Warren Buffett tackles bankers’ bonuses

Warren Buffett tackles bankers’ bonuses

“Be fearful when others are greedy. Be greedy when others are fearful”. — Reuters pic

LONDON, Oct 27 — Warren Buffett has given another insight into the thinking that has made him one of the most successful investors ever.

In a BBC interview, the Sage of Omaha criticised the huge rewards enjoyed by those in the financial industry and called for a more “progressive” taxation system. The second-richest man in the world also sympathised with those who are furious with the bankers who helped to create the financial crisis.

The interview shows that the 79-year old has lost none of his charm. Buffett jokes that in another life he would probably have been devoured by a wild animal. He also defended his use of a private jet, the definitive symbol of corporate excess, on the grounds it made his life easier — even though it did undermine his “Huckleberry Finn” image.

The full interview will be shown on BBC — but here are some of the highlights:

On taxation and a fairer society:

“I get paid enormously, and it’s no great credit to me, I was just lucky at birth. It’s nice to give me a fair amount of the benefits from that but I shouldn’t delude myself into thinking that I’m some superior individual because of that.

“I don’t think society ought to count entirely on the goodwill of the rich to decide on the proportions that go back. So I believe in a very progressive tax on income.”

On the lottery of life:

“As my friend Bill Gates says, if I’ve been born in some different place or some different time I’d have been some animal’s lunch. I’d have been running real fast, and the animal would have been chasing me and I’d say ‘I allocate capital’ and the animal would say ‘well, those are the kind that taste the best’. I’ve been in the right place at the right time, and I’m lucky, I think a fair amount of that luck should be shared with others.”

On the place of financiers within society:

“If 50 of us were on a ship and there was a shipwreck, we all swam to an island, we knew we’d never be rescued — and fortunately it was a fertile island so we could all plant rice and grow enough to take care of ourselves. We would not take the five smartest people out of the 50 and tell them ‘why don’t you start trading rice futures and speculate among yourselves’, and by the way we think that’s so valuable we’re going to give you the most money and probably a favourable tax rate on top of it. Hell no, we’d get everybody producing rice.

On the public’s anger over the banking crisis:

“It’s infuriating for people to see their friends losing their jobs, their friends having their homes foreclosed on and no one going to jail. It was one thing in Enron, at least you had [Jeffery] Skilling and Ken Lay, or WorldCom or those things ... society at least felt there was a little bit of vengeance taking place. But here nobody’s going to jail, in fact a lot of them are walking off with tons of money, which they got in many cases with preferential tax terms.

“So the American public’s exasperation at this is very understandable.”

On the challenge of investing when you’re a billionaire:

“If you want to invest £100,000 (RM540,000) or £1 million, you’re probably going to get a better deal than I am because you can look at the whole universe of investments and you can find things where your £100,000 or £1 million will have an impact. I have a very small universe now ... I’ve only got a few hundred things I can look at, tops, and you’ve got thousands. If I was working with a very small amount of money I would get higher returns now in terms of percentages. But, it’s a high-class problem to have, of having too much money.”

As I was saying ...

One of Buffett’s most famous quotes comes from 2003, when he presciently described derivatives as “financial weapons of mass destruction”. Other pithy sayings include:

“You only find out who is swimming naked when the tide goes out” — his 2001 warning that the good times would not last forever.

“Be fearful when others are greedy. Be greedy when others are fearful” — his golden rule for profitable investing.

“An economic Pearl Harbour” — Buffett on the credit crunch.

“It gets dug out of the ground in Africa or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it” — on gold. — The Guardian