yes we are here with two very special guests this morning Warren Buffett and Greg Abel both of birkshire Hathaway and uh they're they're in Japan maybe the last place you would have expected to find Warren Buffett he's been here since Monday uh and and they've been they've been busy they've been up to a lot but gentlemen welcome welcome it's great to see both of you great to be here thank you we've had a good time all right so let's talk first of all I mean I'll just lay this out for everybody we have a lot to get to we're going to talk to them about everything business related the economy the FED what's happening the banking system but we really want to start with why you're here in Japan um why this trip is happening Warren you've spoken to a couple of outlets over the last couple of days just about the trading houses that you've purchased those are the people you've been talking to um but why did the trip happened and why did those Investments happen to begin with well the Investments began maybe close to four years ago and I was uh looking at company after company as I do every day and uh I just thought these were big companies they were companies that I generally understood what they did somewh similar to burer and that they owned lots of different interests and they were selling it what I thought was a ridiculous price uh particularly the price compared to the interest rates prevailing at that time and and uh so I started buying all five of the uh the five largest trading uh uh companies and uh by my 90th birthday August uh 30th of uh uh 2000 whatever it was0 yeah and and uh uh we had bought just somewhat over 5% of each company and we were buying identical amounts all we announced at that time we bought this 5% interest in each of the five I wrote a letter to the CEOs of each of the companies saying the same thing that that that uh we would never buy Berkshire would never buy uh more than 99.9% uh without their consent that uh uh and that was my word it was burshire ao's word and and uh uh they all welcomed Us in and their results have exceeded our expectations uh since we purchased the group I think I think their dividends on average of going up 70% or something like that and and we now own 7.4% of each of the companies and uh I just uh brag it I together we we wanted to come over and and and uh talk to them and uh so we got on a njet plane and plug and uh and flew over and we have had a terrific time meeting each of the five sequentially uh over the last two days and it's been fascinating and we feel even better about what but we couldn't feel better about the investment and and over that time we've sold periodically yend denominated bonds so more or less not we don't do it precisely but we've insulated ourselves from from exchange rate changes so it's worked out very well so far but we'll be in these stocks 10 20 years I mean we weren't buying with the idea they go next week next month next year but we have had Revelations about the each of the companies that uh uh well Greg and I just fascinated by it was it worth the trip oh absolutely it's been a great trip I mean they War I mean they've been exceptional in how they've communicated both with their performance but just their approach to business what did you learn since you've been here I think the the thing that stands out very quickly to us is they came to the meetings wanting to build a relationship and strengthen it so they understand we've invested in their companies but from the very get-go when we start the conversations with them they come each with their own story and it's around building trust in that relationship with them meaning what that there are other potential deals that you all could do together we've clearly made it uh each time we've met with them we said we very much like the core investment but to the extent they can identify an incremental opportunity that we could do with any of the five companies we would uh very much evaluate it quickly and Warren highlighted the bigger the better and that uh he'll answer the phone on the first ring and we'll never run out of money I mean they can call us that any time and uh it maybe that what they have interest is it may not but they will they'll have an answer you know Bingo and uh if we make a deal the money will be on the way and and we look forward to it and and I'm just astounded at how they really they're all different and they're all the same at the same time I mean we learned about five different individual companies but we it it was not what exactly what we expected was better than we expected in every respect people look at this and say okay uh Warren Buffett is putting his stamp of approval on investing in in Japan basically is that an accurate read well it yeah it was an accurate read but it was an accurate reading a couple years ago too I mean it it I was confounded by the fact that we could buy into these companies and in effect having an earnings yield maybe 14% or something like that with dividends that would grow they actually grew 70% during that time and uh and the people were investing their money at a quarter of a percent or nothing and uh and that quarter perc if they put it out for many years wasn't going to grow and the 14% was more likely to grow than that and uh if that does look like something sensible to you know that's as easy as it gets but it's turned out to be better than I thought it would be is are the opportunities in Japan better than the opportunities in in the United States right now well it isn't one versus the other we can we can we can do both but we do have more money through equities now we we own a lot of Coca-Cola coca coca does a lot of business here Apple does a huge amount of business here but so we do it indirectly through America Investments but but uh we we have we have more money in terms of of equity Securities in the in Japan uh than in any other country in the in the world um and and all of Europe combined but uh we just thought likeing the US excluding and that that message really resonated with them they were surprised that Japan outside of the US would be Berkshire second largest place for deploying our capital in equities right yeah um what's maybe the most surprising thing you've learned since you were here each of you good well it's interesting to us well a you know we like each other and and and we we learned something about each company that I read the reports every quarter I look at every number right you know I can I I eat that up but needing him in person and in the United States nine times out of 10 I I never meet anybody we we buy stock in uh you know but this it's true I mean I I don't go around the companies anymore and I prefer they don't come to us actually uh you know so don't call us we'll call you well know you know they said investor relations people and basically every company comes in and says we're the Best Buy in the world it just isn't true it's ridiculous on his on his face these people just I we read the report or I read the reports at that time and then Greg got interested right away and uh they told us a lot of things that helped us further our understanding of how they thought where they were going uh so we we came away smarter than when we came in and that that's that's unusual yeah I would agree one I mean they they had their each their own story and they yet there were similarities but they each had their approach to business but the other thing that stood out to me the more we talk to each of them there's a lot of similar similarities to Berkshire they're very much thinking longterm and they've got their portfolios but they're thinking about how they manage their risks and then how can they incrementally improve their businesses and that clearly came across from each of the five businesses uh that's not the only thing you all have done since you've been here too you were meeting uh with sub with a subsidiary today as well um this is the last time you were in Japan Warren was 12 years ago and it was to come to the the factory from the from the representatives who came to visit you today yeah we we I I met just few hours ago uh with 10 of the very important Executives of a subsidiary Burk That We Own 100% of uh is car and the accomplishments of that company have been extraordinary and maybe 15 years ago or thereabouts uh it bought an operation here in Tango and Japan and I visited that plant right after the earthquake and it was amazing to me uh and it was a chance uh I was hoping to get uh to their home grounds uhuk but yeah and uh but because of fly the problem of flying helicopters and everything during uh the season uh uh they all joined me few hours ago and and it's an incredible this car was one of our pride and joys in terms of Acquisitions it came from getting a onepage letter one and a quarter Page Letter through the mail and in that one and A4 Page Letter the the person talking to me who I never heard of before I hadn't heard of this company he told me more than these 60-page brochures that the bers would bring out comp he he told me how much he wanted for the business he told me what it was like he told me why it fit into Berkshire and uh and he said he and a couple of other people would come over if I if I like what he was suggesting and they came and we made a deal and um got there on a Friday and we ran into one kind of tax problem and a fellow named Danny Goldman worked all night and on Saturday morning he said we worked it out and I said well then you've got whatever it was 5 billion do and an overall valuation and we made a deal and then not too many months later Charlie and I and a couple of the blumpkins and Sandy goddman we got them on a plan and we went over to see whether there was really anything there we'd written the check for and and it's just been an amazing company it it it started with nothing except the fellow named Steph wordheimer with zero going into competition located in Israel of that time and now it's spread around the world but and it had nothing in and it was making little tools that that other people made and they already had the customers in the United States they could buy the tungsten in China and these guys stuff starting it but later with Aon whater and then with Jacob harai who runs it now is an incredible manager uh they've created a business that we are extraordinarily proud of we love what they've accomplished and uh uh and and they don't stop they just keep going and in Japan you know they just bought a 51% interest in another com that fits in iscar will never stop Berkshire will be proud of it 20 50 100 years from now and it was interesting War didn't you think that the one of the managers asked specifically how did the opportunity to invest in iscar IMC how how did that come to you and you shared that story but uh it's great to see their interest in how they become part of Berkshire and and they highlighted in Japan for example IMC started with a small operation here uh 20 plus years ago and now we have three businesses that we own 100% of and we're going to go visit tungaloy which has a very significant plant in in Japan in Japan and uh and then they've added two cents and now we own just recently starting April 1 we have 51% of a another joint venture company so it's once they've been amazing at establishing a base and then continuing to grow it Greg let me let me talk to you because I've known you for years but we've never had you on the program to talk about your role your Vice chairman at Berkshire hat way you've also been named the era parent which we all found out just about two years ago um at the annual meeting that was held out in Los Angeles right um with our usual dep hand for everybody who doesn't know Charlie Munger mentioned it kind of been passing and uh so that's how the world find found out um how has your life changed since that announcement yeah I would say it hasn't changed in a lot of ways because it goes back to what I enjoy and making Mak sure that those priorities stay in place um the responsibilities around the work uh again the relationships I have with a a Jacob or the other managers uh really hasn't changed there's some external forces or interest and and that's naturally going to come but I would say you know the beauty of it and and it's being part of Berkshire allows me to just continue to do what I really enjoy so I get the opportunity to work with war and Charlie and others but at the same time work with with all our great managers every day and and that hasn't changed the external interest that comes with that what does that mean a lot more people call you a lot more people want to get on your on your call sheet they want to be able to spend some time with you yeah that naturally comes there's a uh a lot of those calls there's people in the community who maybe didn't even know you know that I that I work for Berkshire so you get some interesting comments I I'll get questions from my 11-year-old's uh best friend as to what that means just like the question you asked and I remind them we're still doing all the same things we did 5 years ago together and and that that will be the approach to to to the way forward so how do you two work together what he does all the work and I uh take the bows and and it's exactly what I wanted and he knows more about the individuals the business he's he's he's seen them all and and you know they haven't seen me at the BNSF railroad for U 10 12 years or something like that and and uh you know Katy farmer I mean she yeah you know Greg is there and he understands each of our businesses I to have the grasp of what you know whether it's gr animals or the ra Road operation or you name it it just goes all over and and Greg gets it the same way I get it but the difference is that he likes to work and I like to sit around I like I like to allocate capital and and he likes the he thinks the same way on it as I do but he also he he he likes to meet everybody that's running the business he understands them and and and he's he's probably tougher than I would be in terms of getting things done and everything and so it's improved it's already improved dramatically the management of Burkshire and uh we think aik on Acquisitions we think of like in capital allocation I mean he's uh he's a big Improvement on me but don't tell anybody so what what's an example if he's tougher on you than things what's one example where he's been tougher than you would have been either of you can answer that well I think uh one waren waren grew up with all the businesses he acquired them or they're already there so when I came in I had the opportunity to start from scratch I had to learn the businesses and and their Industries which means there's going to be an active dialogue with the managers and that helps immediately that I was able to at least have that dialogue and then uh associated with that because I'm learning the business I have the opportunity to to discuss their businesses and expectations around it and I would say just even communicating around how they allocate their Capital how they're using it and I wouldn't say giving them Absolute uh requirements but providing Direction in those areas has been beneficial I think both for Brookshire but for them they they like that type of uh input art art managers like autonomy but they also get Lonesome I give them the autonomy and but Greg Greg gives them both and he he gets somewhat more discipline out of the manager with our hand hands off type operation he he he gets more discipline than than I would get is it good C good cop bad cop no not at all is it nice parent mean parent no no no we really get it's just a like I said a bit of a different approach but um what they value is a little more of that oneon-one they don't want to just be out there by themselves but they great so they appreciate that but they want the autonomy that they've always had yeah you know one of the questions that people I've always had is when Warren is no longer running things what what would that mean would all of this collection of managers who you have some great managers a lot of different companies how do you keep them all interested