elections, the global economy and much more. but first, before we get to all that let's bring you up to speed on the overnight market headlines. >> good morning. major european markets are under pressure in early trading. it's a big morning. slumping now to merely five month lows following elections in france and greece. in greece, the two main parties fail to win enough votes to form a governing coalition. francois hollande claimed the president from sarkozy. results reflecting public discontents over austerity measures and serious doubt over their ability to fix the debt crisis. asian markets trading lower overnight. u.s. equity futures also pointing to a lower open on wall street. in addition to all that, oil and other riskier asset classes ares also slumping this morning. and meantime in a flight to quality, yep, u.s. treasuries are rallying.

as for currencies, euro hitting its lowest level since january. >> and congratulations on making it back last night. >> it was a tough flight, but good to be with you and warren over the weekend. >> it was great seeing you here. we'll talk about a lot of things this morning, but with so much of the global market turmoil, cooperate be a better dayton joined for three hours by the world's most successful investor. warren buffett got up extra early with us because out here it's only 5:00. thanks for getting up early first of all. >> we have to start this earlier. >> you saw what happened year night based on the elections in europe over the weekend. what do you think about what's happening with the global market selloff? >> it really doesn't make any difference to us. we were buying stocks on friday and we'll buy the same stocks today. and we'll buy them a little

cheaper. so i never complain about buying things cheaper. >> you were buying stocks on friday, you said stocks multiple. this is not just one issue is this. >> just two. >> two stocks that you're buying? >> yeah. >> are these u.s. stocks? >> yes. >> are these -- >> i think you've exhausted your -- >> what i'm going to get out of you on this. but are these issues you've been looking at for a long time. >> issues we already own. >> so you're adding to your positions and i'll buy more based on the selloff? >> the lower they go, the more we like it. >> obviously what's happening in europe is something that people have been looking at for a long time. when you see the shift away from austerity and the push back coming from the voters, what does it mean for the future of the euro? >> it will be very difficult to resolve their problems. you've got problems of getting the constituencies in those

countries behind and coordinating in some way. so it's a really tough problem. >> did you anticipate that the voters would swing this way over time? >> it's not surprising. you tell people to tighten their belts and give them a chance to vote on it, it's the real problem of dealing with 17 countries, though. because even if you manage to sell one or two or three countries on the fact that it's an advivisible vours of action, you need 17. and you need to have somewhat common 23is cal pofiscal polici. >> and we see what's happening and we get the fact that this is a bit of a selloff, this is trouble that comes along the way. it's difficult to predict, but

if you look two, three years down the road, where do we wind up? >> i really don't know the answer, but there will be a rlo more he especially saids. but 10, 20 years ago, europe will be producing more goods better cap take. it's a huge mar kell. people have lots of skills. wonderful companies over there. so it isn't like it's the end of the world. but it can be one very messy process in getting from here to there. >> what do it do to the relationship with the united states? the united states has not fixed its problems. the euro is at a three month low. united states looks like a stronger place but how long can in a continue. >> i think it will continue a

long time. united states is on a different path. we address the problems of our banks three years ago and put lots of capital in them and they retained lots of capital and cleaned out significant percentage of their bad loans. so we have a whole different banking system in the united states. plus we have our own currency. and being able to issue all of your debt in your own currency is just an entirely different game than having to issue it in some other currency. >> the ecb has figured out a way to extend it balance sheet with the ltro. do you expect more fiscal easing -- or more monetary easing policy to come from them? >> well, a trillion euros isn't bad. they had a funding scare five or six months ago and the banks are in weak capital positions in many cases, loaded with sovereign bonds that mark to market don't make them look very good. so they had a big funding

problem. and the ecb stepped in in a major way and stepped in with three year paper. so they head off a funding crisis. but the problems haven't been solved with the banks over there. neff's been reluctant to raise capital. you had one in italy that did it, but they have a lot of problems. they've solve them, but not without a lot of pain. >> and that's where the politics get awfully ugly. in greece for the election over the weekend, we saw 20 knee owe nazi candidates who came into power.

>> a lot of things worry me, but i believe they get resolved. asking people to vote for pain is not necessarily a winning political -- we won't have two candidates in our country that will ask people to vote for pain. and it can be done under certain circumstances. in a time like world war ii, people voted to restrict hair con simple shon and all kinds of things. but it's not an easy job and particularly not easy to get a number of countries to do it. they always point to the other guy saying he's getting a better deal than we are. >> and i know joe and an uhe have questions. >> questions and comments, i guess. >> not that that's a surprise. >> i guess the whole structure of the eu and the common currency without the fiscal coordination, i guess i didn't think it new fluff to see how it will actually work.

you're really talking about the southern countries that have sort of lived beyond their means saying, no, i don't -- even though we're broke, i don't accept austerity and i want germany to keep funding my lifestyle. and you're expecting the germans who have -- they have their own trouble when they had to bring in eastern europe and they went through a lot of austerity themselves. and they've worked hard and they finally get their day in the sun where things are going well and you've got an entire southern region asking them to fund their lifestyle. what would normally happen, warren, i think is that you you can't get people to accept austerity, so you devalue your currency and de facto their buying you power goes down and they have to sort of accept it because that's the way it works and then you have better exports. and without being able to do that, i don't see how this finally works. but i don't see -- when france says we'll elect a social list

and we want germany to keep paying for everything, i'm watching it it happen and i'm trying to think of what we could -- how it would work here. i know in a we have some poor states that the peg has to subsidize more than some of of the other states, but we just don't feel that way here in this country. they have not accomplished the united states of europe and they're nowhere near will. >> well, should you have told them that 15 years ago because you've given an analysis of the problem and they do not have an answer for you. >> and we've talked before, andrew said he's been worried about it for a while, but short of this just not working and just sort of accepting defeat, i don't see how this really looks. i don't know what the next step is in terms of when -- don't you think it's time for greece to exits the euro? >> they might have. >> everybody might have to. >> that's what i've been saying. the second you get hollande in there, the relationship with merkel will be ticket.

difficult. my question for you, warren, is there anything in europe that you would actually invest in today given what's happening? >> well, we bought outright a did tou dutch collate last week. but everything joe said is 100% correct and no one knows the answer to the points he's laid out. but that doesn't stop us are buying a good business over there. if i got a call today on some major company in it europe that i understood and i knew had a good product and a good future, we'd buy it. we'd take into account what's going on over there, but we'd buy it. >> what would happen, though -- go ahead, andrew. >> i'd just be embarrassed if i was the french. it would be like going back to my parents again and again and again and asking for -- will eventually my pride would stop me. the proud french. but they can't live the way

they've been living and yet they're still straight faced going back to the germans saying we're not going to cut. because there's not enough millions to tax at 75% to pay for the 56% of gdp that would go for the government? there's not enough people there to do that. >> joe, if you were a nephew and you had a rich uncle, i'm not sure you would be too embarrassed to go back to him for more. >> we had a 2.2% gdp, too, which was slowing and then the employment report where i think over the weekend, it looked more negative to me, the more i read, the more negative it looked as people gave up on looking for -- there's no way that what's happening over there can possibly be seen as anything but a negative for our numbers. maybe it doesn't take a material amount off of gdp, but it certainly won't add to gdp, will

it? >> i think you're probably right on that but wi don't buy stocks or bibusinessusinesses base the outlook for the next six months. i bought my first stock when i was 11 years old and at that point, we were losing the war in the pacific to the japanese. and it would be pun to foe back and look it at the headlines on the day i bought my first stock. because things were looking terrible and i bought. so i think it's a terrible that is -- i think the worst mistake you can make in stocks is to buy based on -- buy or sell based on current headlines. >> in the great debate with austerity and stimulus, and it may be almost will unfair to frame it that way because we probably need a combination of both, you how do you think about this issue when you look at what's happening in europe and you look at this debate which by

the way is a debate that's happening here. >> you can't run controlled experiment, but actually i think we've handled it pretty well and much better than the european. but we've had an easier way to handle it than the europeans. if we'd had their structure, who knows what would happen. but because we've had a structure where if the fed and the treasury and the government basically said we've got the will and the ability to give this country a jolt on the way back, we can follow the policies we set out to follow. and we have that had stimulus from the word go in the fall of 2008. the term got unpopular, but we've had continuous stimulus. anytime you're spending 7% or 8% or 9% more than of gdp than you're taking in as a government, that is huge

stimulus by any keynesian definition. it's stimulus when the government is spending way more than it's taking in and we have estimate husband right until today. we are running at whatever, 8%, of gdp as a deficit. and keynesian is probably cheering up in heaven. >> but the other side is saying it's too much. >> we'll have a lot of argument between how and election day. but i would say overall that the policies we followed since really the great crash of 2008 have been pretty darn good. it would be nicer if gdp were galloping maybe at 5% or 4%, but we've had a completely resuscitation of the viability of the banking system, we've had, you know, all cases except residential construction, we've had the economy come back.

so most having record earnings. big ones all having roerd earnings. we're employing more people. but not at any galloping pace. >> maybe we can talk more about that after this quick break. but more maybe this how do you get back to 4%, 5% growth. joe, back over to you. >> does warren think civilized people don't invest in gold? >> yeah, charlie monger's comments over the weekend. >> such a great quote and i love when -- the gold bugs. we usually dance around the whole discussion about -- and warren in the past has talked he'd rather own all the farmland than gold, but that was throwing down the gauntlet to all the gold bugs. classic. i love arguing and i love stirring things up, but that

must have really gotten him. no one wants to be called boorish -- >> charlie makes me look mealy mouthed. >> anyway, coming up, gold is traditionally a safe haven investment in times of geopolitical uncertainty, so why does bill gates shy away from it? we'll find out when "squawk box" returns live from the hollywood diner which is just outside it says here -- it's somewhere out there. anyway, we'll be back. it's gonna be a casual thing. ♪ ♪ ♪ [ male announcer ] the tight-turning, space-saving, eco-friendly smart.

