2009 年 Charlie Rose 巴菲特访谈

Warren Buffett was interviewed by Charlie Rose on November 13, 2009. Here is a transcript of event.

Here is a link to the transcripthttp://www.charlierose.com/download/transcript/10711

The following is the transcript of the interview.

CHARLIE ROSEWarren Buffett is here. As you know, he is perhaps the

world’s most respected investor. He’s also chairman and CEO of Berkshire

Hathaway.

He has been on this program many times. I last spoke with him over a

year ago at the peak of the worst economic crisis since the Great

Depression. At that time, he said that America had been struck by an

economic Pearl Harbor, but much has changed since then, and he’s here to

tell us how he views a global and American economy in recovery.

His own company reflects the progress made in recent months. Last week,

Berkshire Hathaway struck a $26 billion deal to buy all of Burlington

Northern Santa Fe railroad, the largest acquisition in company history. He

called the deal an all-in wager on the American economy. He is in New York

for a town hall event that he held with Bill Gates at Columbia University

yesterday. He graciously agreed to stay over in New York an extra night,

and I am pleased to have a good friend of this program and a good friend of

mine back at this table. Welcome.

WARREN BUFFETTThank you, Charlie. Pleased to be here.

CHARLIE ROSEGreat to see you. It has been, certainly from the

middle of 2008 to the middle of 2009, one incredible year.

WARREN BUFFETTOne incredible year. One to a lifetime, I hope.

CHARLIE ROSEYes. Tell me about it for you.

WARREN BUFFETTWell, it was- it really was an extraordinary time in

this country. We came closer to a financial meltdown than certainly any

time I have ever seen, and probably in certain respects even — there was

even more panic than the Great Depression, because it came on so fast and

so unexpected.

And the whole country wanted to deleverage, corporations, individuals,

and fortunately we had a government that responded. It was — when we

talked last, it was a little question of whether Congress would respond

like they should. They finally did, and I — I felt they would in the end.

I mean, in the end, they come together for things that are this vital to

the country. But we had the right people in Washington. If we’d had a

group that behaved like a deer in the headlines, that deer would have

gotten run over.

CHARLIE ROSESo Paulson and Bernanke and Geithner were the right

people at the right time, and you don’t know what might have happened if

others had been in those positions of power.

WARREN BUFFETTI can think of others- I’m not going to name them-

but I can think of others where the ending would have been with us in the

abyss rather than just peering down into it.

CHARLIE ROSEYou made some investments during that period.

WARREN BUFFETTRight.

CHARLIE ROSEGeneral Electric, Goldman Sachs.

WARREN BUFFETTGoldman Sachs.

CHARLIE ROSEBut you just pulled out the big elephant gun.

WARREN BUFFETTWell, we may have used most of our powder on that

one.

(LAUGHTER)

CHARLIE ROSEYou said I stretched to the last nickel for this one.

WARREN BUFFETTYes.

CHARLIE ROSEWhy did you do it?

WARREN BUFFETTWell, I felt it was an opportunity to buy a business

that is going to be around for 100 or 200 years, that’s interwoven with the

American economy in a way that if the American economy prospers, the

business will prosper. It is the most efficient way of moving goods in the

country. It is the most environmentally friendly way of moving goods, and

both those things are going to be very important.

But the biggest thing is the United States is going to do well. I

mean, we can’t move the railroad to China or India. They haven’t figured

out how to do that. So you know, it’s sort of like if you remember that

song about New York- we have to make it here or we can’t make it anywhere.

CHARLIE ROSEFrank Sinatra.

(LAUGHTER)

WARREN BUFFETTBut it does move 400 — it moves a ton of goods 470

miles on one gallon of diesel. It replaces — a train replaces 280 trucks

on the road. It emits far less into the atmosphere that’s damaging than

trucking, and it moves- I’m talking about the whole rail industry- it

moves 40 percent of the goods.

CHARLIE ROSEAnd you have new ports of entry like Houston that are

bringing a lot of goods…

WARREN BUFFETTOh, sure.

CHARLIE ROSE… through the Panama canal.

WARREN BUFFETTAnd we’re going to have more people in this country

and they’re going to be using more goods over time. And sure, there’s a

bad year from time to time. In the next 100 years, there will probably be

15 bad years, and I don’t know what order they’ll appear, but I also know

the railroads will be essential to the country.

CHARLIE ROSENow, when you called Charlie Munger and said I’m

thinking about this, did he say right on, Warren? Or did he say, how about

this?

WARREN BUFFETTWell, if Charlie said “right on, Warren,” I would

figure I had the wrong number. No, that would be a wrong number.

CHARLIE ROSEThat’s not the likely reply.

WARREN BUFFETTThat might be my wife or my, you know — but Charlie

gave kind of a low-level grumble, and that is a real endorsement from

Charlie.

CHARLIE ROSEBut I mean, he also pointed out, it is said, that, you

know, there was- this was a regulated industry.

WARREN BUFFETTSure.

CHARLIE ROSEThis was an industry that was capital-intensive.

WARREN BUFFETTVery capital-intensive.

CHARLIE ROSEThis was an industry…

WARREN BUFFETTYou spend money…

CHARLIE ROSEThat was unionized.

WARREN BUFFETTIt was unionized. You spend money in this business

regularly every day. You’re spending a lot of money to repair track, add

rolling stock, whatever it may be. So it’s capital-intensive, and it is

regulated, and it will continue to be regulated, and it will continue to be

capital-intensive.

I think that what the service provided by railroads is so important in

many ways. I mean, it’s the right way to move goods around the country to

the extent that you can do it. And it’s far, far more attractive in terms

of global warming than using trucks, for example. So it will be here, and

if we get a reasonable return on the added capital investment- because it

will take added capital investment- we’ll do OK.

CHARLIE ROSEReasonable return is good enough?

WARREN BUFFETTReasonable return is good enough, Charlie. I mean,

50 years ago, I was looking for spectacular returns, but I can’t- I can’t

get them. We have- we have eight or $10 billion to invest every year.

And we’re in the utility business, and it’s the same thing there. When we

build electric generation or something of the sort, we shouldn’t expect a

spectacular return. We’re building things that are essential to society,

and people need our services. They really don’t have any choice in the

case of the electric utilities, for example, and sometimes in case of rail.

And we should get a decent return on that. Enough to encourage us to keep

putting money into the business, but we’re not entitled to spectacular

returns.

CHARLIE ROSEYou carry coal?

WARREN BUFFETTWell, that’s a big one in terms of tonnage, yes.

CHARLIE ROSEAnd if, in fact, we wean ourselves off coal, is that a

big problem?

WARREN BUFFETTWell, we will wean ourselves off coal over time. We

can’t change 40 percent of electric generation that goes- that comes from

coal. We can’t change that next week or next month or next year, but we

will reduce it over times, and we should reduce it over time.

CHARLIE ROSEAnd you can add other things to carry and changes will

be…

WARREN BUFFETTThere will be more grain to move, and there will be

more all kinds — chemicals- or whatever it may be. There will be more

things moving around this country 10 or 20 or 30 years from now.

CHARLIE ROSEKnowing your idea about moats, is it a pleasing idea

that no one is likely to get into the railroad business?

WARREN BUFFETTIf they wanted to reproduce the Burlington Northern

Santa Fe, it might take $100 billion or so.

CHARLIE ROSEAnd 100 billion years.

WARREN BUFFETTThey’d have to be a real sport.

