Fitch cut GMAC / Warren Buffett Says U.S. Economy In Recession
3/3/2008 12:16:29 PM Billionaire investor Warren Buffet discussed the U.S. economy Monday, telling CNBC that it is in recession and, at the same time, “stocks are not cheap.”
Buffett also announced that he has rescinded his offer to bail out floundering bond insurers Ambac Financial Group Inc. (ABK), MBIA Inc. (MBI), and Financial Guarantee Insurance Co. In mid-February he offered to reinsure some $800 billion in municipal bonds backed by those top three bond insurers.
The offer is “not on the table,” he told CNBC. It had been rejected by some of the bond insurers.
As far as the state of the economy, Buffett told CNBC, “From a common-sense standpoint right now, we're in a recession.” This came despite the fact that the U.S. economy has not yet registered one quarter of negative GDP, much less the two consecutive needed to qualify for a recession.
Buffett stopped short of comparing the current situation, with its dangerous combination of a slowing economy and rising inflation, to the stagflation-filled 1970s. He did not, however, rule out the possibility. The environment is “nothing like '73 or '74 yet,” he said. Buffett added that things may get worse before they get better, telling investors that a significant economic downturn is a possibility. |