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if you're just waking up this morning, global markets are under pressure following weekend election results in france and greece. in greece, the two main parties failed to win enough votes to form a governing coalition. in france, the socialist won. only second one in history. claiming the presidency from nicolas sarkozy. interesting piece in the "journal" basically talking about sarkozy didn't necessarily deserve to be reelected. didn't push through the reforms that he was supposed to do. anyway, the u.s. equity futures indicated down about 90 points. only 66 as far as the futures,

bounced a little in the close on friday after that jobs number. there's what's happening in europe. really not -- nothing significant. oil below $100. the yen was below $80. and then also the ten year looked significant down at the 1.8 and change level. but we'll see. we were already in a downdraft after last week and this is certainly you beunsettling. >> i saw gold down, but i haven't seen by how much this morning. i don't know if you've seen the quote on that. you were talking about gold prices. down about four bucks. 1641. obviously a huge question people have asked. we've seen a big run up in gold over the last four years or so and that's something that was definitely talked about this

weekend here. joe just talked about charlie monger's comment that civilized people don't buy gold. this weekend i got the chance to sit down with bill gates. and he's not a huge gold fan either. listen in. gold today was something that both charlie and warren made pretty clear they're not a big fan of. what about you? >> i'm search in thatcamp. historically i did have some silver investments that at a time warren actually had some silver. he got out fairly quickly. i stayed in and did very well on silver. but gold is a tough one because it's so psychological. and if central banks or the imf ever decided to take advantage and i think countries need liquidity, hey, there's an asset that's not doing anything for the citizens.

and then because it's purely psychological, it's not like people say when it gets to $800 and ou an ounce, people buy four times as much jewelry. there is nothing that steps in as a buyer at any price. it's just purely other people in the future will think items he more than it's worth today. if you think the world is scary and people will pan issuing, i'm not saying that theory doesn't exist, but there is no floor if ever people got that view. do you -- we had an invention session with people recently, as this price gets high and you're looking at a 10, 20 year time frame, the supply equation will change. so the bulls have to offset the fact that there will be quite a bit, not in the near term, but over a period of time and these people are claiming this that they can predict gold prices out into the future, but certainly

with equity, you can feel like you you can. well, there you have to understand the innovations in digital mining techniques or some new extraction techniques which actually i think are pretty interesting. and i doubt many people factor that in. >> we've never even talked about the supply picture. but he's talking about eventually being able to increase the supply of gold. you had a shareholder who asked you you a question about god over the weekend, and your response was pretty interesting. berkshire versus gold. do you want to talk about how that's performed over the years? >> yes, but certainly when we took over berkshire, berkshire was selling at $15 a share and gold was selling at $20 an ounce. and gold is now $1600 and berkshire is 120,000. but you take take a broader example. if you buy an ounce of gold today and you hold it at 100 years, you can go to it every day and you could coo to it and

fondle it and 100 years from now, you'll have one ounce of gold and it won't have done anything for you in between. you buy 100 acres of farm land, it will produce for you every year. you can buy more farmland, all kinds of things. and you still have 100 acres of farmland at the end of 100 years. could you buy the dow jones industrial average for 66 at the start of 1900. gold was then $20. at the end, it was 11,400, but you would have gotten dividendses for a 100 years. so a decent productive asset will kill an unproceed ducts differen unproductive asset. >> why don't you join me and buy some you cows. i like your farm land, but you're in iowa. you love steak. we can have leather, we could

have made nure, we could have m. we would employ people taking care of the cows. that little bar of gold that's worth whatever, we had one in here, i think it was worth like $60,000 or $70,000. i could can get like so many head of cattle for that and be row ducts difference. that was my point. but you like farm land. are you too lazy to take care of cattle? >> absolutely. have you ever tried to take care of cattle? >> i've tipped a few, but i've never -- >> you -- >> no i have not. >> that's mean. >> no, they're sweet. but they're not too bright. like me. >> you can get somebody else to do all the work, give them a percentage of the crop and you can sit back there for 100 years an get a percentage of the crop and you still have the land when you get all through. i will guarantee you that farm land over 100 years is going to beat gold and so are equities.

>> why do you think gold bugs get so irate? because they really come out. >> yeah, very interesting. if you go on cnbc and say that bonds are kind of a poor investment, people don't get mad at you. you don't hear from the treasury. you can knock almost any investment. but when you talk about gold and of course that says something about their motivation for ownership, they want people to agree with them, they want -- they want everybody to get so scared they run to a cave with gold. and caves might be a better investment than gold. at least they're not producing more caves all the time. so they want people to be as afraid as they are. incidentally, they're right to be afraid of paper money. their basic premise that paper money around the world is going to get worth less and less over time is absolutely correct. >> you just disagree with the

investment tloheory beyond that. >> right. where they run from that and they should run from it, is where in my view they make the mistake. but they have a correct basic premises. >> guys, we'll send it back over to you. a lot more coming up. >> and of course our conversation with warren buffett is just getting started. so stay tuned. and up next, his thoughts on tech inversements as facebook kicks off its road show. and global stocks coming under a lot of pressure overnight following that eweekend both frafrnce and greece. if you are one of the millions of men

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this weekend warren buffett faced tens of thousands of shair ho shareholders. today he faces "squawk box." plus in-depth conversations with charlie monger and bill gates. this is a special presentation of "squawk box" live from the hollywood diner just outside omaha. welcome back to "squawk box." i'm joe kernen along with andrew ross sorkin and becky quick reporting live are from just outside omaha, which apparently is right next to iowa. >> in iowa. >> but omaha is right next to -- right on the border. like they didn't really want to settle if seems like in nebraska. there is so much of nebraska

west of omaha, i don't know, they were ambivalent between iowa and nebraska. we'll get right back to mr. buffett in a minute wi. major european markets under a bit of pressure, but manageable. slumping to nearly five month lows. they've already been in a down trend, but after the elections in france and greez this weekend and mar kell didn't farewell at all in germany, her party at least. in greece, the two main parties fail to win enough votes in order to form a coalition. in france, social liist claimin victory from sarkozy. to me, just go ahead and do it. embrace what you are. elect a socialist, be socialist. you are a socialistic country, so just embrace it. which they did. >> which will make it that much harder to keep the euro situation together. >> which makes it that much cheaper to visit paris.

results are all good. results reflect public disconsent other than the austerity measures. u.s. equity futures pointing to a lower open on wall street. i watched -- on premium cable, you can watch midnight in paris for free. if you didn't want for spend any euros on watching it. but beautiful scenes. have you seen it? >> yes. >> owen wilson is so annoying, but i can get through it because of the scenery. but i did see bitter sweet seeing carla bruni. does she stay with him now that he's a nobody? >> i love that when it comes to france, that's where you go, to the movies. >> what do you mean? >> that's where your mind goes. >> no, doesn't go to movies. but we're visiting paris within a month or two and i would like a 1.20 euro would work for me. today's top corporate story,

facebook -- you're an expert on this, too? >> just talking to al roker about it. >> did you find out how weather is going to be for the ipo? >> it's on may 18th. al couldn't give me the weather yet, but we'll come back to him will and find out. >> he can give you long term hotter because it will be summer. facebook officially kicking off its ipo pitch. maybe kayla can tell us about it. does it need to be an a. nice day on the 18th? we really didn't care, do we? >> maybe it's like a wedding where if it rains, it's better luck. but even though warren butch at the time might not be buying facebook, thousands of investors who want to get their hands on any bit of it that they can and several hundred of those investors will be here today no a face book group lunch where the management will give a giant presentation and take questions and answers about the deal and bin vesti investing in the company going forward.

investors will have a lot of questions about the company, whether the valuation of just under $100 billion is justified. how it compares to google's ipo in 2004 which some say was actually pretty appropriately valued even though they did a dutch auction. and finally whether mark zum zuckerberg will show up. on friday, there was no sign of zuckerberg zuckerberg, their finance executives did lead the day. people are still unclear as to whether zuckerberg will be here, but if he does show up, it will make it worth the price of admission into the ipo regardless. >> all right, kayla, thank you very much. warren, over the weekend, we talked about this and you mentioned that you have spoken with mark zuckerberg will what he needs to be doing with his company. when did you talk to him? >> last year at sun valley.

>> and what was the basic -- did he come to you or did you reach out to him? >> well, a shareholder or somebody said they would like to get together to talk a bit about facebook. and so we talked. >> obviously you've been in a position of taking a private company public. is that basically what you were talking about? >> yeah, although i took a private company public when i was in the tech world and berkshire, we never really took public. >> you're a public company now. started as a private partnership. >> sure. >> when you look at what's happening with facebook, i know this is not something you're a fan of, but you're also not saying at this point -- you wouldn't buy into it because it's not something that you feel comfortable with, but you don't think it's a bubble scenario. >> oh, no. i'm an agnostic on a company like facebook. anytime you get a truly have a ordinary business and it's obviously an extra ordinary business, but they're the hardest ones to value because

the question is whether five or ten years from now that they will bes as extraordinary as they are now or they may keep doing more and more wonderful things. just harder to figure out than say coca-cola. coca-cola ten years from now will be bigger and more profitable in my view than it is now. but there wouldn't be be some quantum change in either direction. so much easier for me to figure out what coca-cola is worth than google or facebook or you name it. >> although did you get into technology stocks with ibm. is that a different company? >> it's certainly a company that its future will not look as different five or ten years from now in my view than it does now, than will happen with a facebook or apple. it can be in either direction. i would never short those stocks. i'm not saying they have anything but brilliant futures, but i just don't know. >> so that's the question is when it's a fast growing company and a quickly changing arena?

