...
ANDREW: ...and there suddenly is this trending.
JOE: ...they’re not misspelling it, they’re not headed to a buffet for sure? I mean...
ANDREW: They could be headed to a buffet, but more likely they’re watching SQUAWK.
JOE: I don’t think any Twitter people go to buffets anymore, because old people — right?
ANDREW: No, they’re all in the buffet line tweeting at the same time.
JOE: All right. It’s trending on Twitter big time, a lot of trending going on.
ANDREW: Yes.
JOE: Woo! Right behind “The Artist” and Meryl Streep.
ANDREW: Right.
JOE: Right. But first, we’re going to get a — we got to get this — a sneak peek at Squawk on the Street’s new set at the New York Stock Exchange. High-tech extraordinaire. SQUAWK BOX will be right back.
BECKY: We are back with Warren Buffett this morning. We’ve got a last few minutes of questions before we are finished up here. And, Warren, Jim Cramer was just making some comments about your view on stock buybacks, especially regarding IBM. You now own about 5 1/2 percent of the stock of the shares outstanding for that company and in your annual letter you laid out your cause for why you would be happy to see them buying back stock and you’re not necessarily looking for that stock to go up over the last few years. That’s a little controversial. You want to lay it out?
BUFFETT: Well, I don’t know whether it’s going to go up or not.
BECKY: Yeah.
BUFFETT: I’m just saying that if they’re going to buy back stock, they’re going to buy back a lot of stock, they’ve announced they’re going to do that. If they buy it cheaper and I’m a continuing shareholder, I’m better off. I mean, if three people own a McDonald’s stand and you can buy out a — one of the three for a fifth of the total value of it, the other two are better off at the end. And any time you — any time you buy your partner out at a discount, you benefit. Now there’s no moral problem attached to that in the stock market because markets set prices, you wouldn’t want to do that in a private partnership.
BECKY: Right.
BUFFETT: But I’ll love it if IBM buys a ton of stock, and the cheaper they buy it, the better I’ll do over time.
BECKY: OK. Let’s talk about gas prices once again, because we did have a lot of people who wrote in who said that they are feeling the pinch of gas prices already.
BUFFETT: Sure.
BECKY: I guess gas price is up around $3.80, somewhere in that realm. We could very likely see it push back above $4. There are people who, again, who are writing in who say they feel it and it could end up cutting into what they spend in other places. Could it eat into the economy?
BUFFETT: Well, it is a minus, there’s no question about it.
BECKY: Mm-hmm.
BUFFETT: I mean, if you spend more on gas, you’ve got less to spend on other things. We have — you know, we had $147 a barrel oil, too, so I mean, we’ve lived through it in the past. And $30 oil was a shock in the 1970s and it had an effect on the economy. So any time an important part of the American expenditures goes up in price, whether it’s food or whether it’s gas, you know, it has an effect on everything else, no question about it.
BECKY: I know that you look at a lot of different factors and that overall you are very optimistic about the future not only of this country but also of the stock market. But if you have a list of worries, what’s at the top of that list?
BUFFETT: Well, the biggest worry is nuclear, chemical and biological attack of some sort, whether by a government or by a rogue group, and that will happen someday in our future and it’ll be anything from a large tragedy to an unbelievable tragedy.
BECKY: Right now it’s not — it’s not on the forefront of Americans’ minds, although a lot of the things that are happening in the Middle East right now are creeping back up there.
BUFFETT: Yeah. Well, it’ll happen sometime when it isn’t on their — on our minds, just like the attack in — on 9/11. I mean, there are people that wish us ill and they — and they wish us a lot of ill if they can pull it off. So nuclear, chemical and biological knowledge has spread, and there are plenty of people that would like — wish us ill, so that is the biggest worry we have. But in terms of the economy and all of that, the luckiest person born in the history of the world is the baby being born today in the United States. I mean, in terms of the outlook for their lives, they are going to live better than John D. Rockefeller lived or better than I live and so on. I mean, it — our country’s future is just — it’s fantastic.
BECKY: Warren, if you had to compare the stock market and how you feel about it right now vs. where you did back in October of 2008 when you told people to buy stocks, you were, how would you briefly sum that up?
BUFFETT: Well, they were cheaper at that time. It’s become clear now that the dominos aren’t going to fall, so people are less worried now. But the time to buy stocks is when people are most worried, and October of 2008 was a better time than now. This is a better time than 10 years from now will be.
BECKY: OK. Warren, we want to thank you very much for joining us here this morning and being so generous with your time.
BUFFETT: Thanks for coming.
BECKY: We appreciate it.
And, guys, we’ll send it back to you in the studio.
JOE: So Warren, you won’t come to the correspondents’ dinner with me, that’s all right. All right, that’s fine.
BUFFETT: I’m sending — I’m sending another brick, Joe.
JOE: I’m going to...
BUFFETT: It’s in the mail.
JOE: ...I’m going to — you know, I’m going to ask Bill Murray, then. If you’re not coming, I’m going to ask Bill — I’m going to ask Bill Murray. But I asked you first, don’t say that I didn’t.
BUFFETT: Oh, I got it.
ANDREW: Warren, how would you — if I took Ed Asner, would that be OK, or is that sort of off-limits? You know.
JOE: That’s — you...
BUFFETT: I think Ed Asner got overlooked in the — in the Oscars. I’m amazed.
JOE: He’s a little more conservative.
BUFFETT: Those people have no judgment of talent.
JOE: He’s a little more conservative than you are.
ANDREW: Wait, you’re going to say he’s a little more conservative...
JOE: No, than you are, Andrew, yeah.
ANDREW: I’m not so sure about that.
JOE: You — but you guys can have a meeting of the minds.
ANDREW: OK, we got to run. Warren, thank you so much for a wonderful three hours, a lot of news there.
JOE: A lot of time.
ANDREW: Make sure you join us tomorrow.