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Monday, October 31, 2011

TCPALM.COM: Letter: Buffett's call for higher taxes on people like him is hypocritical

Harold Oberkotter, Vero Beach

Posted October 29, 2011 at 4 a.m.

Letter: Buffett's call for higher taxes on people like him is hypocritical

Warren Buffett, Berkshire Hathaway's largest shareholder and one of America's wealthiest people, is often quoted as favoring higher taxes for people like him. This is ironic and hypocritical, since no one has taken more advantage of the tax code to avoid taxation.

Sections 531 to 533 of the Internal Revenue Code prohibit corporations from withholding earnings, beyond what is reasonably needed for investment in the business, to avoid having business retain unreasonable amounts of cash simply to avoid paying dividends, which would be taxed to the shareholder.

For years there was a 28 percent accumulated earnings tax, but this provision is seldom enforced and we have a number of companies with more than $50 billion in cash. If Berkshire paid out dividends, then Buffett and other "rich" people would pay higher taxes. (The rich can still avoid taxation by investing in municipal bonds or by not selling appreciated securities, thus avoiding the capital gains tax and waiting until death to pass the amount tax-free. But this is a another issue.)

President Barack Obama demagogues the issue of rich businessmen, bankers and Wall Street executives, but never mentions rich trial lawyers, entertainers, athletes and his rich liberal Hollywood supporters. Buffett further takes advantage of the tax code with his estate planning, which provides that all of it will go to a charity, along with Bill Gates' fortune. Buffett will thus pay no estate tax.

If we want to have rich people pay more, fine; eliminate all the family-partnership nonsense loopholes; eliminate S corporations that enable owners to avoid paying a corporate tax; tax corporations on revenues not expenses, so that rich owners can't deduct personal expenses for cars, private jets, etc. But simply raising taxes on the rich doesn't solve the trillion-dollar deficits that Obama is running.

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Sunday, October 30, 2011

CNBC: Warren Buffett's Smile Missing as His "5-Minute Deficit Fix" Hits Facebook

Published: Friday, 28 Oct 2011 | 1:31 PM ET
By: Alex Crippen
Executive Producer

Warren Buffett
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Warren Buffett

Warren Buffett's "five-minute" plan to fix the nation's deficit problem .. delivered with a laugh during a live interview on CNBC in July .. has gone viral.

What's missing, however, is the laugh.

The WSJ's Total Return blog notes there's a chain letter now circulating by email and on Facebook that features this line from Buffett's July 7 interview in Sun Valley, Idaho with Becky Quick:

"I could end the deficit in five minutes. You just pass a law that says that any time there's a deficit of more than three percent of GDP, all sitting members of Congress are ineligible for re-election."

The chain letter includes several other ideas to "reform" Congress, and tells its recipients that "Warren Buffet is asking each addressee to forward this email to a minimum of twenty people."

Now, the facts.

First, to state the obvious, Berkshire says in a statement that "the chain letter was not sent out by Warren of course nor did he in any way suggest a chain letter."

Second, the Berkshire statement says Buffett's 'five-minute deficit plan' was "not a serious proposal; just intended to emphasize the importance of proper incentives (and problems when they are absent)."

In our post that July day headlined "Warren Buffett's 5-Minute Plan to Fix the Deficit", we called it "his not-entirely serious (but not entirely joking either) plan."

Here's the video clip. Judge for yourself.


Current Berkshire stock prices:

Class B: [BRK.B 79.96 -0.53 (-0.66%) ]

Class A: [BRK.A 120000.00 -380.00 (-0.32%) ]


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Warren Buffett chain letter

Here’s the text of the "Warren Buffett chain letter". It lists several other proposed changes too.

Warren Buffett, “I could end the deficit in 5 minutes,” he told CNBC. “You just pass a law that says that anytime there is a deficit of more than 3% of GDP, all sitting members of Congress are ineligible for re-election. The 26th amendment (granting the right to vote for 18 year-olds) took only 3 months & 8 days to be ratified! Why? Simple! The people demanded it. That was in 1971…before computers, e-mail, cell phones, etc. Of the 27 amendments to the Constitution, seven (7) took 1 year or less to become the law of the land…all because of public pressure.

Warren Buffet [sic] is asking each addressee to forward this email to a minimum of twenty people on their address list; in turn ask each of those to do likewise. In three days, most people in The United States of America will have the message. This is one idea that really should be passed around.

