Buffett offering comfort

As usual, he makes more sense than anyone else. He tells Charlie Rose that the economy is going through a Pearl Harbor-type crisis and that things will continue to get worse. But he also expresses support for the rescue package ("I'd rather by approximately right than precisely wrong, and it would be precisely wrong to turn it down"), and for Treasury Secretary Hank Paulson ("He knows markets, he knows corporations’ work, he knows money, and he’s got the interests of the country at heart"). He also expects the patient to be back on his feet and better than ever (transcript is a little choppy).

We had a seven for one improvement in the average American standard of living in the 20th century. Now, we had the great depression, we had two world wars, we had the flu epidemic. You know, we had oil shock. You know, we had all these terrible things happen. But something about the American system unleashed … a potential to human beings over that hundred years so that we had a seven for one improvement -- I mean, you have centuries where if you've got a 1 percent improvement, then it's something. So we've got a great system. And we've got more productive capacity now than we ever have. The American worker is more productive than he's ever been. We've got more people to do it. We've got all the ingredients for a sensational future. It's just that right now the athlete's on the floor. But we -- this is a super athlete.

On the chances of the rescue plan actually making money:

If I could take one percent of that 700 billion pot and take the gain or loss from it and be their partner, and they would buy the stuff at market, I'd make a lot of money. I mean you have hedge funds and people like that buying these assets to yield 15 or 20 percent, I mean, that’s the buyer for these people that are trying to unload them. The U.S. Treasury has got borrowing costs like nobody else has. They can borrow basically unlimited amounts. They can stay there for years and years. These assets will be worth more money over time. So when Merrill Lynch sells a bunch of mortgage-related assets at 22 cents on the dollar like they did a month or so ago, the buyer goes -- is going to make money, and he’s going to make a lot more money if it happens to be an institution like the U.S. government which has very, very cheap borrowing costs.

On how the housing bubble got so out of hand:

People don't get … smarter about things that get as basic as greed and you can't stand to see your neighbor getting rich. You know you're smarter than he is, and he's doing these things and he's getting rich, and your spouse is getting unhappy with you because you aren't -- pretty soon you start doing it. And so you get what I call the natural progression, the three I’s: the innovators, the imitators, and the idiots. And that's what happens. Everybody just kind of goes along. And you look kind of silly if you disagree.

Here's the link to the interview and here's the transcript. It's really worth checking out.