Subprime crisis not big threat: Buffett from May 5, 2007, 4:09 p.m. EDT

Discussion in 'Wall St. News' started by S2007S, Sep 16, 2009.

  1. S2007S


    And people believe what he is saying now, I have no clue why cnbc continues to interview him at least 20 times a month, why does anyone listen to him, so he made his billions and thats, that. This was what he thought about subprime in 2007, of course the guy was totallllly wrong, however today when he speaks people still think he knows what he is talking about, especially when he says no double dip recession and an improving residential housing market. If asked a year ago if we were going into a recession he would have yelled out NO.....

    Subprime crisis not big threat: Buffett
    But housing slowdown hurting some Berkshire businesses, chairman says

    By Alistair Barr, MarketWatch

    OMAHA, Neb. (MarketWatch) - Rising delinquencies and defaults in the subprime mortgage business probably won't be a big threat to the U.S. economy, Warren Buffett said on Saturday.

    Still, the Berkshire Hathaway chairman said some of the company's construction-related businesses are being hit by the slowdown in home building, and that could continue "for quite a while."

    House prices fell at their fastest pace in 13 years in February, according to the S&P/Case-Shiller home price index, which was released in late April. The slowdown, combined with an increase in interest rates in recent years, has triggered turmoil in the subprime mortgage business, which lends to poorer home buyers with blemished credit records.

    Borrowers and lenders in the subprime mortgage business were betting that house prices would go up in future, Buffett said. Now that delinquencies and foreclosures are increasing there's extra supply of homes for sale, which changes the dynamics of the real estate market, he explained.

    "You'll see plenty of misery in that field. You've already seen some," Buffett said. "I don't seen a big impact on the economy though."

    'You'll see plenty of misery in that field. You've already seen some. I don't seen a big impact on the economy though.'

    Warren Buffett

    The situation has been exacerbated by securization, in which the loans are packaged up and sold on again to investors as mortgage-backed securities, he added.

    "Once you package those things and sell them through major investment banks, discipline leaves the system," Buffett said.

    Subprime borrowers have been missing their first and second monthly payments recently, he noted. "That shouldn't happen. Securitization has made the problem worse," he added.

    Legislators have been discussing possible new regulations to deal with the crisis, including making investors in mortgage-backed securities more responsible for future delinquencies.

    The subprime shakeout probably isn't going to cause big trouble for the economy, but in certain areas of the country, the real estate market will take longer to recover, Buffett said.

    Berkshire owns one of the largest networks of real estate agencies in the U.S. and several construction-related businesses, including carpet maker Shaw Industries and building products companies Acme Building Brands, Benjamin Moore, Johns Manville and MiTek.

    Shaw revenue fell 11% in the first quarter. Sales and profit are likely to be "significantly" lower for the rest of 2007, Berkshire warned on Friday.
  2. dude,

    It doesn't matter what people believe. People don't move markets, govnt does.
    Either way, they had a speed bump when they had to "value" their assets.
    Trillions later and some accounting changes and presto, the game can continue. Nothing to stand in its way now.
    Just buy stocks.
  3. You don't understand why CNBC keeps interviewing him and I don't understand why you even watch CNBC.

    We are both baffled here :)
  4. lmao,

    just for the heck of it I googled "Subprime crisis not a big threat Lehman"

    Lehman Brothers’ chairman and chief executive officer (CEO) Dick Fuld visited Dubai in May 2007. At a media briefing, the conversation turned to global economic affairs. Fuld appeared confident. He dismissed the suggestion that the developing sub-prime crisis would be a problem and suggested that terrorism was a bigger threat.


    "Subprime crisis not a big threat Mozillo" :D :D :D Hmnnnn wonder if I get any hits on that search, or just feeling lucky.