because for so long it's been amazing to say I work uh with brire hathway and for waren Buffett how how do you build that same sort of rapport with them yeah I think there's a few things so first this has helped a lot when you have this type of transition and I've had the opportunity to work with them so I think we do have very good relationships but there's no question it's not the same as working for war I've understood that and I've I've effectively apologized to them many times for for that outcome but they also realize that they still have an opportunity to go run their businesses what they love and what they wake up to do every day and that's what we're still providing both today under the uh the current uh situation and will'll provide the same opportunity long term so even though it was kind of an accident that the world found out that more than actually you got it out of them I think actually we got got of Charlie Charlie and I are not the most careful in our wording at times but would you say it's almost a good thing that Greg has this opportunity of course I and and and and we so damn lucky I mean it isn't like I had 10 people I could choose from there may be 10 people out there but I don't I know right and and but there aren't 10 Gregs out there that I can guarantee you and and and you know the problem for our board of directors is the day I'm not around and Greg's running it I am not giving him some envelope that tells him what to do next I mean but on the other hand Greg is not looking to retire at 65 or 70 or 75 and we don't want anybody at Berkshire that's thinking about you know what their package will be when they get to B65 we've got a unique organization which now has tremendous resources and uh we've got and and nobody really can copy our style I mean in the end I mean where else can they get an answer in five minutes you know whe we're interested in the business and and uh uh where they get the kind of Freedom now they got to they got to follow the law in every case and and and and they can be more LAX with me than they could with with with Greg Greg Greg Greg just you know says if if there's no need for them any of our subsidiaries to keep any cash around we're the best bank in the world we got hundred billion plus and uh uh Greg is better than enforcing that sort of thing than I am is there and they smile when he gets through enforcing it that's the other thing I mean he he can deliver tough destructions at least compared to me and and and when they go away they feel good about themselves Greg L recently there was news made that you had put even more money into Burkshire um for a while you didn't have a lot of money in Berkshire you had a lot of it in Mid-American Energy and then Berkshire haway energy from the ownership structure but recently you increased your stake to even above a $100 million of stock that you have purchased with your own money correct um why' you do that and will there be more put into it yeah obviously when I'm mon ize the position in uh burer hathway energy that provided an opportunity to um purchase shares in Berkshire and had I done that sooner I would own share the shares in Berkshire earlier so that was always the intention and and yes I always will continue to invest in Berkshire I strongly believe in in Berkshire I believe in uh what's been created and I strongly believe equally that we have a a great path forward and dou how much many managers in the United States have put $100 million of their own money not getting a share at a discount not getting any special deal on it or any of the sort or having an incentive comp expert come around and do as instructed which is to arrange it so that the the the CEO gets the upside but doesn't share the downside you know I I I I could hardly think of a case where anybody's put anything like $100 million of their own money in and getting the exact same deal as the shareholder gets if if they make money they make money if they lose money they lose money and that's just the way we play it at burshire you don't find it any place else yeah and did you feel any pressure to do that or this was always the plan this no I I felt zero pressure I mean I I I very much believe in what Warren said that our our culture is one that's very aligned with our shareholders and I've observed both war and Charlie and and our other board members but specifically those two that they've had their Capital deployed there but it it's the belief that they're going to align with the shareholders and that's who are their partners and that's who they're going to take care of forever and uh so it was a pretty simple decision to win the Capital freed up to acquire Brookshire shares so you've had the relationship for for years now with the non-insurance operation right of overseeing all of that uh AET Jane is responsible for overseeing the insurance operations how how do you and AET work together yeah it's been a great relationship and it's that's been a big benefit of again once we became vice chairs uh yes we would talk and we'd see each other but it's created that opportunity to have an active dialogue so we regularly check in with each other if there's ever an issue that'll cross the boundaries of let's say either it's a broader Berkshire matter uh we'll both pick up the phone whoever it's it's initiates with and checking with the other to see as we move down this path are we each comfortable with it and seek input so it's been a it's been a great relationship and a a true pleasure and honor to have the opportunity to work that much with a and a never wanted to run Berkshire uh Greg didn't want to but he perfectly willing to do but it it wasn't what a je loves is running you know oneof A- kind insurance company in the world which he built himself and uh and he has a lot of fun uh running insurance and he doesn't really give a damn about granal you get right so uh you don't you didn't have two guys competing for the same job or anything like that so uh it's it's job it's it's it's a je job to develop a lot of money for us at at no cost or less and and and then he hands it to me and he says you do something with it warant and and Greg in fact all any non-insurance operation you know will fall on when we bought alagan alany was an insurance company but had eight eight other right subsidiary operations the eight subsidiary operations which are not necessarily small I mean there's hundreds of millions of dollars of right pre-tax earnings there Greg gets them uh Joel continues to run the uh Insurance uh operation and the CEO of he's but he works through he he works with a G now Jo I have a direct relationship to but uh you know it it just all works see I didn't want to waste any time because we got Greg and you know we and I was going to just ask Warren how far he took kraton uh because it was really pretty amazing and then I was going to ask Greg is he a basketb fan and is he will we continue to do that uh you know you win money if you get all of them right which which Warren that's the greatest thing you've ever come up with did you is there anyone in the world who could have gotten even past the second round uh this time there no your money is safe you will never pay off that money that you offer for someone to get everything right Jo we offered we had a winner for $100,000 and this if kraton and had won that last game which they should have actually but uh and I'm not blaming kraton I'm blaming the referee the that that that the woman that won would have gotten $200,000 instead of 100,000 and she would have come to Omaha and thank the great players personally but next year we're going to make it even more interesting I'm I'm I'm redesigning the contest for next year because I want somebody to win the million and of course one time somebody came within a half a game M and by the way don't you Ure don't you have her have that insured or are you paying that out yourselves it's it's for sure self insured self and I am a basketball fan and it'll continue for forever excellent the parody is unbelievable and that's what gets me is that literally one weird bounce on the rim changes the it could be anybody that could have been the final four and it's just so great could be anyway yeah so great and and the parody is amazing I mean kraton I thought x x beat kraton didn't they Warren I mean I don't I don't know um but let's move as I said I don't want to waste any time on this and I just did so take it away as as somebody said a long time ago I think it's Le Leo Ro or something we was robbed I don't think I've ever heard you blame the referees before well all I know is that nobody been calling fouls like that throughout the game and and uh and um the guy missed the shot that uh but he made one of the two free throws and and I don't have anything against San Diego State but uh but uh if the B if the if that referee wants a have a seat at the birkshire halfway angle meeting the H of them okay so um let me take it back away before you get yourself in more trouble with yeah a long way and having that happen yet right all right so we're in Japan but there's still a lot of things that are happening while you guys have been here one of the pieces of news that came out was about a new CEO at Pilot which is the Pilot Flying J franch or business that you all recently upped your position and you used to be a minority holder you just increased your position to just over 80% and as a result you've made some changes there including that new CEO you guys want to talk a little bit about that sure so uh really pleased with the acquisition or taking our our interest up to 80% of Pilot Flying Jay they have a great set of assets and a great management team in place the one area we did want to make a change was in the with the uh was with the CEO and really the focus was to bring in someone who's been tenured with Berkshire and would have a long-term Focus some who's gonna be there for 10 to 20 years or however long uh long longer yeah and that was really the the focus so we were able to uh Adam Wright who is a 20year energy uh veteran with with Berkshire Hathaway energy and really started his career with us back in 1996 so and has gone through uh uh many different roles in our organization in the energy side including being CEO mid- American Energy one of our largest utility subsidiaries so uh when this opportunity presented itself we approached Adam to move to Knoxville and take on the role and we're just thrilled to thrilled to have him back at he he' uh moved on to uh a company for the past two years we thrilled to have him back in the family and I know he's thrilled and he'll be a great leader for Pilot Flying Jay and and the Haslam family is on board with this they still own about 20% absolutely they've been extremely supportive of the of the transition yeah and Adam is now heading a will be the CEO but of a company that last year did about 70 billion of Revenue uh that is a big number and uh now diesel was higher last year it wasn't 45 so it might be it might be normally 45 billion but it is a big big operation and Adam wasn't because he was born in Alma Nebraska but he was born in Al Nebraska he went to the same public high school as my wife went to and three of my grandchildren went to North High that's been around 100 plus years he had a mother that that supported him uh in going to Uno where he set the the rushing record uh uh for three years uh I think he gain 30 3600 yards and L be broken because they gave gave up football he's a remarkable remarkable uh manager and when he ran MidAmerican uh uh it was earning $700 million a year and nobody ever heard of them they you know there's all these people running businesses in this world that don't make $700 million a year after tax and now he'll be moving into an even bigger position and uh uh and by the way he's black and uh uh how many how many black men or women are running operations that will do 40 or 50 billion dollars a year and uh and we've got Katie farmer running the largest railroad United States and no woman was ever thought I come from the town of railroad town and it was Unthinkable and uh both of those people K Katie and now now Adam they've got the job because they deserve they've earned it they you know Katie was at the railroad for 30 plus years and she's got railroading in her blood and Adam is just a terrific executive and you know he he worked he had three jobs when he was at Uno and and uh uh University of Nebraska Omaha University of Nebraska Omaha uh it's an racial wer story and and to have it be in your own backyard and I feel horic about it but I did not engineer it I mean he got there and and then I learned who Adam was after he was there yeah when he was CEO of M americ yeah Lear absolutely yeah and he developed through our company there some great folks that have helped Mentor him but he's he's an exceptional leader Katie is an exceptional leader we're we're when I think of uh uh the talent there it's just amazing and and their leadership skills are remarkable think of the publicity that people get that run a business that make $700 million a year in the case of Katie $6 billion dollar a year and they they work through Berkshire with berkshire's Resources with our support but they are talent and and they get it because they're they're the person for the job and and uh not because some Dei uh shareholder proposal came from no nothing I mean it we just and I you know I feel good about birkshire when I when I look at a guy like Adam who went the North High and uh you know 10 years 1920 I think it about started and and and here he is public schools and know and and he's running aun place he didn't go to Harvard Business School and you know he just earned the job as did Katie he went to TCU and and and uh Texas Christian yeah Texas Christian and and and uh uh they had a BN B BNSF happen to be particularly interested right there you know same same area and and she's I think she started working for us when she was still in college I mean that uh no so I love the stories of these people and they don't get a lot of publicity like other people may get but Bo do I ever do the job yeah both Katie and Adam started had internships with us I mean they came in as interns and now are CEOs of of two important businesses for Berkshire so couldn't be more proud of them while we're talking about the railroad let's take this a little more broadly um Greg you've been working with the railroad for a long time and seeing what's been happening there there have been a lot of questions raised nationally since the derailment of Northfolk Southern in Ohio couple other derailments that have happened since but that one particularly because of the chemicals involved there's been a debate that's been taking place around the country is is this a Nori Southern Pro problem or is it a broader railroad issue what would you say to that yeah I would say um it's a it's a railroad problem now spe specifically now I mean we have to take on the challenges that we've had some significant events and our team at uh BNSF is they take uh I know within the moments of knowing of that accident they were one they're trying to understand it but also Lessons Learned in we recognize there'll be certain actions that come from the federal government out of different agencies and and we'll be very respectful of that in um sharing our experiences and figuring out you know the goal is to have a safe Railway both for the consumers and the communities we operate in and and and ultimately also so also for our employees so there is no question there's uh lessons to be learned for the industry as a whole and there's room for improvement I I just just a business basis we would rather not handle hazardous materials we are a common carrier we're required to carry you know whether it's chlorine or you name it and and uh uh you know we've got to do our damage to do that as safely as possible but they're literally with something like close to a thousand I mean you you are running you are running huge trains 120 cars or maybe and and and and and it's big heavy stuff uh and they go around curves and they go in 100 degree weather