*Congressional Reform Act of 2011*

1. No Tenure / No Pension. A Congressman collects a salary while in office and receives no pay when they are out of office.

2. Congress (past, present & future) participates in Social Security. All funds in the Congressional retirement fund move to the Social Security system immediately. All future funds flow into the Social Security system, and Congress participates with the American people. It may not be used for any other purpose.

3. Congress can purchase their own retirement plan, just as all Americans do.

4. Congress will no longer vote themselves a pay raise. Congressional pay will rise by the lower of CPI or 3%.

5. Congress loses their current health care system and participates in the same health care system as the American people.

6. Congress must equally abide by all laws they impose on the American people.

7. All contracts with past and present Congressmen are void effective 1/1/12. The American people did not make this contract with Congressmen. Congressmen made all these contracts for themselves. Serving in Congress is an honor, not a career. The Founding Fathers envisioned citizen legislators, so ours should serve their term’s [sic], then go home and back to work.

If each person contacts a minimum of twenty people then it will only take three days for most people (in the U.S.) to receive the message. Maybe it is time.

THIS IS HOW YOU FIX CONGRESS!!!!! If you agree with the above, pass it on.


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Friday, October 28, 2011

BLOOMBERG: BYD Starts Sales of E6 Electric Car to Individuals in China

Oct. 26 (Bloomberg) -- BYD Co., the carmaker partly owned by Warren Buffett's Berkshire Hathaway Inc., began selling its all-electric E6 to individuals in China today as it seeks to lead the country's market for alternative-energy cars.

The E6, which has a range of 300 kilometers (188 miles) per charge, has a sticker price of 369,800 yuan ($58,200), BYD said today in Shenzhen, where it is based. Buyers in the southern Chinese city will qualify for as much as 120,000 yuan in subsidies, according to Li Ganming, a deputy director of the National Development and Reform Commission's Shenzhen branch.

“The E6's business success will hinge on the availability of infrastructure and continuous improvements such as reducing weight of the battery,” said John Zeng, a Shanghai-based analyst at J.D. Power & Associates.

BYD has plunged 62 percent in Hong Kong trading this year after vehicle sales fell 15 percent in the first nine months as the popularity of its F3 sedan waned with the phasing out of government buying incentives. The company is banking on success in selling electric cars to revive sales as China, the world's largest polluter, encourages development of alternative-energy automobiles to reduce emissions and fuel imports.

The State Council, or cabinet, is considering a development plan for new-energy vehicles, Su Bo, vice minister of the industry ministry, said on Sept 3.

Government Subsidies

The government aims to have 1 million electric-powered vehicles on China's roads by 2015, according to the Ministry of Science and Technology. The world's largest automobile market had more than 10,000 energy-saving and alternative-energy powered vehicles running in 25 trial cities as of July, according to figures from the Ministry of Industry and Information Technology.

China announced in June 2010 it would give buyers in Shanghai and four other cities up to 60,000 yuan in subsidies for each electric car they purchase. Buyers of the E6 in Shenzhen will get an additional 60,000 yuan, NDRC's Li said.

The city has set up more than 60 charging stations, Li said.

“There are still a lot of difficulties we need to tackle in terms of technology and promotion of the E6,” Lian Yubo, senior vice president of BYD, said in Shenzhen today.

BYD has said it plans to appoint dealers in the U.S. this year for the E6 and will export the car and electric buses to the U.S. and Europe next year, with a right-hand drive E6 available in Hong Kong in June.

“The lack of charging facilities is still a big problem, and promotion of electric vehicles will be handicapped till it is solved,” said George Yin, an analyst with BOCOM International Holdings Co. in Beijing. “BYD also needs to lower the price of E6 to make it more competitive to gasoline-powered vehicles to help attract buyers.”

--Tian Ying. Editors: Chua Kong Ho, Terje Langeland


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Monday, October 17, 2011

BLOOMBERG: Flowserve Converges With McCormick as Buffett Targets: Real M&A

While Warren Buffett’s new favorite investment is Berkshire Hathaway Inc., his almost $50 billion pile of cash may be better spent buying companies from Flowserve Corp. (FLS) to McCormick & Co.

Berkshire is generating more than $1 billion in free cash flow a month, pushing reserves to a record, even as Buffett invests more in equities than at any other time this year. With near zero percent interest rates limiting returns in fixed- income markets, Flowserve, the biggest maker of valves, pumps and seals, McCormick, the largest U.S. spice seller, and 29 other companies are cheaper than Berkshire based on its discount to net assets and meet the takeover criteria in Buffett’s annual letter, according to data compiled by Bloomberg.

