Warren Buffett on Bubbles, Falling Dominos, and the Regenerative Power of Capitalism || Q&A Transcript (2011)
"I read S-1s like other people read Playboy," laughed Buffett. "That’s what happens when you’re 80."
For many decades, Warren Buffett was a fixture at the uber-exclusive and secretive Allen & Co. conference in Sun Valley each summer.
And, during the 2011 conference, he sat down with Betty Liu of Bloomberg to discuss the fragile American economy — and Berkshire Hathaway’s continuing hunt for an elephant-sized acquisition. Enjoy!
Since Obama was sworn into the Presidency, we’ve lost 2.5 million jobs here in the United States. Why are you so confident that we’re going to get those jobs back?
Well, because the American economy works that way. We have gone through — I don’t know how many — recessions. Perhaps fifteen in the history of this country. We used to call them “panics” at one time and then we called it a depression and we call it a recession now.
Our system overshoots periodically. And, in this particular case, we had a huge bubble. So the fact that there’s a correction after that really should not be unexpected. But our system always comes back — and it will this time. And it already is.
Do you think that we will come back and recover most of those 2.5 million jobs by the elections of next year?
I think there’s a good chance of that. We will come back big-time on employment when residential construction comes back. We way overproduced on houses. We were forming 1 million or 1.2 million households and we were building close to 2 million residential units. Well, big surprise that we ended up with too many houses.
We’re not going to blow them up. We’re not going to have kids start getting married at twelve or something. (Laughs) There’s a natural correction and the only way a correction takes place is to have household formation exceed new construction by a significant amount for a significant period of time.
We’ve had it for quite a while. When you see these figures of 500,000 or 600,000, that means we are sopping up housing inventory. I don’t know exactly when that hits equilibrium, but it isn’t five years from now. I know that. I think it actually could be reasonably soon.
What gives you that conviction? Is it something from your business that is telling you this?