and they go in Zer degree weather and and the record of the industry as getting becoming more safe is dramatic over time but uh every day you have to think about making it safer I mean Katie would tell you that it's unacceptable that have anybody die and and for example and but people walk along railroad tracks uh some people commit suicide on railroad tracks and just imagine how traumatic that would be for an engineer he can't stop the train and these blowing his whistle like crazy right somebody decides that that's the way they want to go it it railroading is a tough business and it's a lot better than it used to be it'll be better 10 years from now and 20 years from now and they'll never let up and the NSF I can promise you that some of the blame though has been put on precision railroading and um on the idea that Norfolk Southern in particular if you listen to some of the railmen there who have issued complaints about it saying that I was reading one guy's testimony who said that in the 20 years he's been there and again this is norfol Southern not Burlington Northern but Precision railroading is something almost all the railroads have taken a look at um saying that in the 20 years he'd been there the safety times had gotten shorter and shorter in terms of allowing inspection for every car that went through going from 2 and 1/2 minutes to 2 minutes to a minute and a half and even less um is is that a concern is that something that happens at BNSF as well I would say that listen everybody's trying to become more efficient and all the time as we operate the railro railroads but what if you look at the safety records for example equipment failures definitely at BNSF we see Improvement year after year in that area and there may be blips due to a very specific event but the team as a whole they start with prevention how how do we avoid the problem right at the front end and then you move to detection and you're saying okay if we do have a problem how do we you know identify it early and address it and then you hope you're not responding but you create a culture that you're going to constantly focus on the three of those and that will create a safer work environment both for our employees and for the equipment they're moving and for the communities we operate in but it is rotating equipment you know things do go wrong and that's why that prevention and detection becomes so important and I I think we have a a very strong culture around that in in BNSF the quarterly report I get every ever since we bought it but continuing under Kat it begins with safety right and and it gets around to the operating ratio net income all that but it starts with safety and uh you know it is it's an outdoor exercise I mean we we we've had all you know you deal with hundreds and hundreds of millions of ton miles moving I mean it it's uh you have problems if you have trucks you have problems if you have airplanes you have problems if you have barges you have problems if you have R it's gotten safer dramatically over the years right yeah yeah and all those wrist covered yeah and it uh it's amazing we are carrying now there was much more passenger traffic in the past but we are carrying more ton loads of Freight in the railroad industry than right after World War Two and we've got one tenth as many people that are needed to do it and they're doing it more safely by dramatic measures than than existed at that time but but you know every day uh they're worried about it and and to say that there will never be any more derailments is just plain crazy and and uh uh I would rather not be carrying what they call Hazmat hazardous materials but we they are going to be transported in this country and and the shippers uh decide what is the best method of getting their product to Market and it's uh if they're on BNSF or for a handoff from s of the railroad I mean we we carry them and uh I can tell you that Katie farmer and her predecessor CEOs they care about safety but will we be perfect the answer is no it just isn't going to happen you won't be perfect would your response be the same as what we've seen from Norfolk Southern I think they' handled terribly yeah and you know we we we connect with them in all kinds of ways I mean there you know the amount that we hand off or get received and it it comes to us and it's it's uh it's the way the American system is developed in in in railroading but but uh yeah I I I don't I don't know the person personally the CEO or anything but but they were tone and uh I don't think they're necessarily bad people or anything of the sort but it it just it their response should have not been the the same way I mean it it uh uh it we had we had a derailment not long therea you know I mean it was either going to be Katie or it was going to be Greg that got a immediately got on a plane and flew there I mean and you know looking back now I'm second guessing somebody you know I I've made so many mistakes in my life but but the looking with the hindsight CEO of norw Southern I mean if he got in there and drank the first water and you know said we're going to do whatever it takes to restore your life as it was before this happened and everything you know that that's the way to behave but I've done a lot of things that that rather have doovers on too so I don't I don't want to I don't want to claim my responses have been perfect in every instance either but I sure hope we don't do that ever at BNSF I'll put it that way all right so Greg let's talk about where you spend the most of your time obviously BNS BNSF and Berkshire energy right are two huge areas how much of your time do you spend with Berkshire heway energy yeah it it would be similar to what I spend with BNSF except I still know have a lot of strong relationships in that industry so a few years ago we acquired some assets from Dominion Energy uh a great set of uh gas transmission Assets in the Northeast part of the United States um that's through a strong relationship I had with the prior CEO Tom frell and and so I've maintained those relationships so inevitably I'll spend more time on energy say than a a BNSF on on the general Ms it's equal but there are other opportunities that I'm just know within the energy space and that's where I came from so I in the inevitably I spend more time there but um and then I try to cross our businesses I mean our top 12 businesses account for 85 86% of our underlying cash flows in the group so it's pretty easy to know where you should be spending your time at the same time I Warren touched on earlier I do know all the businesses and and as best I can and the CEOs and and a large part their management team so it's it's not that the rest are ignored but they're the time is prioritized across those top 12 businesses great Greg has lived in Omaha in the past but he lives in De Mo now and he and he was in England part of I mean he's gone wherever it was needed in terms of the predecessor company but he has found apparently some little area in De MO well there's 48 hours in the day and that's the only explanation prob he gets everything done that he does maybe it want be a couple of blocks but I want to find that place we have a lot of great members in our team as we all know that allow a lot to happen but yeah and and that was that's a good point I mean you sort of in the end I go where uh someone's uh either requesting some input or a discussion and of course I know like I said the large ones but if someone else calls and says hey we need to discuss something I'm going to talk to them that day or very very quickly a big part of Warren's job is also Capital allocation and right now Warren and Charlie and Todd Colmes and Ted wesler are all responsible for allocating Capital obviously you've done a lot of deals in your day too um what kind of what kind of relationship do you have with Todd and Ted do you talk to them about Capital allocation at all is there well I pay attention to what they're doing but in the end I think much like Warren does they run their own portfolio yeah so I watch it with interest and I don't really know who's doing what amongst it but we all have a pretty good idea of what Warren is doing versus the two of them so I'll do it to mainly observe and and and pay attention to learn from what they're doing and and I may ask them that was really interesting what what triggered your interest but that's the extent of it and and outside of uh uh having relationships with both of them which are important that's their portfolio and that's the way it'll always be and they'll they'll manage it accordingly do you like Capital allocation he's he's terrific out it but my job the job of any CEO of Berkshire is the job of C Capital allocation is their job and the the chief risk officer is their job and you can't get a rid of it I mean if if you aren't willing to assume that responsibility uh forget you shouldn't have the job now greig's got all kinds of ideas and everything but it's my responsibility in the end it isn't I just and it'll be his responsibility when he runs it I it it just the idea that you have this committee and a risk committee and all that kind of thing I think that's kind of crazy myself but but there are rules for example in in banking that you have a a risk committee and the CEO is the one that is going to get you in trouble yeah yeah or keep you out of it right keep you out of it it's up to them to identify the risk and then and and own it and and we've got that culture and I talked about that responsibility to the shareholder but that comes that with that comes being the chief R risk officer allocating the capital properly and prudently and then incrementally we have our business operations but our managers know what to do but keeping them within the our level of comfort and and with that what we really want to create is a company that's an asset to America and never a liability do you too have discussions about risk management just because Warren you've been somebody who's been great at this over years and years and Decades of kind of seeing risks far off on the horizon before anybody else do do you guys talk about stuff like that it's my job to think about risks that nobody else thinks about I he very easy to read a little thing in the front of the 10k of every company about the rist it's the ones that aren't in there that one way or another going to bite you and I've got 99 and a fraction percent of my net worth in Berkshire but I've got all my relatives in I've got everybody and if I thought that I wasn't going to be able to do a decent job of manag the risk a better than decent job I'd be crazy to take on that responsibility why in the world I've got all the money I need so why should I do something that could destroy me uh internally and my sisters and my cousins and all these people unless I felt that I could do the job of managing risk uh really as well as anybody can do and and it it is a complex organization and I worry about things nobody else worries about uh but I can't solve them all I can't I can't solve it if the pandemic starts but but I anything that can be solved I should be I should be thinking about and Charlie thinks about it too I mean we've talked about it forever well we're going to talk a lot more about this in the next couple of hours um what you see out there as the risks but Greg we want to thank you very much for this time and for sitting down with us we really appreciate it it's been great so thank you very much thank you again Greg Abel who is vice chairman of Berkshire hathway but Warren in the meantime um this is the first time that we've gotten the chance to speak with you in a very long time as as U they say in England I've I've gone quiet yes um you've gone quiet but there's been a lot that's happened and a lot that's happened recently in particular problems in the banking sector your name kept coming up as someone who was in talks with the administration potentially to step in and do something with with some of the regional banks with some of the bigger Banks there was a lot of confusion around it but can you tell us what happened were you were you talking to the Biden Administration about problems with the banks uh I I never talked to the president I've never called a president in my life but I have talked with people that that uh from time to time that that work around the president that's that's been true for administration after Administration and and I don't talk about what I talk with them about are would it be fair to assume that you've spoken with them recently when these I would say the president not the president people around the president let's say people in the administration anybody that recently but but I've spoken with people and and I've spoken with people around Administration but uh generally they call me but not 100% of the time that I mean I I would feel free to call a member of the administration I would never feel free to call the president of the United States okay so let's talk about what's happening in the banking sector right now is is this a banking crisis is this financials in turmoil is this banking crisis 2.0 what would you call what we've been seeing happen well I I would say that the some of the dumb things that Banks do periodically uh well uh become uncovered uh during this period and and uh uh as one of Banker told me one time he says I don't know why we keep looking for new ways to lose moneyy when the old ones are working so well and and uh uh they made the same mistake some banks in this period by by they haven't made as many mistakes they they expect to make some mistakes in making loans but they haven't and particularly if you're getting into credit card loans I mean that's just part of the game but they haven't made it the same sort of mistakes that they made back in 2008 or n but they have uh mismatched assets liabilities and bankers have been tempted to do that forever and and every now and then and then it bites them in a big way and uh it's just amazing to me that that uh Banks could make presentations to financial analys and everything and if One Bank bought a bond at 100 and another bought it at 96 and they both they both put held a maturity One Bank carries it 100 another bank carries it a 96 I mean it it is accounting procedures have driven some bankers to do some things that may have helped their current earnings a little bit and and P and caused the recurring uh uh temptation to to get a little bit bigger spread and report a little more on earnings and uh it it entered in a result you could predict you couldn't predict when it would happen and then once they start looking at one that does it then they start looking at others and and pretty soon you know that everybody is in a position of looking at a number that nobody looked at when it was it was presented to them a year ago if you read the 10K or anything of the sort but the banks did not call attention to what they were doing when it was going on and I would read I would read uh investor contact when they would have meetings with Financial analysts or the people follow Banking and nobody even brought up the point virtually and believe me if you know if we' got a $50 billion loss or something something a per sure we would expect to people to know about it and and uh it's happened before it's happened this time it'll happen again someday did you see this you were reading through the reports you followed all these banking um earnings that were coming in so you noticed it you saw it sure I noticed it is that why you saw sold so many of the banking St you we we sold we we we sold a number of banks I mean we we had we had held some of them for 25 years but I don't like it when when uh people get too focused on on the earnings number and and forget what I my view is basic banking principle I'm not going to get into naming any names right that but uh it it it happened to varying degrees throughout the industry wasn't the and the politicians say well the big Banks did this and that isn't true I mean I I I know who has been holding uh long-term instruments and if they let just take Mor commercial mortgages or something of the