Warren Buffett blames banks for meltdown

[Weyland]

http://www.telegraph.co.uk/money/main.jhtm...C-mostviewedbox


Billionaire Warren Buffett has accused major investment banks of creating their own downfalls through the collapse in the US sub-prime mortgage market.

Mr Buffett, known as the "Sage of Omaha" for his investment record, suggested that the banking fraternity has only itself to blame for its recent problems which have seen banks write off more than $130bn (£66.3bn) so far.

"It's sort of a little poetic justice, in that the people that brewed this toxic Kool-Aid found themselves drinking a lot of it in the end," Mr Buffett said, making reference to the American soft drink.
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The septuagenarian investor, speaking in Toronto, said that in spite of the meltdown in the sub-prime mortgage market and the impact on the banking system, funds remain available.

"I wouldn't quite call it a credit crunch," he said. "Money is available, and it's really quite cheap because of the lowering of rates that has taken place."

However, he said what had taken place was "a re-pricing of risk," leading to an "unavailability of what I might call 'dumb money', of which there was plenty around a year ago."

Mr Buffett also reiterated his negative views on the subject of the US dollar, saying that over the next five-10 years, the dollar could seriously devalue if the US trade deficit persists. As a result, Mr Buffett - who famously bet $21.8bn against the dollar in 2005, a position he has since unwound - stressed he will continue to look beyond the US for investments in part to hedge against the dollar's weakness.

His views echo those of fellow billionaire George Soros, who has taken a negative stance against the dollar for some time.

Mr Soros has warned that the dollar's status as the world's reserve currency is drawing to an end, thanks in part to the financial crisis on Wall Street.

In spite of its recent strengthening, the dollar has fallen against major curencies such as the euro and sterling over the past 18 months.