Wisdom of Warren: Inflation May Be Worse Than 1970s

Becky Quick’s all-day Buffett launched on CNBC this morning and the Oracle of Omaha sent global markets spinning with remarks that inflation was going to get as bad as the 1970s and tossing off the idea that the economy had “fallen off a cliff.”

Later, in response to a viewer question, Buffett said Corporate America “has plenty of room to behave better” especially when it comes to leverage.

“Big financial institutions” leveraged up like crazy, he said so they could increase their earnings. They had to “play games to get better numbers. You have to pull numbers out of black boxes. Corporate America behaved terribly towards the attitude of the sanctity of the numbers they report.”

He also tossed in that American pscyhes have been scarred by the financial meltdown. “We have changed people’s consuming and investing behaviour. They are going to spend their money somewhat differently for quite a while. They’re going to invest their money somewhat differently for quite a while.”

Among his other ditties:

•Wishes that “Buy American Stocks” piece in the New York Times had been lost in his hard drive for a few months so he wouldn’t have cost mum-and-pop investors millions.

•The banking system will take care of itself. No one should worry about having money in a U.S. bank.

•Maybe AIG shouldn’t be allowed to recreate itself in the future, but saving it last fall was the right thing to do.


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