sort that uh they carry them at at U at Cost basically and and uh uh they can't sell them at that cost and it's important it's important that Banks retain the confidence of the public and they can lose it you know in seconds and we saw a country that was was uh not worried about Banks you know until about Wednesday or Thursday of the week when Silicon Valley and then all of a sudden everybody's worried about it all over the country and the interesting thing of course is that that that uh it will not cost the government a penny I mean people think that you know that somehow the government's going to get hung up with us the FDIC is a in effect a very peculiar Mutual Insurance operation uh uh that is run by the government but is financed by the Banks and FDIC had 120 billion or or so at the start of the year and that's all money that banks have paid in less what the FDIC has had to pay out on losses and the FDIC has to pay out 250 billion this time or 300 billion they just assess the banks more and they don't do it in a very business-like manner manner because the the public has the impression that the FDIC is the United States government and the so on and of course uh they do app the people but but the cost of the FDIC including the cost of their employees everything else is borne by the Banks so banks have never cost the federal government a dime but that the public doesn't really understand the whole FDI see and the comments of public officials confuse it and the issue enormously that uh uh somebody ought to likee I mean the FDIC was set up to operate on I think January 1st 1934 you I think somebody would have gotten through the writing what's the essence of this FDIC which is was a fantastically good uh development of the new deal I mean 2,000 banks failed in I don't know whether 1920 or 21 well there's only I don't know something less than 5,000 banks in the United States and I mean it was a paralyzing thing to have a a bank failure in this country and my dad lost his job in 1931 he lost his savings and uh it cu the bank failed that he worked in at uh downtown in Omaha and uh uh people shouldn't be worried about losing their money in the deposits they have in in in an American Bank and today they have no reason to worry and but the message has gotten very confused and people don't really understand how it all works and uh and uh you know and and politicians can make hay out of it and all kinds of all kinds of things bad bad things happen when people don't understand some major institution and who actually Bears the costs and and what the responsibilities are and nobody is going to uh uh lose money on an on a deposit in the US Bank I don't know about the rest of the world I don't know I'm not that familiar with it but that it's not going to happen and that message is gotten mixed up well look the message has gotten mixed up because and Andrew's got a question we'll get to him in one second the message has gotten mixed up because the government no longer has the authority to do to back up all deposits without getting the explicit okay from Congress but they'll get the okay I mean the you know you can say that you know that we're going to hit the deficit ceiling you know that uh the Deb ceiling uh and you know it and everybody makes hay out of it politically everything we're going to change the de sequ again and the unnecessary apprehension commentary everything that's caused by the fact that people say well the law doesn't allow the the federal to get above X well they're going to change it and what happened what happened with the with the failure of Silicon Valley and and and then uh signature there after there the the uh the understandably the Federal Reserve says we have this much power on a Sunday uh understandably the FDIC says we have as much power on a Sunday which is an accurate statement and the president of United States next day says that your deposits are safe and he's absolutely correct but you have to change the law and I the president of the United States can also say the United States is not going to is not going to uh uh uh let a Deb ceiling mess up the whole world and and that's true too but it wasn't technically true in the sense that they would have to go to Congress and then Janet Yellen uh quite understandably said well uh we won't change the rules without coming to the House and Senate and so on and and uh the public gets confused when they hear that they're both essentially right yeah secretary is right the president is right but uh it could have been added that the American public is not going to lose no American depositor is going to lose any money in in their in their bank but they got $250,000 or more but if that change is needed we'll make it and besides the other banks are going to pay the cost of it and the messages get a little garbled Andrew's got a question too Andrew well hey thanks Becky hey Warren to that end I think there's the issue of of individuals who have money at Banks uh and then there's companies who have payroll at Banks and whether you would advocate for effectively not just this implicit guarantee but um an explicit guarantee that covers everything and what the implications of that are just uh from the for the risk that Banks may take as a result of of knowing that it's guaranteed and also what the cost of effectively you you've been you are in the insurance business if we if we were to insure every deposit across the entire banking system what that would do to how much Capital would even be in the system if you will and available for loan you you basically have a mutual insurance company and they uh of a very peculiar sort and the the ability to pay the assessment I think the assessments were like 10 billion or maybe that was the total revenue of the FDIC but if they need 30 billion or 50 billion it won't be the federal government that will put in the money it will be Banks and and uh I don't think that's understood even though well originally when it started in 1934 they had some different rules and you didn't even have to belong to the FDIC so it it's evolved in a way it's evolved like Social Security where people people sort of got a notion in their minds and the politicians to sometimes use the the the demagogue version things and in the end you know it's like saying the Social Security trust is going to run out of money and therefore I won't pay people well I will well here's the here's the offer I will make actually I like to make bets Charlie doesn't like to make bets so I won't frame it exactly as a bet but I will I will be glad to put a million dollars of my own money at in the bank that or any place else actually the anybody takes a different view takes and have them put a million dollars in and at the end of the year from when we do it if any American depositor has lost money from a bank failure uh the the other fellow gets to name where the $2 million goes to what charity and if they haven't I get payment and that's a firm offer and we'll see who steps up right if that's the case are are the regional Banks right now the first republics and the like a a steal from a value proposition no they're not going to save the stockholder I didn't say the the saving the stockholder I didn't say saving the debt of the holding company you know people really don't understand it when they look generally the bank when it says debt it's us the fact that the shareholders own the bank on margin you know they borrow they borrow money the holding company own and that that's a different game but with they should lose money I mean I don't have any problem with people losing money if they they do dumb things I and I I've got a suggestion how to handle moral hazard on that subject which we can get to in a second but but the depositors are going to get their money and they got their money on you know in the of uh uh silan Valley on Monday morning but they were sweating bullets all weekend unnecessarily if it just if they just understood how the system worked and you know it it uh you know it's a failure of all of ours that that message is really not communicated I don't think that I don't think one person in 100 can describe how the FDIC actually operates and where they get their money and who appoints the you uh uh the people that are working there who pays the salary of the people and it it's it's it's it's it's a misunderstood institution well are we through the banking crisis at this point or we're not through with bank failures but but we we are through the depositor the depositors haven't had a crisis the owners of banks may have lost a hell of a lot of money the people who bought the debt of the of the holding company they may lose a lot of money people can they can lose a lot of money uh but the depositors aren't and so you don't need to turn a dumb decision by managers into a panicking the whole citizenry of the United States about something they don't need to be panicked about I mean it it is really uh you know it's it's like we thinking that that uh uh I just don't know why you do it with people we set up the FDIC to relieve the worry of people and initially it wasn't the same institution is you're saying on one hand okay no depositor is going to lose money on the other hand you're saying we're not through the bank failures Banks can go bust but depositors aren't going to be hurt I mean that Banks can go bust I mean the Continental Illinois Bank was thought to be impregnable you know back many years ago and uh you know the Franklin National Bank the bank of the common weth they and sometimes they go broke because they make too many dumb loans and sometimes it's because they mismatch majorities Joe's got a question too Joe I I want just wanted Warren to get to he's he uh foreshadowed he's going to talk about how to deal with the moral hazard if there is moral hazard if the banks can fail maybe the sh you know if the shareholders lose and debt holders lose that's that maybe there is no moral hazard but it's been posited that you give bank managers or CEOs the notion that all their depositors are going to be protected then they're going to keep promising higher rates that they can't deliver and they're going to do all kinds of things cuz they're not worried about about their depositors anymore but you've got an answer for how to deal with that moral hazard absolutely I mean they got they they've got to have something to lose themselves I mean in 2008 all kinds of trouble was called caused by the Banks but no Bank executive the the CEOs of made those decisions they all continue to live fine you know they may have lost their job but they they get their pensions uh so they bore no resp and then the bank later would pay billions of dollars a bunch of sholders money that had nothing to make to do with making those decisions so I would absolutely uh suggest and uh I had some friends in banking I may not have any by the time this program is over but I would suggest that anybody that CEO anybody that CEO of a bank that screws up and cost shareholders a lot of money that in effect you know they get no pension from the bank they they they they go back to living you know like a a person that works on the production line of Ford or something like that they don't deserve anything special and and uh uh I would suggest to the directors of the bank that uh sat there for 5 years and listen to people come in and give reports and all that sort of thing that they get back all their director's fees and they I mean they there's got to be consequences to the people who make the decisions and penalize the shareholders later on by have big billions of dollars worth of fines paid to the government you know that that doesn't that doesn't deter the bad action the way if if you're the president of the XYZ pump bank and you screw up enormously that uh you know you still live on like you did before it's you've you've you've taken away any sense of real responsibility with the directors and answer with the directors isn't have more risk committee meetings or anything like that but the answer to a I've been on the board of Banks and uh the answer is to have board of directors feel my God if this guy screws things up I've got to give back all this money that I've gotten you know 300,000 a year or whatever it may be and pre stock and this kind of stuff I got to give it all back for 5 years believe me that changes behavior of the people that caused the problem and this system doesn't get rid of of moral hazard because it penalizes different people and make the decision I want to penalize people who make the decision and have it very clear to them and uh uh that will not be metant by great enthusiasm from a lot of friends of mine but that's that's exactly what I believe is should be done and banking systems are enormously important the world doesn't work well without with without uh banking systems and and and I don't know anybody that that went back to flipping burgers at McDonald's or something you know after after they screwed up the system you know in a big way in 20089 now they really were they made dumb they they did things in 2008 or seven and eight that really are uh quality ly different and and really much more reprehensible than than things that people did in this uh period currently but they they they did a lot of dumb things and and some of them sold their stock and I mean it it there's no penalty attached to bad behavior and uh uh and it it does really really affect the system when people lose confidence in Banks well let me ask you you again um have sold a lot of your bank shares that Brookshire hathway holds um should we read that as an indication that you think banking is less investable than it used to be well I no I I I I I'd love to own a good bank but we we owned a bank in 1969 at at Berkshire and it was one of the best R well I think it was probably the best one Bank in the in the country and and and uh Gan AER ran that ran it like I'm talking about I mean he he he was a real Banker fell name Morris Shapiro and Harry Keith used to run the two big banking analyst firms on on Wall Street and and and they were really smart guys and mor Shapiro once said there are more Banks than bankers and uh uh you want you want people that understand that they are handling other people's money just like you do when you want people running you know hedge funds or anything else like they they'd handle their own money I mean that that that and uh it's regarded as very clever in this country if if you set up things so you know it's nice if your investors make money but you get very rich by assets under management and in the banking industry uh you have not connected responsibility for for problems uh to the real punishment for that act and that's when you get responsible okay but better you got a better banking some of the banks that you've sold include USB Wells Fargo Goldman Sachs JP Morgan PNC should we think that there are banks that aren't run well-run because you've sold them or no okay no but I do think I do I I I did think that banking could get in a lot of trouble just because of the kind of things that they did and that that I I didn't like the banking business as well as I did before why' you keep Bank of America but I would love to own a bank if if B could have owned 100% of a bank we'd love to own but we can't do it under the bank holding company would you like to be a bank holding company well that that that means we can't do all the other things we do so so we got taken out of that in 1970 we had just bought a bank in 1969 and we had to get rid of it in 10 years and and there's I don't argue against regulation of banks believe me uh but uh that particular option has been taken away from Berkshire and it I think it's probably a good idea to takeing taking it away from corporate managements generally why' you keep Bank of America pardon me why did you keep Bank of America what a uh they invited I mean I invited myself in many years earlier and they made a a very decent deal for us and I like Brian wean enormously uh and I just don't want to I don't want to sell it but but uh uh uh I did sell banks that we'd own for 25 or 30 years and I and