>> just harder to figure. and it's fascinating to watch, but i don't have to draw a conclusion on even tens of stocks. i just have to look at one or two and feel that i've got a reasonable fix on what those companies will look like in five or ten years. >> andrew. >> warren, a question on facebook but technology companies bloodily. a number of the ipos we've seen including facebook have dual class shares where the founder in this case mark zuckerberg really does control the company. would he seen with google and zynga and so many others. i'm curious when you think about corporate governance and you think about the dual class shares how does it impact you as an investor and as a ceo how do you think about it? >> as an investor, it doesn't change my view much. we're buying into a nope quantities. when we buy into the "washington post" company as we did in 1973, the graham family controlled one of the classes of stock.

and i wrote mr. graham oig a let willer and said that was fine with me. there are a few other people if castro controlled it or something, i might have felt different about coming in. but i think if you know what you're getting into, you can make a decision on that. at berkshire, we have two classes of stock and we have made a careful determination that those two classes have to be treated identically. when you have a situation where the super voting stock can be sold at a big premium about they sell the company to what the diminished shares sell for, i think that's wrong. i don't think you should be selling the boat when you sell a coat. and i've seen that done. we've had it done to us in some situations way back in the past. >> what about with google? >> i do think that when you have

some extraordinary people running a business where the business is very tied to their particulart talents, you may wat to protect tell to get a chance to he -- >> but it's one thing to know what the stock structure is as you buy if to a stock. it's another thing to have it change once you're in. >> my memory, i think dow jones changed it. i think lee enterprises changed it. various companies. probably more the media field than others. a lot of the media companies had a dual structure going in. others created it after the public was in. i think that gets a little more dubious. >> warren, one of the arguments is that when things are going well, for example right now things at google going relatively well, when everything's going well, there is no problem. nobody will come after the company or come of a ter the ceo, but it's actually when there's trouble that as a shareholder you might want to have more power than you would in one of these circumstances.

no? >> i won't argue with that, but i would say if you had an extraordinary company back in 1973, cap city broadcasts was a truly extraordinary company. that company in 1973 was selling for a third or less of what it was intrinsically worth even though it was think managed making might have se magnificently. so anybody with money at a time like that could have walked in and taken away a great group of assets at a discount from its intrinsic value, but a premium to the market value. and that would have been a mistake. i can pick out examples the other way, too. it's not like i'm a big fan of dual classes, but i can see some reasons for them. >> while we're on the topic of some of the other companies take are in the news right now, can i ask you about yahoo! too? there is news about its ceo that

he did not in fact have a degree in computer science. and now dan lobe and another investor who i think owns a little over 3% of the stock are pushing for his ouster. what do you think about what happened and the company's announcement that this was an inadvertent error? >> i don't know all the facts, but just from the few sentences i read, it doesn't sound like an inadvertent error. if i thought as a director, if i thought that an officer had consistently misstated some fact to me, i think i would probably do somethingwilly had that one and about you can't rust the people you're working with, you've got a are problem. >> right. another stock we're watching is walmart. and that is berkshire's 7th largest holding. >> sounds about right. >> so walmart has had its own

issues p there w issue. there was a report alleging bribery in mexico. has that changed your opinion about the soc about the stock? >> not really. we have 270,000 people working at berkshire. i will guarantee you during the rest of the day, some people will be doing something wrong. it scares the dickens out of me because you can't have 270,000 people without somebody doing something wrong. >> this is different, though. >> well,what's particularly different in this is they handled it once it came to their attention. that's the problem. >> the question is does it undermine your faith in the board given that it does team to have risen to potentially that level or at least management back here in the u.s. >> i don't necessarily think -- i've not read anything that it got to the board, but i have read things that it got to the

management. and if story as reported in the new york sometime as f"new york imply that had it got to the higher levels of management and then got brushed aside and did not get reported, you know, that's a big mistake. >> would you have second thoughts about the company at that point is this. >> it wouldn't be the same individuals running it. there may be things that happen to certain individuals because of this, but i don't think it changed how i viewed all 8,000 people when solomon did it. it did mean they needed to make changes. >> andrew, i'll send it back over to you. >> if you have comments, questions about anything you see here on squawk, anything that warren said, please shoot us an e-mail. squawk@cnbc.com. coming up, why charlie monger

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here now, becky quick. >> welcome back, everybody. we are spending the morning with warren buffett and this weekend, i got the chance to sit down with his right hand man, charlie monger, and we spoke with what's been happening on wall street whether the rules there need to be tightened up. warren, take a listen to this. we had michael lewis on the show

this week and he said that the volcker rule is not enough, it needs to have way more teeth, there need to be stricter things. >> i totally agree. if i were making the rule, i would make michael lewis look like a piker. >> i thought you might say something like that. if you were a benevolent dictator and this was yours to lay out, how would you lay it out. >> take the rapid training by the computer geniuses. those people have all the social utility of a bunch of rats admitted to a grainry. i never would have allowed the rats to get in the grainerry. i don't want the brilliant young men of america being rats in somebody else's grainery. that's not the right way to run the republican and if you would

let me write the law, that wouldn't happen. but of course nobody is going to let me do that. >> you know that he would like to see more restrictions on do . >> that's charlie's thoughts. you know he'd like to see more restrictions on wall street. what do you think about that? >> wishy washy. >> pretty strong. s. >> charlie's pretty old testament. i don't believe quite as strong as he do. we would have both thought that the repeal was a mistake. banking is a big business. it's a profitable business and there's plenty of money that can be made with banking. banks in this country in effect can issue a government guaranteed piece of paper. and once you have the right to your government guaranteed piece of paper, your customer doesn't care whether you're doing dumb things or not. so the market does not impose a

discipline on you because they're worried whether they're going to get the money back. they're going to get the money back because of the fdic. the undisciplined way to raise huge amounts relative to capital is potentially dangerous. and we've seen that in the past. so you do not want banks to have a free hand in doing lots of things where there's great interconnectedness and where dominos can get lined up. that's what we had a few years ago up. >> said you opposed the repeal of glass-steagall but can you put the genie back in the bottle? >> no. and then you get the whole argument about the international system and then you say do you want a banking system in the united states that has its hands tied behind its back with

european entities. i can see that argument. but the end the government has to decide what banks can do and where they start doing it and where the limits things they can do without getting into an area where they start causing dominos to topple. >> that obviously gets us into the too big to fail top beiic. andrew, who better to ask than you? >> i want you to know i am wearing on the desk right now your sneakers here. these are brooks sneakers that are berkshire sneakers. but i do have a question about the volcker rule. when you think about glass-steagall, if we could have put that in, would that have changed the outcome of of the financial crisis? i've heard so many people say if we just had that, we wouldn't have had the crisis and i think of lehman and bear and i say glass-steagall had nothing to do with them.

>> glass-steagall was not the primary cause of what happened in 2008. it's very hard to get at the primary cause because we all participated in a bubble. we liked the bubble while it was going on. government liked it, wall street liked did, main street liked it, homeowners really loved it. they were able to keep refinancing their homes, it became an atm machine for them. it's hard to pick out one group and say, ah, there's the culprit. but certainly the abilities of banks to have sieves and that sort of things, all kinds of things spring up. so you do need intelligent regulation of banks. in the end you can't let them do everything they want to do because they will -- we owned a bank at one time in 1969 and they passed a bank holding company act. they said it wasn't a good idea

for an ntity that owned a whole bunch of other businesses like we did to own a bank and they were probably right. >> do you think the banks are still too big? wells fargo, which i know you have a big stake in, jpmorgan, with y which you have a personal stake in? >> our banks in this country are less concentrated that many other countries', including canada. i don't have a problem with the size of banks. up need capital commensurate with size and up need regulation, but size did not cause the problems. europe has been -- i mean, in ireland the banks achieved a size relative to the economy that were ten times what they might be here. the size of our banks was not a problem. >> joe, you asked about why we were in iowa and not nebraska. warren can tell you more about

that in just a little bit. i don't know how tight we are up against the top of the hour. there's an actual reason we're here. >> the missouri river defined the border and the missouri river changed direction. >> it just looks like omaha. you downknow whether you waidn' wanted to leave iowa and you just left it out west for the cows. it's a great line where the character says "i thought i was dead, too, but then i found out i was in nebraska." you didn't embrace it. you're kind of an iowaite. >> i can see why you're saying those things from a distance. >> are you going to show those

sneakers? >> i don't know if warren is wearing his sneakers. >> i have mine at the table. >> these are special sneakers from this weekend. they say brk, these are limited editions and they have inside the sole here, can you see that? there is warren b., the man himself. i assume, warren, you're going to run a marathon later this year in these sneakers yourself. >> they were selling so strongly the other day. i sold my pair, too. >> what do they sell for, warren? over $50? because andrew was only too happy to accept this over $50. you haven't been to the legal training. you can wear one of them. >> just getting started. warren buffett is fielding questions from the berkshire faithful. he did it all weekend and today he's got two more hours left

with us after the break.

this is a special edition of "squawk box," live with warren buffett, the economy, taxes and making money now. warren talks to squawk fresh off the berkshire annual shareholder meeting as the second hour of "squawk box" begins right now. good morning and welcome back to "squawk box" on this monday morning. i'm andrew ross sorkin, along with joe kernen and becky quick is in iowa with warren buffett.

let's get you caught up with what's going on in the world. european markets sliding this morning, the nikkei finishing at a three-month low following the election results in france and greece, which recent agreements resolving the eurozone financial crisis putting all that into question now. that's what those elections are doing. that's what has the markets under pressure. also facebook's ipo road show begins as it gets set for the largest public offering in the silicon valley. even though it's not trading, several street analysts are already rating it a buy. and britain's barclays will offer a variety of products, including five-year certificates of depos that pay up to 1.75%. let's take a look at futures at this hour. dow looks like it would open about 90 points lower, nasdaq would be off as would the s&p 500. joe?