(LAUGHTER)

CHARLIE ROSEAnd they are also modernized today, are they not?

WARREN BUFFETTEnormously. Enormously. The railroads- take a

railroad like BNSF. They’re moving far more ton miles of product with less

in the way of people, less in the way of fuel. Railroads have become far

more efficient over the years. There were a million and a half people

employed in the rail industry after World War II. Now there are about-

less than 200,000 in the United States, and they’re moving far more goods.

So it’s really become efficient. You watch those 130-unit trains double

stacked…

CHARLIE ROSEYou had other railroad companies in your portfolio.

WARREN BUFFETTRight.

CHARLIE ROSEYou’re selling them?

WARREN BUFFETTI’ve already sold them. Yes. I’ve done that just to

facilitate the transaction. I think they’re good investments, but I would

have held them if this hadn’t happened.

CHARLIE ROSEWhen you look at the future, there’s also the argument

made that this is something that goes with your philosophy today- get out

of cash and get into assets. Because we don’t know what’s going to happen

to the dollar.

WARREN BUFFETTWell, cash is always a bad investment. I mean, when

people say cash is king a year ago, I mean that’s crazy. I mean, cash

wasn’t producing anything, and it was sure to go down in value over time.

And then you always want to be sure you have enough. It’s like — like

oxygen — you want to be sure it’s around, you know. But you don’t need to

have — you don’t need to have excessive amounts of it around. And cash,

we will always have enough cash around.

CHARLIE ROSEYes.

WARREN BUFFETTBut anytime we have surplus cash around, I’m unhappy.

I mean, I would much rather have good businesses than cash. And we found a

chance in the last year, thereabouts, to deploy — we came in with

something over $40 billion in cash …

CHARLIE ROSERight.

WARREN BUFFETT… and we have got about $20 billion now, and we’ve

had some earnings. So, we — we’ve put a lot of cash to work. And I like

that. No, I’d much rather own a good business than have cash.

CHARLIE ROSEAnd it is a hedge against the dollar?

WARREN BUFFETTWell, you can say all assets are a hedge against the

dollar. I mean, but — all you know is that the dollar is going to be

worth less 10, 20, 30 years from now. I say “worth less.” Not worthless.

CHARLIE ROSERight.

(LAUGHTER)

WARREN BUFFETTYou want to watch that. But it will be — you know,

and that’s true of almost every currency that I can think of. The question

is how much it depreciates in value. But cash — cash is not a place…

CHARLIE ROSENow, why is that?

WARREN BUFFETTWell, because …

CHARLIE ROSE… that the dollar is going to be worth less?

WARREN BUFFETTBecause we’ll print more of them in relation to the

amount of goods that are moving. You know, if we dropped — if we dropped

a million dollars of cash into every household in the United States today,

everybody would feel very good except the people that invested in things

that were denominated in dollars. You know …

CHARLIE ROSEExactly. Got it.

WARREN BUFFETTThere will be no tendency toward deflation in this

country over time or — or virtually …

CHARLIE ROSEA tendency towards inflation.

WARREN BUFFETTAbsolutely.

CHARLIE ROSEOK.

CHARLIE ROSEIn all the conversations we’ve had, I never thought

that I would sit with you and we would talk about a 50:1 split of a class B

stock.

WARREN BUFFETTRight. Right.

CHARLIE ROSEI mean, this had to be a hard one or not?

WARREN BUFFETTI think I had a lobotomy one night and I didn’t know

about it. It is — it is not — it is not natural for me, but it was

needed to facilitate the small shareholders of BNSF getting the same deal

as the big shareholders.

CHARLIE ROSERight. Right. Right. Will it also qualify you for

the S&P index?

WARREN BUFFETTWell, it probably makes it a little less — a little

more likely over time that we get in there (ph). It makes it easier for

S&P, because we’re by far the largest company that’s not in the index …

CHARLIE ROSEYeah.

WARREN BUFFETT… and — and we’ll probably- my guess is that

they’ll consider us for it.

CHARLIE ROSEAnd you’d like that?

WARREN BUFFETTI certainly wouldn’t mind it. But I don’t — but I

don’t — I mean, it’s not — it’s not on my wish list for Christmas.

CHARLIE ROSEIt is not on your high lust list.

WARREN BUFFETTNo, no, no. The big thing is what happens to the

value of the company. And the shares will take care of themselves if we

build value.

CHARLIE ROSEYeah. When you — when you look at the railroad

business, it has a romance to it. You had a railroad track, I guess, in

your attic, didn’t you or some …

WARREN BUFFETTI still do. I still do. I hope they don’t make me

sell it for antitrust reasons.

(LAUGHTER)

CHARLIE ROSETake a look at this tape.

(VIDEO CLIP)

WARREN BUFFETTMy heart’s beating faster after watching that.

Throwing Grace Kelly in the middle of the road, I would have paid more.

(LAUGHTER)

CHARLIE ROSEJ.P. Morgan also owned the railroads, didn’t he?

WARREN BUFFETTYeah, and he was — he …

(CROSSTALK)

WARREN BUFFETTIn fact, there was a huge fight over the Northern

Pacific …

CHARLIE ROSERight.

WARREN BUFFETT… which is one of the predecessor roads. And —

and you had — you had two factions, and Morgan was lined up on one side.

Yeah, he was — he was very involved.

CHARLIE ROSELast night at Columbia, you said that the economic

panic is over.

WARREN BUFFETTYes.

CHARLIE ROSEWhere do you think we are?

WARREN BUFFETTWell, I can tell you where we are today. I can’t

tell you, you know, what’s going to happen tomorrow. But we’ve got 70-some

businesses — so I get a lot of — the panic is over. I mean, now money’s

flowing. I mean, because we’re in a recession, there’s not as much demand

for money, and money isn’t flowing to really dumb projects like it was a

few years ago, but money is available now. And the panic is gone, and

credit defaults spreads have come down dramatically.

But that panic that spilled over into the real economy last fall,

really, has — it’s left — it’s left real scars on the American public

psyche. I mean, the reset of how they spend their money and how they’re

thinking about their future changed in a big way last fall, and that —

that has not come back. And so in our businesses, they’ve bottomed. But

they’re not — there are very few upticks. It’s more or less flat right

now. But it will come back, Charlie. I want to emphasize that. But it

has not changed much since so far.

CHARLIE ROSEDo you have any sense of timing about that?

WARREN BUFFETTI really don’t. I mean, you know, it — I keep

watching, and it will come back. And people are not panicked anymore, but

they’re behaving differently than they did a year ago.

CHARLIE ROSESaving more, taking less risk.

WARREN BUFFETTThey’re taking less risk, and they’re more worried

about …

CHARLIE ROSEBudgeting better.

WARREN BUFFETTThey’re worried about their future, more people are.

You know, they have — they have seen something happen that they didn’t —

wasn’t really in their — in the scope of what they thought was possible.

CHARLIE ROSEYou have said for a long time that we are too much of a

consuming society, not enough of a saving society. Will we now become a

saving society?

WARREN BUFFETTYeah, we’ll probably become a saving society, but of

course the government demands for borrowing will be such that even with a

lot of borrowing from abroad, there will be a lot of borrowing required

from within the country.

CHARLIE ROSEAnd where is the consumer demand going to come from?

WARREN BUFFETTWell, it will come back eventually. I mean, we —

you know, our system will still work. But we have — you know, we talked

last year about the patient, you know, being on the floor with a cardiac

arrest …

CHARLIE ROSEYeah. Right.

