Why the bailout plan is not only about Wall Street

Very interesting commentary about the economic credit crisis and the bailout plan from investor extraordinaire Warren Buffett, who was interviewed today by CNBC’s Becky Quick.

Here is an excerpt of it.

"Quick: WHEN WE TALKED LAST WEEK ABOUT GOLDMAN SACHS, YOU SAID THE REASON YOU WERE DOING THAT DEAL IS BECAUSE YOU ASSUMED SOMETHING WOULD GET THROUGH CONGRESS. THAT PLAN RAN INTO A WALL THIS WEEK. ARE YOU STILL EXPECTING SOME SORT OF DEAL WILL BE MADE?

Buffett: THE CONGRESS WILL DO THE RIGHT THING WHEN THEY UNDERSTAND. THEY MAY GET SIDETRACKED AS THEY DID EARLIER THIS WEEK. THERE'S NO QUESTION ABOUT THE PATRIOTISM AND WILLINGNESS TO ACT IN THE INTEREST OF THE COUNTRY. IT WON'T BE 435 TO NOTHING, BUT I'M BETTING THEY'LL ACT RESPONSIBLY ON THIS. I HAVE EVERY EXPECTATION THEY WILL, BUT I'LL STILL FEEL BETTER AFTER THE VOTES HAVE BEEN COUNTED.

Quick: THE DEAL WITH GE TODAY AND GOLDMAN LAST WEEK, ARE THESE STILL GOOD DEALS IF NOTHING GETS THROUGH CONGRESS?

Buffett: NO. I THINK WE HAVE TERRIBLE, TERRIBLE PROBLEMS. I SAID TWO WEEKS AGO THAT IT WAS AN ECONOMIC PEARL HARBOR. TWO WEEKS LATER, WE'RE IN WORSE SHAPE BECAUSE YOU DON'T WANT TO DELAY WHEN THERE IS A NATIONAL EMERGENCY. I THINK THAT'S PROBABLY OBVIOUS TO A MAJORITY OF CONGRESS. I THINK WE'LL GET ACTION. IF WE DON'T, I WILL HAVE DONE SOME DUMB THINGS.

Quick: THE HOLDUPS OVER THE LAST COUPLE OF DAYS, HOW DAMAGING IS THAT TO THE UNITED STATES ECONOMY?

Buffett: IT HURTS. YOU'VE HAD AN ECONOMY THAT'S LIKE A GREAT ATHLETE THAT'S HAD A HEART ATTACK, CARDIAC ARREST, AND THE PARAMEDICS THAT HAVE COME, INSTEAD OF ARGUING WHO WAS AT FAULT, THE ATHLETES SHOULD HAVE BEEN CHECKING HIS BLOOD PRESSURE MORE CAREFULLY. THE IMPORTANT THING IS TO APPLY THE RESUSCITATOR. IT DOESN'T HELP SPENDING TIME WORRYING ABOUT WHO IS TO BLAME FOR THE PATIENT HAVING THE HEART ATTACK.

(...)

Quick: MR. BUFFETT, WE HAVE HEARD FROM PLENTY OF PEOPLE WHO HAVE WRITTEN US AND CALLED IT AND SAID THEY'RE AGAINST THIS RESCUE PLAN BECAUSE THEY THINK IT'S A BAILOUT FOR WALL STREET. YOU'VE COME OUT IN FAVOR, BUT HOW WOULD YOU EXPLAIN THIS TO THE AVERAGE AMERICAN WHO DOESN'T HAVE A LOT INVESTED IN THE STOCK MARKET. WHAT DO THEY HAVE AT STAKE?

Buffett: THERE IS NO QUESTION THIS IS A RESCUE PLAN, BUT IT'S A RESCUE PLAN FOR THE AMERICAN ECONOMY NOT WALL STREET. IF YOU LOOK AT HE PEOPLE AT LEHMAN OR BEAR STEARNS OR AIG, THE SHAREHOLDERS HAVE GOTTEN KILLED AND A LOT OF THE PEOPLE ARE LOSING JOBS OR LOSING BONUSES AND ALL KIND OF THINGS. THIS IS DESIGNED TO HELP THE AMERICAN ECONOMY FROM GOING INTO THE ULTIMATE TAIL SPIN, BUT WHEN CREDIT IS FROZEN AND WHEN BANKS ARE UNWILLING TO LEND TO EACH OTHER AND 8% OF DEPOSITS IN AMERICAN BANKS HAVE BEEN MOVED -- THESE ARE -- THIS IS AN ECONOMIC PEARL HARBOR AND ONLY THE WHOLE WORLD WANTS TO DELEVERAGE. THE ONLY ENTITY IN THE WORLD THAT CAN LEVERAGE UP TO MATCH THAT FORCE IS THE U.S. TREASURY. THEY ARE NOT DOING THIS FOR WALLSTREET. THIS IS BEING DONE FOR THE AMERICAN ECONOMY."

Read and watch a video of the interview here.

On a different level, and very much different than Buffett's opinion, read the free market brilliant epiphany from the man who have almost destroyed the entire oil business in Venezuela, here.