The 81-year-old chairman of Omaha, Nebraska-based Berkshire said last week he would repurchase stock for the first time in four decades as long as it sold for less than 1.1 times book value, 29 percent less than its decade-long average. While Oscar Gruss & Son Inc. says the plan may have signaled the world’s most successful investor is finding fewer takeover opportunities after agreeing to spend $9 billion on Lubrizol Corp. in March, the global stock selloff is now making it cheaper for Buffett to find deals, according to Highmark Capital Management Inc.

“His gun is loaded,” Todd Lowenstein, who helps oversee $17.2 billion at Highmark, said in a telephone interview from Los Angeles. Flowserve and McCormick are “extremely well positioned. He would be attracted to their competitive positioning and market share. So this is the time when I’d expect him to put money to work,” he said.

Buyback Plan

Buffett didn’t respond to a request for comment e-mailed to his assistant, Carrie Kizer.

Berkshire has preferred to use its profits to buy companies and securities issued by others. Since Buffett took control of the failing textile manufacturer in 1965, “not a dime of cash” has been spent on buybacks or dividends, the billionaire told investors in his annual letter published in February.

While Buffett began buying his own stock and plowing $4 billion into common shares of other companies last quarter, Berkshire may still need acquisitions to help reduce the record $47.9 billion in cash it held at the end of June, according to Mark Bronzo, who helps manage $26 billion at Security Global Investors in Irvington, New York.

“It definitely makes sense to expect a firm like Berkshire to make acquisitions,” he said in a telephone interview.

Buffett Criteria

Buffett prefers “simple” businesses with pretax profit exceeding $75 million, “consistent” earning power and “good” returns on equity while employing little or no debt, according to his report. He has shifted his takeover strategy as Berkshire has grown to focus on “capital intensive businesses,” such as power producers and railroads, which require consistent investment in infrastructure and equipment.

There are 31 companies in developed and emerging markets with equity values from $3 billion to $20 billion that trade at a discount of more than 30 percent to their 10-year average price-book ratios; averaged a return on invested capital in the past five years that exceeds 10 percent; had capital expenses accounting for at least 10 percent of their net fixed assets; generated profit growth in the past five years that ranked in the top 50 percent; and sold for a lower price-earnings ratio over that span than the MSCI World (MXWO) Index or MSCI Emerging Markets Index median, data compiled by Bloomberg show.

So-called value investors such as Buffett also purchase companies when their stock prices are low by historical standards when compared with earnings.

Empire Building

Berkshire, which had a market value of $174 billion yesterday, fell to $100,000 a share for the first time in almost two years on Sept. 22. Four days later, it announced the buyback. Today, shares of Berkshire jumped 4.3 percent to $110,300 in New York.

The company, which employs more than 250,000 people, owns insurers including Geico and General Re, as well as more than 60 other companies ranging from food distributor McLane Co. and clothing-maker Fruit of the Loom to toolmaker Iscar Metalworking Cos. and utility MidAmerican Energy Holdings Co.

Last month, Berkshire also completed its purchase of Lubrizol, the company’s second-largest since 2006. Wickliffe, Ohio-based Lubrizol, the world’s largest producer of lubricant additives, was one of the American companies that met the acquisition criteria when its takeover was announced, according to data compiled by Bloomberg.

This time around, U.S. companies accounted for almost half the total that passed, data compiled by Bloomberg show.

Flowserve of Irving, Texas, is valued at 1.66 times its assets minus liabilities, versus its average multiple of 2.64 times its book value in the past decade.

Valves, Pumps and Seals

Net income has climbed 87 percent in the past five years and analysts estimate earnings will jump to a record next year, the data show. The stock has slumped 41 percent this year, leaving it with a market value of less than $4 billion. Flowserve’s shares advanced 5 percent to $73.47 today.

While Flowserve faces competition from other makers of valves, pumps and seals, the company has an advantage because it’s the only one that produces all three, said Hamzah Mazari, a New York-based analyst for Credit Suisse Group AG. He estimates Flowserve’s stock will more than double to $150 within a year.

Demand for water and petroleum-related products is unlikely to diminish over time, which also benefits Flowserve because it specializes in pumping and filtration services, according to Harry Rady, chief executive officer of Rady Asset Management LLC, a La Jolla, California-based hedge fund firm.