WARREN BUFFETT… and we’re not out of the hospital yet. But we

will come out of the hospital. This — the things that made America what

it is have not disappeared, and they will — they will assert themselves

with time. But if you have way too many houses, you know, it’s going to

take time to work that off. If you’ve got a commercial real estate problem

where people just borrowed too much money and bought in at too low cap

rates and all of that, that does take time to work off. That’s happened to

us in the past, though, too. It happened in the 19th century, it happened

in the 20th century at various times, and we’ve always come back stronger.

CHARLIE ROSECommercial real estate is really in trouble.

WARREN BUFFETTIt’s a mess.

CHARLIE ROSEYou’re in the underwear business, you’re in the ice

cream business. You’re also in utilities.

WARREN BUFFETTRight.

CHARLIE ROSEThere was even a depreciation in demand on the part of

— for electricity?

WARREN BUFFETTIt’s amazing. We’re — in both Iowa, Midwest, and

then we also have the Pacific Northwest and the mountain states, and

everywhere you expected to see a big drop in industrial demand, but if you

take weather-adjusted behavior of residential customers, it fell off. And

it was like nothing we’ve seen since World War II. You know, it doesn’t

mean that it goes down 20 percent in residential or anything, but this was

an absolutely different experience than anything we’ve seen since World War

II in residential usage.

CHARLIE ROSEIs one of the things that is going to come out of this

crisis, that the demand for products, somebody else is going to have to

shoulder that demand, create that demand, other than the American economy?

WARREN BUFFETTNo, the American — the American economy will come

back. It won’t be tomorrow, and, you know, it won’t be exactly the same.

But in the end, we have not — we’ve not changed the American people in

their capacity to innovate or their excitement about — about becoming more

prosperous, and coming up with new ideas. There are — businesses will be

formed. Businesses will expand. But not much tomorrow.

CHARLIE ROSEYou have said we may need more medicine. Meaning more

stimulus? More what?

WARREN BUFFETTNo, we had a lot of medicine, and we’re going to have

a lot of after-effects from the medicine.

CHARLIE ROSEWe’ll talk about that in a minute. Yes.

WARREN BUFFETTYes, but they — the stimulus was not perfectly

executed. Nothing’s perfectly executed, I mean. I shouldn’t be

criticizing. But …

CHARLIE ROSEWhy shouldn’t you be criticizing? Don’t we learn from

that? I mean …

WARREN BUFFETTWell, oh, yeah, no, but I mean, overall, if they get

the job done, I don’t believe in picking too much at given — given

actions. But, you know, there should have been more infrastructure in

there, and they hung a Christmas tree under it — as I said, sort of like

mixing half a tablet of Viagra with candy. I mean, it would have been

better to leave out the candy and have the full take — full dose of

Viagra.

(LAUGHTER)

CHARLIE ROSEBut do you think we need a new stimulus, and because

the other one — the previous one, the only one was flawed?

WARREN BUFFETTNo, I think we can reserve judgment on that. I think

just the holiday season will tell us something when it comes. And I would

say that so far from what I’ve seen, you know, I don’t think it’s going to

be that big of a holiday season, but we’ll know — we’ll know that in a

month. And let’s see what happens on that.

CHARLIE ROSEYou’ve also said that America will still be the best

place to invest your money.

WARREN BUFFETTAbsolutely.

CHARLIE ROSEIn terms of American companies, in terms of everything.

WARREN BUFFETTEverything. You know, if you look back a couple of

hundred years, we’ve gotten where we are not because we’ve gotten smarter

or not because we work harder. We’ve got it because we found ways to

unleash more of the human potential. And what does that? Well, a rule of

law helps. A market system helps. Equality of opportunity helps. All of

these things that are still a fundamental part of the American system. As

a matter of fact, the American system is now better than it was a couple of

hundred years ago, because until the 19th Amendment, you know, we’ve had

half the talent in the United States that wasn’t entitled to do much. So

we’ve got a great system.

CHARLIE ROSEBut what’s happened is that the rest of the world,

especially China and India and places like that, have grown and have

enormous potential now and that are growing faster than we are.

WARREN BUFFETTThat’s terrific.

CHARLIE ROSEThat’s terrific? It means the pie’s bigger?

WARREN BUFFETTSure. The world is not a zero-sum game. I mean, if

we had our choice of being an island of prosperity in a world of 6.5

billion people, most of whom were struggling, or being the same country

with other people prospering, the latter is much the better choice,

particularly in the nuclear world. You do not want — you don’t want

billions of people with nuclear capacity …

CHARLIE ROSERight. Right. Right.

WARREN BUFFETT… envying you and feeling that somehow you’ve

gotten all the goodies of the world. So, we will grow slower relative to a

China, significantly slower, but they’re starting from much of lower base.

CHARLIE ROSEBut at some point, mid-century, they’ll have a larger

economy than we will.

WARREN BUFFETTIt’s going to be a long time.

CHARLIE ROSEYou don’t believe that, though?

WARREN BUFFETTWell, larger on a per-capita basis is a long way …

CHARLIE ROSEI don’t mean per capita, but a larger growth economy.

WARREN BUFFETTThat’s true.

CHARLIE ROSEThey’ll have a larger growth domestic product than we

will.

WARREN BUFFETTThey have four times as many people as we have,

they’re going to — they will have a larger overall economy. You know,

they will grow faster than we will grow, but they’re starting from a much

lower base. I mean, you know, I’ll meet some guy in the street today whose

net worth will be growing faster than mine on a percentage basis, but if I

start with a big enough number, it will be a while before they catch me.

CHARLIE ROSEOh, yes. This is also different for China. They now,

you know, have certainly — you are invested in a Chinese automotive and

battery company …

WARREN BUFFETTRight.

CHARLIE ROSE… of which the founder, a 43-year-old entrepreneur,

is somebody that you would admire wherever he was from.

WARREN BUFFETTThat’s right. And some of the things …

CHARLIE ROSEAnd he has a bit of you in him.

WARREN BUFFETTWell, yeah. He speaks Chinese, I don’t. Yeah. That

fellow is probably going to do remarkable things.

CHARLIE ROSEHe’s the richest man in China now.

WARREN BUFFETTThat’s right. But I think if he does remarkable

things, that’s going to be good for the United States. I mean, if he

develops better battery technology, we will get it, believe me.

CHARLIE ROSEOK, but there’s the question that has been raised. In

the past the United States has always been on the cutting edge of

technology. Your great friend Bill Gates is testament to that.

WARREN BUFFETTSure.

CHARLIE ROSEBut are they developing the capacity — he’s going to

lead in batteries. Somewhere else they say China is going to lead in solar

technology. Somewhere else say, they do more — is this …

WARREN BUFFETTWell, we don’t know…

CHARLIE ROSEAre we looking at that hard reality?

WARREN BUFFETTWell, it’s better to have the whole world, the talent

of the whole world working on things like battery technology or whatever it

may be. I mean, I’d like — you know if we’re going to add the resources

of a whole bunch of other people to help solve our problems, I’m all for

it. If we get there first and they copy us, fine. If we get there first

and we copy them, fine. I mean, it is not like they’re going to be able to

horde the technology and we’ll never see it.

So, you know, I’d like to see — I’d like to see the United States come in

first on everything, but I don’t — I don’t think it will be terrible if

somebody in China or India comes up with something that enables this

country to deal with its problems. We’ll get the technology.

