Warren Buffett was on CNBC this morning for three hours talking about a whole range of issues from the European sovereign debt crisis to too big to fail to housing in the US to penalties for corporate crime. The video of Europe is below, with more to follow. Buffett also talks about housing and how it is weaker than he anticipated.
On Europe, this is Buffett’s take. He points to the political economy as the problem:
They have a situation where they found kind of a fundamental flaw which is that they can’t print money. And when you have a loss of confidence, that begins a run which has occurred to some degree on both sovereign debt and banks over there. In 2008, we had our own run in the United States and it took the full power of the United States and some very strong action – the belief that the authorities would do whatever it took. And we did believe that and it led us out. But it’s not clear who can say we’ll do whatever it takes over there and if they’ve got the ability to do whatever it takes. It will have to become much more clear as to who can do what and that they will do that. They need the will and the ability.
Buffett is not invested in European banks because of what he calls a ‘bank run’ in Europe.