and if they asked me why I did it I told them but uh uh and I like the people I mean I just think the system isn't set up quite right in terms of connecting punishment to corporates on something that's an important it's incredibly important that your banking system run well in the country it just isn't going to work unless you have a banking system that works and you don't want them to create periodic crisis unnecessarily okay we're not taking a lot of breaks today but we will take one right now we are in Japan in Tokyo with Warren Buffett the chairman and CEO of Berkshire hathway he's been talking about the financial crisis or I don't know if we'd even call it a financial crisis but the situation in banking right now where things stand Warren you had said that you you wouldn't necessarily um no depositors are going to lose money exactly but shareholders might and you could also see Bond holders will in many cases I think all right so let's talk about the assets that are out there though you've got Assets Now from Silicon Valley Bank from Signature Bank um that are now the responsibility of the government who's trying to auction off some of these things you've got people asking questions about what comes next if this um sort of pig in the python continues to work its way down if that's the case uh commercial real estate has been brought up sure as an issue of of looming problem particularly since 80% of commercial real estate loans are made from these Regional Banks where most of the problems have been yeah what do you think about that I think that they there will be problems when and you know people had anybody that's got a fixed rate in locked in for a while when the fixed rate goes away and they got to reprice it now has got a problem and and uh the the holder of a 30-year uh Freddy Mack or Freddy they've got the best deal in the world and they should I I love the program but you mean somebody who has their their 30-year mortgage yeah has the mortgage but the reason it's for the very fact that it's very advantageous to person who has the mortgage means some very dumb holding for banks but I also believe in the system that produces I think net the country is better off because it but I don't want to own any 30-year mortgages myself and and the idea that if you've got a 30-year mortgage uh you personally you can call off the deal 10 minutes later and if and if the banks got a bad deal they're stuck with it for 30 years burshire cannnot make the deal with our credit than you can make um if you qualify for for for making a a Freddy or fat Fanny made I think that's a good thing for society I don't think it's a very good investment for banks but banks have a good enough business business the front and right that they can they can do some things like that and they they they but I wouldn't I still wouldn't do it myself and uh we will see people well gets back to that old story you know when it when the tide goes out you learn who's been swim swimming naked and and you know he actually ran into a nud schol here I mean in terms of the banks all over do that sort of thing and they can handle losses uh but to say that because you can hold up maturity that therefore it's it's it's safe well what if you the prime rate went to 21 a half% you know in the 1980s uh who knows what can happen to what you're paying on your deposits and people really know now what they can get you know the idea that you've you've got this this kind of lazy money and people are sitting around with money and zero uh you're telling them every day uh on CNBC you know go shop around and get the best rate you can for your money and uh so unlike the physical world I mean in the physical world you know how fast sound will travel uh we'll travel the same speed as you know 20 years ago or 50 years ago and you know you know if an apple falls from a tree how long it will take you know basically uh uh but in economics the equation changes every time because of the experience of the previous time so so things that seemed to make the mistakes of 2008 and N uh they affect how people behave subsequently and 20 203 is is a is a different world the speed it isn't like light travels at the same speed or anything like that and people have adjusted so that lazy money in 2008 doesn't exist in the same uh uh way at all and uh and we'll see how it plays out but you know it's our job at burshire for example and in all our businesses to not think about you take cognizance of what's happened in the past but you have to worry about things that people haven't seen yet and and uh you know the people that have run Banks the wrong way at uh shareholders are going to lose money but the depositors aren't going to lose money and I made that offer you know in the previous segment and if anybody's called in with a million dollars I'm I'm still good for it okay let's go back to that for anybody who's just tuning in you're saying that you will put up a million dollars against anybody who wants to take the other side of the bet that no depositor in the US Bank will lose money in the next year in a year from now uh whichever one of us has won uh uh gets to decide where the what charity the $2 million goes to so so charity is going to win just like on that hedge fund bet I made a few years back but but I'm I'm betting on what's is certain to happen politically it isn't the law now but it'll get changed I will bet on the fact that the United States will not suffer a ruin the world by messing around and not finally CH changing the death ceiling and why know the Congress we elect to do all kinds of things and they're overworked in all kinds of ways why they spend a lot of time fiddling around on that and make hay out of it on one side or the other depends who's in who's in charge I it's it's just silly and uh uh I'd rather have the government you know actually focus on things like uh they did back in the New Deal which my dad hated but which Social Security came out of the FDIC came out these things really improved uh the situation of the world and and and they proved they improved America and uh uh I've got the advantage of hindsight and i' I've believed in it and and uh really you know since I was 11 years old if I just said bet on American figure out a way to be in the better businesses but even if you're in the average business you know it it's just the way we still work despite all our shortcomings and and but we can work better all right back to commercial real estate we have had lots of investors in commercial real estate who have come in and said that this is going to be a crisis point that the government is going to have to step in um that something should be done because there are so many commercial real estate loans that are coming due between now and 2025 and that they won't be able to get credit from the banks in the same way to renew or to Once those maturities come due to refinance well let's say they lose $100 billion in the banking system most of the banks can take that loss that their share of that loss and a few of them because they did other things you know their shareholders will end up losing the money but the depositors won't lose money but if you lend money to somebody and uh it comes due and they can't pay you know the old story about the banker I never I never made a loan of course some of them turned bad after I made them I mean and that's exactly what happens in you know whether it's in commercial real estate and if people if money rates are 2% or we were lending money out of four basis points at Berkshire to the to the federal government uh not much more than a year ago a year and a half ago or something like that and if those rates change let the person who bet that they wouldn't change lose money I mean that that's if you make mist mistakes in business there's people plenty of people make mistakes you pay for them if you've got a big profitable business on top of it you know which a good many banks do you take your losses and you keep going on I mean Banks can take a lot of loan losses but they can't take something that wipes out their capital and and and and expect the world to ignore that fact meaning that you don't think anything needs to be done on the commercial real estate front I think that the people that the people that lend too much money should take loss and they're getting properties handled handed back to them now I mean you know within the last month or 6 weeks I mean yeah I mean they got some Office Buildings in Los Angeles and and uh you know Blackstone walked away from something I mean and and if you get a non-recourse you know every every everybody goes in the real estate business is told the first rule the second rule the third rule is never sign your name to anything and so you have non-recourse mortgages and they're going to walk away and the bank's going to get stuck with losses and maybe they'll hold the property a long time and it'll come back and they I mean there's all kinds of ways that if you got Capital strength you may you may decide well I'll just hold it and and but that money is sterile for for quite a while and that's part of banking I mean you expect to lose some money in banking it's not a sure thing on every loan and you build that into your calculations and then you have Capital that protects your depositors from from it uh eating into their money and if it does eat into their money then the FDIC which is in effect really a Mutual Insurance Company of a very peculiar sort uh essentially spreads the losses among the continuing banks by higher FDIC Assessments in the future we we've had some people in commercial real estate who say who make the point that it's not just Comm commercial real estate but other places where the economy is turning over where inflation is coming down that the FED is doing too much what do you think of the job the FED is doing right now I I I do not think I could run the Fed as well as Jay Po's run I think Jay poell has been a terrific and part of the job well look at Paul vulker back in the 1980s I mean people were sending him you know I mean he was he needed Secret Service protection and everything else but uh but in the end he felt his responsibility was to do the right thing at the fed and he didn't give a damn about what anybody wrote about him or anything else and and I think that he's one of my heroes and I think he's one of J Paul's Heroes and I think J pawell is did the same thing actually in March of of uh 2020 when we went into the pandemic I think at the annual meeting that year I said you know that he was a hero and he is a hero and you have to you have to act and you have to act on insufficient information and you've got a you've got an ultimate responsibility to the American public and it doesn't mean you can stop recessions it doesn't mean that you can turn bad loans into good loans or anything else but it it does mean that you got to keep the system working and the system came close to stopping if you read a book called trillion dollar triage you can you can get it on a day-by-day account and people don't know how close it was and and Jay Powell did not call for studies or position papers and you know ly debate and everything you just don't do it you act and that's what Paul bker did and and I thank heavens you know JP was there I mean you could have gotten a very different result in March of of uh 2020 after the pandemic broke out did the FED keep rates low for too long after that who knows who knows we won't know I don't I don't I don't know what they precisely should do and nobody does and they follow conventional wisdom and all of that and sometimes sometimes it works works out and sometimes it doesn't but but since 1942 you know we've made all kinds of mistakes in this country and we'll continue to make them but somehow the system works pretty damn well I'd rather own stocks than bonds over over many years I'd rather own part of America then try to squirel my money away some other place I thought you know maybe in Switzerland qu SW or something like that it it just people are uh they don't really get any wiser about this sort of thing people somebody else fire they're going to run for the the door I mean and then uh it's it's built into fear is so easy to arouse in people and you talk about fear about their money they don't really understand the system necessarily or anything of the sort and they can actually by their own actions and create what they were afraid of it it's it's it's a it's a very interesting phenomen and it it actually yeah my dad hated Roosevelt But but so I grew up first 10 years of my life I couldn't get dessert dinner unless I said something nasty about Roosevelt or something but over the years you know when Roosevelt said the only thing we have to fear is for our he was 100% right when he closed the banks and said I'll open them I'll open the good ones a week from then he didn't really he didn't know anything about which bag was good b or anything like that but people just needed that get a a an appropriate confidence and now they really got an appropriate confidence because we didn't have an FDIC and we didn't have an FDIC that was required for every Bank a lot of banks fought the idea uh and now we've got a system that that works but people are still scared when they get scared and it being scared is so contagious you can't imagine what it was like that weekend after so B I mean you know guy that drives me around because I can't see that well and you know all he was talking was banking you know and and and he would you know what should he do and it it it's uh unnecessary fear is is a terrible thing to give people and and and Roosevelt and the New Deal really wanted to get rid of that and uh it here we are X years later and we've got a mechanism that's so much better than we had going in but people really don't quite understand it and and maybe you know maybe it takes the president of the United States to just go on and deliver Roosevelt's message and make it more clear to people what we really do have and what they need to be worried about and what they don't need to be worried about but of course if you're in you're trying to win an election next time you tell people you know that if you're out of off or you're out of control you you tell them how terrible the other guy is for getting them into this problem and that's going to always live with us so you look around and you're not worried at this point well at 92 I've got other things to worry about no I I am I'm I'm not I I don't worry about our ability there's things I worry about sure I worry I wor about the nuclear threat I worry about a pandemic in the future and all kinds of but I don't worry about them because I can't do anything about them but I I actually that's what I originally thought my money could be best used for but I don't know any answers now after 40 or 50 years of thinking that way uh but uh I'm I'm not I don't worry about no I don't I I never go to bit worried about Berkshire uh and I well had thing if I'm worried about burshire I should get I should figure out something different to do about what Berkshire is doing but Berkshire is my responsibility and and and I I think I was very very very lucky uh that Berkshire happened to be an American I happen to be an American I was born in 1930 and i' I've been under a golden age ever since I was born the the GDP per capita is up like sixfold or Sevenfold in one person's lifetime there's never been anything like that the history of mankind and so you know we love the complain about wherever we are but but uh you know most people don't work on Saturdays and don't work on Sundays and and when I was a kid everybody worked on Saturdays and I mean the world has changed so much for the better in terms of you know how well off people are compared to any other time in history if I'd been born 150 years ago and I went to dentist I mean you know they pour Whiskey on me and all kinds of there's just all kinds of improvements and but it's man's nature to be dissatisfied and and politics does stir that up and you've got to say if you're out of power that that the other guy is screwing up and you could do