CHARLIE ROSEIt may very well be that this — the world will be

waking up. I saw today that President Medvedev basically said in a sort of

stern message to the Russians, that we can’t just depend on the export of

oil and energy. We have to begin to think about how we restructure — all

the things — sounding like an American …

WARREN BUFFETTYes.

CHARLIE ROSE… speaking about the economic reality of today.

WARREN BUFFETTAnd the reason he’s saying that, it is because it’s

so darn obvious. I mean, you know, they did count on oil. They’ve been

counting on it too much. And — but the beauty of it is, you know, we

don’t have a monopoly on the system. I mean, we can — a market system can

exist elsewhere. And that does cause people to work on things that other

people want. I mean, you know, it’s much better than having a central

planner.

CHARLIE ROSEWhen you look at today and what we face in terms of the

job reality, are we going to have the capacity to create the kind of jobs

or will we have to settle at a new unemployment rate that we’re not

familiar with?

WARREN BUFFETTNo. We’ll create new jobs. I mean, we’ve been

through all kinds of tough unemployment cycles. In the early ‘80s being

probably the toughest. It really looked tougher for the — not in the

financial world. But in 1981, 1982,you know, we were at 10 percent

unemployment, and Volcker was applying, you know, a battle axe to the

economy, and people said, you know, Germany and Japan are going to produce

everything, what will happen to this country.

We’ve created millions and millions and millions of jobs since then. But,

you know, who would have thought when Paul Allen and Bill Gates were in

Albuquerque, you know, eating pizza and drinking coke at 2:00 in the

morning, you know, that they were a big part of our future. But that’s

going on right now. I mean, who would have thought the Google guys were

doing what they were doing, you know, a few years back?

We have — we can’t predict what it will be. I sat there in that room in

Columbia last night with 1,000 people. If we’d had that same 1,000 people

back in 1790 and I gave them some pep talk like this and they’d leave the

place and they’d all go back to their farms and say, that’s fine, but, you

know, what the hell are we going to do, you know. If farm implements get

better, well, there is no jobs. But they wouldn’t have been thinking about

the automobile and the airplane and the electric — all of that. I can’t

tell you what it will be, but I can tell you it will happen.

CHARLIE ROSEYou have also said and been very clear that you think

in this conversation and every other one, you know, that we had to pour a

lot of money at a crisis, and we may very well have presented ourselves

with a problem that is as difficult as the crisis.

WARREN BUFFETTWell, when you — when you use old medicines in

unprecedented dosages, and even invent some new medicines as we had to do

last fall — you know, there are side effects and after-effects. And

probably they’re somewhat proportional in certain ways to the extreme

nature of the dosages. So, you know, we cannot keep running fiscal

deficits like we are currently without having a lot of consequences over

time. And …

CHARLIE ROSE$1.4 trillion for 2009.

WARREN BUFFETTYeah, a lot — you know, that’s just, you know, even

for a guy like me, I mean …

CHARLIE ROSEThose are real numbers.

WARREN BUFFETTTrillion gets my attention. So, you know, that has

consequences. And we are not saving $1.4 trillion to finance that deficit.

And we faced huge deficits in World War II. I mean, relative to GDP then,

to fight a war, and there were inflationary consequences after, even a

little bit during the war.

CHARLIE ROSESo inflation will be inevitable because of the amount

of money we …

(CROSSTALK)

WARREN BUFFETTAnd then the question is whether — and basically,

it’s Congress. I mean in the end, Congress is the one that determines the

value of the dollar over time. They — if they follow policies that

require us printing too much of it, monetizing debt and all of that sort of

thing, dollars — dollars will become worth a lot less.

CHARLIE ROSESo Congress has to do what?

WARREN BUFFETTThey — they have to, once the economy is rolling

again, they’ve got to — they’ve got to apply some, you know, they’ve got

to raise taxes now that income will go up as the recession ends anyway, but

they’re going to have to — they’re going to have to close the gap between

expenditures.

CHARLIE ROSEThey’ve got to find more revenues.

WARREN BUFFETTThey’ve got to …

CHARLIE ROSEThe expenditures is a harder thing to do than the —

finding the revenues. Isn’t it?

WARREN BUFFETTYes.

CHARLIE ROSEI mean — go ahead, tell me. Which is easier, cutting

expenditures or raising the revenues?

WARREN BUFFETTThey have got to do one of the two, because the gap

between the two, you know, is as wide as the percentage of GDP — is wider

as a percentage of GDP than we’ve ever seen except in wartime.

CHARLIE ROSEIt’s now what, ten percent?

WARREN BUFFETTYes. That’s exactly. Just a touch over ten percent

is the gap. And that’s huge.

CHARLIE ROSEAnd what’s acceptable? Six?

WARREN BUFFETTWell …

CHARLIE ROSEIt was six during Reagan. It was six …

WARREN BUFFETTWe can work — if we have a gap of about 2, 2.5

percent and we have sort of normal growth, then debt as a percentage of GDP

doesn’t grow. So, the country gets more valuable over time and we have

more productive capacity, and all. So we can handle more debt, but it

should not be — it should be proportional to, in a sense, the wealth and

earnings of the country. And — and we can take a couple of percent gap

over time, and have that debt not grow proportionally.

CHARLIE ROSERight.

WARREN BUFFETTIt’s about — the net outstanding is about 55 percent

of GDP now. There’s nothing wrong with that. But you don’t want to just

keep climbing. And at a point it gets out of control and interest on debt

compounds and all of that sort of thing. But of course, in good years, if

you’re going to average 2 percent, you’d better not have 2 percent be the

base, because you’ll get into years like this with ten percent, and it will

pull the average up a lot.

CHARLIE ROSEThis question is asked frequently. Will at some point

the deficit and the debt and the decline of the dollar get to a point that

people who hold our debt will no longer want to buy and then we’re in a

crisis?

WARREN BUFFETTWell, the rest of the world doesn’t have much choice,

in a sense. I mean, if we — if our current account surplus — deficit, is

$400 billion, we’re handing $400 billion to the rest of the world. They’ve

got to buy something with it, and one way or another they have to buy

something in dollars. I mean, if they get those dollars and they buy

government bonds of the United States and they decide to sell them to buy

stocks, you know, they still get dollars when they sell the government

bonds. They can — they can choose among assets. They can’t really choose

not to invest in the United States.

CHARLIE ROSEBut they can choose as to where else they go for new

investments, can they not?

WARREN BUFFETTWell, they — in effect, if we’re running a $400

billion deficit figure, the rest of the world is getting $400 billion worth

of I.O.U.’s of one sort or another from the United States.

CHARLIE ROSERight. Right.

WARREN BUFFETTNow, if they invest that in France — because some

say the Chinese buy stuff from France — now France has got the dollars.

The only way you can bring down that is to actually get rid of the current

account deficit over time. And — but in any event …

CHARLIE ROSEAnd that’s having to do with the costs and savings, the

consumption savings rate.

WARREN BUFFETTBut if you are running a $1.4 trillion deficit, even

if you are exporting $400 billion of I.O.U.’s in effect to the rest of the

world, that leaves another trillion. And, you know, the domestic savers

are not going to come up with a trillion. I mean, so these numbers are

unsustainable over time, what we’re doing. It is true, though, that if you

keep flooding the world with your debt and people see your fiscal policies

are sort of out of control, they’re going to get less and less and less

enthused about your debt, and then one of two things happen. Either you

keep paying more and more to roll over that debt or you start monetizing it

like crazy. And I mean, the Federal Reserve can buy the debt and issue —

issue currency for it, but then the currency gets worth less.

