when you came back from New York uh in the 56 I think it was having studied and worked with Ben Graham what was the dream what was the ambition well it was kind of disgustingly low I uh I didn't know what I was going to do I I had about $150,000 at that time and I felt you know if I earn 10% on that'd be $155,000 a year and and I could live big on that at the time I was I was interested in reading and and taking courses at the University I took my father-in-law's
course in Psychology and uh I thought I might go to law school I knew there were whole bunch of subjects I wanted to read about and then I sort of stumbled into this partnership a few months later because seven members of the family uh said we want to we want you to handle our investments and I didn't want to do it one at a time or tell them what I was doing so I put the seven together in a partnership that had $115,100 in it you can guess who the $100 was and and I thought
that was it and a few months later a fellow named Homer Dodge who had been a stockholder Graham Newman came out saw me in Omaha and he said Graham Newman was liquidating and and he said he'd asked Ben where to put his money and Ben said maybe Warren would be a good choice so he joined me for I think about $100,000 at the time and then four months later some fellow in Omaha that read the legal notice actually a friend of mine called me up said what are you doing and I told him and he
did it so yeah I just kind of stumbled along you kind stumble along all of a sudden you have a partnership and you're making money and I couldn't sell Kio now but the partnership did well and part of the partnership was buying what looked like cheap stocks Berkshire half away looked like a cheap stock it wasn't a very it was a terrible business what was your ambition then now you have a vehicle yeah well I started out by thinking I was a textile expert but but I was disabused of that notion fairly fast I really
did I thought you know well I'll you know what what do these guys know about making textiles they've only been doing a few hundred years I mean the Egyptians I think figured out how to weave so but I've been in Omaha for a while I right I know a lot about just turned me loose in the pl and see what happen so anyway uh what happened was right at that period the textile business was good for a very short period of time and so I was like a duck floating on a pond when it was
raining I was going up in the world but I and I thought it was because I was flapping My Wings it was that damn rain that was coming down and and then when it quit raining I mean I found out what do I know right and then then we went into other businesses yeah and what so all of a sudden I mean was it you went into other businesses meaning you you had some cash flow coming in we had some cash not not very much but we had some cash around and when Jack ringwalt decided
to sell his insurance companies in early 607 uh we we paid 8.7 million I think 8.4 million I guess it was 8 4 million and we had in Berkshire we had I don't know maybe four or five million around maybe we borrowed a few million but so that was your first entry into the insurance business why was the insurance business attractive well it it it does control money and and and if you've got somebody that's doing a decent job on the insurance end in underwriting it gives you money to invest on my end how much
of your Revenue comes from the insurance bu well a lot comes from insurance and then we have a lot money that's generated by insurance so insurance has propelled our growth there's no question about that because it gave you money to it gave us money to both invest in marketable Securities and and also money to buy businesses outright and then in 1965 you have a chance to take over right Berkshire what happened after a while I realized what a lousy business I was in and we didn't get out of the textile business but I decided that
that to the extent we could we'd try to add on other things um uh interestingly enough Charlie the uh I'd have been better off if I done all the subsequent things without putting them in Berkshire originally if you just talk financially Berkshire the textile business was a drag for 20 years so if I instead of buying these things for Berkshire we just bought them in in a separate entity the X then why didn't you do that I don't know but it worked out fine but I I don't know everything worked out but I mean if
you look back looking back it was it was it was a big fundamental wrong decision from a financial to get involved in a texal business at all yeah I should have just gotten out of that and going on and done these other things by but do you tell me why you didn't I kind of stick with things it's that yeah I really do I mean here was here with I it's just my personality you know I mean I'm I'm I'm driving a car after eight years I'm living in the same house after 47 years your
net worth about that time was about6 OR7 million that probably is about right yeah that's probably about right because in 1962 when I formed when I put all the Partnerships together it was about a million and when I wound up it was about 25 and so it probably was what are you thinking I mean I'm just just going to continue finding Investments that I can make and everything mid 60s I was running this partnership so I thought I was going to keep running the partnership and then I I got to where I didn't think I
