Buffett: Today’s Economy Is Nothing Like The ’70s. “where multibillion-dollar portfolios had been leveraged?”

Buffett: Today’s Economy Is Nothing Like The ’70s

Last Update: 3/3/2008 6:56:56 AM

NEW YORK (Dow Jones)–Warren Buffett, famed investor and Berkshire Hathaway Inc.
(BRKA, BRKA) chairman and chief executive, said his new municipal bond insurance
company has written 206 new policies in the past three weeks. The average fee
collected was 3.5%.

But so far, he said in CNBC interview Monday, none of the established municipal
bond insurers has taken his offer to reinsure their policies.

Overall, Buffett said, he’s seeing “waves of deleveraging” unfolding in the
market.

“Unfortunately for the people that are deleveraging, it was leveraged at crazy
valuations in many cases,” Buffett said. “People that have been out on a limb
financially are having the limb sawed off.”

Buffett also said last week his company fielded phone calls on “large portfolios
of various fixed income instruments and even on municipals where
multibillion-dollar portfolios had been leveraged.”

The asking price for the portfolios varied, but Buffett said some have been
offered for 75 cents on the dollar.

“It was pretty chaotic,” he said, noting a significant economic turndown can’t be
ruled out.

But, he added, so far the economic environment cannot be compared to the
stagflation of the 1970s.

Did you like this? If so, please bookmark it,

$\\$

about it, and subscribe to the blog RSS feed.

Possibly Related Posts: