Washington, DC (PressExposure) March 01, 2009 -- Warren Buffet, who is chairman of Berkshire Hathaway Inc. made the following points in his annual letter to shareholders on February 28, 2009.
"The economy will be in a shambles throughout 2009, and for that matter, probably well beyond. Though the path has not been smooth, our economic system has worked extraordinarily well over time. It has unleashed human potential as no other system has, and it will continue to do so".
"A frightening web of mutual dependence develops among huge financial institutions. Participants seeking to dodge troubles face the same problem as someone seeking to avoid venereal diseases. It's not just whom you sleep with, but also whom they are sleeping with and firms with enough derivatives can infect the entire neighborhood".
"Whatever the downsides may be, strong and immediate action by government was essential last year if the financial system was to avoid a total breakdown. Had that occurred, the consequences for every area of our economy would have been cataclysmic. Like it or not, the inhabitants of Wall Street, Main Street and the various Side Streets of America were all in the same boat".
"Major industries have become dependent on federal assistance, and they will be followed by cities and states bearing mind-boggling requests. Weaning these entities from the public teat will be a political challenge. They won't leave willingly".
Referring to 'Berkshire Hathaway Inc.' losses of about $8 billion, Buffet said that purchasing shares in the oil producer ConocoPhillips when oil and gas prices were near their peak was a "major mistake".
Berkshire paid $7.01 billion for their stake which was revalued at $4.4 billion as of Dec. 31.
Buffett also listed the purchase of shares in two unnamed Irish banks for $244 million that Berkshire was forced to write down by 89% as having been another mistake.
Berkshire's available cash is now estimated at about $25.5 billion down from $33.4 billion on Sept. 30.
The above, are his comments about the global economy, and additional comments that related solely to Berkshire Hathaway Inc., which would most likely only be of interest to its shareholders were omitted.