could do that well and why did you think that well the market in 16 stock market the stock market just went crazy and and it's a little like you know in 1999 and 2000 I mean I was left behind and I didn't want to do things I didn't understand and that didn't make sense to me but I also didn't like sitting there while everybody else was you know running rings around me and my partners were probably not saying it but they might think you know has this guy lost it so so I gave him all
the money back and I gave him the shares of Berkshire and got a lot of them myself as part of that and then I I just kind of got more involved in Berkshire it you know it it became my painting I was only painting an hour or two a day at the start and then I started painting like crazy so you had a steak in Berkshire right and I actually bought more but I just decided I'd put all my money in Berkshire and ride with it and ride with Berkshire as a vehicle just as just
as yeah as kind of an extens extension of me yeah and are you out of the texto business by then we got out of the no we did not get out of the textile business for 20 years I even bought it another Tex sh I mean this is you know I'm going to confess you this is like this is like a Revival meeting now I'm GNA just go up to you we need forgive me will you because I I uh I bought another textile company I bought somebody called wck Mills in Manchester New Hampshire why
did you do that only my psychiatrist knows I again I thought I was going to solve something by doing it I mean I I solve something well I mean I thought that these two put together would do better some crazy thing I mean I did it myself too no Management Consultant told me to do it so it was it was 19 about 85 I mean 20 years later but before we got out of the text business we got of the textile business I said it's a little bit like watching a parade with all these other
textile companies and you stand up on your tiptoes and then everybody else stands up on their tip toes to it and all that you don't see any better and your legs hurt and that's what happened with textiles in 1973 would may be your first big first run at the Washington Post you began to buy shares yeah how did you come to the conclusion I looked at the perspectus in 1971 when Charlie and I first met K Graham one time and they were going public right at the time of the Pentagon papers and then in 1973
uh the stock got very cheap because their television licenses were under challenged by BB Roso Nixon's friend and the the stock went from I think like 38 to 16 or so in a very short period of time and when it got down to around 20 uh just in a few blocks we bought almost 10% of the of the company and that now is about 18% because they've repurchased shares when it got to about 20 that meant the whole Washington Post company it had 4, 800,000 shares up the whole Washington Post company was selling for $100
million now they own the Washington Post they own news they owned four big Network television stations incl Washington DC and all of thatv I mean everything and they didn't know any money and if you had taken those separate parts you literally could have been out in the middle of the Atlantic Ocean you know at midnight in a rowboat and you could have sold them for $500 million people have been swimming out in shark infested waters if necessary and you could have had all of it for 100 million at that time 100 million me you weren't
going to get all of it here's what I don't understand how come 95 people didn't see that it was amazing we were buying it from Big institutional investors and they were bailing out of it and if you'd asked any one of them what the pieces were worth they would have said something close to what I would say but they thought the stock was going to go down so so what you know and the stock did go down in fact after we bought it it went down a little more but so what Warren Buffett believes that
I'm not looking at the price of the stock I'm looking at the value of the business I'm looking at the properties and I'm looking at the Graham family I mean that stock we paid about 10 million for is probably worth billion and a half from more today and they 10 million and it's billion and a billion and a half and they have not struck oil they have not invented a cure for cancer you know they've just taken those properties and kept doing reasonably intelligent things and sometimes very intelligent things with the money generated by it
and they've developed the properties they've had and they've been terrific stewards of the money but there's there's no Miracles involved Warren bought into the company without my knowing him that's why I say luck really plays a role in people's lives it just does a lot of people said stiff arm him he's buying too much stock um he means you no good and my native Instinct was let's take a look let's see what he's like and everything I learned about him was very good so I asked him to come and take a look at the company
in which she just bought these shares um he had to write me a letter when he owned 5% of the company saying Dear Mrs Graham I've just bought 5% of your company and I mean you no harm uh and I think it's a great company and I know it's Graham owned and Graham run and that's fine with me and so I got to know him and I thought whoa this guy is really terrific so after he joined our board he used to come to board meetings with about 20 annual reports and he would take me
