Billionaire investor Warren Buffett says the economy is in recession and getting worse — but he sees opportunities in the crisis.
“Everything connected with construction and with consumer, I see weakness, and if anything, it’s accentuating a little bit,” he said in a recent television interview.
The chief executive of Berkshire Hathaway also thinks inflation is picking up, especially in steel and oil.
“In my adult lifetime, up until the last year or two, there’s been a huge amount of excess supply available. We don’t have excess capacity in the world anymore, and that’s why you’re seeing these oil prices.”
Experts have predicted that world energy use will surge 50 percent by 2030, and oil prices will range from $113 to $186 a barrel.
Oil has already risen 40 percent this year to a record of nearly $140 a barrel.
OPEC’s President Chakib Khelil that prices could rise as high as $170
in coming months.
Despite his dour outlook on the economy, Buffett sees opportunities for investing even in some markets that most investors are shying away from, like the subprime mortgage business.
Buffett told Reuters in an interview that Berkshire Hathaway had already made some subprime investments through its Clayton Homes manufactured housing unit.
In addition, he said Berkshire’s monoline insurer might indirectly invest in some distressed areas, including subprime.
“We have bought some subprime paper in the open market, as people have wanted to sell portfolios,” he said, adding that other investments are possible.
“We listen to anything we hear about. If it is big and unusual, and carries the proper premium, we listen.”
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