>> let's continue our special interview with warren buffett following this weekend's berkshire hathaway annual meeting. they are in carter lake, iowa, which is next to omaha, iowa, which is what it should have been. the more i think about it -- >> the next time warren sends you a brick, he's going to throw it at your head. >> what's a brick go for? that didn't cost as much as a sneaker, as a shoe lace even, right? >> personalized bricks bring big money. >> they do? but a regular brick is not that expensive, is it? >> yes, but you've got a very special brick. if you keep talking this way, you'll get another special brick. >> you're very generous with the brick. that is at home in the study in a very prominent place. >> i won't ask where.

what joe really wants is he wants a brick on a net jet. >> there you go, there you go. go ahead, joe. >> i was just wondering whether do you have enough, warren, enough resolution -- you must in all your businesses -- to have felt this latest semi-swoon we've seen in the last three months and do you think it makes for a repeat of the last two years or is it different? >> what we've really seen, joe, since the fall of 2009 is very steady but very slow improvement in business, everything except residential construction. and there's been no acceleration in the rate of improvement in the last few months but there hasn't ban big deceleration either. our businesses in the first four months, if you look at our five largest businesses outside of insurance, they look to me at the present time like they'll

all set records this year. and our businesses are getting better. they've already in most cases got i don't knten quite good bu getting better at a slow pace. there's not been any noticeable deceleration. there hasn't been any acceleration either but i don't really see much change. i see a little but it could be a false pickup, but i see a little pickup in the residential construction arena but i wouldn't want to bet on the fact that means a lot. >> so why did we get the worst jobs report on friday we've seen in six months? >> it's still 100 some thousand, had you a revision upward in the previous months. that may be what you see until residential construction comes back. maybe it will be 200, maybe a 100, maybe 150.

that's aren't terrible figure, they're just not good figure. we have come back from what was an incredible shock to our economic system but we've kept coming back. >> what would it take and could we get the country moving back at a ddp of 4% to 5%? >> well, we can't keep 4% to 5% over time but we could have a jolt upward and we will when housing construction comes back. when we're building a million residential units a year, things will be growing faster. but you have to realize if you get 2.2% and have you 1% population growth, that's a 1% gain in real output per capita. that means in a generation in 20 years, you have over a 20% gain in gdp on a real basis per capita. that's tremendous. if every generation lives 20% better than the generation before, that's pretty dramatic. we need more than that right now to come back from the big dip we took, but if you could guarantee

the american people a 2.2% real gdp gain for the next century it, would be nirvana. >> we talked a little bit very briefly about the elections, the french elections, the german elections and what's happening right here in the united states. right now "usa today" has something that puts romney and obama almost at a dead heat. it got obama at 47, romney at 45 but i saw another poll that had romney at 48 and obama at 47. how much is tied right to the economy? >> a lot will be tied to the economy. overwhelm overwhelmingly it will be tied to the economy in my view come november. >> you're talking about an economy that's not going to improve that quickly, which means the jobs numbers aren't going to improve quickly. what does that mean in the fall?

>> it probably means you have a close election. >> you and romney weren't in the same businesses obviously but you must look at his track record at bain and think he was a pretty talented businessman, right? >> well, i thought they bought some of those businesses very well. they bought them at the right cases. some of them turned out very well and others did not turn out so well. because leverage, the financial results when things worked out well, financial results turned out far better than the basic economics of the business and of course in some cases they took a lot of money out of the businesses and then the businesses failed. but overall, you know, i have no fault with him as a business person. >> you're in a different business. i had one other totally separate question that i was saying. you love single-family houses. you've expressed that again and again and again as like the best investment out there and you said i wish i could own a hundred thousand of them but it's too hard to do that because

you got to like manage each one. a guy like you, i figure you've been sitting around figuring out the way to do that and i wondered have you come up with a way to -- are you already -- i mean, bricks obviously one way to do it but have you come up with a better way to make a big investment in single familiar lip houses? what would be the easiest way to do that? >> it's very difficult to do in scale. since i made that statement, i've had a lot of letters from very promoters around the country saying join my fund and we'll do it in the fund. but if you look at the cost of doing it and everything, it's going to work out fine for the fund manager and how it works out for the vestor is a different thing. wall street has a way of creating products for it than it does for the industry. there's a lot of frictional costs to managing single houses. if you contract with someone and pay them them a very significant amount of revenues to manage it, you've taken a lot of the return

away. but what i said was particularly attractive that has some skills perhaps, i think they're going to do very well. i know they're going to do very well if they buy into a city with rising population over time. >> what about mortgage servicing? there must be some way can you do it, something connected to the whole industry that you could buy in bulk that would make sense for berkshire. >> well, obviously i think about it. the truth is when housing comes back, and it will, all of our businesses will do well. they're doing pretty well anyway. we've got a big better on the american economy and we will have it -- our railroad will do better when there's a million housing units. a lot of our businesses will. i don't have to play it directly. >> warren, i wanted to switch gears for half a second just to what seemed like one of the big headlines that came out of the weekend, which was your remark that you had almost spent $22

billion buying a company a couple months ago. i was hoping you could give us a little bit of color. i'd love if you want to tell us whoit or hint about what happened but more necessarily about why you didn't buy the company. >> we couldn't come to terms. but we're always looking, andrew. and there aren't lots of big companies that you can make a deal on. there are lots of big companies that i don't understand so they're outside my circle of competition. there are some that have no intense of selling but there are others that -- big deals aren't going to happen very often but occasionally they will. >> is it possible your $22 billion elephant comes back? >> it's always possible. when a girl hangs up on my me once, i try again. that hasn't been too successful, though. i hope my batting average is

better with companies. >> when you call back and her husband answers, normally that puts a damper on thing, right? >> it's certainly been tough when i call your house. >> ow! >> warren, let's talk a little bit about what you see with stocks. we did talk about this at the top of the 6. but there are people just waking up now and they see the markets are down and it's on a day when people are very worried about the outcome of europe. what are you doing today in the markets? >> we'll be buying something today. i feel better by b buying it today as the same things i bought on friday because i'm buying them cheaper. the ten-year, 20-year prospects hasn't changed. i liked the price on friday, i like the price better today. if mcdonald's lowers the price of hamburgers today, the fact i

paid more for one on friday, i'm even more enthused about biography a hamburger today. >> are you talking about serious amounts of money you put into the market? >> well, we put as much as wes can buy without disturbing the price. >> how much did you sprend on friday? >> we probably spent about $60 million. we try to buy maybe 10% of what trades. when we were buying ibm, day by day i would just account for 10% of the trading. >> wow. but it was done very quietly, you kind of moved your way through? >> yeah, i put duct tape over my mouth. particularly when i talk to you. >> again, if you are a retail investor, that's what you would be telling people to do, don't pay attention to the headlines? >> retail investors should not pay any attention to the day's news and they're trying to buy and sell stocks based on the day's news, they're never going to be successful investors.

the idea is to buy a good business. it the same way if you and your brother went out to buy a business, you'd look around for a company that had some little price difference. you wouldn't read the newspaper before do you it. my partner charlie munger and i have working together for -- we have never talked about that day's news or that week's news or month's news. we're looking at where the business is going to be ten years from then because we're going to own it then. that's what counts. >> andrew, over to you. >> you can e-mail us or you can follow us at our twitter handle @squawkcnbc.

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we are live in omaha speaking to warren buffett. here now becky quick. we are actually live in carter lake, iowa this morning where we're speaking to berkshire hathaway chairman and ceo warren buffett. we're here at the hollywood diner. we've been to a lot of the places you frequent in the past but in is a place you've taken a lot of people as well. >> yeah. for one, it's handy to the airport, for another its hamburgers and strawberry shakes are terrific. i brought bono here, jimmy buffett and i brought jay-z. >> the tie you're wearing was given to you by jay-z.

>> i'm not sure he gave it to me. i kept telling him i admired it and finally he took it off and gave it to me. i tried it again when he opened up his night club and he said "you only get one, warren." >> you don't spend money on clothes like that. you talk your way into thing. >> if people want to give me ties, i accept. >> what about obama, didn't you ask him for one, too? >> i didn't ask him. i just wore this tie that looked like it had been through a washing machine, had threads hanging off it and he said i can't let you leave the white house like that and he gave me a tie. >> i'm learning more and more about how people -- >> it works. a rich guy never has to pay for anything. >> that is the jay-z tie you're wearing right there. >> this is the jay-z tie. it doesn't look as good on me as

it does on him but it's my best tie. we'll put it that way. >> we've been watching oil prices. as we've seen the risk-off trades, oil prices have been coming down. this started happening on friday after we got the lousy jobs number. now it's trading at 97 and change, just below $98. you've got a big stake in con op -- conoco. how do you see it playing in investments? >> i haven't the slightest idea, that's why i shouldn't own conoco. risk off, if it's selling and going into cash, that's risk on for me. cash is as risky an asset you can own over time. that is the biggest risk-on

trade you can have is to own cash. >> joe, did you. >> did you get those two pictures i sent over, beck? >> let me see. joe during the break sent out a couple of pictures of his wife penelope with warren. here it is. >> we may show that. because he's got his wallet out. >> can we keep looking at this? i want to keep looking at this. >> exactly. for stocks to watch, instead of the animal orchestra, if it's all right with him, but we did find out some other things on break, too. i'm happy for warren. let's not get too deeply into all of it. >> i've never seen her look happier. >> i know it. >> he's looking at the wallet -- he opened up the wallet and moths flew out. it hadn't been used in so long

and there was like $1 in there i think. >> i'd forgotten the combination to it. hi a little problem. >> with conoco stock, you stay you maybe you shouldn't have bought it. it's still a big position for you. >> the truth is i made a mistake in that. >> why? >> because i paid too much. i have no special knowledge in terms of oil positions. conoco looked very cheap and they were repurchasing their shares and unfortunately they spent a lot of money on gas prices and gas did not do as well as oil. >> you see people moving into this. recently delta got into the idea where it's buying a refinery because it pays so much in jet fuel costs. what do you think of that move? >> we buy a lot of diesel fuel, too but i'd rather be in the railroad business than be in the diesel fuel business.

i mean, if i like milk, i don't have to buy a cow basically. >> so you wouldn't yourself look at that at something you would -- >> i think if you're in a business that you know and understand and you buy goods from other people, you should probably stick with the business that you know and understand, let the other people run that business. you know, becoming fully integrated in some way. just take the newspaper business. you don't have -- it it all comes out on newsprint. newsprint has been a terrible business forever. some newspapers went and bought newsprint facilities but they never held any parties afterwards. >> we're going to continue this conversation in a moment, but, joe, i'll send it back oaf to you. >> i have some things to ask him. i know andrew does. walmart, what he makes of that. you always ask this question.