through these annual reports I mean it was like going to business school with Warren Buffett couldn't have a better teacher no it was wonderful K Graham told me that that when she met you she'd never even Ood how to read an annual report that that's what you brought to her some sense of being helping her come to grips with the idea of making business decisions Kay was very very smart but she thought because she this have been pushed into her by her mother and her husband to some extent in the in the past she she
thought only males who had been to business school could run businesses I mean she she had been she had the intellect but she didn't have the confidence and I told her my job was to get her away from looking into that funh house mirror that she was looking into about herself and distorting it and looking into a real mirror and when she looked in a real mirror she'd see a person that was perfectly capable of running the Washington Post or in the other company how long did it take it to learn that well you know
fits and starts over time but but she I had the right raw material I mean she was good she was good and and she'd had beaten into her over such a long period of time uh that that wasn't what she could do in life that it it took it took some convincing and she had to see evidence of success and all that sort of thing I said Mrs Graham I said you know you control this company Lock Stock and Barrel but you're still worried about me so I said what you're doing is you're looking at
me and you're seeing fangs and I'm telling you these are baby teeth and I said they really are baby teeth but they always look like fangs to you and there's nothing I can do except even except take them out I said even though they're baby teeth I'm going to just take them all out so I'm perfectly willing you call George Gillespie up you're your lawyer and I said I'll sign an agreement that I'll never buy another share of stock of Washington Post unless you give me the okay and I said I'm fine you know I
want you happy with me I want you nervous about me and so George came up and I took out the baby teeth and she saw fangs falling to the floor and we got log right every okay but then but you already had we had we had 10 million invested or not yeah we had 10 million invest we had n nine we had 9% nine and a fraction percent of the stock I told her the smart thing is to repurchase your shares I mean it and and the shares I would otherwise buy you should buy for
the company and and we'll all get richer if if you do that and and she had a lot of other people advising her otherwise but she finally she decided to do it and that's the reason we now own almost 18% I believe of the company instead of nine and a fraction percent the Buffalo Evening News was bought in 1977 and I gave K first shot at that you did what I gave K first shot at that you said I I'm if you if you don't want to buy it I am you yeah I'm going to
buy it why would you do that I just felt that you know she'd been good to me and and we were a big holder and they were in the newspaper business and and she wanted to buy things uh so I just said you know I'm not gonna not going to find that I went up to see Vince Mano on a Sunday and bought this thing away from you so that you otherwise would have bought so I gave her a shot at it in 198 three you purchased Nebraska Furniture Mart that's right for $60 million this
is B tell me about her well this is a woman that walked out of Russia got on a peanut booat landed in Seattle with a tag around her neck couldn't speak a word of English and the Red Cross got her out to Fort Dodge Iowa which is what the tag said she couldn't learn the language she moved all all because there were more Russian Jews here that she could talk with her oldest daughter started school came home and T of the words that she learned she took 16 years to save $500 so she could start
this company and selling used clothing bringing her siblings and her mother and father over her 50 bucks at a crack and in 1937 took $500 and went into business and competed against all these people who had all kinds of advantages over in every way and she killed them and she she killed them yeah how was she able to kill him she cared about she was smart she knew the limitations of her knowledge and she and she was confident within her circle of confidence confidence she didn't get outside of it and she took care of her
customer she sold sheep and it took her a long time but she built the largest home furnishing store in the country in a town like Omaha with 700,000 people so how did you come to buy it well I was in love with this operation I mean that's my kind of woman and I bought it when she was 89 she worked till 103 there was a period there where she left for a couple years if you went over to Mrs Bee's house as I did and youd very nice house and you go in and on her
sofa her lamps her bed there'd be little green tags hanging down because it made her feel like she was in the store I mean this is this a remarkable remarkable woman and the punchline Charlie is she couldn't read or right you know and and I think every business school in the United States ought to study here I mean what would they learn they would learn the essence of business they would learn that taking care of your customer is what it's all about taking care of and and by that I mean giving them good deals and
know which nobody would touch and she uh and working working like crazy I mean she was there day after day after day and and she she she had a passion for it and the truth is if you if if you took the Fortune 500 CEOs and I gave you first draft pick on 10 of them and I'd put them in competition with Mrs B she'd she'd win no doubt she'd win yeah Michael Eiser was here I told him the story he loved it and uh Michael wanted to get the movie rights and Michael could be
