An unruffled Warren Buffett recently told an interviewer with Fox Business Network that market meltdowns like the current nosedive have happened before and were even worse.
"I mean, in 1929, [the market] went from 381 down to 42, an 89 percent decline," Buffett pointed out.
"So we've had it. Most people don't even remember from '37 and '38 it went down 50 percent."
Shares in Buffett’s own Berkshire Hathaway have dived by 43 percent since the beginning of the year.
Buffett pointed out that even Berkshire has tanked before. It has happened three times, he said.
"It happened when it went from 90 to 40 back in 1974 and '75. It happened in 1987 [when] it went down 50 percent, and in 1998 to 2000. I hope I live long enough so it happens a couple of more times to me."
As for the economy, Treasury Secretary Henry Paulson is running out of options.
Paulson faces a "very, very tough situation," and has no more "magic bullets" to fire, Buffett says.
"We're in a negative feedback cycle that's going to last for a while."
But even as the economy continues to unravel, Buffett is still optimistic. By the middle of 2009 the economy should start recovering and "go to new heights," he said.
Paulson, meanwhile, abandoned his original strategy of buying bad loans and toxic debt from financial institutions and said he would instead concentrate on providing cash to banks and financial firms.
Government policymakers, Paulson told reporters this week, should make sure that the financial services industry doesn't "encourage unsafe and unsound risk-taking or reward failure."
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