>> i want to talk to him more about the buffett rule because he did make some distinctions over the weekend. >> i'll talk about that, too. he's a great thinker. that's one thing to think about. i want him to solve our entitlement problems. i'd rather have him spend more times on than that $40 billion. maybe someone from there, i don't know, they tried i guess. nearly 164 shares that, would cut the government's stake from 63 to 70. disney smashing box office records. a half a billion worldwide. details after the break. time now for today's aflac trivia question.

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now the answer to today's aflac trivia question. in shake spear's romo and juliet, what is juliet's sur name? gas prices are down 7 cents, below the year-ago price of $4. chicago had the highest average price at $4.32 a gallon. and disney's the "avengers" show that five superheros are better than one. "think like a man" slipped to second place with $8 million. the first weekend in may kick's off the summer movie series filled with big budget action

movies and sequels. the other big news of the morning is those elections in europe and what it's meaning to the markets this morning, which we've been talking about with warren buffett. joe? >> very good. comments, questions about anything you see here on cnbc, e-mail us. you can also follow us on twitter. the more i see of what people tweet about -- >> not for you? >> they tweet every waking thought. it makes you look so self-absorbed, narcissistic. i don't need to telegraph that to people any more than i do. facebook hits the road. what is the company telling potential investors and how is management selling its business model. and would warren buffett buy the stock? find out next. >> tomorrow on "squawk box," the ceos of boeing and caterpillar,

former presidential candidate bill bradley, aei president arthur brooks. plus, joe, becky and andrew mix drinks with a top ba cardy exec. and don't forget, it's trump tuesday, "squawk box" starting at 6:00 a.m. eastern. [ male announcer ] the inspiring story

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this monday morning. we're going to get back to our special interview with warren buffett in just a moment. morning the stories we're following, u.s. stocks and futures moving lower following the european elections this weekend. >> and at&t planning to add a wireless home monitoring service. and rovio says it had earnings

strong enough for an ipo. and the facebook row show begins with a ten-day marketing blitz. we're joined outside the sheraton new york city where today's event is taking place. kayla? >> this will be the one of the biggest tests of investor confidence going into this ipo, the lunch happening midday. some 400 people i'm told are expected to be at the lunch. i was able to get a quick peek at the room in the wee hours of the morning. for all intents and purposes, it looks like a standard road show, a stage for management, where you speck that the management will probably do some form or iteration of the heavily produced video they had on retail road show posted last week and you'll see the air force base map showing all of

the connections through the globe. i'm also told there is a security detail of 30 people expected to be for a big name in attendance as far as investors. they are more confident of an appearance by sandburg than by suckerburg. keel you up dated. this will be one of the biggest groups, tomorrow they have a big group lunch in palo alto. this is one of the first big tests for facebook management. joe, back to you. >> let's get back to kaert lake, iowa. becky is there with warren buffett. i don't know where you want to go. andrew wanted to get some buffett rule discussion in here. but this is your show. >> before we get to it, real quickly i want to take a moment. we spoke with warren a little bit earlier about his conversations he's had with mark zuckerberg, but we also caught

up with microsoft found are bill gates and he little bit about situation and why don't you listen in. >>, a and i have done an amazing job. it's quite impressive. >> does he remind i of yourself? >> in some ways. his company is doing a different thing. but he's worked long hours, he's a harvard dropout, he's very logical in his thinking and he's willing to pursue his deal even when it's not faddishly popular. he has a vision where he wants to go. i hope some of those positive attributes have some similarities to my equivalent years. >> how often do you get to chat with him? >> actually, we've got two

topics. he's talked to me about some facebook things just to get advice. facebook ander in come also he's getting into fill on throw pee at an earlier age than i did so talking about flil and throw pi in general, that's another topic we've been able to talk about. >> again, we're live with warren buffett this morning. you hear conversations like that, does zplukerberg remind you of either bill gates or yourself? >> yeah, there's a certain similarity. certainly with bill, they both have this intense focus. i've probably had some of that in the past that i'm maybe calming down a little. but you see they've got a vision for their business and no matter what anybody else thinks, they're going to take the

painting the way we've seen it. they've both done extraordinary this evenings and did it at an early age so there's, to have an owner like that to, maybeseed some control to an owner. >> yeah. it can go in the wrong direction, too, as we may have seen an owation or two in recent months. go back to disney, or steve jobs. what you do see with those people is a passion. to some extent they're not thinking solely about the money involved. they're not getting their businesses to get extremely rich. they don't mind getting rich and they know how to do that, too, is what they're creating. up saw that with bill, you see it mark and when you get that,

when you find out and they've got big ideas and the rest of the world doesn't necessarily understand them very well when they're doing it, you can get you can brings up those topics from before? >> to me one of the most interesting answers at the meeting was what came out about the buffett rule. it sounded to me like you were indicating what the white house has done with the buffett rule is different than what you would have done. i think you used the quote that it's been butchered a bit. did you elaborate on that? >> i said some of the comenif i were writing a bill myself. there mention the term white house because it's senator white

house who introduced the bill is senator whitehouse of rhode island. and i wrote him a all right after -- a letter after and said i'm fine with it. >> some of the criticism that's come out is that it's really a band-aid on a really bad tax system. >> it is a small improvement in a very bad tax system. it doesn't cure all. in high original article i said we've got major problems on the expenditure side. all it does is says when you wh you've got 131 of the 400 largest incomes in the country that are averaging 170 million, you have a third think paying at race -- >> you said you'd do it at 10 million. that's so different from what we're talking about here. >> no, no, what i said, joe, is

i would do the 30% at 10 million and i'd do 35. >> all right, utility go up. >>. if i as much time trying to figure out -- take your pick, social security, medicare, some way of using that mind to figure out a trillion dollar problem instead of something that would raise $40 billion over ten years, would i put my name on that thing. could rise to the level of something called the buffett anything, would i make out a much bigger, you know, solve a much big are one of our problems. i just think you don't like these 130 people or something. >> no, i think there's -- i like them. many of them are my friends. i just think in terms of -- >> not anymore. >> no, that is not true. >> i know, i know. >> the 47 bill was scored on the basis of scored on the basis of

the present system, it actually comes in at something like 170 billion. and that's the same figure of the people who gave the 47 when tax cuts exsired. i think most republicans and most democrats know that we have to bring spending down and they know woo have toe bring up 19%. neither side wants to go first because-the-figure they'll get -- but you're absolutely right. one of the yes was this idea that there are shareholders who don't like your politics. is that bd for the business or

started running, i did expect any employee, any director of berkshire, i don't care what their poll six are and i don't care what they -- >> i remember years ago, remember there was the charitable program and you ended up shutting the program down because ultimately it became bad for business because it created controversy. >> it was bad for business in a small way all along. certain people would say we're not going to buy cs candy because you've giver given the could easily give more money to pro-life organizations. when we quit it, it was because independent consultant who is depended upon a berkshire company were getting hurt themselves. it was not part of berkshire. they were having their live live

hood threatened by a bunch of radio people blasting away at them and triping to interrupt the showings they were making and that's sort of thing. >> guys, one of the big conversations we've freakly had around the squawk table has been centered around paul krugman, the "new york times" columnist. we talked about how howe he's been pushing for main less. and listen to what he had to say about that. >> the crooked lawyer, that kind of thing disintegrates the body politic and affects how well these economic principles that

he believes in works. that said, i think paul krugman is one of the smartest and most articulate people we have and he's very often right. >> that gets us into a broader discussion, especially after this weekend when we see a lot of the elections in europe pointing away from austerity and toward more fiscal spending. what do you think of the idea of stimulus? have we done enough? is there more that needs to happen? >> we are doing of stimulus, spenlding at a government 1.2 million, more than we're taking in. we have lot of stimulus and it's helped the economy. do i think we should run $2 trillion deficits instead of 1.2 trillion?

absolutely not. i think we should have a well thought ot plan and it should be very clear and very binding to bring down those deficits over time. as long as we're running a deficit, we are still lating. >> okay. so enough is enough though at this point? >> i think we should be thinking about bringing them down -- absolutely. i think we have to bring down expenditures and bring up revenue. the problem is we can't find a way for the two political party to think it's in their advantage to push forward on both sides of the equation. >> what will it take to change that? >> probably time. we will do the right thing in this country. we always do. it's probably regarded as a political disadvantage for any democrat to start going out and talking aboutcutting expenditures and also a political disadvantage for republicans o talk about increasing revenues. >> do you think france should start talking more and spending

more? what about austerity over there? do you think that they they should just accept the sin and should they go on a big canes i don't know, whatever, and just tax the heck out of everyone and keep spending and ad -- would that work? >> actually, probably keynes i amly. when you don't have the luxury of of a printy press of your own, pee can run huge deficits. but they don't have the print epress. they the awb that we have. >> but drugman is constantly

pointing that the idea is not working over here. i don't see what their choices are at this point. the uncle can't double the profligate neff you've's credit card when he's got 100 grand already owned. you don't argue it to a few more nephews around. . >> no, the containment problem is huge. we've got a farr we have the incredible overhang in residential house and that is a -- it was like 1929 but it was in houses rather than stocks. the degree to which the public was participated and it was huge, they got used to using their houses like atm machines,

they flipped houses, thinking they could sell it for more andoned it was a huge issue that we worked our way out of it and we're on recovery. >> even though it points out that we've, it's like 6.5 billion. it points out one of the rin readers for this, retail investors, still have a lot of concerned have they missed the biggest part of the rally? should they still be getting back into the market? >> i think ek waits are very attract of they may get more

attractive next week. but equities producing businesses, and but who knows whether they go up or down in price tags. as to the volume, though, there's still way too much volume in the market. i mean, it -- the idea that the ownership of a company should turn over 100% in a year that, is not the way people behave with apartment houses, it's not the way they behave with farmland but they have this another that they ought to do something every day. buy stock at a good company, don't look at the price for wife years -- >> so you're not a fan of high speed training. >> i'm not a fan of acting training actively, becky. maybe if i didn't i wouldn't so

fact -- they got burned really blad badly when things collapsed in 2008, some of them didn't have retirement that they needed for c kids to go to college. you look at that and say i don't want to get burned again, i'll going to keep my money in safer investments. >> i know things that bounce around in price but their purchasing power goes like that. the one thing that is not safe is the dollar in your pocket. that's going to become worthless over time. the greatest mass et to own is your onlt if you develop your own talents -- i tell the college students that. the best thing to have is to develop your own talents. the second thing is to buy into other people's experiences.