very persuasive but but uh I saw him standing with Mrs be's daughter the same daughter I referred to earlier you know who's now who at that time was probably close to 80 or so and and Francis is this tall of Michael's that tall and Francis is saying my mother wants a piece of everything when you hear an 80-year-old say that her mother wants a piece of everything that's great so Mrs B Mrs B wanted him whatever they were gonna do she wanted piece of the action if they were gonna make Mrs B Doll she wanted
on a piece of and they didn't teach that any business school to her she P that up right from understanding ownership was everything she understood business and she understood people awfully well too in 1988 you started buying cocacola how come I I don't remember exactly probably read their annual report uh probably read the 1987 annual report and I've been I've watched it some but they're just comes a point there's a Tipping Point you know in terms of knowledge you've accumulated over a period of time price changes in the stock which had gone down some they
were heavy repurchases of their own stock Roberto and Don were doing a terrific job nothing bad was going to happen to Coca-Cola so I started buying most of it in that period from the middle of ' 88 to early ' 89 but then a little further on but we put overall about a billion dollars into it and it's probably worth about 8 billion now and you have no intent so no you have said though that in during the bubble it got overpriced there were some things that you might have sold and would have been wise
to have sold them at that time if I was running the partnership like I did back in the 60s I definitely should have sold those stocks I mean they that it stocks went crazy and but you do not today look back and say I should have sold Coca-Cola when the bubble was there because it it just it wasn't me I mean I wouldn't you know I I I I I knew it was selling at a very fancy price and I even wrote about it and same way with Gillette but but you know I'm I don't
do that very often I'm not saying I wouldn't ever do it I mean if we went into the wildest speculative orgie in history orgy in history and some of these things went crazy maybe I would sell some but I it's not my it it goes against the grain for one thing wonderful businesses are not that common and if you get a big position in a wonderful business not a bad thing what is the single best investment on a large scale that you have made Geico twice in my life uh three times in my life has
been a good investment I mean it was a good investment when I was when I was uh really 20 years of age and when I when I bought I put three4 of my net worth in in Geico when my net worth was like $10,000 and and and that caused my net worth probably to double or something like that and that was that was great at the time in 1976 the got in trouble and what we bought what turned out to be half of the company for like $40 million and then in 1995 or so we
bought the other half for two billion and that was a good deal so it's it's been a triple play help me understand this you you're sitting with more than $40 billion essentially in cash right you could buy some big businesses I would assume for $40 billion right but you don't see any at a price that you want to own that's that's right and and when I look at the deals that have been made in the last year there's not one I'm envious of so I mean it isn't like we missed them uh I mean you
know it may turn out that that I should have bought one of them but I mean there's none that I feel GE I wish I'd bought that last year but I hope I buy one tomorrow I know but I mean there's nothing I mean you know you don't look at General Motors and say I look at General Motors General Motors is selling for about $5 billion now that there's 500 million shares 28 or 29 something like that you know and the whole General company 15 billion and of course that was the most powerful company in
the world you know back when I was a kid so and you could you could have it in a second well I don't know about that but I but I certainly can buy I can buy what don't you know about that I well I mean buy the whole compan is a different story how much is the whole company uh the whole company would cost 15 billion 100% of the stock yeah so why couldn't you get pay $15 billion and get General well they might they might not like me doing it some other things but nevertheless
I could buy a lot of stock at a valuation of 15 billion and you think it's a good bu today I think it's too tough to figure too tough to figure yeah you know it is a company that sells 25% of all the vehicles in the United States and and one sth of all the vehicles in the world you know and employs hundreds of thousands of people but it's got some terrible obligations outside out standing like Fiat or that's they but the well the Fiat deal they they solve for two billion but still two billion
but they no the the big problem was that they really entered into contracts with the UAW that were based on their the economics of market dominance and they don't have market dominance anymore but they still got the contracts and I don't blame the UAW I mean you know they it was a free will negotiation but but they they signed up I think they're paying like two and a half people that don't work for every people for every person that works or something like that you know in terms of uh retirement health care and and that
