President Barack Obama takes office today holding the power to unleash the second half of the $700 billion Troubled Asset Relief Program, and there’s also legislation in the works to provide an additional $825 billion jolt to the economy (see Inman News story).
Billionaire Warren Buffett thinks Obama is "the absolute right commander in chief" for tackling the financial crisis. Excerpts from a transcript of an interview with NBC’s Tom Brokaw posted by CNBC:
BROKAW: I’ve been describing this as the domestic equivalent of war. Is that an overstatement?
BUFFETT: Well, actually, in September I said …. this really is an economic Pearl Harbor. The country is facing something it hasn’t faced since World War II.
And they’re fearful about it. And they don’t know quite what to do about it. And the point is … temporarily it looks like we’re losing. It has that same aspect. Interestingly enough, we were losing for a while after Pearl Harbor. But the American people never doubted that we’d win. I mean, we had that attitude then. I think, right now, that they’re sort of paralyzed.
BROKAW: Is Barack Obama the right commander in chief for the economy?
BUFFETT: He’s the absolute right commander in chief … that’s another thing the American people seem to do, occasionally, is that we elect people that are right for the times. You know, whether it was Lincoln, Roosevelt. I would say Obama … you couldn’t have anybody better in charge.
BROKAW: But why is he right for the times?
BUFFETT: Well, he’s smart, he’s got the right values, but he also … understands economics very well. He’s cool. He’s analytical. But then, when he gets it all thought through, he’s fast — he can convey to the American people what needs to be done. Not to expect miracles. That it’s gonna take time. But that we’re gonna get to the other end.
…BROKAW: The stimulus program, that the new president wants to have, and that Congress is cobbling together, in your judgment is it sound? Are there some things they’re– they should be doing they’re not doing?
BUFFETT: Well, they’re … gonna turn the fire hose on this fire. I mean, it’s a blunt instrument to some extent … but it’s very, very big. We’re gonna have a medicine coming in a dosage we’ve never seen before. But it won’t have immediate impact. It should take time for it to hit the economy in real force. So people should not expect miracles in February or March or April. That isn’t gonna happen.
…BROKAW: Paul Krugman, among others, says we’re not doing enough. That we’ve got to … open the valves even greater than we have been. A lot of people are concerned about the deficit and what the consequences are gonna be down the stream. Are we doing enough?
BUFFETT: I don’t know the perfect answer. Nobody else does either. I mean, Paul Krugman doesn’t know it. And Barack Obama doesn’t know it. And (incoming Treasury Secretary) Tim Geithner doesn’t know it. All we know is we have to do something on a very major scale. And if we find out six months down the road … we’ve gone a little off course, left or right … that can be (adjusted) we do not want to sit around and debate for six months what the perfect solution is.
We wouldn’t know it if we found it. The important thing to do is do what we know we need to do now. And … there will always be critics on that. The important thing is, that the person that’s there takes the action that makes sense at the time. Did we handle the aftermath of Pearl Harbor the next month perfectly? I don’t know whether we did or not. But I would doubt that. You know, somebody now can come up with a better system. The important thing is, we got going.
…BROKAW: But how much money can we print? I mean, the people are already saying, in the latest NBC News Wall Street Journal poll they’re as concerned about the deficit as they are about almost anything else going on in their lives.
BUFFET: They should be concerned about the deficit. But they should be more concerned about getting the economy working right … there are consequences to printing money, and they’re not pleasant.
…BROKAW: (With) Democrats controlling both chambers now, there’s gonna be a big cry for more regulations on Wall Street. For the financial institutions to be more closely supervised. Is that a good idea?
BUFFET: Well, it’s probably a good idea. But I wouldn’t look at that as a panacea. What you have to do, to some extent, is you have to create the right incentives also for those that are running those institutions. And, you know, I’m not sure whether I would shoot the CEO of any bank that went broke or anything. But I would make it much tougher than it’s been in the past to run an institution into the ground. I think there are plenty of things to be done in the boardroom as well as in the rooms of the Senate or the House.
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