they'll be drnging more of this and tail next week, next one or be in years. people beat themselves in the stock market. the stock market literally in the 66 on the dow to 11,47b 00. you say how can anybody not have excited at the bronx time and you get dree dee pressed at the -- you've got to give up the idea you can decide when to buy stocks and well to sell steks. >> we played a side bite earlier when you talked about rats in a grainery. is it a situation we need tore wary of? >> think of it this way. if a group of people are sitting around playing games on

computers, depending on beating quotations, which charlie would say is a form of front-running and let's say they're taking $10 billion a year inning a congratulate at gross profits. that $10 billion is not -- it comes out matically. the company companies will continue group. it's not good to have a siphon paying -- it's like the grainery. i want him to get the hate mail, not me. >> andrew, you have a question. >> a number of shareholders ask asked now given your size, you've suggested that the

company in terms of its stock performance isn't necessarily going to per the way it did. if you're just getting into the market today, how big of a chunk of your portfolio would you have in berkshire? your answer could be 100%. it could be but what's your answer? >> i've got 98 %. i would say we cannot do what we do d in the past. we can't do what we did in the past but i feel very comfortable with berkshire because i think we're constructed so that it's very hard over a period of time not to get a reasonably decent result. but an extraordinary result is out of the question. it won't happen. ornl on the other hand, i think the chances of us doing better than average over a look period of time will be good.

i this the chance of of us doing way worse than other people have low. >> should investors have a certain percentage in berkshire or stock that you would have thought looked like berkshire 15 years ago? >> sure. i'm not shooting for the moon. i don't believe people getting very rick very quickly in stocks. i don't know p they don't know how to do, i don't know how to do that. there's plenty that if you buy them, there's a high probability they'll have made 20 in 5, 10 or 15 years. the chances are getting a balt result on burke shire. if you're willing to be s-- i

have members of my family who have 80%, 90% of their money in berkshire. i'm not uncomfortable with that but they do not expect the get the kind of returns they've gotten from berkshire in the past and they won't. >> you just talked about returns, pension fund returns in the past and how we're looking a lot of them, for 7%, 8 % growth. is that a relatively good assumption? >> it's not an assumption of 8% rurps and you've got half your monies when you are going to get 2% or 2 and a half half. when that's so hard to do, i'm going to have to put my money in a bunch of investments and private funds that are being promoted to me and they've got huge management feel p fooes or something like that, it's not

going to happen. you should never buy your investments with the idea i have to get a certain return. you should not make your investments earn what you feel you need. it doesn't work a way. the stock doesn't think you own it. you can say i need 8% a year but the doesn't care about that or the bottom doesn't care about that. you should say how much can i earn and then learn to live with that number. >> we're going to have a lot more with warren from carter like, ai wa. mr. buffett is here for the remainder of the show. got more from that interview coming up in just a moment. in a meantime the elections results out of france and germany and greece, still concern there is. we're off our worst levels of the morning. s&p futures off by 9.5. we'll have more from warren

buffett right after this. >> today it's three hours live with warren buffett. and the week is only getting started. >> tomorrow the ceo of dow components boeing and caterpillar, plus doughing and trump, and the latest member of the squawk book rolls club. thursday, aformer new jersey governorias owe far. i could play that, starting at 6 eastern. lanket just so i can get on e-trade. check my investment portfolio, research stocks... wait, why are you taking... oh, i see...solitary.

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and that feels absolutely wonderful. i'm hardly using gas, but it's there when i need it. anybody that thinks that this car doesn't have solid performance, hasn't driven it. there's no other car like this on the road. ♪ a win for the socialists in france. sarkozy is out, hollande is in. >> and we'll bring you another hour of warren buffett as the third hour of a special edition of "squawk box" begins right now.

welcome back to a special edition of "squawk box" here on cnbc, first in business worldwide. i'm joe kernen, with andrew ross sorkin and becky quick is with warren buffett. >> what are you doing, joe? are we going to show the sneakers a little bit later? we'll have to. >> global pressures after elections in france and greece this weekend. in greece the two main parties failed to win enough votes to form a coalition. and in france, francois hollande

winning the presidency over sarkozy. european equities slumped to nearly five-month lows. the major asian markets also trading lower overnight on european elections in weaker than expected jobs data that we got back on friday. the dow would open 75 lower, the dow down and the s&p downtown 8. i'm still wearing my sneakers. it doesn't look good with a suit, though. i don't know if warren has them under his table there. >> he did not wear them. he chose better shoes to go with the suit but he likes you're wearing them. >> i sold mine yesterday. they were selling so fast, we were selling out. >> we are here at carter lake where warren is having the breakfast of champions. he just ordered a strawberry

shake. when we came in the dow looked like it was down by 90 points but now down 75 or so. what's your take on it? >> the lower they go, the more i like it. i look my stocks lower rather than higher. >> going down like i heard you cheering earlier. >> if you're a net buyer of stocks, you're better off if stocks go down. people don't generally feel that way but we do feel that way. we own stock in ibm, we own stock in wells fargo, which may be buying them. we are increasing our ownership in all four of our largest investors without laying out a penny. the lower those stocks are, the more the dollar buys. as soon as the market opens we're benefiting every minute if

they tick down. and it's significant over time. >> it is significant over time. that's part of the reason you liked ibm to begin with, correct? >> sure. our ownership of ibm has gone up significantly since the end of the year without us laying out any money. and, you know, that happens long enough, it makes a lot of difference. we bought 6.7% of coca-cola some years ago. it's now 9% without us laying out another dime. >> same thing happened with american express. how much do you own of that right now? >> i guess -- i think we own about 14%. >> 13%? >> yeah. it goes up. we haven't bought a share -- we can't buy it because it's a bank holding company but our interest in the company goes up and we love it. it's a wonderful business and what's better than owning more and more of a wonderful business without laying out any money. >> right. >> this weekend at the shareholders meetings there were about 35,000 shareholders who came in through omaha. there was anything in the

questioning that caught you by surprise or maybe you learned something from? >> the questions generally were good. to some extent you learn what's on the shareholders' minds. to an extently even think about addressing next year in the annual report the kind of questions that -- answers to the kind of questions that we get. it tells me what shareholders -- what i haven't communicated well enough perhaps to shareholders. >> what was one of those topics? >> i've discussed it before but we've discussed a logical stock repurchase program in this year's annual report. i think we'll discuss a logical dividend policy in next year's report. i've addressed that before. >> you said yesterday you would not pay a dividend. >> no but we can discuss when it makes sense to may dividends, and what it doesn't make sense to pay dividend, even though i've written about it in the past. >> when does it make sense?

when you can't find anything else to do with your money? >> when you can't keep money in the business and generate more than $1 at present value. then up sus distribute it. >> what should a company like apple do with all the billions and billions and billions sitting around? >> i got a call from steve jobs a couple years ago about that question and it's very unlikely, at least when i talked to steve at that time, that apple will ever find an acquisition that is in the tens and tens and tens of billions of dollars and there's no sense sitting with the cash over time. they either ought to pay dividends or repurchase shares. i guess they're going to do both now. >> yeah. when you look at some of of the issues that were also discussed this weekend, the question of succession came up and the shareholders' questions more pointedly with that movement that was brought by the afl-cio where they were asking for more

specifics. that proposal got voted down. i think it was by 95% to 5% in favor of it. but people have looked at the situation with the question of succession and nogs's changed from the boardies perspective at this point. >> yeah and the afl-cio, we were on the same page. they did not want to us name a name. they wanted us to include something in the proxy material to tell people how we're dealing with it. we put it in the body of the annual report this year for example. we were in a very similar position. there was not a big disagreement on it. but if you look at our largest holdings again, american express, coca-cola, wells fargo, ibm, i do not know the name of the next ceo of any of those four. i don't even have any idea who it will be. when they picked their ceos, i didn't know who was going to be picked.

i didn't know john stump would be picked guineapicked. we will spend more time on succession by any other topic by far. we're blessed in the sense that we've got multiple candidates, they're with us, we know them well, we've seen them perform and it is not a problem. >> you just mentioned jenny hahmehah rahmetti at ibm -- so they haven't asked you? >> no. >> are you okay one way or the

other? >> yeah. >> why don't we talk about some of the other headlines -- >> becky? >> yeah, go ahead. >> paul losano became a member. he was a ceo for five years before he was a member. so who know what is the club finally does. but i don't think people know that. they figured paul immediately was because they're sponsors of the masters but it was five years before he, you know, was finally invited in. warren, how long did it take you to get in, too? especially with your skills. i figure they would have had a silver platter if they had seen you play. >> i made just the opposite appeal. i'm the highest handicap member of the club and i am in there as part of their outreach program. that was the appeal i made. >> gates, too, right? >> oh, yeah. well, he may be the second highest handicap member but i definitely hold the title. they need me.

if they're going to show their democratic in terms of taking any kind of golfer, they need me. >> letting you and gets in is much more open -- that just shows you they don't discriminate against really bad golfers. >> i will not argue that point. >> likewise. >> joe, i'm sorry, did you want to ask about walmart? you had asked that before. >> i wanted to ask -- >> i really struggle with this, warren. as a shareholder, i look at the piece we saw from holmes and jenkins, which talks about the best way to bring a developing country like that up to speed is -- one of the ways to get rid of corruption and everything is development. and the net good that walmart has done down there in terms of jobs, in terms of bringing cheap goods to the population of mexico, i really struggle with

as -- i'm not a shareholder, but if i were, if i looked at all the net benefits and net costss are even pr costs, to get that jump start in mexico and to do in rome as the romans do, i can almost make a case as a shareholder i would feel really ambiguous about the decisions they made down there. are you willing to say outright they should have never done anything in terms of trying to grease the skids down there? >> i hear your argument but in the end, you know, when in rome you can only do what the romans do unless it's against the law in your own country. >> but maybe the law is antiquated and -- i made the point that let's say you were in sub saharan africa and it's

illegal to bring in vaccines and you find out there's a way to do it through bribes. would you do that? you would do that. i hate to say the ends justify the means but in that case nine out of ten people would say go for it. >> but that's a different case. >> but it is and it isn't. it depends on what you think is -- >> it's so untoward. >> what? >> bribery itself is untoward. >> you would never do it? >> i would not. >> walmart would not be where it is then. >> that's okay. >> it's a tough issue. >> you're at a disadvantage if you're in a country where there's a lot of corruption and your own country says you can't engage in it and another country doesn't say their country can't engage in it.