“It’s definitely a Buffett-type of stock,” Rady, who oversees $260 million, said in a telephone interview. “Buffett’s looking for long-term secular trends in a business that’s got a defensible position. Anything related to water has long-term secular trends at its back basically forever.”

Allspice to Turmeric

Steve Boone, a spokesman at Flowserve, didn’t respond to telephone or e-mail messages seeking comment.

McCormick, which sells everything from allspice to marjoram leaves and turmeric, is the largest seller of spices in the U.S., according to data compiled by Bloomberg.

The company, which has boosted per-share earnings for nine straight years and beaten analysts’ estimates in the past six, has a “dominant brand” of spices that is more appealing to chefs than those of its store-brand competitors, according to Tim Ghriskey, who oversees $2 billion as chief investment officer of Solaris Group LLC in Bedford Hills, New York.

Annual sales at Sparks, Maryland-based McCormick, which trades at a 36 percent discount to its average price-book ratio over the past decade, have only declined twice since 1988, according to data compiled by Bloomberg.

‘High Barriers’

“Buffett loves market leaders and often somewhat simple businesses,” Ghriskey said in a telephone interview. McCormick has a “high barrier to entry. The stock is particularly inexpensive. It would certainly, at least on the surface, seem to make a lot of sense for Buffett,” he said.

Lori Robinson, a spokeswoman for McCormick, said it doesn’t comment on takeover speculation. Shares of McCormick gained 2.7 percent to $46.14 today.

Joy Global Inc. (JOYG) is another industrial company that Buffett may find attractive as he bets that the U.S. economy will skirt a recession, according to Dan Veru, chief investment officer at Fort Lee, New Jersey-based Palisade Capital Management LLC, which manages $3.4 billion.

Milwaukee-based Joy Global, which slumped 30 percent this year through yesterday as concern over a global slowdown pushed the Standard & Poor’s 500 Index to within 1 percent of a so- called bear market, trades at 11.2 times earnings. That’s 24 percent lower than its five-year average of 14.8 times.

The company, which competes mainly with Caterpillar Inc. (CAT) for sales in mining equipment, makes sense for Buffett because he usually favors industries with only two or three major competitors, according to Highmark’s Lowenstein.

Buying Opportunity

As one of the largest independent makers of underground mining equipment, Joy Global had an average return on invested capital approaching 50 percent over the past five years, data compiled by Bloomberg show. That’s the highest among companies in the industrialized world that met Buffett’s criteria.

Joy Global’s stock rose 1.9 percent to $61.66 today.

Sandy McKenzie of Joy Global’s investor relations department said that no one was available to comment.

“He’s really playing on a global recovery and certainly Joy Global would be one of the names that would fit,” Palisade Capital’s Veru said in a telephone interview. “Buffett likes to be opportunistic. A guy like Buffett is going to take advantage of that fear” of a slowdown in economic growth, he said.

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CNBC: Warren Buffett Reveals His Adjusted Gross Income ($63M) .. and Offers to Show Even More

Published: Wednesday, 12 Oct 2011 | 2:21 PM ET

By: Alex Crippen
Executive Producer

Warren Buffett has told a Republican Congressman that his adjusted gross income last year came to $62,855,038, with taxable income of $39,814,784. He also paid $15,300 in payroll taxes.

The numbers are from a letter sent by Buffett to Rep. Tim Hulskamp of Kansas, in response to the Congressman's request that Buffett release his full federal tax return amid the national debate over the Obama Administration's "Buffett Rule."

According to CNNMoney, Buffett again offered in the letter to release his full return if other members of the super-rich club, like Rupert Murdoch, do the same:

"If you could get other ultra rich Americans to publish their returns along with mine, that would be very useful to the tax dialogue and intelligent reform."

Answering those who are suggesting he's fudging the figures, he also offers a "pre-release wager" of any amount with anyone, that "the figures in my return will be exactly those used in my op-ed piece."

That's a reference to his "Stop Coddling the Super-Rich" op-ed in the New York Times on August 14, in which he said his federal tax bill last year was $6,923,494, 17.4 percent of his taxable income.

Doing the math on those figures, you can figure out the $39.8 million taxable income. We didn't know, until now, his AGI. We also don't know exactly what accounts for the difference between that number and his taxable income.

In his Times piece, Buffett noted he paid a lower tax rate than anyone else in his office, and argued that wealthy Americans who get a lot of their income from capital gains should be paying more.


