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‘Green shoots’ of recovery are not visible as yet

‘Green shoots’ of recovery are not visible as yet
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First Published: Thu, Jun 25 2009. 10 33 PM IST

Concerted efforts: Buffett says more efforts are needed to pull the US economy out of recession. Chip East / Reuters
Concerted efforts: Buffett says more efforts are needed to pull the US economy out of recession. Chip East / Reuters
Updated: Thu, Jun 25 2009. 10 33 PM IST
Billionaire investor Warren Buffett, known as the Oracle of Omaha, says the Barack Obama administration has to put in a more concerted effort if it has to win the battle to pull the US economy out of recession. Buffett, chairman and chief executive officer of Berkshire Hathaway Inc., told CNBC that he can’t yet see the “green shoots” of recovery some economists are talking about. Edited excerpts:
Concerted efforts: Buffett says more efforts are needed to pull the US economy out of recession. Chip East / Reuters
The last time we sat down to talk with you was on 4 May and you said we are in an economic war right now... How much progress we have made in this war so far?
Well, it’s been pretty flat. Everything I see about the economy is that we have had no bounce. The financial system was really where the crisis was last September and October, and that has been surmounted, and that is enormously important. But in terms of the economy coming back, it takes a while... It looks to me that process will be underway for quite a while. In the annual report I said that the economy would be in shambles this year and probably will be beyond that as well. And I am afraid that’s true.
We hear people talking about the green shoots that they are seeing... Are you seeing any of those green shoots?
I had a cataract operation on my left eye about a month ago and I thought: “Maybe now I will be able to see some green shoots.” But we are not seeing them. Whether it is retailing, manufacturing, whatever. Even when we have a bigger operation like the utility operation, industrial demand is down like we have never seen before...even for simple things like electricity. So, it hasn’t happened yet. It will happen. I won’t emphasize that, but it hasn’t happened as yet.
Earlier this year, you also told us that you think Washington and the Obama administration should be paying attention to jobs in the economy. That’s the No. 1, No. 2, and No. 3 job they should be doing. Has there been any progress made at all on that front?
Well, they are doing things and they are doing things on a lot of fronts. But you cannot produce a baby in one month by getting nine women pregnant. It doesn’t work that way. So you can be throwing things at the economy, and they will have an impact, but they haven’t had much of an impact just yet. Unemployment will go high and it will lag the turn-up of the economy.
When we sat down with you last year, you said inflation was a very big worry for you. What do you see today? Do you worry about inflation or deflation?
Well, I don’t worry about deflation at all. We have taken action in fighting the economic war that we have faced. Those actions certainly sow the seeds of substantial inflation down the road. Not in the next six months or two years, but we have done things that have raised the probability of really high rates of inflation at some point. We are flooding the system, monetizing debt, doing all the things that lead to that. Those are appropriate things to do.
Our economy was like a fellow going down in quicksand last September, and up to his shoulders, and somebody tosses a rope. We can tie it around and yank him out with a truck... You may dislocate shoulders, but it still pays to get him out.
cnbctv18@livemint.com
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First Published: Thu, Jun 25 2009. 10 33 PM IST