in the end you have to follow the laws of your countrynd you need to have people working for you that will follow the laws of company. >> if the ceo knew what was happening and decided not to negotiate it in a more strict way, then he should go then. >> i don't know the facts about the ceo or anything but i do know this -- the thing i worry about at berkshire with 270,000 people, somebody is doing something wrong, i guarantee you somebody is doing something wrong. i hope we find out about it and it's minor and i certainly hope that we hear about it and get it corrected. but you can't have a huge organization -- anybody who run as huge organization, i don't care whether it's a clutch or an army, a political organization, a governmental department, that's what haunts you is that down the line people are doing things that they're not supposed to be doing and you have various methods to try and keep that

under control. you'll never solve it 100%. you have to make sure when you do find out about it, you do something about it. >> warren, if we learn within the walmart issue that somehow it did get to the board and that there really was a cover up of grander proportion than we know, would that change your view that you would want to own the stock or is the business itself so solid that it doesn't matter who's running it? >> well, my -- i really don't want to get into a hypothetical going to the board because i don't think it did. i'll take the xyz company. my guess is if something really terrible got to the board and they didn't do anything about it, you'd change the board and there would be no problems in terms of owning the stock because there would be a new board there. i don't think you throw away the stock. in terms of our subsidiary, somebody did something wrong,

you wouldn't throw away the subsidiary, you'd get rid of the person who did something wrong. >> you always said you want a company that can be run by a ham sandwich? you did an interview about a month ago where you were asked who was the most difficult person you ever had time talking to and had you came up with an interesting answer. >> it was jackie kennedy and princess di. i was in aenroom alone one time with princess di and somehow we found ourselves in this library. in 15 minutes, i had trouble remembering my name and i couldn't think of anything to say and it was a total disaster. the more interesting thing is i only met her one other time. it was a partly at kay graham's house and it was shortly before her death and i was at the table, they put me across the table after my previous disaster but she was sitting between

barry diller and tenny forceman and after she died a few weeks later, all these people called and said what did she talk about that evening? i didn't tell them but i will tell you today a comment she made which is actually true, she had been to the white house that day and she said that bill clinton was the sexiest man alive. i didn't ask her who the least sexy guy in the world alive was. i was afraid i might get my play in there. >> wow. >> they tried to keep their face steady as she made that proclamation. that's the last thing i heard from her before she died. >> i'll send it back to you guys. >> what would i say? i would say that bill obviously, i've heard that about him, becky.

you've told me about him, too, he will look at you like you're the only person in the world -- that's what you'd say. like you're the only person in the world. i think he could make me feel like he was the sexiest man alive, right? >> he has not heard this before. he's probably having a good day today. i never told him this. >> he's a person who walks into the room and focusses on you and makes you feel like you are special no matter what. >> when princess di was looking at me and said he was the sexiest man alive, the fact she was looking at me did not make me feel -- >> any better. if it had been bill down in colombia with the secret service guys, you've seen the jokes, it would have been a whole different ball game down there, right? i tell you, i mean, a lot of high five probably. >> you're on your own, joe. >> i'm willing to go there. i've gotten a lot of that. >> i'm being told by the

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assets and operational aspects. >> do you worry about hedging -- >> i don't worry about trying to hedge. when we bought burlington, they would engage in a lot of hedging of their fuel. most companies hedge. but the truth is if they really knew what those currencies were going to do, they might as well close down the railroad. we're just playing around with the oil market. d all of those things have costs attached to them and i'm going to live a long time and my guess is we take all of the hedges of all the companies that

we might be exposed to and add them all up over a 50-year period, net they would have cost me money. i don't worry about what we earn from quarter to quarter. people that worry a lot about what they earn every quarter can get you a lot of hedges which can get you an economic cost to them. they care more quarterly than they do the net over a ten-year period. >> let's talk about burlington northern. you've always loved the railroad because you say it's an early indication of how the economy is doing. >> i didn't love them early enough. a very interesting set of statistics comes with them that tells you a lot about the economy. >> what are youeeing right now? >> that little bit of improvement month to month overtime. it's not much different than we've seen in the fall of 2009 in that it just keeps getting a little bit better consistently. now given -- coal is down for example and of course grain will depend on crops and all but overall i see improvement.

>> if natural goes becomes a bigger and bigger play over the long haul, we've seen some companies putting real money into making the conversion to natural gas. is that a big problem for the railroads? >> no, you could even think in terms of natural gas being the fuel for locomotives. you get a big enough differential between the oil and natural gas and you'll figure out a way to do a lot of different things. we're seeing that in utility generation right now in terms of the move to gas. >> what's mid america energy doing? is it looking to make that conversion to natural gas? >> where we have units that have the option of using gas, gas is cheap. most units don't move around that easily. so you're never going to have a major change in a short period of time from one energy base to another, but, you know, gas is going to be the preferred method

between gas, coal and oil obviously in terms of utility generation. >> we're going to slip in a quick break here. when we come back, we do have much more from warren buffett. i don't know what direction you want to take this but i think you've got a few questions coming up, too. >> i don't know where we're going to go. i'm going to talk it over with andrew. where do you want to go, andrew? >> i got a couple questions we didn't get to sneak in to the annual meeting that i think will be fun next. >> wasn't it like hours? >> it was ours and one clever one that will be fun. >> that's a pretty good tease for you. >> i'm trying. >> plenty more to come. >> we've got a big bet on the american economy. our railroad will do better when there's a million housing units. a lot of our businesses will. so i don't have to play it directly. today it's three hours live

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welcome back to "squawk box." u.s. equities are trading off their lows. u.s. equities reversing early losses. it was u.k. may day. >> they get a day to think it over. >> they do. >> really?

>> cinco demayo was saturday. >> was it a dry -- >> i was playing ping-pong saturday night. >> were you playing with him? >> i don't think we actually hit together this time around. >> among this morning's corporate movers, check out the vars shares of vertex, reporting positive data for its cystic fibrosis therapy. it's a heart breaking condition and you've seen kids that have to clear out their lungs and the prognosis isn't always great. that's good news. i'm going to look into that. >> good. let's get back to becky quick in carter lake, iowa with our

newsmaker of the morning. becky. >> thank you. of course our newsmaker of the morning is warren buffett coming fresh off the berkshire hathaway annual meeting. 35,000 shareholders descended and they did a lot shopping. it's interesting because our furniture store will do $35 million in business. we've done a thousand dollars of business per every man, child and woman. the shareholders were out getting bargains. >> that says a lot about the shareholders, the numbers coming in, but it says something about consumers, too. >> sure. they're in a different mood than they were a few years ago. i saw that at the jewelry store, too. i sold jewelry for two and a

quarter hours and i couldn't sell tickets fast enough. crazy warren was in his element. >> it's a special thing when people are buying it from you. >> they get a better price. >> andrew, i knew you had some question, too, things you didn't get to this weekend? >> one question. warren and i talked about it briefly. it came from a shareholder in chicago. the question was google self-driving cars are expected to hit the road within ten years. how does this new technology impact auto insurance premiums and how geico is preparing itself for a future with no car accidents. i actually thought it was a pretty good question. >> it's interesting. i've seen news clips of that car. i would doubt in a country with 250 million vehicles that you and i would do great driving around with a whole bunch of driverless cars. i don't think it will happen. but the google guys come up with

a lot of interesting thing. i will say this, if you ever end up with no accidents, we will end up with no insurance company. >> here's the follow-up. this was another shareholder with a different but geico related question. the shareholder writes if geico consistently operates with an underwriting profits and i buy insurance from geico, does this mean i'm overpaying for my insurance? >> no, it means our operating costs are far lower than most of our competitors and it means we can pass on some of those savings in operating costs and they're large enough we can still make a profit. our advantage comes from the fact we're a low-cost operator. we wouldn't have bought geico except for the fact it was and will continue to be very much the low-cost operator. >> what does it have different in terms of overhead that other more traditional companies have? >> we -- our expense ratio runs about 17%. we could run as low as 11% or

12% if we didn't want to grow. many companies operate anywhere from 25% to 30%. and we're also very efficient because as we get scale advantages, we even get that in terms of the loss adjustment costs as well. it's a very efficient operation. >> joe, i'm sorry, did i cut you off? >> no, i was asking andrew, i was trying to figure that one out. i was thinking in reference to jeeves. it's not a driverless car but you have nothing to do with the -- that was a serious question, though. >> it was about whether google -- this is -- >> there's going to be accident. >> people say the technology changes everything always and and it invariably gets better. >> i figure -- think if there's a virus or something goes wrong, there's going to be pile-ups everywhere. i think you ought to add to your position. don't you?

