Thus Spake The Super Guru

Warren Buffet, billionaire and chairman of Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) shared his views about different issues affecting the economy and the financial world. I am always eager to hear what Warren has to say, seldom I allow myself to be against one of his views, not that I don’t have strong views, it’s just that his track record is too good. I like the way he conceptualizes many of his views, he is usually pragmatic and thorough.

So he had some pretty nasty things to say about European leadership, which I don’t think anyone disagrees:

Regarding the Europe, Buffet said that the euro is on its way to failure. According to him, the 17 countries sharing the euro need to overhaul their system because it has “fundamental, fatal flaws” and it cannot survive with the present rules. He emphasizes that improving the euro monetary system is difficult because there are money countries involved.

This is almost commonsense. However, I do believe that if Buffet was an European citizen he would be buying European securities, I just think that the prices and quality of the assets outnumber the threats. And Europe is a little bit like the US, we will do the right thing after we exhaust all the other options.

He also gave some insights about the housing market:

Buffet also talks about the housing industry. According to Buffett, during the past few months the industry showed a more balanced development. He also says that Wells Fargo has a “sensational mortgage operation” and the company must aim for $1 trillion in mortgages, Buffet believes that the bank’s leadership in home lending in the United States will pay off as the housing market recovers. According to him, the company does a better job than any other big players in the mortgage market. Currently, Wells Fargo holds 33.9 percent of all U.S. home loans. Buffet’s Berkshire Hathaway Inc.  is Wells Fargo’s largest shareholder.

I agree with that, and I believe that those arguments also hold for Europe’s  housing market and banks (though on different proportions). Coming out of this mess the banks that have been able to set up a good mortgage operation with controlled non-performing loans, will do well out of this recession. Banks like Santander in Spain might have the upper hand in 1 or 2 years.



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