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Buffett: A US default would be 'pure idiocy'
by Danielle Levy on Oct 16, 2013 at 14:45
Renowned investor Warren Buffett has called on the Republicans and Democrats to avoid using the debt limit as a weapon against each other.
In an interview with CNBC, Berkshire Hathaway's founder said the prospect of not raising the US debt ceiling 'after you've already spent the money' was akin to a 'political weapon of mass destruction'.
'I know it's been used in the past, but we used the atomic bomb back in 1945 but we decided we weren't going to do something like that again,' he said. His comments come ahead of the Thursday deadline to raise the debt limit or possibly default.
Buffett urged both sides to not use debt ceiling talks as a weapon against each other, stressing that other means like filibusters could be used.
He expects an agreement will be reached, arguing that it if this doesn't happen it and the government default on its debt payments it would be a 'pure act of idiocy' and 'asinine'.
'Credit worthiness is like virginity, it can be preserved but not restored very easily, so it is crazy to play around with it,' he said.
While Buffett's firm owns short-term Treasury securities, he said he isn't worried about the positions and whether they will get paid.
Meanwhile, on the equity front he said investors have nothing to fear about a bubble forming in stocks and questions the alternatives right now.
'What do you diversify in? You want to diversify into cash? I think it's a terrible investment compared to equities. You want to diversify into long-term bonds? I think it's a terrible investment compared to equities.'
He is positive on banks, claiming they are in 'the best shape I can remember' and sided with Apple's management in response to activist investor Carl Icahn's public calls for a large share buyback.
'I think Apple's management has done a pretty good job of running the company... and my vote would be with them.' he said, adding: 'I just wish I'd bought the stock many years ago.'
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