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Sunday, October 2, 2011

CNBC TRANSCRIPT: Warren Buffett Thinks Double-Dip is 'Very, Very Unlikely'

Published: Friday, 30 Sep 2011 | 12:54 PM
By: Alex Crippen
Executive Producer

Warren Buffett on NYSE floor
Ben Hider/NYSE Euronext
Warren Buffett and Business Wire CEO Cathy Baron Tamraz on the floor of the New York Stock Exchange, September 30, 2011.

The following is clearly bollocks because either the USA is already in recession or will be soon be. I used to be a big fan of his but I have lost faith in the man because of his attack on those who work hard that he wants to tax more and because of stupid stuff like this. Posted because some of you might like to read how dopey he is.


This is a transcript of Warren Buffett's live interview on CNBC with Andrew Ross Sorkin on Friday, September 30, 2011. In it, Buffett says he thinks it is "very, very unlikely" the U.S. economy will go back into recession. He also reveals that Berkshire has been buying billions of dollars worth of inexpensive stocks during the third quarter, and has just started to repurchase its own shares:

SIMON HOBBS, CNBC: Let's go down to the floor. Andrew Ross Sorkin is there with a very special guest this Friday morning. Good morning, Andrew.

ANDREW ROSS SORKIN, CNBC: Good morning. We are here with the one and only, the "Oracle of Omaha," Warren Buffett. We're also here with Cathy Baron Tamraz. You're here for the 50th anniversary of Business Wire, so congratulations to you, Cathy.

CATHY BARON TAMRAZ, Business Wire Chairman & CEO: Thank you so much.

ANDREW: I want to get to you in a second and this anniversary, but I also want to get to buybacks, which are in the news this week. You just announced it. Why do it now? I think there's a big question, Buffett watchers who've seen you over many years, you have not always liked buybacks. So what is it about what's going on right now?

WARREN BUFFETT, Berkshire Hathaway CEO: Price to value. I mean, the only — the only time to do buybacks, in my view, is when you think your stock is selling well below its intrinsic business value. And we talk— we've talked about that in many annual reports over the years, and we haven't had very many opportunities to do it. Now we think that...

ANDREW: OK. So you've instituted the program, but the big question that viewers want to know is, have you actually started buying yet?

BUFFETT: We actually have.

ANDREW: You have started buying yet.

BUFFETT: Yeah, yeah.

ANDREW: OK. And how much can we expect for you to buy? I know you said that you wanted to keep a $20 billion kitty at all times. You have about $40 billion on hand right now.

BUFFETT: Yeah. Well, we don't have quite that much, but the cheaper it is, the more aggressive, generally, we will be in terms of buying. It's just like buying any other stock.

ANDREW: And how much have you bought so far?

BUFFETT: We only got the paperwork done yesterday.

ANDREW: OK. And what does this say, and then I want to get to Cathy, what does this say more in a larger picture about your ability to find elephants? You always talk about your trigger finger.

BUFFETT: That's what I'm looking for.

ANDREW: Well, I know that, but in terms of moving money into your own stock, does it mean that you're not finding the same kind of opportunities right now, given the markets?

BUFFETT: We find opportunities periodically. I mean, we did the BofA deal, we did Lubrizol, we put 9, almost $9 billion in Lubrizol. We just announced yesterday a $400 million acquisition for an insurance company. Just yesterday. We've bought, in the last quarter, the third— in the current quarter, we bought net 4 billion of common equities, which was similar to the total amount we bought in the first half. The cheaper stocks get, the better I like to buy them, whether it's our stock or somebody else's.

ANDREW: So there's still— there's still— we should still see you make a big deal.

BUFFETT: You...

ANDREW: And this is not...

BUFFETT: I sure hope so.

ANDREW: And the buyback is not an announcement that you're taking...

BUFFETT: Oh no.

ANDREW: ...money into your own stock.

BUFFETT: No.

ANDREW: OK. Cathy, Mr. Buffett bought your company in 2006. You've lasted 50 years through all sorts of different business cycles, and yet we're living now in the age of the Internet and Twitter. And the SEC has now told companies that they can actually put their press releases up online. What do you do to defend your business and, frankly, to grow your business in this environment?

TAMRAZ: Well, actually our business is growing in this environment. We also are creating websites for companies that want to put their releases online. But that's not the way to put out breaking news. And that's what we do at Business Wire. And as long as we can push that news out to the investing public, I think it's the best way to go.