CHARLIE ROSEBut is what you just described the reality we’re facing

if we don’t do something dramatic soon?

WARREN BUFFETTFairly soon. And we still want the economy to come

back. I mean, we want to put out the fire. You know, but then make sure

…

CHARLIE ROSEYou worry about that later after we put out that fire.

WARREN BUFFETTThen we don’t — (inaudible) just squirting water on

those buildings. We have to know when the fire is out.

CHARLIE ROSEYeah, but how do we know that? That’s my question.

WARREN BUFFETTOh, well, well, we will know — unemployment will top

out late. But we’ll know when the economy is really coming back.

CHARLIE ROSEWhat will be the indication of that for us?

WARREN BUFFETTWell, it will be — it will be retail sales. It will

be automobile sales. It will be when home construction starts coming back.

It’ll be — there’ll be plenty of economic signs — they may be a little

late in getting recognized. There’s you know, the depth (ph) comes a

little late.

CHARLIE ROSERight. Right.

WARREN BUFFETTBut we’ll know. We’ll know. We won’t know — we

won’t know when the turn happens, but three or four months later, we will

know it’s happened.

CHARLIE ROSEAnd it’s inevitable that’s going to happen in the next

year or two or later?

WARREN BUFFETTWell, I like two better than one. But when you say

inevitable, that doesn’t mean it can’t happen earlier.

CHARLIE ROSEBut I mean — what would you worry about that might —

that we might not come back the way we ought to, that somehow there have

been repercussions from this that will have lasting impact?

WARREN BUFFETTWell, there will be some lasting impacts of certain

types, but in terms of coming out of it, I don’t worry. If you had some

big exogenous event — if you had a major- either by a country or by

terrorists — sort of a 9/11 squared or something …

CHARLIE ROSERight. Right.

WARREN BUFFETT… a huge anthrax attack or something like that, you

know.

CHARLIE ROSEOr oil went to $250 a barrel or something like that.

WARREN BUFFETTIf oil rose to $250 a barrel, there can be certain

exogenous effects that could …

CHARLIE ROSESo, that kind of thing would worry you the most that’s

likely to happen. Otherwise …

WARREN BUFFETTI mean, for some reason or another, 5 million barrels

a day of oil out of the 85 million barrels, you know, got shut off, and

more or less looked like permanently at the time, you know, there would be

a lot of disruption in this world.

CHARLIE ROSEWhen you look at the lessons we have learned, one was

as you have suggested, way overleveraged.

WARREN BUFFETTYes.

CHARLIE ROSEWe also experienced a bubble, a housing bubble. We

will have other bubbles.

WARREN BUFFETTWe’ll have other bubbles. I’ll guarantee you.

CHARLIE ROSEAre we going to go back to the same kind of leverage?

WARREN BUFFETTNot for a while. We learn lessons and they last for

a while, and the deeper the wounds, to some extent, the longer they last.

I was a beneficiary of that. I mean, I got out of school in 1951, and all

of my competitors were still worried about the Great Depression, and my

memory wasn’t good enough so I had forgotten. So, this — this will have -

• this will have an impact on thinking for quite a while in certain

respects. But fear, greed, folly …

CHARLIE ROSENot going to change.

WARREN BUFFETTNo, we haven’t — we haven’t gotten rid of those. We

get smarter in all kinds of ways. We don’t get smarter emotionally.

CHARLIE ROSEWhy is that?

WARREN BUFFETTIt’s just the way the human animal is put together.

You know I mean …

CHARLIE ROSEThe memory fades and all of a sudden the new temptation

is there.

WARREN BUFFETTYeah, you know, and plus, you know, plus being greedy

can be fun for a while, I guess. You know, leverage can be fun when it

works.

CHARLIE ROSEYes.

WARREN BUFFETTLeverage — leverage is one of those things that

works 99 times out of 100, and when it doesn’t, you know, it’s all over.

CHARLIE ROSEHow do you explain the fact that you always enjoyed

making it more than even spending it? You enjoy making it and investing

it, but not necessarily spending it.

WARREN BUFFETTWell, I have everything I want in life, so there’s

nothing to spend it on. I mean, I could have 10 houses instead of one,

would I be happier? No way. I could have 10 cars instead of, you know, two

in the house. I wouldn’t be happier. You know, it would drive me crazy.

I could have a 400-foot boat, you know, and then I’ve got to have a crew of

50 or 60, and some of them (inaudible), sleeping together — I mean, who

knows what would be going on. So I don’t — if I wanted to be a ship’s

captain, you know, I’d have gone into a different profession. I have

everything in life I want.

CHARLIE ROSEAnd what you enjoy doing is studying where we are,

understanding, doing the kind of analysis through conversations and reading

…

WARREN BUFFETTI love working — I love working with the people I

work with. I love just viewing the human scene, but I mean, I have an

ideal life. I get to do what I want to do every day. So, you know, and

money can’t — can’t buy any more than that.

CHARLIE ROSEWhat do you think of a value added tax?

WARREN BUFFETTWell, I don’t — I basically don’t like it because

it’s somewhat akin, it is not the same, but it’s somewhat akin to a sales

tax. I mean it has — it has …

CHARLIE ROSEIt’s regressive.

WARREN BUFFETTYeah, it’s regressive, and, you know, we don’t need

more regressive taxes in the United States.

CHARLIE ROSEThat’s why you don’t like cap and trade.

WARREN BUFFETTYeah, well, that’s right. In terms of the way it

falls on people, absolutely. I think that if we’re looking for more money,

we ought to look to guys like me. I mean, I am still paying a lower rate

on dividends and capital gains than my cleaning lady. It’s, you know, in

terms of her payroll tax, just to start with. And so, I just think that

we’ve gotten so far out of whack in terms of who’s been prosperous in

recent years, and most of the economy — most people have been left behind,

you know. So we learn that a rising tide lifts all yachts.

(LAUGHTER)

CHARLIE ROSEBut there are not a lot of guys like you to start with.

WARREN BUFFETTWell, there are some.

CHARLIE ROSEWell, but you’re the top of the list there with — you

and Bill. But there is also this — what is an appropriate rate of

taxation of people like you before, as some conservatives and supply-siders

argue, you begin to somehow inhibit growth?

WARREN BUFFETTYeah. Well, I — I worked through all kinds of

systems of taxation.

CHARLIE ROSERight.

WARREN BUFFETTAnd I worked with rich people, you know, even in the

‘50s and the ‘60s, and I worked with them when the top rate was 70 percent.

I worked with them when capital gains rates were 39.6 percent, and not one

of them said, you know, it’s 1:00, and instead of working this afternoon I

think I’ll go to the movies because my marginal rate is so high. I mean,

if anything, they worked harder, Charlie.

CHARLIE ROSEThe reason they got rich is because they worked hard.

WARREN BUFFETTI never had one person — I had hundreds of people

…

CHARLIE ROSEYeah.

WARREN BUFFETT… you know, in the partnership …

CHARLIE ROSERight.

WARREN BUFFETT… and not one of them ever came to me and said,

“Warren, I decided to hell with it. 39.6 percent, I’m not going to invest

my money.” What would they do with it, stick it under the mattress?

