S&P Erred in Cutting U.S. Rating: Buffett
By Betty Liu and Andrew FryeBillionaire Warren Buffett saidStandard & Poor’s erred when it lowered the U.S. credit ratingand reiterated his view that the economy will avoid its second recession in three years.
The U.S., which was cut Aug. 5 to AA+ from AAA at S&P, merits a “quadruple A” rating, Buffett, 80, said yesterday in an interview with Betty Liu at Bloomberg Television. The downgrade followed the biggest weekly selloff in U.S. stocks in 32 months, with the S&P 500 slumping 7.2 percent to its lowest level since November.
“Financial markets create their own dynamics, but I don’t think we’re facing a double dip recession,” said Buffett, chairman and chief executive officer of Omaha, Nebraska-basedBerkshire Hathaway Inc. (BRK/A) “Clearly what stock markets do have is an effect on confidence, and this selloff can create a lack of confidence.”
Comment: There are many investment amateurs who believe that if Buffett says so it must be right. So go ahead, buy, and blame on Buffett later.