BUFFETT: If I— if I want to know what's going on at Bank of America, I do not want to have a website tuned to that all day. I want to get it instantly from CNBC, and the way that they'll get it is, you know, is from Business Wire.

ANDREW: Right. I would— I would be remiss if I didn't mention that one of the other reasons you're in town is for this Obama fundraiser tonight at the Four Seasons.

BUFFETT: Right. Yeah.

ANDREW: And I wanted to ask you specifically, so many people in the business community say that the president is anti-business. Do you believe he's anti-business...

BUFFETT: No.

ANDREW: ...when you think about his rhetoric? And why not?

BUFFETT: No. Well, I mean, I...

ANDREW: Rhetoric and policies, by the way. There's so many people who have said...

BUFFETT: Oh, I mean, he took action to save General Motors and Chrysler. I mean, he backed programs that have kept the banks around and, in the process, rejuvenated the economy. He knows, and he knew it 10 years ago, to be president of the United States...

ANDREW: Right.

BUFFETT: ...particularly in the second term, you better have business doing well. And he wants it to do well.

ANDREW: So the talk of higher taxes and more regulation, you don't think is creating more uncertainty in the business community?

BUFFETT: I don't— I don't have any...

ANDREW: What do you tell the CEOs who talk to you about this?

BUFFETT: I don't have any uncertainty. We are investing at Berkshire a record $7 billion in plant and equipment this year. Never before that much; 90-plus percent is in the United States. We're seeing our businesses doing well. Business is coming back in the United States.

ANDREW: OK. Let's talk about the ‘Buffett Rule’ for a moment.

BUFFETT: Uh-huh.

ANDREW: Talk to you about how it came about in terms of the White House getting in touch with you and you putting your name to this.

BUFFETT: Well, (National Economic Council Director) Gene Sperling called and said, `Can we use your name?' And I said yes.

ANDREW: Are you— are you happy you said yes?

BUFFETT: Sure. I mean, I wrote about it.

ANDREW: Are you happy with the way it's being described? Is the program that the White House has presented, a million dollars and over, your program?

BUFFETT: Well, the precise program, which will— I don't know what their program will be. My program would be on the very high incomes that are taxed very low. Not just high incomes.

ANDREW: OK.

BUFFETT: Some guy make a 50 million here playing baseball, his taxes won't change. Make $50 million a year appearing on television, his income won't change. But if they make a lot of money and they pay a very low tax rate, like me, it would be changed by a minimum tax that would only bring them up to what the other people pay.

ANDREW: OK. So does that mean you disagree with the president's new jobs proposal, which would be paid for by raising taxes on households with incomes of over $250,000?

BUFFETT: Now that's another program that I won't be discussing. I—my program...

ANDREW: Right.

BUFFETT: ...is to have a tax on ultra-rich people who are paying very low tax rate, not just all the rich people; and it would probably apply to 50,000 people in a population of 310 million.

ANDREW: OK. So, but that means you disagree with the president on the 250,000.

BUFFETT: No. No, no, no. You may disagree with him, I don't know.

ANDREW: No. I don't know, but I'm asking, so you agree $250,000 is the right number?

BUFFETT: I will look at the overall plan that gets submitted to Congress and which they are voting on and decide, net, do I like it, or do I not like it. I— there's no question there will be parts I'll disagree with, just like any plan.

ANDREW: And are you a supporter of his jobs program right now?

BUFFETT: I am a supporter of the action he's trying to get the Congress to join him in taking to really do something rather than sit there and go in different directions.

ANDREW: But you agree with all the details or no?

BUFFETT: Oh, I haven't looked at all the details.

ANDREW: OK. Fair enough. Cathy, you know, one of the conversations that we have always about Berkshire is succession. It is an issue. And as something who understands the culture of this company so well and what Mr. Buffett has done for it, I'm curious if you could pick his successor, what kind of person would it be? Who would it be?

TAMRAZ: Well, I don't want to think about it, but since you're making me think about it. He's irreplaceable in terms of who he is. I think I'm not privy to what's going on. That's at the board level, but it's got to be somebody that knows how to motivate people because the one thing that Warren Buffett does, not better than anything else, because he's the capital...

ANDREW: Can the culture remain the same?

TAMRAZ: Yes. Because there are so many people throughout the organization that live and breathe the same— the culture that Warren has created and it's infectious. I feel it myself after five and a half years in the company. The culture will go on.

