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WORLD> America
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Buffett says US government is doing the right things
(Agencies)
Updated: 2009-05-03 15:55 OMAHA, Neb. -- Billionaire Warren Buffett spent Saturday praising the decisions US officials made to right the economy in the midst of a "financial hurricane" and defending the ones he made to help his company navigate the storm. The state of the economy and Berkshire Hathaway Inc.'s recent performance were among the first things addressed at the shareholders' meeting. Roughly 35,000 people packed an arena and overflow rooms to listen to Buffett and Berkshire Vice Chairman Charlie Munger answer questions for more than five hours.
But Buffett said he can't predict how quickly the economy and the markets will improve. He said last fall that the US was facing an "economic Pearl Harbor." To illustrate the challenges the nation faced last year, Buffett showed a sales receipt for $5 million in US Treasury bonds that Berkshire sold in December for $90.07 more than face value, ensuring a negative return for the buyer. Buffett said he doesn't think most investors will see negative returns on US bonds again in their lifetimes. "It's been a very extraordinary year," he said. The economy, succession at the top of Berkshire and the state of the company, which last year had its worst year since Buffett took over in 1965, were on the minds of many shareholders. Berkshire's Class A stock lost 32 percent in 2008, and Berkshire's book value -- assets minus liabilities -- declined 9.6 percent, to $70,530 per share. That was the biggest drop in book value under Buffett and only the second time its book value has declined. But despite Berkshire's rough year -- which was depressed by unrealized multibillion-dollar derivative losses -- the company still outpaced the market index Buffett uses as a measuring stick. The S&P 500 fell 37 percent in 2008. Berkshire reported a 2008 profit of $4.99 billion, or $3,224 per Class A share. That was down 62 percent from the previous year, but better than many companies. The meeting began as usual with a humorous movie, but instead of the traditional comical cartoon, Berkshire offered a reassuring message from animated versions of its products. An animated Mrs. See of See's Candy told the crowd that it didn't seem right to have a humorous cartoon when so many things in the world don't seem sweet. Retired shareholder Paul Gallmeyer of the Chicago area said he wasn't especially worried about who will replace the 78-year-old Buffett as Berkshire's chairman and CEO. He said all of Berkshire's more than 60 subsidiaries are run by people who will keep the company going after Buffett is gone. |