better and that's just built into the system but but that was the case when I was a kid and it's the case today Joe's got a question Joe yeah I uh I love his sort of his oblique references to to his dad I like that War I think sounds like a real solid Nebraskan though I think I would have uh I don't know I would like to would like to had a couple of domestic beers with with your dad uh I think what what I was trying to figure out warn is is in in your long life U where you've seen a lot of different business cycles and you've seen hyperinflation and you've seen you know secular disinflation last forever what do you think happened uh this time to get to 40-year highs it it's obviously pandemic related and supply chain related but do you ascribe anything to to to the FED enabling too much um fiscal spending propagate spending by by uh the federal by the government in general do you think that added to it the the increase in the money supply or what what where did it come from why did we uh what engendered it this time around and and how bad is it how long lasting it's fun sending money out to people if you if if you want to stay in office and you want their vote and that's always been a problem a problem of of of uh our political system and and and around the world and and some companies just and some countries have just you know printed it where they have billions and billions of this currency or that that uh and inflation is a a constant threat to a country that that uh but uh uh so far the United States has done pretty well of that now you know it's still the case that the the price level is probably 15 times uh what it was when I was a kid and so but the interesting thing is you know the price of the Coca-Cola is maybe twice or something like that main cost is the container uh and and uh the price of the uh uh New York Times has gone up 40 for one or 50 for one I mean there it's a very uneven thing and commodities base Commodities tend to move less but oil was $3 a barrel when I was a uh back when I was managing money at first and it had been 10 cents a barrel in the East Texas situation in 1931 you know now it's it's it's $80 a barrel and I mean I said in the annual report that birkshire can offer some protection against inflation but the effect of inflation can be can be wild some people if you owe a lot of money all of a sudden you don't owe anything you can earn it back in five minutes and on the other hand there's there's just all kinds of things but it's not a good thing for society and and I think that the United States has generally did done a pretty good job of of keeping inflation from getting out of control and I think when Paul Boer came in that that was a a seminal moment uh in in US history uh because it was close I mean cash is trash and and Prime rates of 21.5% and paying paying interest of $200 an acre on Farmland in Nebraska when the crops you could produce would only produce $80 an acre and it cost Banks to go broke and I bought a I bought some Farmland from the from uh I think probably the FD DC I don't know somebody or other that taken it over and it was just crazy the country went crazy because they were afraid of cash and they they just piled in the things and bulker who knows what would have happened if he hadn't come along and uh and it's popular to send money out if you're in politics if you you know if you tell every one of your constituents that they just won the lottery you know and here's here's $5,000 or $155,000 something's going to happen you're not going to have more goods and services produced immediately that can stop up that money and and you know it's it's it's fiscal policy in that case and we are spending a lot more than our government is spending a lot more than it's taking in and that's a lot of fun if you're want to stay in office but it NE isn't necessarily the best thing to do uh for your kids let's talk a little bit more about where we left things with that inflation number again we are with Warren Buffett in in Tokyo Japan right now um Warren you can talk about inflation and what's coming and what's going but we've got the CPI number coming up and I think you probably have better information than Janet Yellen or J pal just in terms of what's happening on a day-by-day basis you have so many businesses that Berkshire owns outright you have so many big companies that you own a major stake in um what do you think about inflation have have we seen the worst of inflation is it rolling over is it coming down steadily well inflation is always a possibility and by inflation I mean extreme inflation I and and uh uh it's a possibility I mean just look at the countries of what they've done I mean I don't I don't know how many times uh and and and eventually they almost lead what that they can lead to Terrible Things led to terrible things in Germany uh and and uh uh you want people to trust their money I mean if they really have a flight from money that it the economy doesn't work but in 1942 when I bought uh my first stock I mean we we were going to pour money into people's pockets and they couldn't buy anything they couldn't buy cars they couldn't buy I mean that they couldn't buy washing machines or anything else but they had money flowing into them and of course uh we had price controls we did various things and the war ended in August of 1945 and for a little while uh uh the fact that there was all this money slashing around and and people wanted to buy things that they hadn't been able to buy for three or four years and women had gone to work and all of that sort of thing and I think the inflation rate went from something like 1% in January 46 to by the end of the year was running at 15 % or something I mean if you give people a lot more money put in their pocket than than uh uh that you've got in corresponding goods and services being turned out that money is going to become worth less not worthless worth less we had and that's happened periodically I mean we've had incredible inflations in certain countries if you look it up in on on on search you know the greatest inflation we we've had a post World War II in various countries I mean it and there comes a point when it gets out of control it is out of control and it screws everything up and it's not good for uh Society there certain people who profit on it obviously that anybody that borrowed a lot of money uh but the citizenry it it it is not good for society and and uh government has the responsibility for making sure that they issue the the currency and it's the only thing that's legal tender and and you know that you need to have I think Charlie mentioned it even on the currency is one of the great inventions of mankind you don't want to go around all the time trying to trade your services you know in terms of giving somebody eggs and trying to get back a watch and then trying to trade your watches for I mean you you want something that is that is you need something in a side This legal tender and and but it's important how you treat it and uh United States has been pretty good at it uh really quite good but you know if you look over the year since I've been investing I mean you know there's been a 90% plus loss in purchasing power but it sounds to me like you are more worried about inflation than recession is that fair no I I think either one can cause a lot of trouble and recessions can turn into depressions I mean you know I mean it it is we've got a great great country and it can it gets messed up by depressions I mean I I lived through I was born in 1930 and the Dow didn't get back to the level it was it was higher than when I was born for about 5 days and I got out of college before it got back to that point and it wasn't that the American people had turned bad or anything else but we got something that fed on itself and banks failed and I mean you can disrupt an economy a lot easier than you can put it back together again and and we've had some close calls on that and I think we've had some I think in in 2007 and8 I mean I think Hank Hank Paulson said you know that we'll use the economic station stabilization act which was enacted back in 34 and all of a sudden we'll get guarantee money market funds and and it was a good idea to do whether he really had the authority to do do I don't know but he was sure the right guy in the job so we don't want to we don't want to mess up our economic machine and and it can be done by how do we mess it up how do we mess it up is is should the FED keep raising rates is inflation at Bay what do you think well I basically it fiscal policy scares me more than monetary policy meaning that we I think I think it is easier to obtain votes if you give people money and I think that just like I want to keep my job at at Berkshire I want to get elected next year and uh fortunately I have enough stock everything you know I can do it and if I was in a super super super safe District maybe I would vote my conscience in in in Congress but who knows how I behave unless I was there but I my dad was in Congress and I got to view how it behaved then and I don't think it's beh Behavior has improved you know since 1942 when I first went went there and had lunch with Sam rabburn one time so you think that Congress is going to screw it up by continuing to spend more money and Jay Powell is going to be in the position of having to continue to raise rates I I don't know what I don't know what they're going to do but it if you ask me the things that are I think about in terms of taking care of millions of people savings and trusted me uh that's one of the calculations I have in my mind and I I have said in the annual report that that uh that we will ride along with America and and and uh if we can't we we can't necessarily predict how we would come out in a wild inflationary period but it certainly be better than you would doing in the unit unit of currency and that's the best I can do and and believe me I think about it obviously and we own a lot of good businesses and the rail worlds will continue to run no matter what the currency does you know the the insurance company will continue to insure people and Garen will continue to turn out grbl for kids I mean we we are we are a cross-section of America's economy and and and uh we're going to behave in a way that we'll be the last person standing all right ask you one more time because I don't think you want to answer it I know you don't want J Pal's job but if he asked you if he should keep raising rates what would you say I would say he should do whatever he thinks is in the best interest of the United States and if he said what do you think is in the best interest of the United States well I'd say that that's why I didn't ever want to be chairman of the FED I mean it's it it it's it's a very very tough job because you have to deal with Congress you have to deal with banks you have to I mean it and the biggest problem is is is uh in the end Congress can can uh torpedo your job and I hate to I I hate to have a job or something that somebody else can do can essentially Nega nullify any actions I take and uh you know Paul vulker faed that and and I looked at him one time in the 1980s I look up like that I mean he was he was even bigger looking in person and I said you know what can you do under that exigency clause or whatever there was in the and and po basically said I'll do what I need to do and you know he says what are they going to do come down arrest me you know basically and T Supreme Court going to put me in jail or something you know I I mean he he felt that it was his job to do what was right and I think Jake Paul feels exactly the same and I and actually I feel most people in there in that job overwhelmingly they they want to do it but I I think some of them haven't been as smart about it as others Hey Joe you want to take a crack I going to shift gears a little bit be although obviously Energy prices have a huge effect on on inflation warm but I I I was struck by the article on oxy uh that was in the journal and about how much money uh is is being spent by the company I think with your blessing on on carbon capture and I I I guess I'm just trying to figure out how you feel we should transition uh how long it should take how much hydrocarbon production we need to to to continue with um there are you know depending on on a Continuum you can find people that think we should spend 20 trillion over the next I don't know 15 20 years on the transition which would obviously impact growth around the world there there there's got to be a way to do this this where we can continue to grow and I'm wondering you know if you think we're doing it effectively is oxy a model for how we should ocidental a model for how we should be doing it in your view Warren well I certainly think Vicki Hollow at ocidental is an extremely competent good citizen of America and I I really like she understands oil and she understands political realities and she understands what is happening between the below the surface of the uh of of of the country and she's she's she is extremely concerned with ways to have have carbon capture capture I mean it but I don't I think your figure of 20 trillion is way way low I mean it it we're producing the the world needs 100 million barrels a day or something like that uh at present and youve got this enormous problem that the United States put a good bit of the carbon into the air and then they say to the rest of the world you know you can't do that and besides that you ought to chip in and I mean it it's a very tough problem for for it seems to me somebody that has been uh responsible country that's been responsible for putting the carbon uh starts saying to everybody else you can't have any you know so it's got It's an enormous problem it's an everpresent problem and and you really need somebody that uh understands the dimensions of it and and what can be done with carbon capture but you will not you will be producing more oil in the five years from now or about the same amount and if you spent trillions of dollars now you'd still be needing it it you can't change the world that fast right I I guess I I've heard Charlie talk about it I think he thinks that that maybe some of the hysteria is overdone on on the entire uh subject I mean we could we could spend an awful lot of of capital and GDP globally on dealing with this problem I've asked you this before in terms of your insurance companies at this point how much worse are your payouts for adverse weather events compared to historically for what you've seen well uh it it it it's essentially nothing and we we are writing more cat cover this year actually than we were riding last year because the prices are somewhat better and actually you know I don't know a damn thing about hurricanes but but uh but in terms of you know elino or whatever it may be it's it's slightly it's somewhat more probable that that we have a good hurricane season I mean a good one of being a l one than than last year but but there's all kinds of chance events and that's what we ensure people against but but can you say without War can you say without hesitation that you're you need to charge much higher premiums because these things are happening much more frequently because that's we're cons we're considering spending in terms of no we're charging higher go ahead we're charging higher prices Joe because prices got too low I mean we're we're the price level for Hurricane insurance is not I mean if you take Florida as an example for example you we say we'll we'll insure against any event that costes more than $50 billion of damage in Florida you know there's all kinds of reinsurance contracts but those are those have been priced well below what they were uh some years ago and and and we we didn't think we were getting paid enough uh but now prices have moved back up somewhat and we you know a je calls me and says how much are you willing to lose in a single event you know in in Florida or or Texas or or earthquake and and I said you know we can lose 10 billion and nobody else can play in that game uh and so now it hasn't be it's not as attractive as it been at