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  • johnnyg135 johnnyg135 Aug 7, 2011 8:59 AM Flag

    Warren Buffett says downgrade does not make sense...

    Warren Buffett: S&P Downgrade 'Doesn't Make Sense'

    Warren Buffett: S&P Downgrade 'Doesn't Make Sense'

    Berkshire Hathaway Chairman and CEO Warren Buffett told the FOX Business Network that S&P's downgrade of the United States' triple-A credit rating "doesn't make sense."

    "I don't get it," Buffett told FBN late Friday night. In fact, Buffett reaffirmed his belief in the quality of the United States' credit telling FBN, "In Omaha, the U.S. is still triple A. In fact, if there were a quadruple-A rating, I'd give the U.S. that."

    Buffett told me tonight that Berkshire Hathaway's T-bill exposure is significant.

    "We just filed our 10Q and we have $47 billion in cash and cash equivalents. Well over $40 billion of it is in short end T-bills. (Tonight's S&P downgrade) doesn't tempt me to sell. We'll stay right there."

    Buffett sounded no alarm bells about the downgrade, going so far as to say it wouldn't have much effect on the markets Monday. "If nothing else takes place, meaning, if all other variables hold and there isn't say, a new problem in Europe, it won't make any difference."

    "Think about it. The U.S., to my knowledge owes no money in currency other than the U.S. dollar, which it can print at will. Now if you're talking about inflation, that's a different question."

    When asked if he felt the U.S. deserved the downgrade, Buffett said, "No." He took a swipe at S&P, quipping, "Remember, this is the same group that downgraded Berkshire."

    The downgrade has prompted some economists and market watchers to warn that interest rates may rise, the dollar may weaken and stocks could see a sell-off. When asked whether he was worried about market gyrations Monday, Buffett said, "No."

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    • There was little effect on the international US bond buying while this was approaching...perhaps cooler heads will prevail...S & P doesn't have much respect in other parts of the world...they know its contribution to the GS worthless paper ratings...

      • 1 Reply to java20joe
      • I just don't understand why S&P still did it even they confessed that their analysis has error on numbers. How could this happen for a reputable (I guess it's not any more) rating agency who switched it's reason for a such important downgrading in a blink without further reassess?

        I bet they have already played in the short side strategy directly or indirectly before the announcement. Even they realized the number they used to shore up their thesis was wrong but it's too late for them to turn around. DOJ shall investigate this or do something to make sure that there will be a consequence for this.

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