gets to be crushing if you're competing with people that don't have the same obligations you've looked at this closely well I look at all the things when you read eight hours a day you have a chance to cover a lot of yeah a lot of but General Motors and listen I I think they're doing a great job considering the hand they're dealt but but General Motors is a huge annuity and health insurance company with a major Auto Company attached and unfortunately the huge annuity and health company has got a terrible bunch of contracts out I
mean it is worth some big minus number and the question is is whether the auto company is worth a big enough plus number to offset that big minus number but you can't separate the two and you can't figure it out well I I can figure it out I no no but you can't what well I in the end I can't come to a conclusion that that that that it's obvious that that's what I mean you can't make you can't come to a conclusion right because you don't have all the facts or no I got the
facts what don't you know why can't you reach a conclusion I don't know whether you can exist with the kind of obligations they've got in 25% of the market and very tough people like Toyota and all kinds of people coming at them who who don't have those costs they call them Legacy costs here is the Dilemma you got $40 million in cash 40 billion 40 billion I'm sorry there's a difference there's a difference and you've gotten so big that you got to make a big play right that's your problem that's my problem and I thought
it was a problem when we were a lot smaller and it was and but it's a bigger problem now so what happened and if I'm lucky it'll be an even bigger problem five years from now and and what and you so what tell me how the Dilemma plays itself out for you the odds are good Charlie that one way or another we will find reasonably intelligent things to do with most of the money but they won't be as intelligent as the things that we could find 30 or 40 years ago with much smaller amounts of
money nowhere close because there few there right it just can't it won't happen what's the test what test does it have to meet it has to be a business I understand it has to be a company that I think has some kind of enduring competitive Advantage it has to be a management that I like and trust and it has to be an reasonably attractive price price is the least important but it's still important and you'd like to own all of it I'd like to own not necess but not necessarily it's a very small that's a
small field to it's a small field when you get to have as much money as we have it was a big field 30 or 40 years ago when I bought the Washington Post stock in 1973 and 74 there were hundreds of companies that met my test it was just a question of you know deciding absolutely and the one you like the most yeah the combination mhm you don't have any single candidate right now that's true that's why you see these tears in my eyes it is I me tell me the emotional feeling I mean you
no no no I mean tears but there is a certain sense of it's happened it's happened before I mean I closed up my partnership in ' 69 because I didn't feel there were any opportunities then in what I was doing managing money and there weren't I mean it's at least for me and you know in the year in in in 1999 and 2000 in the in the General stock market there was certainly nothing attractive and we found some businesses then but it it happens from time to time I mean I am not in a business
where you can do something smart every day I'm not even in a business where you can do something smart every year but I may be in a business where you can do something smart every three or four years yeah but I mean I read every day about one more big deal by by a group of private Equity guys in the paper today right and they're using other people's money and they get an override and and and their calculus is not the same same as my calculus and right now that enables them to pay way more
tell me how their calculus is different well they they just it's it's money they get from somebody else that they get paid quite a bit of money on if they don't do anything and then they get a percentage of The Upside and they don't take the downside I mean that is that is a different calculus than burkers yeah you have the upside and the downside upside and the downside and I'm going to keep them forever and I'm not going to dress up the accounting or rearrange things a little and resell it not going to take
a big fever doing it no so I don't have an exit strategy and I'm not getting paid just to sit with a whole bunch of other people's money now it's my money we sat down again with warrant on June 29th 2006 after he had made some Acquisitions since we last spoke with him me talk about the future of birkshire Hathaway right the last time we talked about the rise of Berkshire hathway you were sitting on give or take a billion dollars about $44 billion you didn't find anything that you were very interested in making investment
then you've made some Investments yeah we've spent over 10 billion this year and uh one was this car one was this car which was 4 billion 80% we bought of a five billion the business Pacific Corp was five and a fraction billion and yeah we we're finding a few things the important thing is to find big things okay for you you have a unique size scale problem I'm Looking For Elephants but my question is did anything change between say 2004 and 200 six I mean because you don't look at the economy as much as you