CHARLIE ROSEDoes that mean that the American system is in a sense a

bit unfair and geared to the rich?

WARREN BUFFETTWell, I think it has become more geared to the rich

as time has gone by, and I think that the rich have, you know, obviously a

disproportionate impact, you know, on how Congress behaves, and…

CHARLIE ROSEMoney in politics.

WARREN BUFFETTYou basically have to — if you have a very rich

country with a great number of superrich, you have to fight against a

plutocracy. I mean, you know, the Congress has to be your bore (ph) — for

the principles of democracy to win out over a plutocracy, and we’ve done

that well in this country. But it’s a constant fight. I mean, you know, K

Street is not populated by a whole people — a whole bunch of people who

represent my cleaning woman. And if you look at the Forbes 400, you’ll

find that, you know, they find their way to K Street, and it finds their

way to them.

CHARLIE ROSESure. They have multiple voices on K Street.

WARREN BUFFETTThey care. Sure. They care.

CHARLIE ROSESo, what would you do about that?

WARREN BUFFETTWell, it’s always a problem.

CHARLIE ROSEYeah.

WARREN BUFFETTAnd you want a prosperous country so you want a whole

bunch of rich people, but you also want everybody to do reasonably well in

something as prosperous as we have. We have $45,000 of GDP per capita in

the United States …

CHARLIE ROSEYes.

WARREN BUFFETT… but we’ve got — we’ve got almost 60 million

people living in households where 20 — the top income is $21,000 or less.

That’s the top of the 60 million people. So we can do better. Now, we

have done better over time. I mean, we put in Social Security and we’ve

done things in the country that have worked in the direction …

CHARLIE ROSEMedicare and Medicaid.

WARREN BUFFETTYeah.

CHARLIE ROSEYeah.

WARREN BUFFETTBut a prosperous country should not just be

prosperous for the people like me who are wired in a particular way at

birth — no credit to me — but I happen to know something about capital

allocation. It wasn’t, you know, I could have instead — I could have been

— I could have been wired, you know, so I was, you know, I don’t know — a

great ukulele player. But there’s more money …

CHARLIE ROSESometimes you can be both.

WARREN BUFFETTYeah, well, not often. Not in this case anyway. But

there’s more money in what I do.

CHARLIE ROSEYes.

WARREN BUFFETTAnd you don’t want to mess up the market system that

works to bring out of people what their best talents are, but the market

system is not perfect in any kind of distribution of wealth. And taxation

is a way where you get to the excesses of what the market system produces

and where you take care of the people that get the short straws. In a

country as prosperous as we are, nobody should get a really short straw.

CHARLIE ROSEYou know, some people are going to hear you say that

and they’ll say, “Warren is talking about sharing the wealth. There he

goes ..”

WARREN BUFFETTWell, I’m talking about sharing the prosperity.

CHARLIE ROSEYou’re …

(CROSSTALK)

WARREN BUFFETTI’m prosperous because of the society around me.

Stick me down in some poor country and I’ll walk around and say I allocate

capital, you know, and they’ll say, so what? What we need is a guy with a

strong back. You know, and I don’t have a strong back.

CHARLIE ROSEBut can you row a boat or something?

WARREN BUFFETTYeah. Something like that.

CHARLIE ROSERight.

WARREN BUFFETTSo — so society — listen, when a couple of

middleweights fight it out on Pay Per View this weekend and get $49.95 from

me, or whatever it maybe, and I can’t remember their names two weeks later,

you know, they are benefiting not because of their own talent that much,

but because some guy invented television and then invented cable

television, and learned how to change a stadium of 15,000 people into a

stadium of 300 million. So they benefit from society. We all do. And

some like me benefit enormously from society, you know. I can’t do it by

myself. Stick me on a desert island, you know, you do not want to be on

the same island.

CHARLIE ROSEThere is this, also. The Bush administration says that

when the economic crisis came, they treated it with a tactic, which was

doing what they did. They worry that what the Obama administration is

doing is a strategy to put in place a different attitude about the

relationship between the government and the economy.

WARREN BUFFETTYeah, I don’t think the Obama administration wants

the government to take over the economy. But they did — they took on a

situation — and incidentally, I can give credit to the Bush administration

in that last four or five months of 2008. I mean, a lot of right things

were done. I mean, when George Bush said, you know, if money doesn’t ease

up — if money doesn’t ease up, this sucker can go down. That was one of

the most profound economic statements ever made. He became the economist

in chief as far as I was concerned at that point.

But so I give them credit, too. But the Obama administration, they’re not

running General Motors because they want to run General Motors. I mean, it

isn’t like that Barack Obama grew up wanting to run the whole American

economy. They’re doing well…

CHARLIE ROSEAlthough he might want to buy a railroad, though.

WARREN BUFFETTYeah, well.

(LAUGHTER)

CHARLIE ROSEThat’s going to be …

(CROSSTALK)

WARREN BUFFETTHe’ll buy it from me.

CHARLIE ROSEBut go ahead. It’s a good — but …

WARREN BUFFETTThey are doing what is necessary in their view to get

this economy righted. Nobody makes perfect decisions on this. And they’re

doing things I’m sure they don’t like to do. I don’t think they want to

run General Motors, you know, or Chrysler or anything of the sort …

CHARLIE ROSEOr own AIG?

WARREN BUFFETTNo.

(CROSSTALK)

WARREN BUFFETTThat is no fun. Or prop up Freddie and Fannie.

CHARLIE ROSESo, all these people who think that somehow there’s

some new idea about — they use the word “socialism,” but something else in

terms of …

WARREN BUFFETTYeah, Barack Obama …

CHARLIE ROSEYou don’t buy that.

WARREN BUFFETTBarack Obama wants a much more prosperous economy,

embodying the principles that have made it prosperous, but I think he does

want to make sure that the bottom 20 or 30 percent does better than it has

done in the last 20 years while the top has prospered so much.

CHARLIE ROSEThat brings us to the question beyond whether Congress

has the will or not, there is this idea, which is how do you create a new

regulatory platform and architecture. And you’ve got on the one hand the

administration comes in and says let the Federal Reserve do it, then you

have Chris Dodd who says no, no, no, don’t do that. And then Barney Frank

says I’m somewhere halfway in between. Where is Warren Buffett?

WARREN BUFFETTI am 100 percent for the independence of the Fed.

CHARLIE ROSERight.

WARREN BUFFETTI mean, if you have a central bank that is bowing to

the will of Congress, either directly or indirectly, through some of the

various (ph) mechanisms, it would be a disaster.

CHARLIE ROSEWho wants to be in on their monetary decisions or

oversight or whatever…

WARREN BUFFETTYeah, you’ve got to hope you’ve got a good Fed

chairman and some good members, but — and we’ve done that generally. If

Paul Volcker was — you know, he was essential to this country coming out

of that 1979-’82 period like we did. Ben Bernanke was essential to keeping

us from going into the abyss last September. We need — we need an

independent Fed, and I think every country needs an independent federal

bank.

CHARLIE ROSEBut does that mean they should be the regulator as

well?

WARREN BUFFETTSomebody has to regulate, and banks do need

regulation.

CHARLIE ROSEDo we need one regulator, one big regulator that will

…

WARREN BUFFETTWell, if it was me, I would like it. I mean I — I -

• because you need — you need somebody that does have a big stick.

CHARLIE ROSEYes.