different times but but the auto insurance which we've done big through Geico the average price of our policy when I went in in 1950 was I don't know 50 or 60 bucks and now it's over $2,000 a year and and we even went the whole auto insurance industry went from pricing the stuff for a yearly policy to changing it every 6 months I mean we are not issuing any 20-year policy or 30-year policy and it's not a special risk for insurers you just keep adjusting your prices to the risk as the as the risk changes and and you can argue uh I sure as I don't wish it on anybody but you can argue inflation is basically good forers because you're right you know you get much bigger premiums on much bigger coverages and and and that's actually happened in auto insurance while while the Autos have gotten safer you know and it isn't everybody is uh driving terribly compared to the way they drive 20 years the accidents per 100 million miles driven you know was gone down a lot but the price of insurance auto insurance has gone up like 30 or 40 for one and it went up was going up at a fast enough rate the insurance company said we're not going to say give you a one-year policy we're going to give you a six-month policy if it was going fast enough we'd give a one month policy or 30 you know 15-day policy uh you know we' we are not committing ourselves as to what insurance is going to cost in respect to climate 30 years from now and we it is not a special risk to the insurance industry now people don't get that but it really isn't I mean we're backing it up with money every day Warren let me just ask you um about the economy we have heard recently from Jamie Diamond and his annual letter uh at JP Morgan he says a recession is much more likely now Janet Yellen was just speaking I think in the last 24 hours although it's hard to track from here when things are happening has just said in the last 24 hours I think that the US is in better shape now than it was six months ago which of those camps would you put yourself in well I I I know what a lot of different businesses are doing and I just got report from one of them that happens to be in the retail related business in any event you know it was minus 22% in February from a year ago they didn't think that was going to happen sales you mean in sales profits are down a lot more than that on the other hand some of our businesses are still doing fine but they all are reporting that the new you know some of them are living off of orders were placed months earlier and that sort of thing but but uh it's a tougher world out there in a great many businesses not in the insurance business uh Insurance business should be better this year than last year that doesn't mean it will be because we can't predict everything that happens but on a probability basis it should be better than last year and the railroad business is down uh and carloads carried uh but it isn't dramatic and of course we've got a utility business and that doesn't really vary much with things so but overall I think people that run our businesses that do have any sensitivity to the economy are surprised at where they are now compared to where they thought they were going to be 6 months ago that doesn't mean the world is coming to an end or anything because 58 years I've been running Berkshire I mean we've run into all kinds of problems but but that's that's what business is about and and and we run our business so that we don't depend on everything being big hunky dory always we run it so that we will be the last band standing and and and that's the way if if millions of people are going to give me their money and tell me to take care of it we're going to try and take care of it and if we don't make as much money as we might have if we leveraged more or done other policies so be it but you think a recession is more likely now than maybe you would have said six months ago well I think most of our manager would would say that they are surprised at where they are now compared to how they thought they were going to feel 6 months ago at this point in a lot of businesses but not in the insurance business you know and and uh uh but I think the people at the railroad are are somewhat surprised that car loadings aren't a little higher rather than a little lower you know somewhat lower but most of the stuff we carry is is essential but but it reflects what's happening and and of course supply lines were so disrupted and everything year or two ago that uh uh you know no economic figures are pure but I will I'm just telling you my impression and I look at the numbers every day I mean I can I look at our Easter sales day by day at the candy store and you know I look at California versus Washington versus Oregon and I can I get them the next day I mean so I I I love figures you know you say that it doesn't really do me that good to be such a figure not but I just like them when I see them in terms of the potential for a credit crunch coming through with the banks are going through right now there's been a lot of speculation about what that could mean to the economy is it going to mean a a 0.5% hit to GDP is it going to mean a 1% hit to GDP what would you guess I would say that I've been business running Berkshire for 58 years and I've never found an economic forecast of any use to the company and and all we have to do is keep running every business as well as we can and we got to keep plenty of cash on hand so that people can keep making intelligence decisions rather than those forced upon them and that's all we know how to do and if I dependent in my life on economic forecast you know I don't think we could make any money I don't know how to do it and and you know people want to get them so they get them but but uh it doesn't it has no utilities when I when I find one of our companies is hired somebody to tell them what's going to happen in the economy I mean they throwing the money away as far as I'm concerned all right so you had 12 other than that I'm I'm very tolerant Berkshire had 128 billion almost in cash at the end of the year cash and treasury bills and and treasury bills and and a bit in Money Market Government Bond only uh money market funds uh but we've never we don't own commercial paper we and we didn't in 2008 now we we we you know it's we want to be ready for anything that happens do you have more or less now uh where are we three and a half months later yeah well we laid out you know s or billion plus uh in terms of the pilot and we spent 4 billion buying in stocks that's 11 billion that's going out the door but uh uh we'll know the figures and you know exact but I think we're probably up on cash and and and treasury BS y just because more keeps coming in the money comes in every day uh and and uh you know we we earn in the neighborhood of something over $100 million a working day and a little less than that for all calendar days and that money comes in and and uh uh we spend the money that we had for depreciation we don't talk about Eva or anything that crazy thing but but we have a lot of money coming in and the float grows in insurance and and and we'll continue to have a lot of money coming in and we'd love to displ some of it we all also want to have enough money around so that the worst can happen and we're not we're looked at as an asset to the United States freey rather than rather than uh something that caused uh the problems of the economy and would you say you're doing anything differently at this point just in terms of all right you're not going to worry about economic we haven't changed we don't change our what we're doing in terms of trying to improve the railroad or what they don't want to I don't want to give economic forecast to our managers how they run their business I just wanted to make sure that they have happy customers and and that they have they're cost effective and they behave good citizens but that they you know they ask me and before they spend a lot of money in terms of capital allocation Warren if you don't mind we're going to pause here because we do have that big CPI number coming up uh we're going to have more with Warren in just a little bit we were listening intently to all of that uh Warren Buffett is standing by too um Warren what do you think well Becky uh on Good Friday I was working Mark Mard who handles all the bonds and stock trades for the whole bra Berkshire uh was there and uh I knew I was leaving town on on Sunday night and Mark says what do we do next week and I said here's what we do and uh on Monday we always buy treasur bills we bought about 2 billion of them we got a $499 uh% bond equivalent yield and but the the only question is whether we buy three months or six months and and uh and I tell him use his own judgment uh on that so Monday I was here and he sends me a sheet as to what we did and uh I don't change anything Tuesday it does the same thing and uh net we happened to be a net seller of 300 something million dollar but we could have been a net buyer of 500 million in in stocks and uh and uh I am not going to I'm going to be traveling tomorrow over and you know he's going to be operating on Wednesday and I'm not changing any instructions him he's going to keep doing what he's been doing I mean I we don't make our decisions as to whether to own part of a company for the next 20 years uh we we don't have any idea what what anybody's going to do next week or next month and when I was buying Berkshire in between 1962 and 1965 of control uh it didn't really have anything to do with it you know all kinds of things wrapping in the economic markets all the time and I but we haven't changed our course you know in 58 years and and we just want to buy good businesses and run by people we like and trust and and at at a decent price and and we'll keep doing that and we'll keep buying treasury bills every every Monday and and we have missed a Monday yet and uh and we keep all our money short we keep it in treasuries and we were getting four basis points which was 40 million 100 billion do worth and now we get almost 5% which is 5 billion so we've got 100 times the earnings but it doesn't make any difference I mean that is there to be to be the the strongest company you can imagine and and and also to take opportunities when they come along but Mark if you're listening just keep doing the same thing you were doing yesterday and the day before and and I could go away for a I could go away for a couple weeks and I would tell them here's what we want to do on the buy side here's what we want to do on the sell side and just keep doing it and uh and that's what we do and and uh and some periods there was a period about a year ago I mean when incredible volumes were we we bought 20% of a company uh that already the index funds own you 25 or 30% dodging Coxs own 10% we put 20% of a company in a month or something like that now accidental is that yeah it was accidental and and and we did we were doing other things too but now it's a different kind of market and we can't acquire at the same if we're if we're buying an accidental or if we're selling something else but we'll just keep doing that that's what we've been doing for 58 years and and I can't tell you what the Fed was doing when I was buying birkshire day by day or week by week or month by month or year by year we were buying Burkshire and you know and we've kept buying things and we we don't we don't make stock market guesses and and uh we don't we don't know how to profit by looking at at Broad statistics and and guessing what stock markets or Bond markets will do but you have said that you do pay attention to interest rates and that interest rates are like gravity on Equity prices there's no question about that I mean so where's the level of gravity are we on the moon are we on Earth well we're in a way different position than we were when that essentially what the op the option was to get four basis points on on bonds and that changes the value it changed the value of real estate changes the value of of equities it changes everything but that's all happened in my lifetime various ways all the way up to 21 and a half% prime and down to zero which nobody thought we would ever get to you can read the economic textbooks of of well by Paul samon you know the wonderful man and and it's a 900 page textbook that every kid want to school with and you look for negative interest rates in the in the index and there's not a word on it so anything can happen and we we're prepared for anything but we like to do things over time we want to buy good businesses it's that simple and we always want to have money Andrew's got a question too Andrew hey Warren uh this is actually a question that sort of moves where the economy may go and it's a question around technology uh which is I I know a space that you don't always want to go to but I also know your one of your best friends is Bill Gates I'm curious if you guys talk about it we keep talking about chat GPT and potentially how that could transform AI how that could transform our economy in the future and obviously there's also lots of questions about whether AI is is dangerous and we have the right policy set around it and I I was curious if you've given much thought to any of it well well I I think it's something I don't understand at all but Bill did come by about I don't know four or five months ago and he said you know I'm going to show you the the latest thing what what can be done and and then he you know I I actually said uh take the song my way and write it in Spanish and you know and and uh uh have it encompassed my views on what's funny and what's likely to happen in the economy and two seconds later you know comes out it comes out that rhymes and does all these wonderful things and and uh uh but he told me he said he said it can't tell jokes which I thought was very interesting it just doesn't know how to tell jokes but it can tell you it's read every book every legal opinion I mean the amount of time it could save you if you were doing all kinds of things is unbelievable but but I said the bill is I I said just let me know uh what I can ask you know how are you going to how how are you going to ruin the human race and uh uh and uh and then let me know someone unplug it or whatever I have to do at that point and of course I'll be programmed so that nobody thinks they should unplug it or some DN things so I don't really understand it I think it's an incredible technological advance in terms of showing what we can do but I don't know whether we know what what happens and I was listening uh um who was it the other day that was who knows a lot about technology he just says you know it scares him well if it scares him it's it scares me in terms of the possibilities of I mean we we've done amazing things like we figured out how to create an Adam Bomb back in 1945 I didn't know what an Adam was or anything but Einstein told me it was going to change the world and it change the world so I I don't want to change the world too many times without having some idea of the consequences of it and this I think this is extraordinary but I don't know whether it's beneficial was it Steve wnc pardon me was it Steve was uh it was um uh Eric Schmid and uh uh he was he just Eric was saying you know we don't know where this takes us and maybe we ought to pause for a while well I don't know 100 1% about physics or anything else that that that that Eric knows but I come to the same conclusion look at you Warren watching squawkbox from Tokyo last night it sounds like cuz Eric was on talking about that on the broadcast um one other question for you Warren because we always ask you I I don't know if that's where you were watching it but he was he was talking about it uh just yesterday with us but but separately we always we always have a Bitcoin question for you but I've been thinking about okay I I was thinking about this with you with you Warren and I know your views about Bitcoin and I've been very surprised at how Bitcoins come back up to close to $30,000 again you know when you go back to U the Tulip Mania tulip Mania went from 1634 to 1637 only lasted three years and