U.S. debt limit threat 'political weapon of mass destruction'-Buffett

Reuters

NEW YORK, Oct 16 (Reuters) - Warren Buffett, chairman andchief executive of Berkshire Hathaway, said Wednesdaythat the threat of not raising the U.S. debt ceiling is a"political weapon of mass destruction".

"It would be a colossal readjustment of the world if peoplelost faith in the United States government," Buffett said in aninterview with cable television network CNBC as negotiationscontinued in Washington over raising the $16.7 trillion U.S.borrowing limit.

Buffett said a deal between Republican and Democraticlawmakers to raise the debt limit would likely be reached thisweek. If the debt ceiling is not raised, it could lead to theUnited States missing debt payments.

Berkshire Hathaway owns short-term Treasury bills butBuffett said he was "not worried" about the bills being paid.U.S. Treasury Secretary Jack Lew has said the United States willexhaust its borrowing authority no later than Oct. 17.

Berkshire owns more than 80 businesses in such areas asinsurance, chemicals, railroads and clothing, and has more than$130 billion of equity and fixed income investments.

Buffett said that his firm's spending rate this year,particularly in reference to acquisitions, is as "high as ever,"and that it recently missed an "elephant"-sized buyingopportunity worth more than $12 billion. He gave no furtherdetails.

Berkshire Hathaway currently had about $40 billion in cashon hand, he said.

Overall, stocks were still a better investment thanlong-term bonds but were not "selling at bubble levels", Buffettsaid. The Standard & Poor's 500 stock index has risen19.1 percent this year.

One of the stocks that Berkshire has an interest in is Bankof America Corp, after a $5 billion purchase ofpreferred shares in 2011. Buffett said Bank of America andJPMorgan Chase & Co were both "in the best shape I canremember."

Berkshire had increased its investment this year inInternational Business Machines Corp, which has beentrimming costs to ensure stable profits amid slowing demand forhardware, and felt "fine" with its current stake, Buffett said.The investment was valued at $13 billion as of June 30.

Berkshire Hathaway is a supplier to struggling retailer J.C.Penney Co Inc, but Buffett told CNBC he was "not worriedabout them surviving." The department store chain's shares aredown more than 63 percent this year.

When asked about activist investor Carl Icahn's push to haveApple Inc do a larger share buyback, Buffett said hesupported Apple management and directors.

"I do not think that companies should be run primarily toplease Wall Street and largely shareholders who are going tosell," Buffett said. Icahn has been pushing Apple to enact a$150 billion share buyback.

Berkshire has said an investment in Apple would not be inline with its strategy and did not list Apple among itsinvestments in the second quarter.

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