More On Warren Buffett's Views on Recession

The question was rather straightforward.

Asked by Germany's weekly magazine, Der Spiegel, if US could still avoid a recession:

• "I believe that we are already in a recession. Perhaps not in the sense as defined by economists. But people are already feeling the effects of a recession. It will be deeper and longer than what many think."

And this is creating massive headlines.

US already in recession, says world's richest man Buffett

• Buffett, the 77-year-old chief of the Berkshire Hathaway holding company, blamed financial institutions for introducing instruments "they can no longer control" and said the "genie can no longer be put back in the bottle."

Some headlines are even more drastic, Buffett Calls For Colossal Recession

And the following article was posted on CNBC, Banks Are to Blame For Subprime Debt Crisis

• The banks exposed themselves too much, they took on too much risk .... It's their fault. There's no need to blame anyone else," he said.
  
  Buffett, dubbed the world's richest person by Forbes magazine, said he believed the situation in financial markets would not deteriorate further.
  
  "I don't think the situation will get worse in financial markets. General conditions in the business world will get worse, but it will only last a while," he said, adding he had no idea when an upturn would come.
  
  Buffett gave the interview on a recent visit to Madrid, as part of a European tour including Switzerland, Germany, Italy and Spain on the look out for new investments.
  
  He said the idea of the trip was to increase awareness amongst European businesses of his holding company Berkshire Hathaway , which holds stakes in businesses ranging from American Express American Express to Coca-Cola.
  He said he wanted business owners to think of him when they were looking to sell.
  
  "We want to buy big companies that earn at least 50 million euros ($78.6 million) before taxes, and there's more of those in Europe than in other parts of the world," he said.
  
  He would not be drawn on what companies in particular he was looking at, other than saying he was not interested in distressed businesses.
  
  The day before, Buffett was quoted in the German magazine Der Spiegel as saying the US is already in a recession and that it will be longer as well as deeper than many people expect.
  
  He said the United States was "already in recession" and added: "Perhaps not in the sense that economists would define it" with two consecutive quarters of negative growth.
  
  "But the people are already feeling the effects," said Buffett, the world's richest man. "It will be deeper and last longer than many think."
  
  But he said that won't stop him from investing in selected companies and said he remained interested in well-managed German family-owned companies.
  
  "If the world were falling apart I'd still invest in companies," he said.
  
  Buffett also renewed his criticism of derivatives trading.
  
  "It's not right that hundreds of thousands of jobs are being eliminated, that entire industrial sectors in the real economy are being wiped out by financial bets even though the sectors are actually in good health."
  
  Buffett complained about the lack of effective controls.
  
  "That's the problem," he said. "You can't steer it, you can't regulate it anymore. You can't get the genie back in the bottle."

Well, this isn't hardly any breaking news for Buffett had already stated his recessionary reasonings. ( See Is iCapital Views Consistent? Is Warren Buffett a Lousy Ecomist? )

In this year's Berkshire Annual Meeting, Warren Buffett had already fielded questions on this issue. ( see previous posting here! )

• Q3: Sam from Fort Lee. Recession, stock market up in April. What next?
  
  WB: I could expand on that question, but I couldn’t answer it. Charlie and I haven’t the faintest idea where it goes next week, next month or next year. We are not in that business. It isn’t our game. We see 1,000s of companies priced every day. We ignore 99% of what we see. Every now and then, we find an attractive price for a business. When we buy it, we would be happy if market was closed for a few years. Wouldn’t get a price quote daily on a farm. We look at expected yield, cost of taxes. If you buy a farm, you would look at cost of fertilizers, what a farm produces relative to purchase price, price per acre, production per acre, etc.. We make judgments.

And the following article was published in early May, Buffett Says US in Recession, Banks to Face Pain