Buffett interview excerpts

I watched the whole thing, and so should you.  Or at least read it.

But if you do not have time, here are some tidbits I found particularly interesting.

On guaranteeing bank liabilities:

…frankly, nobody but the president now will be believable to the American people. I mean, you can’t–people have heard–they don’t–names like Paulson, Geithner, Bernanke, those–that’s just a muddle to them. The only authoritative voice in the United States who says, `This is what we’re going to do, this is what we’re not going to do,’ and very specifically, is the president of the United States.

…

No depositor of an insured deposit has ever lost a penny since 1934. It was a huge factor in making this economy work to be one of the greatest–well, the greatest economy that’s ever existed. Thirty-six hundred times the FDIC has come in. In the last year, they have moved, I think, something close to 8 percent of the deposits in the United States. It hasn’t cost the taxpayer one dime, no depositor has lost one dime. Now, what the American people have to be sure of is that when organizations as big as the ones that have been in the news, like a Citigroup, where people know the FDIC can’t come over and move it to the Second National Bank of Omaha or something overnight, they have to be sure that all deposits, really, all debt liabilities of Citigroup are going be met. There’s–and the truth is we’re going to do that. People say they’re too big to fail, but you really need somebody that’s totally authoritative who can say, `Just forget about the problems of ever worrying about having your money or actually a debt instrument of a bank.’ It’s too important that–to be left ambiguous on that subject. And all of the–the FDIC’s raising more money now. But the FDIC will take care of banks. They talk about nationalizing banks, they nationalized for a nanosecond 20 banks this year, roughly 20 last year. They moved it overnight, it’s all working fine. Nobody loses a dime. And people have to feel that way about the entire banking system. And if they don’t, we will have–you’ll have more articles like the one you talked about in the Journal.  [emphasis added]

That’s right; Buffett said that Obama needs to stand up and assert that the U.S. government is guaranteeing all debt liabilities of the banks.

On gold:

BECKY: OK. Harold from Williamsville, New York, writes in. He says, “You said recently that Treasury Bonds and cash equivalents are going to have very bad times in the not too distant future. Does that imply that you like gold and silver and the equities underlying them?”

BUFFETT: No. It implies I like good businesses.

BECKY: Mm-hmm.

BUFFETT: You know, if the dollar becomes way–worth way less, we will sell See’s Candy for more money. I mean, it won’t be more real dollars, but we–if somebody’s willing to give up 15 minutes of their labor or half to buy a pound of this or to buy six cans of this, they’ll do the same thing and it won’t make any difference whether shark’s teeth are being used for money, basically. So the best–well, the best assets you can have during inflation is your abilities. I mean, because if you’re the best doctor in town or the best lawyer in town or the best broadcaster in town or whatever it may be, you will always command a certain percentage of the resources of society. So your own talents are the most important thing. But if you don’t have any talent like I do, you try to buy into other people’s talents. And you know, this is the best candy. This is the best soft drink, as far as I’m concerned, and it will be that way 10 years from now. And whatever the value currency is, we’ll get our share in that–in terms of that value at that time.

On mark-to-market and the uptick rule:

BECKY: There are people who are looking for quick solutions. Theodore in Woodstock, Georgia, writes in with the question a lot of people have asked. He says, “Should the SEC suspend mark-to-market accounting?”

BUFFETT: Well, that’s a–you know, I’ve always been theological on mark-to-market accounting, because I’ve seen so much of what people do when they’re allowed to use their imagination on balance sheets or income statements. And frankly, American business misbehaved in a big way, particularly in the ’90s. But people did play games with numbers. And they probably still do. But it–there was–it was almost accepted as a way of doing business. So I’ve always been suspicious when you give a CEO a pen and tell him it’s the honor system. And anything other than mark-to-market works in that direction.

Now, it’s true, I think, that mark-to-market has had a–it’s been some gasoline on the fire in terms of financial institutions. The markets are, on certain things, are pretty unrealistic, which is why I said just a little while ago that I would like to–I would rather buy the toxic assets at market from a bank than their good–than their best assets. There’s more money to be made in those and they’ve been marked to a level where there’s a lot of–you know, where they’re probably below fair value, in my opinion. So I’m sympathetic. I think the best way to handle that, though, probably still, is to have the mark-to-market figures, but not have the regulators say, `We’re going to force you to put a lot more capital based in on these mark-to-market figures.’ I say in our annual report, I mark some–we mark everything to market. I say I don’t agree with it in certain cases, and I explain my reasons and shareholders can decide whether they think the reasons are valid or not. I hate to give it up.

…

BECKY: All right, you counted on–you commented on mark-to-market. What about the uptick rule? We’ve had several people who’ve written in about that.

BUFFETT: Yeah. Yeah, I–there’s no–there’s no question that it–there’s something wrong with people buying stocks and saying untrue things, and there’s something wrong with people shorting stocks and saying untrue things. And sometimes it seems like the shorts are a little more eager to spread negative stories than the longs. But I’ve seen a lot of people on the long side do a lot of things they shouldn’t have done, too. I think–I think probably the uptick rule is a good idea. I mean, we had it for decades and the–it–on balance, I probably would have it in. I don’t think it’s the key to things at all. I mean, I think that–I mean, you can–you can do bear raids of a sort through credit defaults, swaps and all that sort of thing now, and there’ll always be people trying to push the bear case. There are people trying to push the bull case all the time. In the end, if you don’t owe money on stocks and you own a good business, a good business will not be ruined by somebody selling stock short on an uptick or otherwise. I welcome people shorting Berkshire. I mean, you know what I mean? They’re the–they’re the sure buyers later on. They have to buy someday, right?

On EFCA and “card check” (elimination of secret ballots):

JOE: No. I kind of feel like I’m a pesky little gnat. I’ve got one more–one more thought, Mr. Buffett, and that has to do with, you know, trying to narrow the–what we’ve seen between the haves and have nots, and I know that you think that, you know, that certain people have been treated too well, others not enough. Some say that EFCA and card check would narrow the disparity. In other words, having unions have more of a say, more companies unionized. Is that a good idea? Or do you think, as a business owner, it would be a negative for the economy?

BUFFETT: I think the secret ballot’s pretty important in the country. You know, I’m against card check, to make a perfectly flat statement.

JOE: OK.

BECKY: Wow.

JOE: That’s great, thank you. Appreciate it. OK, Beck.

BECKY: I didn’t expect that short of an answer either.

On gold again:

BECKY: OK. I want to get to a question that came from an investment club of seventh and eighth graders who invest $1 million in fake money every year. This is the Grizzell Middle School Investment Club in Dublin, Ohio, and the question is, where do you think gold will be in five years and should that be a part of value investing?

BUFFETT: I have no views as to where it will be, but the one thing I can tell you is it won’t do anything between now and then except look at you. Whereas, you know, Coca-Cola will be making money, and I think Wells Fargo will be making a lot of money and there will be a lot–and it’s a lot–it’s a lot better to have a goose that keeps laying eggs than a goose that just sits there and eats insurance and storage and a few things like that. The idea of digging something up out of the ground, you know, in South Africa or someplace and then transporting it to the United States and putting into the ground, you know, in the Federal Reserve of New York, does not strike me as a terrific asset.