Warren Buffett Explains the 2008 Financial Crisis

the worst day on Wall Street since the crash of 1983 everything there completely wiped out in the Nasdaq everything and more has been completely wiped out let's talk about the speed with which we are watching this market deteriorate yeah 1 billion 2 billion 3 billion you can imagine the American economy is economic train moving down a track that has no ending and it picks up cargo and and and passengers as we go along there's 330 million of us now and there were only four million in 1790 and our farms are incredibly more productive and we have 75 million houses and we had a few huts then and we have great universities and all of these things so we're just constantly moving more and more cargo and passengers along and occasionally that train is going to get derailed in 2008 you had something close to a a bubble in home real estate 50 million people had mortgages roughly at that time out of 75 million homeowners when that bubble burst it hit home to probably 40 percent of households in the country these people that have mortgages on their houses and fear spread in the month of September 2008 at a rate that was like a tsunami who do you hold responsible for that bubbles are always hard to ascertain the originators of everybody aren't any originators everybody got caught in some some were foolish some were crooked some were both but you had a mass illusion that it could go on forever he had Wall Street firms participating you had mortgage originator purchasing but you had the public participating and then it was you know it was a lot of fun and me it was like going to Cinderella going to the party I mean it was all going to turn to mice and pumpkins at midnight but nobody wanted to leave until one minute to me I'd head and the rush for the door was a couldn't be having what for you were the the lessons you learned from 2008 I didn't really learn any new lessons in 2008 or 9 I had emphasized to me some of the things that I'd always believed that you do need somebody who can say we'll do whatever it takes the US government had to do the right things not perfect things but generally the right things starting in in September and and they did a fantastic job actually of getting the train back on the tracks there was still damage for a long period thereafter but it was really important to have fast action at that time and we were very fortunate we had the leaders we did if we'd had people who waited for all the information to be right or for committees to work or you know that sort of thing it would have been far far worse there's people talk about a fog of war but there's a fog of panic too and during that panic you're you're getting inaccurate information you're hearing rumors if you wait till you know everything it's too late people's today ten years later they're still affected by the crisis various people in different ways but they're not as effective as they are in 2009 or 2010 has that confidence come back yeah but it comes back slowly I can understand why people that lost their houses or lost their jobs or whatever may have happened to them feel that there must be somebody out there that was profiting from this that did it doing some things that shouldn't send them to jail no they the people that ran most of the institution's the big institutions that got in trouble I mean probably shouldn't name names but but you know they went away rich they may have been disgraced to some degree but they went away rich so I don't think the incentive system has been improved a lot from from what it was ten years ago if I knew what the next crisis would look like I might be a little bit helpful and stop it but there will be other crises there's no way of knowing when you're in a situation like we were in in the fall of 2008 or 9 when or precisely how it will end you know the United States will come back to the factories don't disappear the farmland doesn't disappear the skills of the people don't disappear but you had a system which it was going to put them all in an idle position or couldn't do it and there's no way of knowing how far it was going to go what's left from the crisis is premature memories I mean the tracks are still there the trains still there but we had a big interruption in 2008 and 9 and now the Train has been running pretty darn well and we've shown that America can't be stopped you

Channel: Wall Street Journal

Views: 1,379,593

Rating: 4.741766 out of 5

Keywords: Warren Buffett, Buffett, WARREN BUFFETT 2008 INTERVIEW, WARREN BUFFETT INTERVIEW, WARREN BUFFETT 2008 CRISIS WSJ, WARREN BUFFET WSJ INTERVIEW, WARREN BUFFETT WSJ INTERVIEW, Financial Crisis, Investment Advice, Economic Predictions, Forecasts, Economic Growth, Recession, Economic News, Investment Ideas, Investor Education, History

Id: k2VSSNECLTQ

Length: 5min 30sec (330 seconds)

Published: Thu Sep 06 2018

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[u/geordano_bruno]

"Since 2008 the train is running pretty damned well and America can't be stopped"

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Actually the CDO's and CDS system which brought down the United States is now back bigger and worse than before - but with less capacity to deal with the crisis because of the debt incurred. Worse. Corporate America has now joined the party and leveraged what are known as CLO's (credit loan obligations) - they leverage debt to buy back shares - this is what is driving up US stock prices.

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Those debts, like the CDO's, are being onsold in trenches to savings funds as AAA rated - ANY downturn in the stock market, or increase in interest rates will wipe them all out - they are an order of magnitude of several times more risky than the CDO's which brought down the US in 2008.

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WORSE is that they are several trillion MORE than the entire CDO market.

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America has literally been completely and utterly financially hijacked in the most unimaginable way - and literally no one is prepared to speak openly about it.

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https://www.bloomberg.com/news/articles/2018-05-25/clo-machine-is-approaching-full-tilt-and-credit-quality-suffers