ANDREW: All right. Now you recently hired Ted Weschler to be one of your investment managers.

BUFFETT: Right.

ANDREW: Some people have speculated he actually could ultimately be CEO. He's not just been an investment manager, but also a investment banker and has worked in corporate America. How should we think about him?

BUFFETT: We've got a lot of talent.

ANDREW: You've got a lot of talent. And will you be— that— you have two. You've suggested that you would go for— that you would have three in total.

BUFFETT: Possibly, possibly.

ANDREW: Possibly. Do you have a name already in your hat?

BUFFETT: I've got a couple in my mind, but I'm very happy with the two. I'll be happy if we have a third. You know, and it's not essential at all, but...

ANDREW: And none of those three do you think will become the CEO of the company?

BUFFETT: Hard to tell. Hard to tell.

ANDREW: Final question, Berkshire Hathaway, long thought of as a play on America, given the industrials and how much that represents.

BUFFETT: Yeah.

ANDREW: So many people say we're going back into a recession. You say what?

BUFFETT: Oh, we're not. We're not going— I think it's very, very unlikely we'll go back into a recession. We're coming out of a recession and what we've been doing it since 2009, and a great majority of our businesses are going to be earning more money than they did last year and the year before.

ANDREW: Right. How much are you worried about Europe impacting and infecting actually Berkshire's business and our economy?

BUFFETT: I don't worry too much about it infecting us. I worry about what will happen in Europe. And it's bound to have some fallout here. How it plays out, nobody knows. All I know is our business is five years from now and 10 years from now, and the country's businesses will be doing a lot better than now.

ANDREW: You own some German bonds?

BUFFETT: We own German bonds.

ANDREW: German bonds.

BUFFETT: Yeah.

ANDREW: What kind of haircut do you want to take on those?

BUFFETT: On German, no...

ANDREW: You think you're OK.

BUFFETT: They're in our— we have a German reinsurance subsidiary that's on those bonds for a long, long time, and we're fine with them. But we've sold other countries.

ANDREW: Bank of America [BAC 6.12 -0.23 (-3.62%) ].

BUFFETT: Yeah.

ANDREW: Big deal for you. (CEO) Brian Moynihan, since you— since you made your investment, a lot of things have happened there. Did you expect those things to happen...

BUFFETT: Well...

ANDREW: ...the way they have in terms of layoffs and everything else?

BUFFETT: ...I expected him to clean up a lot of the problems from the past, and they're going to take a long time to clean up.

ANDREW: Right.

BUFFETT: I mean, two years from now and three years from now you'll still see some headlines on it.

ANDREW: And your bet is that the company not only survives but thrives?

BUFFETT: Sure.

ANDREW: Or you're just making a bet that you stick around and you're going to get your dividend?

BUFFETT: No, it's a great underlying business. It's a fabulous underlying business, but it's got a lot of problems from the past. Brian didn't create those, he has to— he has to clean up the mess. But I've been in those kind of situations before.

ANDREW: Fair enough. Warren, thank you so much.

BUFFETT: OK. Thank you.

ANDREW: Cathy, congratulations on 50 years.

TAMRAZ: Thank you, Andrew. Thank you.

ANDREW: Let's hope there's 50 more. Back to you guys, thanks so much.

HOBBS: So Andrew, has he invited you to the dinner tonight?

ANDREW: I have not been invited. Warren has not invited me. Am I invited to the dinner tonight?

BUFFETT: No.

ANDREW: I don't know how much that plate costs, though. That's a pricey plate.

BUFFETT: Let's— get out your wallet.

ANDREW: Yeah, I've got to get my wallet out, so. Anyway, back to you guys.

BUFFETT: We're very selective.

HOBBS: Wow.

TAMRAZ: Oh.

BUFFETT: All you have to have is $1,000 or...(unintelligible).

HOBBS: Andrew Ross Sorkin with Warren Buffett.

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FOX BUSINESS: Buffett: Buying Stocks Every Day

Oct 1, 2011

- 6:38 -

Berkshire Hathaway CEO Warren Buffett discusses his current investment plan

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FOX BUSINESS: Buffett: Top 400 Earners Aren’t Paying Enough Taxes



Oct 1, 2011

- 3:26 -

Berkshire Hathaway CEO Warren Buffett discusses why he and other “ultra-wealthy” Americans should pay more in taxes.

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