SPECIAL REPORTS

Warren Buffett to CNBC: Economy Has "Fallen Off a Cliff"

Alex Crippen
CNBC
Monday, March 9, 2009

Warren Buffett tells CNBC's Becky Quick the U.S. economy has "fallen off a cliff."

At the start of a three-hour appearance on Squawk Box, Buffett said economic developments have been very "close to the worst case" that he had imagined, although conditions would be far worse if the Federal Reserve hadn't stepped in last September.

Other highlights:

  • The economy "can't turn around on a dime" and a turnaround "won't happen fast."
  • Five years from now, the economy will be running fine. The strength of the American system will pull it through, just as it has many times in the past.
  • Democrats and Republicans should work together and not try to take advantage of the economic situation to achieve partisan goals.
  • Inflation has the "potential" to be worse than the 1970s.
  • Most banks are in "pretty good shape" and can "earn their way out" of the current problems given the low cost of funds. Banks, however, "need to get back to banking."
  • Extremely important that the government make clear depositors won't lose their money if banks fail.

Full article here

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