Buffett: US Rating Still AAA, No Matter What S&P Says

http://www.cnbc.com/id/44056326


Buffett: US Rating Still AAA, No Matter What S&P Says

Published: Monday, 8 Aug 2011 | 7:10 AM ET
By: Becky Quick
CNBC Anchor


Warren Buffett says there's no question that the United States' debt is still AAA and that he's not changing his mind about Treasurys based on Standard & Poor's downgrade.




"If anything, it may change my opinion on S&P," the legendary investor said.

Buffett is a big shareholder in Moody's [MCO 30.3023 -2.5777 (-7.84%) ], rival to S&P.

And Buffett is putting his money where his mouth is. As of June 30, Buffett's Berkshire Hathaway [BRKA 105069.9922 -2230.0078 (-2.08%) ] had $47 billion in cash and equivalents. Buffett tells me that at least $40 billion of that is in U.S. Treasury bills. Not only that, Buffett says almost all of his own personal holdings in cash and equivalents are in T-bills as well.

"I wouldn't dream of putting it anywhere else," says Buffett, adding that at Berkshire, the only reason he's sold U.S. Treasurys in the past is to buy stocks or make acquisitions. And Buffett says Berkshire is still buying T-bills, even though yields have fallen so low. "If I have to buy (Treasurys) at a zero percent yield , I will," he says. "I don't like it, but we'll do it."

That's not to say that the nation's recent spending habits, the Fed's propensity to print money , and Washington's political gridlock haven't taken its toll on investor sentiment. Buffett recognizes that, as well. "Our currency is not AAA, and in recent months the performance of our government has not been AAA, but our debt is AAA," Buffett adds.

S&P and other bond ratings agencies are responsible for rating whether entities can pay off their obligations. Buffett argues that as the richest nation in the world with a GDP of $48,000 per person, America should have no problem meeting that obligation. And, of course, there's also the benefit of having a Federal Reserve that can print money. "I can go out drinking all night, but if I've got a printing press, my debt is good," says Buffett.


© 2011 CNBC.com

He must be smoking the same kool-aid drenched weed as Okie...hahaha!

August 8, 2011, 1:56 pmMergers & Acquisitions
S.&P. ‘Negative’ on Berkshire Hathaway

Not long after Berkshire Hathaway uncharacteristically entered the takeover fray for Transatlantic Holdings, offering $3.25 billion, the credit ratings agency Standard & Poor’s had a surprise of its own: It lowered its outlook on Warren E. Buffett’s company.

While affirming the AA+ ratings of Berkshire Hathaway and four other insurers, S.&P. said it was revising its outlook on the five to “negative” from “stable.”

The move, S.&P. said, was a direct consequence of its decision on Friday. to lower its credit rating on United States debt to AA+. The other insurers are Assured Guaranty, Guardian, Massachusetts Mutual and Western & Southern.
The agency said in a statement:

Our view of these companies’ fundamental credit characteristics has not changed. Rather, the rating actions reflect the application of criteria and our view that the link between the ratings on these entities and the sovereign credit ratings on the U.S. could lead to a decline in the insurers’ financial strength. This is because these companies’ businesses and assets are highly concentrated in the U.S.

Likewise, S.&P. said, “If we were to lower our rating on the U.S. again, we would likely take the same rating action on the affected insurers and their related obligations.”

The class A shares of Berkshire Hathaway were down about 1.9 percent in early afternoon trading, amid a rout in financial stocks.


Well, guess S&P got back at him.