DOW JONES: Warren Buffett: Econ Won't Turn Around By Mid-'09-Fox

CHICAGO -(Dow Jones)- Although the Federal Reserve and others are suggesting that the downtrodden U.S. economy will begin recovering in mid-2009, investment sage Warren Buffett says it will take longer, and unemployment will continue to rise for some time.

"There are going to be more people unemployed," Buffett said during a Friday interview on Fox Business Network that will air Friday at 4 p.m. EST. "I'm not worried about five years from now. Five months from now, can be very painful," and "it will not turn around by mid-year next year."

Buffett, who is chairman of insurance and investment conglomerate Berkshire Hathaway (BRKA BRKB), predicted that unemployment next year will go " considerably higher" than the 5.9% to 6.5% the Federal Reserve has suggested it will be by mid-2009. The October unemployment rate was 6.5%, according to U.S. Department of Labor statistics.

Buffett's view contrasted with more optimistic comments made earlier Friday by Federal Reserve Bank of Richmond President Jeffrey Lacker, who called it a " reasonable expectation" that a recovery will begin by mid-2009.

Lacker cited a "stimulative" monetary policy, falling energy prices and a lessened drag from housing as reasons to expect a recovery to begin next year.

Buffett said that he has seen downturns before, even in his own company's share price, and doesn't have long-term concern about the economy at large.

In the past few months, Buffett has called on investors to begin investing in U.S stocks again, and has made a few high profile investments himself recently, including buying preferred shares of Goldman Sachs Group Inc. (GS), and General Electric Corp. (GE).

He said that he didn't have another investment pick lined up at the moment, but that his plans could change quickly.

"Both GE and Goldman Sachs happened on a phone call I got in the morning and I said yes," Buffett said.

Buffett also offered his take on the recent bailout talks for the big three Detroit auto makers General Motors Corp. (GM), the Ford Motor Co. (F) and Chrysler LLC.

Chief executives of the automakers left Congress empty-handed Thursday after failing in their bid to obtain a $25 billion federal bailout.

The companies are "pretty close to the end of the line," Buffett said. He said that some form of rescue was preferable to three individual bankruptcy filings, if the companies can come up with a successful business plan.

At this point, Buffett said that only the president can craft a bailout deal.

"We've got $25 or $50 billion, if the outcome is going to be a successful American auto industry, and we need a business plan that will work," Buffett said, of a theoretical conversation between the president and auto executives. " You can get it in bankruptcy or you can get it from me. But you won't get it from me without having something that is really going to work."

One element of any bailout should include a requirement that executives put their own money at risk by buying stakes in their own companies, he said.

Buffett said that he watched the presidential election returns at his home, and that president-elect Barack Obama "will make a terrific president.

"You need a strong, decisive, smart leader, who can communicate very well with the American people at a time like this," Buffett said. "They need somebody they believe in, and I think that he has the qualities that are right for this time."

Buffett's interview will be aired on Fox Business Network's Bulls and Bears show.

-By Lavonne Kuykendall, Dow Jones Newswires; 312-750 4141; lavonne.kuykendall@ dowjones.com

(Brian Blackstone contributed to this report.)

Related Links

Political Animal - New Zealand Politics
Share Investor Blog - Stockmarket & Business commentary
Share Investor New Zealand Business News- Get more business news
Shareinvestorforum.com - Discuss this topic further


From Amazon


The Snowball: Warren Buffett and the Business of Life by Alice Schroeder
Buy new: $21.00 / Used from: $16.99
Usually ships in 24 hours

	The Warren Buffett Way, Second Edition by Robert G. Hagstrom Buy new: $10.17 / Used from: $6.92 Usually ships in 24 hours
	The Tao of Warren Buffett: Warren Buffett's Words of Wisdom: Quotations and Interpretations to Help Guide You to Billionaire Wealth and Enlightened Business Management by Mary Buffett Buy new: $15.61 / Used from: $5.95 Usually ships in 24 hours
	The Four Filters Invention of Warren Buffett and Charlie Munger by Bud Labitan Buy new: $29.65 / Used from: $32.38 Usually ships in 24 hours
	Warren Buffett Speaks: Wit and Wisdom from the World's Greatest Investor by Janet Lowe Buy new: $13.57 / Used from: $7.95 Usually ships in 24 hours