look at the business I only look at the business I there's never been a business that I've passed up that I liked because I had some view on the economy that maybe it'd be better next year there's never been one I've bought because I thought the economy was going to do particularly well this year you know I I look at I look at a business we're going to hold it forever if I hold let's say I live 20 years that's pretty optimistic but let's just say I do you know in those 20 years there gonna
be a lot of good years there be a few bad years you know in the economy but what difference does it make I mean it's like playing 18 holes of golf there's some par 3es and Par fives and you know by the only way to get the clubhous is to play them all and if you like golf you play them all I like business and and so we're we're going to play the tough years we're going to play the the the easy years and if we got the right businesses and the right managers it's going
to work I mean why couldn't you have seen isar in 2004 because it was just that company nothing happened to them or nothing happened to you to make the investment in 2006 rather than 2004 except the CEO wrote you an email that's right never heard of the company of 2004 that's the re very hard to do it if you haven't heard of the company and I never heard of I never heard of Aon wordheimer but he wrote me a letter in October the CEO he's the CEO and the owner and his family and he wrote
me in October of 2005 and he said he told me a page in fraction of about the company and he said Berkshire is a logical home for us and he said I'd like to talk to you so he came over from myy and we talk but if he'd written me in 2004 we would have made the deal it would have been cheaper too wish he had written me in 2004 but my point is understanding why you didn't see companies was nothing having to do with the economy nothing having to do with anything other than you
just simply hadn't seen one yeah it's availability it's availability yeah they sometimes it's something that happens in a family you know that there may be more people or they may owe taxes or who knows what I mean we buy when they're ready to buy it's ready to sell and I don't go out prospecting I I let my interest be known but I get a lot of people say well why don't you call on this person why don't you call on that one and you know soften them up or you know and then I don't do
it because it my batting average would be terrible just uh you've got to wait till they're ready to do something and that's when we hear about companies so they come to you when they're ready when they're ready my phone rings at this stage in your experience you know pretty quickly if it's right yeah like about two minutes yeah I mean I read the letter from Kathy I knew it was right I mean you you KN you can tell have you ever met girls Charlie that you knew it was right I don't want get personal but
there's some you know you and you know that other people would like them it's just not for you they're just not for you they're just not for ex uh but but that has to do with I mean you you can see the numbers immediately you got to make an evaluation of the management how can you do that so quick you just have at this time in your life an instinctive knowledge yeah it's not going to always be right but it's usually going to be right one more time for the criteria it is in terms of
an earnings that for 75 million pre-tax 75 75 million you're looking at management you're looking at a simple business one I can understand which really mean simple and and we're looking for management in place and we're looking for a seller that knows the price he wants for his business the seller must know yeah the price is it a hard negotiation or is it pretty quick I mean they know what very quick because they know that I mean if if I like the price and if I if I if it meets the test I can say
yes very fast I mean I it doesn't take any time really Charlie now there's others if I spent two years on them I wouldn't know the answer at the end of two years but I do know the difference between the ones that take two years the ones that take two minutes and you like the ones that take two minutes yeah and you don't go to some Investment Bank to do the due diligence no no if if I need them you know I Need a Doctor maybe to tell me about my heal but if I need
them to tell me about a business you know they ought to be running birkshire uh I did not I did not take money from 400,000 people to essentially start farming it out and H and say well I lost your money but this guy I thought he was good he just happened he was wrong it's my job to know what I'm doing and if I don't know what I'm doing I don't do it well we've established that you know what you're doing no no not always Coca-Cola is one example um your Val the value of your
Holdings gone down by about 8 ion dollar haven't they that's you you hit it right on the button let's keep this quiet though I mean does it ever you ever say man what am I doing here my my commitment to the end is no I no I I I I looking back I made a mistake by not selling something El but but no I don't I don't look I I don't look back on things yeah okay but let me just say with that idea yeah so you look back and you say when it was $80
