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Buffett Sees Uneven Recovery, Craves Big Deals

Wednesday, 02 Mar 2011 06:53 AM

Billionaire Warren Buffett said on Wednesday he is optimistic about U.S. economic prospects, despite an uneven recovery that mirrors the fortunes of businesses at his company Berkshire Hathaway Inc.

Buffett also said that despite his "enormous respect" for the efforts of Federal Reserve Chairman Ben Bernanke to move the economy forward, more stimulus is not the answer now.

"In the end, I don't think we need more of that," Buffett said in an interview on CNBC television.

Buffett said improvements in the business environment is likely in future months to be reflected by a decline in the unemployment rate, likely to the low 7 percent range by the November 2012 elections from 9 percent now.

Activity is "probably closer to inching in most businesses" at Berkshire and in much of the economy, while others are "moving forward" and others are "stuck," Buffett said.

"There is a resiliency to the American system," he said. "It does work. It sputters from time to time, it will sputter from time to time, but you don't want to get worried."

Sitting on a more than $38 billion cash pile, Berkshire is also eager to make large acquisitions, which Buffett calls "elephants."

But Buffett said they are hard to find, with one sizable acquisition — he called it a "zebra" — having fallen through a day or two ago. He said that there is no acquisition in the works that has a "high probability" of going through.

"There aren't many elephants out there, and not all of the elephants want to be in my zoo," he said. "It's going to be rare that we find something in the tens of billions of dollars where I understand the business, where the management wants to join Berkshire, where the price makes the deal feasible."

Buffett also said it is "rational to worry" that Middle East unrest could result in wider oil supply disruptions, though he is not presently concerned about the impact on Berkshire.

He also said stocks are a better investment over the long-term than bonds, saying "it's a terrible mistake to buy into fixed-dollar investments" at current rates.

Berkshire is based in Omaha, Nebraska, and has about 80 operating units.

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Billionaire Warren Buffett said on Wednesday he is optimistic about U.S. economic prospects, despite an uneven recovery that mirrors the fortunes of businesses at his company Berkshire Hathaway Inc. Buffett also said that despite his enormous respect for the efforts of...
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