A decade after the financial crisis, billionaire investor Warren Buffett explains what was behind the 2008 mayhem, what we can do to limit the damage and opportunities missed last time.
Q2 hedge fund letters, conference, scoops etc
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Billionaire Investor Warren Buffett Explains 08 Crisis
Transcript
The worst day on Wall Street since the crash of 1987. Traders are standing here watching in amazement. Don't blame us when they're down. FIFTY.
THREE PERCENT. Almost everything never. Completely wiped out in the Nasdaq.
Everything and more has been completely wiped out at the speed with which we are watching this market.
This feels a little too. Yeah well one billion two billion three billion. You can imagine the American economy is an economic train moving down a track. That has no ending. And. It picks up. Cargo and.
And passengers as we go along. There's 330 million of us now and there are only 4 million in 1790 and our farmers are incredibly more productive and we have 75 million houses and we had a few Hartstein and we have great universities and all of these things so we're just constantly moving more and more cargo and passengers along. And occasionally that train is going to get derailed. In 2008 you had something close to a bubble. And home real estate. 50 million people had mortgages roughly at that time out of seventy five million homeowners. When that bubble burst that hit. Home to probably 40 percent of households in the. Country these people had mortgages on their houses and fears spread in the month of September 2008 at a rate that was like a tsunami.
Who do you hold responsible for that. Bubbles are always. Hard to.
Ascertain.
The originators of the body aren't the originators everybody got caught in some some were foolish some were crooked some or both. Ah but you had a mass delusion. That it could go on forever. Yeah. Wall Street firms participating in mortgage originators parta look you had the public participating and it was you know it was it was a lot of fun. I mean it was like going to Cinderella going to the party. I mean it was all going to turn to some pumpkins at midnight. But nobody wanted to leave until one minute to my right hand and the rush for the door was it.
Couldn't be had. What for you were that the lessons you learned from 2008.
I didn't really learn any new lessons in 2008 or not. I had emphasized to me. Some of the things that I always believed to do need somebody who can say we'll do whatever it takes. The US government had to do the right things. Not perfect things but generally the right things. Starting in September. And they did a fantastic job actually getting the train back on the tracks. There was still damage for a long period thereafter but it was really important that fast action at that time and we were very fortunate we had the leaders we did. If we'd had people who waited for all the information to be right or for committees to work or that sort of thing it would have been far far worse. There's people talk about a fog of war but there's a fog of panic too. And during that panic. You're getting inaccurate information you're hearing rumors if you wait until you know everything it's too late. People today 10 years later they're still affected by the crisis. Various people in different ways but they're not as effective as they were in 2009 or 2010.
Has that confidence come back.
Yeah but it comes back slowly. I can understand why people lost their houses or lost their jobs or whatever may have happened to them. Feel that there must be somebody out there that was profiting from this that they're doing some things that should send them to jail. The the people that ran most of the institutions the big institutions. In Trouble.
Probably shouldn't name names but but you know they went away rich. They may have been disgraced to some degree but they went away rich. So I don't think the incentive system has been improved a lot from from what it was 10 years ago.
You knew what the next crisis would look like. Can I be a little bit helpful. But there will be other crises.
There's no way of knowing when you're in a situation like we were in in the fall of 2000 eight or nine when or precisely how well that you know the United States will come back to the factories don't disappear the farmland doesn't disappear the skills of the people that disappear. But you had a system which was going to put them all in an idle position or could do it and there's no way of knowing how far it was going to go. What's left from the crisis is pretty much our memories. I mean the tracks are still there the train is still there. But we had a big interruption in 2008 or nine. And now the train has been running pretty darn well and we've shown that America can't be stopped.