WARREN BUFFETTI mean, left to their own devices, people will take

on too much leverage. They may not this year or next year, but the

financial institutions, particularly if they’re promising they’re going to

increase their earnings per share every quarter, and they’ll do off-balance

sheets, things — all of these sins that were committed a few years ago.

CHARLIE ROSERight.

WARREN BUFFETTYou know, Freddie and Fannie did a lot of them, too,

and they were regulated by Congress.

CHARLIE ROSEAnd they had 200 regulators marching into the office

every day.

WARREN BUFFETTSo we’ve had Congress regulate the two of the five or

six most important financial institutions in the United States, and it was

a total flop. So it’s tough being a regulator, and — but you want

somebody that is independent, somebody that has got real muscle, and

hopefully somebody that, you know, who has an understanding of what you

need to do to keep the system working well.

CHARLIE ROSEAnd that’s the Federal Reserve.

WARREN BUFFETTI think they’re good at it. Yes. You know, they

weren’t perfect this time around, and, you know, but Congress wasn’t

perfect, either.

CHARLIE ROSEBut once the problem came, they responded, and you had

untold admiration for Bernanke.

WARREN BUFFETTIf he hadn’t have had the authority he had…

CHARLIE ROSEYeah.

WARREN BUFFETT… and maybe — maybe if he even had and thought he

had a little more authority than he even did have last fall — I mean,

there’s something to that, you know. I mean, you had to have somebody that

would step up and guarantee money market funds, you know, keep commercial

paper flowing, do these things that not many people could have done. And

certainly Congress couldn’t have done them with the speed — you know, and

speed was absolutely essential. I mean, you did not have a lot of time to

save this patient.

CHARLIE ROSEAnd they understood that, too.

WARREN BUFFETTAnd they really understood it.

CHARLIE ROSEAnd reacted. And gained a lot of power and used it.

There’s also this — you cannot establish a particular leverage ratio, can

you? You can’t say that 15:1 is as far as it should ever be.

WARREN BUFFETTNo, if you have a bank that owns nothing but short-

term government bonds, they can have 50:1, and if you got them, you know,

they’ve got a whole bunch of money lent out to other guys who were

leveraged in various ways, in various speculative things, five to one is

too much, so pure numbers don’t work.

CHARLIE ROSESo what works?

WARREN BUFFETTThat is the problem. That is the problem.

CHARLIE ROSEThat’s why…

WARREN BUFFETTNo, I mean, if you could just stick a bunch of ratios

out there, it would be all over.

CHARLIE ROSEBut what works? I mean, it’s the problem, give me a

possible way of dealing with the problem.

WARREN BUFFETTI would like to have a very smart, strong regulator

that understood the nuances of different kinds of leverage and what it

might mean. And one who would be willing not only to use those rules of

individual institutions, but who would speak out to the country. You can’t

speak out too often and have it meaningful, but who would speak out to the

country about a generalized problem. Because that’s what we needed. It

wasn’t — it wasn’t the fact that it was bank “A” or bank “B” or bank “C.”

What was happening was that you were having a bubble that everybody was

joining in, and speaking out on that — which requires a lot of guts and

may even get ignored, although if it comes from somebody that is running

the Fed, you know, or whomever, or the president of the United States, I

mean there can be people that will have an impact on that.

CHARLIE ROSEYou’ve said that you’re not in favor of too much

coddling and that you’d like to see the stick used more.

WARREN BUFFETTAbsolutely.

CHARLIE ROSETell us what you meant.

WARREN BUFFETTWell, what I mean is, that if you run a financial

institution — and it’s financial institutions overwhelmingly that do tend

to create the problems because there’s this aggregation of capital — if

you run a financial institution that in effect can bring down the system,

unless the federal government steps in …

CHARLIE ROSERight.

WARREN BUFFETTIf you get to that point, I think something very bad

should happen to you. I don’t think you should walk away with a lot of

money or even with 10 percent of your previous net worth or anything of the

sort. And I think the directors who selected you and let you operate in

that manner should have some real downside. You know, I’m not for shooting

them, but I’m for …

CHARLIE ROSEBut the threat of it would be…

WARREN BUFFETTI want to make it painful for them. I mean, seriously

…

CHARLIE ROSEPainful would be they — what, they can’t buy

insurance?

WARREN BUFFETTNo, yeah, well, I would probably have in terms of the

very large financial institutions, if they have to go to the government,

you know, and the government had to act — because there are going to

always be too big to fail institutions.

CHARLIE ROSERight.

WARREN BUFFETTIt drives regulators crazy, but that’s the reality of

it- and if an institution comes in and says, “If we go down, we’re pulling

the whole country down with us,” I think that the directors and the CEO of

an institution like that, I think the directors say — should certainly

have to give back — you know, they should — five times the highest fee

they’ve received in the previous year, because you’re sitting around those

places now getting $200,000 to $300,000 a year, you know. And for the —

all I want from my $200,000 to $300,000 a year is somebody that is

selecting and designing a compensation system for the person they put in

charge, the CEO, who should be the chief risk officer. I want them to have

a system that penalizes that person very, very significantly, and if they

don’t — they don’t create that kind — if they pick the wrong person or

they let that person go off the reservation, I want them to pay, also.

CHARLIE ROSEAll right. So, let me just -you want there to be a

penalty for directors who do not do their job.

WARREN BUFFETTYeah.

CHARLIE ROSEBut you recognize that there are going to be financial

institutions that are too big to fail. It has been and will continue to

be.

WARREN BUFFETTIt will continue to be.

CHARLIE ROSEYou can’t simply say we’re going to let anybody fail no

matter how big, no matter what the consequences.

WARREN BUFFETTNo, we’re just going to have a mom and pop bank on

every corner, and it isn’t going to work.

CHARLIE ROSEDo you think that the financial community has any sense

of I’m sorry?

WARREN BUFFETTWell, most of them didn’t do it, I mean, in the sense

that- if you take the leaders of these institutions that got them in, a

lot of them are gone. Now, they’re gone with more money than I would like

to have them gone with. And I think what’s infuriating to the American

public — if you take the people in Omaha, you know, they have seen lots of

unemployment. They’ve seen in many cases their homes or friends’ homes

foreclosed. They’ve seen all these things happen to them, and nobody’s

going to jail. And as far as they’re concerned, the leaders of institution

A, B, or C, that have in a big way contributed to these problems, you know,

they may be worth — they may be worth $10 million instead of $100 million

or something like that, but they don’t see anybody going to jail. They

don’t see — they don’t see anybody being held very responsible for it.

CHARLIE ROSEAnd they don’t believe that if they were in the same

place, a much lower investment, that anybody would have come along and

taken care of them.

WARREN BUFFETTWell, yeah, and they’re right about that. I mean, if

I have a tiny little business that fails, it doesn’t affect the United

States. But if you have Freddie Mac and — Mac and Fannie Mae …

CHARLIE ROSEOr AIG.

WARREN BUFFETTOr AIG.

CHARLIE ROSEOr Citicorp.

WARREN BUFFETTYeah, they — and they — it would have affected us.

I mean, we could not stand those dominoes falling. And it drives people

crazy that we couldn’t, but we couldn’t. I mean, if those — if a few more

dominoes had fallen, if that weekend of September 12 to 14th, or whatever

it was, if one more domino then, you know, Merrill Lynch going, Morgan

Stanley would have been next — if the dominoes were so lined up, and they

were so big that …

CHARLIE ROSEWithout the government, they would have gone down.