if people aren't driving their cars? you ought to double down. >> what's the tom cruise movie? >> it's not on the top of the list of my worries, i'll put it that way. >> but i would figure and i wasn't going to ask you this, warren, but i might ask it in terms of climate change and we had a warm summer and winter on the, you know, in north america, not the rest of the world. and we had a very cold winter the previous one but suddenly people are factoring in more catastrophic events in coming year and positing it it's going to be fact, even though you remember the year of the hurricane and that hasn't repeated itself. you knew the next couple years would be great for hurricanes. you were writing policies left and right. you knew there weren't going to be a lot of hurricanes for a few years, right? >> i don't know what the hurricane ratio is but the fact

that this year is unusually warm and last year unusually cool does not change my valuation for the expectancy of hurricanes, earthquakes, tornadoes. people extrapolate too much out of current experience and -- >> i agree. >> warren, let talk about some of the other stocks you on position in. procter & gamble is one of those stocks. >> yeah. >> recently it talked about some disappointing market conditions in some arenas. what did you think of that? >> well, i think they've found that they're having problems raising prices in certain areas. they have learned -- i'm privy to no special information on this, but clearly this very found they didn't have the pricing flexibility with several items they thought they had. >> it may be surprising when you're talking about how consumers are feeling a lot better. i guess consumers have pared

back the same way businesses have. >> it depends on the item. consumers are always looking for value. you want to be with a low-cost -- that's an advantage that walmart or costco has. low-cost operators have an advantage. p & g have been selling higher end products than available. >> you're a long-term holder? >> well, we've been a long-term holder. >> that sounds -- >> that sound as little weasely, doesn't it? >> it does sound a little weasely. >> so are you selling? >> i'll just say that we've been a long-term holder. >> we'll leave it at that. >> and that i'm being weasely. >> but did you, for the people who didn't hear earlier, you are going to be buying two different stocks in the market today. >> the cheaper we buy them, the better i feel. i should note, if you looked

last year, i think we did reduce our holdings of p&g. >> why don't we talk a little bit about what's happening in washington right now. >> not much. >> are you frustrated, just as an american who thinks we need to be getting our deficits under control, are you frustrated more hasn't happened in an election year? >> i would say this -- we have the richest country in the world. our problem is not that we don't have all kinds of financial and economic resources in is a wonderful company. $48,000 of gdp per capita, we should be able to work out our problems. the interesting thing is i think most people know how to do it. you've got to cut expenditures significantly. even a rich family can spend too much money and you need to get some more revenues. and you can argue about how you do it on both sides but i think most people could come to reasonable agreements on that on both sides. but each side feels that if they speak first, that it will hurt

them politically. so you have a standoff where the democrats want the republicans to move on revenue and the republicans want the democrats to move on expenditures. normally when you get an impasse like that is corre, you hope th meet in private and work out something. you can't do it in public or on the sunday talk shows because you lose face and bargaining position so you try to work it out privately and get people to follow you. the problem is people worry about troops following. >> is that because we've seen more extreme positions on the right and on the left? >> yes. we have more people that the primary system leads to that in some degree. many, many people who were in congress worry more about winning their primaries than they do about winning the general election. that means it pushes people to the extremes. we'll get over this but it's gumming up government to some extent. >> we'll have more with warren in just a little bit. right now i'll send it back to

you in the studio. >> coming up, becky talked some politics with berkshire hathaway vice president charlie munger and we'll ask charlie to weigh in on the white house. >> tomorrow, a travel industry icon. southwest airlines chairman herb kel eher, plus joe, beak and andrew mix drinks with a top bacardi exec. and don't forget, it's trump tuesday. we're america's natural gas

and here's what we did today: supported nearly 3 million steady jobs across our country... ... scientists, technicians, engineers, machinists... ... adding nearly 400 billion dollars to our economy... we're at work providing power to almost a quarter of our homes and businesses... ... and giving us cleaner rides to work and school... and tomorrow, we could do even more. cleaner, domestic, abundant and creating jobs now.

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welcome back, everybody. we are live it ediner in carter lake, iowa, where we've been speaking with warren buffett. i got to sit down with charlie munger and ask him what he thought about mitt romney's chances against barack obama coming in this year's presidential election. listen in. >> i think he's by far the best of the republican nominees. so did warren. i think considering how

poisonous the political atmosphere in the country is, it's amazing we have two people as outstanding as those we have. i think that people will live to have two candidates out there and just hate having to make the choice. i think there's a lot of merit in both these people. >> again, that was charlie elec

from november, december until we get back into january, is that market's perspective? >> i'm not sure it's a problem from the market, but it's a big problem. there's always big problems, lots of big problems. i do not give that a 1%, make that a 1% factor in determining what i'm doing today in investing. we're always good. things are going to come out of right field or you're going to have 9/11s or october 1987, all kinds of things are going to happen. i'm trying to predict where businesses will be five, ten years from now. whenever we buy a stock, i say, am i happy owning that stock if the stock market closes a couple of years? if i've got a good business and the stock market closes a couple of years, i'm fine. if i own part of a good business, i do not need the stock market to be open to do

fine in investing. >> that is one of the questions that came up a bit this weekend. the valuation of berkshire shares right now. some people think it's severely undervalued. you and charlie decided to go ahead and start buying back shares, which is unusual. what do you think it is holding back berkshire shares? >> berkshire has been underpriced during the 45 plus years i've been there, it's been overpriced. most of the time it's been in the range of value. in the next 50 years, it will be overpriced, sometimes, underpriced. it's the nature of stocks. that's what makes stock investing so wonderful. if everything was perfectly priced, there would be no money in the game. i love coca-cola gets underpriced or overpriced. i love wells fargo gets underpriced or overpriced. it will always happen with berkshire. i will guarantee you the next 10, 20 years you'll see berkshire overpriced, underpriced. >> do you think the stock market has more opportunities where

there are significant mispricings right now? >> sure. i would love it if they only allowed me and a bunch of psychotic drunks to buy stocks. we would get rich. >> there have been a lot of talk when you start looking at new regulations proposed for some of the futures markets, particularly if you look at commodities and some of the things -- we talked with bart childress. one of the things they put forth is nobody should be allowed to own more than 10% of, let's say the oil market. do you need rules like that? >> do you need rules to prevent cornering. that goes back 100 years. in stocks, it's not a problem. the real problem in stocks, people are emotional about them. the problem isn't with the company, but the people who call themselves investors. if you look at how american

business is done over history, it's done magnificently. if you owned a cross section, you didn't need to know how to read a balance sheet or anything. the problem is people get excited about getting rich quickly or get depressed when they thought they would get rich quickly and they didn't. people beat themselves in the stock market. the companies don't beat them, the stocks don't beat them, they beat themselves. >> i was listening to warren. i saw a piece over the weekend about volume on the new york stock exchange, maybe it's finally coming home to roost, electronic trading was going to take over and it was a really negative piece on the prospects for the big board. to me, it just looked like an incredibly positive piece for the commentary about the stock market itself. i think that lack of enthusiasm means they are not in. they'll eventually get in, but

at much higher levels. this is a really opportune time, don't you think? >> i think stocks are the most attractive investment with the exception for a single family home. they are the most attractive investment available to the american public. >> warren, you said you don't think what's happening right now with social networking stocks is a bubble. and with housing, that was a bubble. we are trying to find where the next bubble is because of some policy gone wrong or unforeseen consequences. have you seen any arenas where it seems there is too much helium starting to build in? >> not really. i guarantee it will happen there will be bubbles in the future. people get excited about things that have gone up in price. that very excitement becomes further proof to them in the rise in price. it becomes circular and keeps going until it kennedys thaends.

you can get rich off bubbles if you take advantage of them rather than participate in them. >> there's some talk, people think the next bubble is going to come from all this easy monetary policy, not only from the fed, central banks around the world, they look at where you see commodity prices creeping up. all that money has to go somewhere. >> that is not a bubble. that's inflation. if you print enough money, the price of everything will go up even though the value doesn't go up, in a sense. if you made a lot of million dollars, every american family, you will not have a bubble, you'll have inflation. you'll also have a lot of activity for a while. the printing of money results in the decline in the value of money. it's very simple. >> do we need a bubble to get us back to stronger gdp growth? >> we don't need a bubble. we need the housing, excess housing supply to be sopped up. that is happening.

i think, for example in omaha, we are very close to equal or even. >> that was the last bubble. you don't need that bubble to reinflate but come back to its normal? >> you just need normal levels. >> if that drove the last great -- >> what we want to have is the normal growth that comes out of an economy where people are finding more and more things to do than please you and me in terms of what we buy. >> we have not gotten the chance to talk to you about this live. it was discussed this weekend at the shareholders meeting, but how are you feeling? >> i feel terrific. having me bring my strawberry shake, enjoying life. absolutely no change. my energy level is 100%. i have no symptoms of any kind. nothing has changed. >> guys, this is your last chance to jump in with a last-minute question. i know we are just about out of time. >> i've got a question from doug

kass. doug says that for many years, warren, you referred to henry singleton, founder of teledyne as one of the brightest ceos in america. he broke up the company to enable managements to focus on what they knew and put in an options program. doug asks, what's the rational for having this business as a diverse and unconnected as berkshire? have you thought hard about doing something like henry? >> henry did incredibly well. he repurchased an astounding purchase of his stock over the year. he ran the business well. after he did what you talked about, it didn't work so well. that was in his later years. apparently he wasn't functioning as well then. his record was made not by what

you were talking about, but by the policies i advocate. >> i did mention and maybe you can mention that becky got a star on the hollywood walk of fame along with jay-zee, who else is on the list there? >> bill gates has been here. >> bill, jimmy buffet. >> and now the becky quick. you're in good company. they did a nice job there. >> you're the first female, i believe. >> here is something to do. next time you come here, make sure you come here, too. >> i'll have to work on that. i don't know if i'll qualify. you're the first female so they are doing better than augusta at the moment. >> warren, thank you very much for joining us for these three hours. it's been a very busy weekend. we love having these chats with you. >> i had a lot of fun.

thank you. >> we really appreciate it. guys, we'll send it back over to you. >> excellent, thank you, becky. he talks all weekend long. >> i've got to tell you, he has more energy than i do, i can tell you that. it's a remarkable thing to see at any age. >> i notice when i ask him that question about obviously there is not a whole lot of retail excitement at this point, i think we are all, maybe a lot of people are gun shy. he wants to say, yeah, this is a great time, but he doesn't say it that stridently because he doesn't want everyone to know i think he will do a lot of buying and position himself. i think he has the same feeling. when you see the public as unexcited as they are. >> you heard him say. he was buying on friday, he'll be buying today. that $22 billion acquisition, i'll wonder what that is for a very long time. >> that narrows it down. the s&p 500 -- >> it'no