here we have if you're right about Bitcoin something that's now lasted something along the lines of 15 years and so I'm I've been trying to understand if in fact you're right and this is um not just rat poison squared but it's not is not a thing when it would be unveiled as not a thing that's predicting when speculation will end or you know when the gambling Instinct will go away and when more people want to get out and are getting in and I have no way of if I thought I was good at that I'd figure out a way to make a lot of money in different things I all I'm trying to do is buy good businesses but I the one thing I know is I you know I didn't like chain letters when I was a kid I thought why in the world should I send along a chain letter the next day when I could start my own I mean I've seen people do stupid things all my life and and I I and I really I empathize with that I mean people like to play the lottery they're going to get 60 cents back on the dollar or whatever the number may be and and States essentially the numbers racket was something that you avoided and then the government decided it was a source of Revenue and it's it's very hard to tell people that that if they're going to put a tax on a eventually a a a sure loser for Society for the for the gamblers on the lottery on the whole but they they're they're appealing to the gambling Instinct and and uh you know it spreads I mean people love the idea they're going to make more money tomorrow and it really drives them crazy if their nextd door neighbor is making a lot of money not knowing what they're doing and they're just sitting there and their spouse is saying you know why is that guy getting a second car and why why are we missing this whole thing and the gambling instinct is so strong and and you had millions of people that were getting checks in the money and sitting home and finding out that they could have a roulette wheel in their house and they had all the peels of gambling and that that are used that get people to go to Las Vegas and you can do it in your home and they had money and and we've had an explosion of of of gambling essentially and and and and you know I like to bet on a football game if I'm sitting and watching it makes it more interesting but I I don't think I want to make a a living trying to bet against the house ever I want to if if I were to get into gambling I I would want to own the roulette will and not be a roulette player but but uh we haven't done that but but people all the time well actually on my on my honeymoon in in in uh my first marriage you know we're talking when I was 21 and we went through Las Vegas population there about 20,000 a bunch of Fells from Omaha uh and other places that bought the flamingo after Bugsy signal met his maker sooner than he expected and uh uh and they welcomed me in because they all knew my uncle Fred and I looked at all these people who had flown thousands of miles to do something that unintelligent as fast as they could I mean they just they couldn't you know they thought the dice were hot or something like that and I thought you know I'm going to get rich in this country I mean if if that's what people do I I can be smarter than that so uh I've watched it ever since and it's fascinating to me but the gambling urge is so strong throughout the world and now you've created the perfect condition for it where states are legalizing gambling and you know what it does to the football games I mean prly it just you're just point shaving you know which uh you know the guy gets offered a million bucks and it's like you know the the white sock work back in 1920 or you know they did it for a few hundred dollars but and you aren't even throwing the game I mean you're just you're just making sure that the the spread is met it's I don't I you're not going to change the gambling Instinct but when the state has started sponsoring it it's given a it's given a different a is a different climate than before you think that the idea of this legalized gambling and it's spreading in the states and everything that's happening right now you think that's changing the games you think there is there are situations where the spread's not going to be made and it's because somebody is is doing it they they been paid well I think everybody in the country spent all the time gambling you know flipping coins against each other uh you know somebody would win 20 times in in a row you know every what million times or something like that you got 330 million people doing it you've got 330 people that called the coin flip correct or something I mean the urge to participate in something or looks like easy money is it's it's it's a human instinct which has been Unleashed is always there I mean and uh when my dad was in Congress in the in in in the house office building I could go to the elevator and yell Sammy and a guy would come up to take numbers bets which were illegal you on the fourth floor of the house office building and it's it's people love the idea of getting rich C I don't blame him but uh I I've always wanted to get rich slow and I have a lot of fun along the way but but I don't I'm not immune from it i' I've been on football games I made one wager and and and at at the sports book in Nevada and then I was out there with a couple friends and and I went up and bet on Nebraska against it and about 10 people got up behind me and said I'll have what he's having you know got make Ryan in the movie and so they had a very unbalanced book when they got through that day and I got 500 my 550 and I made a profit of 500 it and I had somebody else cash the tickets sobody that's that's I just uh it it it's so human and once Unleashed you can't put it back in the bottle and something like Bitcoin uh you know it is something it's a gambling token and doesn't have any intrinsic value and and you know Larry sers was on a weeko it doesn't have any value I mean it doesn't have any value but that doesn't stop people from wanting to play a roulette wheel and think that if there's 37 you know one zero and or double zero doesn't make it a difference yeah it makes a difference and it's just a question how fast it eats up your money if you spend the rest of your life spending around wheel but they feature the winners and people get excited about it and that's why the slot machines make a lot of noise when they're paying out I I don't know I don't know how to turn back the clock on that let's talk about some Investments that you have placed Wagers on and maybe switched your Wagers um Taiwan semiconductor is a stock that showed up in berkshire's Holdings in a big way a couple of quarters ago and then a quarter later most of it was gone yeah and that was me that wasn't one of the two other guys there's two other people that make decision that each run about $15 billion and sometimes they get confused with me they said off if it's buying this or not and is one of the two other guys but that was my decision and and I think Taiwan semiconductor is one of the best well it's the best in that field and is one of the best companies in the world it's a fabulous Enterprise and uh Apple buys a lot of the products from them I mean they they they're good and they're coming to the United States and we're actually I think maybe even building for one of our subsidiaries helping build facilities for them but I do think that that uh there is a danger there to some I don't have any idea there's actually a danger of seismic action I mean and and and and and where they're located but that's a low probability they you know they they're smart people but but would I rather have it that was us doile company then than be a subject of who knows what depending on conditions outside their control I'd rather you know I I re-evaluated that part of it I didn't re-evaluate the business the management or anything of the sort it is a fabulous company uh and you know uh you re-evaluated the geopolitical risk from China stepping in to to Taiwan yeah I I think there is any question that conditions change I just don't know what the results of condition changing I mean China and the United States are going to be superpowers you know as long as your children live and you know and and they will always compete with each other and uh and they should and you can't let it get out of control and you can't have accidents and all sorts of things I mean it uh it it it it's a dangerous world if you're concerned about China and what that might mean for Taiwan semiconductor are you worried about what it would mean for your largest holding Apple because Apple does so much of its business there both in terms of manufacturing and sales I weigh that in but but Apple was you know it uh uh if somebody if if you're an Apple user and somebody offers you $10,000 uh but the only provisor is you'll never be able to they'll take away your your iPhone and you'll never be able to buy another you're not going to take it uh if they tell you if you buy another Ford motor car they'll give you $10,000 not to do that you'll take the $10,000 you buy a Chevy instead I mean it it is it's an incredibly valuable uh utility that doesn't mean that it can't be misused by kids and Tim Cook cares about that I mean everything can be used fire can be misused I mean but I think that Tim Cook is the one of the classiest CEOs he understands the business and he has a product which Steve Jobs basically invented but Tim Cook has managed that company in an extraordinary way and uh uh you know I I love you know we've got aund whatever we got we've got 9 900 million plus 95 million shares actually and you know it's it people say well is that a lot of money to Happ well we've got a railroad worth a similar amount we've got a utility business worth a similar amount I mean it's a wonderful business how the hell could we can't develop a business like that and so we own a lot of it and and uh and our ownership goes up a little bit every year CU they buy in their stock and and and Tim does not issue it he buys it in and and we love it meaning you're not selling any oh no I there was one period actually from a tax standpoint it was a good idea to sell some we sold some around 115 uh and uh it was a dumb sale I mean in the end we could solve the stack situation some other way and uh uh we actually bought a few shares last year we got a little few more shares when we bought we bought alagan Corp because they had some of the port I only kept two stocks they owned Berkshire halfway and apple they happen own they had 20 I don't 27 stocks or something they're all gone except for those too so I we will'll never own a bu business that makes so many people happier and useful for them and you know you probably got 20,000 photos up there and that and it Apple what Steve Jobs did with that and other people can do other technical things and I don't know whether when I look at my iPhone I don't know whether there's some little guy inside that's doing I don't know the technical aspects at all but I know that the Nebraska Furniture Mark if we don't have the Apple product people leave the store and go someplace else and uh you know I've just stood there and watched people and and talk to the people that sell our our Earth Products at the furnish market and and uh you know whether they're old whether they're young whether you know they want to have it and and lots of people have multiple uh products they have they have they've been come up with just one little addition after another and who who knows what they come up with additionally but Tim Cook has managed that business uh greatest managers obviously in history let's talk about another company you own that has a major China presence in fact that's its only presence byd the electric car company that you've owned for a very long time um you've been selling some of that why yeah well we've been selling it because the company our interest in it's being valued at I don't well the interest we had is being valued you know 6 and half billion whatever it may be and and I think it's an extraordinary company and I think the fellow that runs it who run it right along ever since we purchased it I don't know 14 years ago or something is an extraordinary person been over there Vis but but I think that uh uh we'll find things to do with the money that I'll feel better about but we haven't we haven't sold L our byd by long we're not in a hurry about something like it but but uh uh my job is to allocate the capital and within Berkshire halfway the way I would do it for my sister because she is a big shareholder and and that's why I feel about all the millions of shareholders we have very quickly can I just ask you about paramont that's another Berkshire investment that's been a relatively new one um is it because of streaming what what what happened streaming that you know is not really a very good business and uh you know it it uh uh the people in entertainment have made lots of money to the shareholders really haven't done that great over time and uh uh it's applied to many it's it's a glamorous business and and uh I had some friends in Hollywood you know and they they look for pigeons you know but and they find them I mean it's like it attracts people and uh you mean suckers it's a great way to meet girls over all I know I mean but but the uh it isn't fundamentally that good a business whether it was Distributing producing movies or and and you've got some people that have got Deep Pockets that aren't going to quit and the product they're offering people the chance to watch all those movies you know for peanuts and all that but can they raare prices we'll find out but so far they haven't been able to they've been able to attract subscribers but they attracted them at a terrible price all right you gave a whole lot of reasons why not to buy Paramount why did you buy it well we'll see what happens um Warren you are known for somebody who has the appetite and the taste of a 5-year-old you like hot dogs you like Coke you like seiz candy someone wrote in on Twitter and wants to know what you've been eating in Japan oh that's that's an interesting question I I I uh I have a Coke here and uh I me I had some Hershey kisses before I came over here and and a few things like that and uh and know I I've gotten a 92 with the habits of a six-year-old and so far it's working Charlie's 99 he doesn't eat any better than I do pretty much but I just get more attention with my diet and You Know It uh I think I mean you know your roll di I've been lucky in life I haven't really gotten that sick and the only terrible things happen when people die or get sick that you care about and you can make it decent living in this country and you know just been lucky and and you know I make all kinds of money because I'm good at some game where the crumbs of capitalism just fall off the table and and and uh and it it you know what what people contribute to society is not proportional somebody that you know gives their life and fight award that they don't need to get I always admired Hank Greenberg get away be a tough competitor and everything in the business but he lied about his age upward in order to go in the army and he landed to Normandy that I mean that is that is really uh something so I've been lucky and uh you know I I always tell people I found everything I like to eat by the time I was six I mean I mean why should I pull around with all these other Foods I know all these people eat all these green things and everything but if somebody told me I would would live an extra year if I ate nothing but broccoli and a few other things all my life instead of eating what I like to eat I would say take a take a year off the end of my life and let me let me eat what I like to eat but I don't really think it because I think it I think happiness makes an enormous amount of difference and in terms of you can't measure very well in terms of longevity and I'm happier when I'm eating hot food Sunday or drinking Coke or whatever May Hot Dogs waren We Are to have spent the last three hours with you we want to thank you for your time today thanks for inviting me you invited us but thank you Warren Buffett