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Monday, May 3, 2010

Economy Showing Signs of 'Real Strength' Warren Buffett ( BRK.B , BRK.A )

Warren Buffett tells CNBC the U.S. economy has started to show signs of "real strength" in March and April, and it's not just companies replenishing their inventories.

Buffett says there's been an increase in manufacturing activity and some improvement in consumer demand as people regain confidence.

"We're glad we have inventory because it's been flying out the door."

He says Berkshire Hathaway is a "net hirer" right now, and that's happening because there is renewed demand for the products its subsidiaries make.But he notes that Berkshire's residential housing businesses are lagging, due to a hangover of demand in that market. He thinks that housing invesntory will be gone within a year.

Buffett again warns that the U.S. government will need to reduce its enormous deficits and says the country faces potentially significant inflation in the years to come.

As for the debt situation in Europe, Buffett says he doesn't know "how that will turn out" but it is an "interesting movie to watch."

Still, he says, "I don't like betting on the future purchasing power of any currency."Current Berkshire stock prices:

Class B: [BRK.B 77.0 --- UNCH (0) ]

Class A: [BRK.A 115325.0 ---
Warren Buffett tells CNBC this morning that he does not see a "problem" with the Goldman Sachs Abacus deal at the center of SEC fraud charges against the firm.
He says there's nothing "unique" about the 2007 Abacus deal and points out that a lot of banks and others, including American homeowners, lost money betting on the housing market at the time.
"When there's a mass delusion, you can say everyone is to blame... There's no villain."
Buffett also endorses CEO Lloyd Blankfein, saying he's done a "great job" at the company and should continue as CEO.  Buffett says he has not had any conversations with Blankfein about him possibly stepping down as Goldman chief.  Buffett also says he hasn't spoken with Blankfein about settling with the SEC and
doesn't think there's a legal reason to do so.  He leaves it up to Goldman's board of directors to decide if there is a 'business' justification for settling the SEC's charges, a possible he calls "conceivable."  If not, the situation "will play out over time."Buffett says he's "talking his belief," not simply defending Goldman because Berkshire invested $5 billion in the firm in September of 2008.  Goldman is paying Berkshire a dividend of 10 percent a year on that $5 billion loan.  Berkshire also has the option to buy another $5 billion of Goldman stock at $115 per share.  Current price: [GS  145.20  ---  UNCH  (0)   ]
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