a sh I should have sold it cuz that was it's top say or close to its top and 50 plus times ears 5050 times ears but but it's not in your blood to want to sell no but I I do sell marketable security sometimes I don't sell businesses but I I do sell Market this is a marketable security that was a marketable security as is American Express as is yeah but I don't sell C's candy or the Buffalo News yeah I don't sell businesses for for we're you were married to them for better or worse
yeah I've got one section in the annual report and I put it in every year that if a business like that promises to lose money indefinitely Or if they have major labor problems or something but just because uh just because I don't think it's going to do very well or I could use the money better elsewhere or because I get offered a crazy high price for something I don't sell them I got offered a crazy high price for something here recently that we own and I told the fellow that called me I said I don't
do it you can look in the back of the annual report and you'll see I don't do it he said well I read it but I didn't believe it I believe it now he thought he could buy it and thought he named a number to me that he and it was a good number it was a good number if if I was Trustee of a children's home and that was the only asset of the Children's Home and it was my responsibility simply to do get the best economic result for the children's home I would have
had to sell it to exactly since I last talked to you you have with the consent with the in concert with other members of the board have chosen the successor well what we have Charlie is we have three that could do it and every meeting of the board we don't have very many meetings but every meeting Bo that's the subject and the question is if something happens to me that night who do they put in charge so they always go away knowing what they would do the next day now there's there's there may be a
pool of three but we have settled on one at at anytime and and so if something happened to me tonight tomorrow morning the board of directors of Berkshire uh would convene and they they would know exactly who they were going to to put in charge you will run Berkshire as long as as long as I keep my marbles and you have somebody that'll come to tell you that you don't have them if necessary well I yes I I've assigned that job to my children I I tell them I tell them they better all three come
in together because if just one comes I'm cutting them out of the will you have said that you want to keep if you could find $30 billion in Acquisitions you're prepared to do that you want to just keep in reserve 10 billion about 10 billion yeah and why that breakup why that well I think I think that a company that writes the catastrophe insurance and all of that sort of thing that we do should have plenty of liquidity I mean I want I want Berkshire always to be the rocket rer I mean we we've got
400,000 shareholders we've got people who have workers compensation claims against us that are quadriplegics or that're going to be getting a check from US 60 years from now I've got no business fooling around with anything close to the to the solvency of of Berkshire so I uh I uh I will keep it way way over on the uh on the safe side in every respect and having a lot of money around you know when you're in the insurance business like we are I don't want to depend on letters of credit from Banks or anything of
the sort you know I don't want to no too big to fail doctor to bail us out I really want us to be 10 billion is the right number well know the right number is the insurance business still as attractive to you today as it was from the beginning it's always been a a business sort of fits me I mean it it it gives you the money first so it get it it the the investment element is important it also is a business that where you know you're calculating odds on things and that's what you
I guess I I was probably destined to be a bookmaker but my dad wouldn't let me you can calculate off but I mean in the insurance business is is the increasing number of hurricanes increasing number of of the terrorism is a fact of life today I think so no no matter how you can write a policy against all those things I mean does it make it any less is it well you have to get the right you have to you have to calculate the odds right you got to get the right premium and you never
know whether you've gotten the right premium I mean you know over a lifetime whether overall you've gotten the right premium for things but you lose on some policies and and and other policies nothing happens and so you don't know in any given day or week or month whether you're doing the right thing but over over time you'll see whether your judgment has generally been right and and it's it's an interesting game as the Scandal affected at all no I wouldn't say so the uh all of the controversy about AGI and AIG we're doing you know
we do a lot of business I mean we've got a lot of different irons in the fire in the insurance business I me we got Geico auto insurance so we got a lot of different Insurance businesses and and uh no it'll be it'll it'll be the most important business at Berkshire throughout my lifetime and probably a long time thereafter one thing you're doing is looking out to International companies is it for the first time no I've always been interested but we we haven't been on the radar screen very much for entire businesses abroad people did
