Wednesday, September 15, 2010

Charlie Munger Interview

A couple of days ago Warren Buffett was being quoted as saying how amazing the United States is going to be and how bullish on America he was. Well there may be some schism with the famous partnership because Munger is not as optimistic.

Yesterday Munger participated in a interview of sorts with CNBC's Becky Quick at the Ross School of Business at the University of Michigan. He spoke and fielded questions for 2 hours!! The video is freaking long but worth every second. It can be seen in its entirety here. He talks about the economy (about 10% of the video) and says employment problems are around for a long time and that many industries haven't seen the worst of it.

He also said "Tom Friedman said its like the car that has to run across 300 miles of hot desert without a spare tire. We have used all the standard tricks that it is safe to use and now we still have the damn desert to cross without the spare tire."

I don't want to give the impression he is cataclysimic because he is not. He thinks it could get as bad as Japan but doesn't think the odds are that it will. Of course in my opinion Japan is a positive outcome.

Another thing that really struck me was that he talked about the bailouts, and how they were a must. He said you do not want to know what would have happened if they didn't occur. He than goes on to talk about how the Germans had such a great system but how Hitler came around with enough economic hardship. My question is this: what has changed from the bailouts? I completely agree. No bailouts and the world would have changed in ways you cannot imagine. However, that is why I am so bearish on where we are currently. The bailouts did not change anything and just ratcheted up the pressure. Instead of cleansing the sewage system we just got more sewage that is more toxic than ever. So if what would have happened was going to be so bad that even someone like Munger who is a hard core capitalist endorses them, you have to think of the probability of it still happening since the problem is still there. It is unwise not to be prepared for at least the possibility.

The the very end may have been the biggest nugget as far as overall wisdom though not related to the economy at all. He said you must study Singapore's Lee Kuan Yew, the first prime minister of Singapore. That he, almost single handily, created the best system in the history of man including Athens and the United States. For any life alive today it is a must study.

Like I said, it is freaking long, but well worth your time to watch the entire thing.


Mrs. Watanabe said...

Don't these guys just talk their book?

Market Seer said...

Sure but Buffett and Munger should have the same book. They own all the same assets and have worked together their entire life buying all the same assets.

More than talking his book I really think Buffett has allowed himself to become a political pin ball.