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Buffett blames banks for credit crisis

Blame for the sub-prime crisis lies at the feet of banks who took too many risks in mortgage lending, US billionaire investor Warren Buffett told newspaper El Pais in an interview published on Sunday. Buffett sees “deeper, longer” US recession.

“The banks exposed themselves too much, they took on too much risk .... It’s their fault. There’s no need to blame anyone else,” he said. Buffett, dubbed the world’s richest person by Forbes magazine (Berkshire Hathaway holding company, just overtook Bill Gates this year as the world’s richest man. His wealth jumped from $52 billion last year to $62 billion), said he believed the situation in financial markets would not deteriorate further. “I don’t think the situation will get worse in financial markets. General conditions in the business world will get worse, but it will only last a while,” he said, adding he had no idea when an upturn would come.

Buffett gave the interview on a recent visit to Madrid, as part of a European tour including Switzerland, Germany, Italy and Spain on the look out for new investments. He said the idea of the trip was to increase awareness amongst European businesses of his holding company Berkshire Hathaway Inc, which holds stakes in businesses ranging from American Express Co to Coca-Cola Co. He said he wanted business owners to think of him when they were looking to sell. “We want to buy big companies that earn at least €50 million before taxes, and there’s more of those in Europe than in other parts of the world,” he said. He would not be drawn on what companies in particular he was looking at, other than saying he was not interested in distressed businesses.

 


The United States is “already in recession,” and it will be “deeper” and “longer” than people think, said Warren Buffett in an interview with German magazine Der Spiegel on Saturday. He added: “Perhaps not in the sense that economists would define it” with two consecutive quarters of negative growth. “But the people are already feeling the effects,” said Buffett, “It will be deeper and last longer than many think.” He blamed financial institutions for introducing instruments “they can no longer control” and said the “genie can no longer be put back in the bottle.” However, he also mentioned this won’t stop him investing in selected companies.

US economic growth has slowed dramatically in recent months and a growing number of economists believe the world’s largest economy will experience a recession during 2008 amid a housing slump and related credit crunch. (Reuters, China Daily)