WARREN BUFFETTThey would have gone down. But bear this in mind —

they talk about moral hazard on this. There isn’t any moral hazard. If

you look at Citi, 90 percent of the market value has disappeared. If you

look at Freddie Mac, 90 percent of the market value — more than that.

CHARLIE ROSELook at AIG.

WARREN BUFFETTFannie Mae, AIG, all of them. So, the stockholders

have gotten totally creamed. The owners have gotten totally creamed. So,

it’s not like anybody who was a stockholder of Citi or Freddie, or Fannie,

or AIG or you name it, is thinking, ha-ha, you know, the system is going to

save me. Because it didn’t save them. They got killed. But the guys at

the top did not get — you know, in most cases, did not get killed. And

they’re the ones that made the mistakes.

CHARLIE ROSEAnd should they have gotten killed, so to speak?

WARREN BUFFETTIt should have been harder for them.

CHARLIE ROSEAnd so, how would the government have done that?

WARREN BUFFETTI would probably have something with those kinds of

institution where no one got rich from running an institution like that

until about five years after they left. I mean …

CHARLIE ROSEYeah.

WARREN BUFFETTAnd I’d have had a very restricted and I’d have

clawbacks, and I’d be plenty tough, and I’d be tough on the directors if

they hadn’t put in those kind of arrangements.

CHARLIE ROSEAnd they say that now, if you listen to the financial

executives today, they say we’re in favor of clawbacks, and we’ve

instituted those kinds of things. I don’t know whether they have or not…

WARREN BUFFETTWell, they’ve done some, but I’d probably square it.

CHARLIE ROSEMake it exponentially.

WARREN BUFFETTWell — and I wouldn’t let them buy — against this

sort of risk, I wouldn’t let them buy directors officers insurance —

liability insurance.

CHARLIE ROSERight.

WARREN BUFFETTWe don’t have that at Berkshire. I mean, if our

shareholders are going to go down, I want me to go down with them and the

directors to go down with them. You know, we’ve taken on the job. And,

you know, if the ship goes down, we should not get the first lifeboat.

CHARLIE ROSEWhen you look at that year — this is a book by Andrew

Ross Sorkin …

WARREN BUFFETTIt’s a very good …

CHARLIE ROSEIt’s a very good book.

WARREN BUFFETTIt’s a very good book.

CHARLIE ROSEAnd you’re in there. Moments for you, I mean you were

at the other end of phone calls from people who …

WARREN BUFFETTWho wanted money.

(LAUGHTER)

CHARLIE ROSEWho wanted money. And in some cases advice, but mostly

money.

WARREN BUFFETTMostly — yeah, they’d take money before — if there

was a choice between money and advice, right…

CHARLIE ROSEThey’ll take money. So, they mostly wanted money. Are

there moments you look back in which you said no that you might have said

yes? I mean, do you have any sense of …

WARREN BUFFETTYou just ….

CHARLIE ROSEI know you do.

(CROSSTALK)

WARREN BUFFETTI mean, it’s just like standing at that plate and the

pitch comes in and you have got a half a second to decide whether to swing.

CHARLIE ROSEYeah.

WARREN BUFFETTYou know. No.

CHARLIE ROSEI know you’re not a man to agonize, but I mean have —

I mean …

WARREN BUFFETTOr, I could have done way smarter things.

CHARLIE ROSELike?

WARREN BUFFETTI did not optimize the period.

CHARLIE ROSERight. Because you had money and they needed money and

they would have given up a lot for that money.

WARREN BUFFETTYeah, plus, the bottom of the market was six months

later, I mean, and it was significantly lower. So if I just saved the

money, just put it in the market six months later, I would have done way

better than making these deals.

CHARLIE ROSERight. Right.

WARREN BUFFETTBut I didn’t know that at the time.

CHARLIE ROSESo you said I’m optimistic, but I’m not sure my

optimism is justified.

WARREN BUFFETTWell, I don’t try to pick bottoms. No, I really —

when something — when I get a call and it makes sense and I’ve got the

money, I do it. You know.

CHARLIE ROSEYes.

WARREN BUFFETTAnd I don’t think I can do this better tomorrow or

the next day, or that sort of thing. But most of the things didn’t make

sense.

CHARLIE ROSEBut here’s something else you taught me as well — you

don’t get that many swings at the bat.

WARREN BUFFETTNot with big sums.

CHARLIE ROSEWith big sums.

WARREN BUFFETTYes, with big sums.

CHARLIE ROSESo if you look at Burlington Northern, is that- that

was a big - that was a big sum.

WARREN BUFFETTYeah. And you don’t get bargains on things like

that. It’s not cheap.

CHARLIE ROSEBut that was a bargain?

WARREN BUFFETTNo, it’s not a bargain.

CHARLIE ROSEI didn’t think so. That’s what I’m asking you.

WARREN BUFFETTNo, but it’s a good asset to own for Berkshire over

the next century.

CHARLIE ROSEBut does it restrict how many — suppose tomorrow a

great thing came along that you didn’t know. Would you say, “oh, my

God…”

WARREN BUFFETTWell, it could happen. I mean, if the Union Pacific

came along at half the price - you know, but I don’t worry about that sort

of thing at all, Charlie.

CHARLIE ROSESo when we look back at this time, for one who loves-

who loves understanding what’s going on and where it’s going — you said to

me before, you know, you might sacrifice the last year of your life if

somebody would come along and say, “Warren, I can tell you what the next 40

years are going to look like. All the questions you have, I can answer.”

WARREN BUFFETTOr just let me watch. Just let me watch the next 40

years. The last year, you know, you don’t get to be here, but the next 40

years you get to watch. Kind of like Chauncey Gardiner, he liked to watch.

CHARLIE ROSESo as we put a cap on this, we’re going to come out of

this OK.

WARREN BUFFETTAbsolutely.

CHARLIE ROSEWe’ve got some real problems we have to deal with. The

deficit is one. How we learn the lessons of this in terms of finding some

kind of regulation that works. And have confidence that we got here

because we had unique kinds of skills. Go back to 1776 and see what a few

group of people did and where we are today, makes you an optimistic about

America, but also optimistic about the world.

(CROSSTALK)

CHARLIE ROSEAs the center of gravity moves to Asia.

WARREN BUFFETTIt’s wonderful that the lessons we learned over the

last couple of hundred years are being absorbed in many parts of the world.

I mean, people have seen success and they’ve had the sense to copy some of

it, and get into their own system those ingredients that have done it for

us. But we haven’t lost the ingredients. The fact that they’re able to

use the ingredients does not take it away from us.

And every year of my life, I could sit down at the start of the year

and write on a pad a dozen things that were looming over the economy. When

people say, “I’m not buying stocks now because times are uncertain,” I say

to them, so, I say to them, “well, on September 10th, 2001, were times

certain?” You thought they were certain, but you found out the next day

they weren’t. On October 18th, 1987, before the — the day the Dow took

that 22 percent — things are always uncertain in the short term. What

really is certain is the things that worked over time will continue to work

over time. So the next day is always uncertain. The next hour is always

uncertain. The longer term is pretty darn certain.

CHARLIE ROSEWarren, thank you.

WARREN BUFFETTThank you.

CHARLIE ROSEIt’s always great to see you. Warren Buffett for the

hour.

Thank you very much for joining us. We’ll see you next time.