By JOSH FUNK
During a live appearance on CNBC, Buffett said ripples of the credit crunch were continuing to cause problems in financial businesses and the economy.
Earlier this year, he said a financial crisis reveals which players have been “swimming naked,” because the tide goes out. That picture has worsened along with the crisis.
“We found out that Wall Street has been king of a nudist beach,” said Buffett, who is chairman and chief executive of Berkshire Hathaway Inc., which is based in Omaha.
Buffett said activity at businesses Berkshire owns, especially ones related to housing construction such as Shaw carpet and Acme Brick, continued to slow during the summer.
He is confident the nation will be doing better five years from now, Buffett said, but the economy could be worse five months from now.
Buffett said the economy was in a recession, because most Americans were not doing as well today as before.
Regarding the nation’s credit crunch, Buffett said he thought mortgage giants Fannie Mae and Freddie Mac were too big to fail, but that shareholder equity still could be wiped out.
“They’re looking for help, obviously,” Buffett said. “And the scale of help is such that I don’t think it can come from the private sector.”
Buffett said it was likely more banks would fail, especially in areas where there was a real estate bubble and the banks got heavily involved.
“What we’ll see is failures where the bankers were dumb in what they did,” Buffett said.
Buffett also said Friday he sold nearly two-thirds of Berkshire’s 35.6 million shares of Anheuser-Busch Cos. stock because he had not been sure Belgian brewer InBev SA’s takeover bid of $65 a share would succeed. Anheuser agreed to the $52 billion bid in July.
“In retrospect, I was wrong to partially sell the holdings,” Buffett said, disclosing that he sold the stock for $61 or $62 a share. At the end of June Berkshire still held 13.8 million shares of Anheuser-Busch.
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