Buffett Believes Credit Crunch Is Easing
Kurt Brouwer May 5th, 2008
Warren Buffett also believes the credit crunch is easing, although he clearly believes real estate troubles are not over. The BBC reports on comments Buffett made at the Berkshire Hathaway annual meeting [emphasis added]:
Buffett Sees Credit Crisis Easing (BBC, May 4, 2008)
Investment guru Warren Buffett says the worst of the global credit crunch is over for Wall Street, but not for the man or woman on the street.
The chief executive of Berkshire Hathaway said there would be “a lot of pain to come” for mortgage holders.
He made the comments as Berkshire Hathaway’s annual meeting got under way in Omaha, Nebraska, attended by a record 31,000 people.
The meeting has become known as “Woodstock for Capitalists”.
Mr Buffet’s investment decisions often go against the market and are followed religiously by many.
However, Berkshire Hathaway, the company Mr Buffet took over in 1965, has not escaped the credit crisis.
It saw its first quarter profit tumble 64%, hurt by losses tied to derivatives contracts and a steep slide in insurance premiums.
…Mr Buffett, ranked the world’s richest man by Forbes magazine, praised the Federal Reserve’s rescue of Bear Stearns.
He said the move avoided financial market chaos.
“I think the Fed did the right thing in stepping in on Bear Stearns,” Mr Buffett said.
“Just imagine the thousands of counterparties around the world having to undo contracts.”
The central bank helped broker the buyout by JP Morgan, after financial institutions became reluctant to lend to Wall Street’s fifth-largest investment bank…
For more on the Bear Stearns buyout, see JP Morgan, Fed Move To Bail Out Bear Stearns.
- Business , Economy , Geopolitics , Investing , Money
- Comments(3)
Did you enjoy this article?
Additional interesting commentary on the credit situation that you may appreciate, Kurt:
http://www.ft.com/cms/s/0/5fe688f4-1af2-11dd-aa67-0000779fd2ac.html
This credit tightening shouldn’t come as a surprise to you or your readers, since I brought it to your attention months ago.
OK. The point of this post is not that there is a credit crunch, but rather that Warren Buffett believes it is easing.
Maybe Warren is correct, however the Fed survey that’s referenced in the article is fairly recent and doesn’t appear to give any indication of easing yet but quite the contrary.