not think of us in Germany or the UK or you know up till now Israel they had a business to sell now I've always looked at International stocks and we've always owned some International stocks tell me how you see the economy today well the economy still is pretty good as we sit and talk today that uh you know people they've taken lots of Equity out of their uh or they've taken they've extracted the equity that's appreciated in their houses big time in the last few years and all of that but if you looked at the
economy right today you'd have to say it's pretty good now it we've got plenty of problems but they are not manifesting themselves in business today do you worry about inflation I worry some about inflation sure sure inflation inflation is never gone it's always in remission and and and you know it's it's very easy it's never did uh but but it uh and it's something that is man-made and governments can create and and it often times seems preferable to some alternative that's in the here and now so you have to worry about anytime you have governments
you have to worry about inflation and what about oil prices well I'm I'm no good on oil prices I mean you know we're using 84 million barrels a day or so in the world of oil and if something disrupts three or four million barrels a day of Supply like something happening in Iran perhaps you know it the marginal Barrel will go will go crazy on the edge yeah yeah we've got less Reserve capacity by far than than we had 15 or 20 years ago when you U think about the dollar I think the dollar over
time will go down because I think we're following policies that uh uh in connection with trade that will cause the dollar I don't know whether it'll be in you know 6 months 6 years 10 years but but the policies we're following as a country will cause the dollar to and in my view that decline primarily our trade deficit our trade deficit right and the the flip side of our trade deficit is when we when we consume more than we produce we have to trade the rest of the world something for that and we give them
our our assets we give them IUS of the government we give them dollars initially and then they can convert those into other other assets in this country so we are trading away assets in order to overc consume as you said to me earlier we're giving away pieces of the farm yeah we're give away pieces of the farm we want to we want to we want to consume more than we produce and so we trade away a little bit of the farm and we we've got such a big farm I mean it's you know this is
one prosperous country but we so we we can trade away we don't see it day by day but it adds up and it has consequences more severe to you than the fiscal deficit that's true yeah the fiscal our national debt in relation to GDP is is not extraordinary I mean we've had plenty of times in the past when it's been higher particularly after World War II and I don't like it when it keeps going up as a percentage of GDP but a very rich country can stand more debt than a than a poorer country and
and and we can take we can handle a lot more debt than in the past now as that debt gets to be more and more owned by the rest of the world because of the of the trade deficit you know it it it can cause problems down the line but if you if you ask me whether I'd rather cure one or the other uh I would I would rather largely cure the trade deficit do you accept the argument that countries like China are locked into this dance with us because they need our market so they're
unlikely to dump American Securities oh yeah and in if they want to sell American Securities if they sell them to somebody the United States they get dollars with them so they have to buy some something else with the dollars if they sell them to the French the French now have them you know and and and the the Chinese have got a claim on on France but they can't get really get rid of them they can they can change their asset preference about the American assets they own but China can't get rid of American assets big
basically or the rest of the world can't unless we start uh exporting as much to them as as as we're importing and that day is not going to it's coming but people who will suggest that there may be some catastrophic day and we had that little trimmer from the south Koreans about a year ago there could be a catastrophic day I don't know the answer to that I mean I but anytime you have huge imbalances in the world and you have lots of people on hair triggers trading currencies and stock and bonds you have the
potential for catastrophic days back to the fiscal depth and your sense of where we are a lot of people look at the budget that they see today and they look 10 years out and they say with a baby boom generation coming in and Social Security and Medicare you know that we are looking at a a huge problem Downstream that either we got to raise taxes cut spending or change the age of the beneficiary yeah we have to change the promises I mean what a lot of what you see coming down the uh the road as
really large looming problems revolve around promises and and uh we won't in my view ever change the promise on Social Security we may change it when you get into Medicare or something of that sort no politician will suggest this no they wouldn't but this country has incredible resources it has more resources per capita than it had five or 10 or 20 years ago I mean we're not going backwards economically as a nation but we have made a lot of promises and we could we could have a very rich Family Charlie and and our income could
keep going up but if I promised you know the Elder members of the family that they would you know all live like multi-millionaires we could get in trouble
