Economy better than electoral hopefuls argue: Warren Buffett

By Josh Funk ,AP

OMAHA, Nebraska — Billionaire investor Warren Buffett said Saturday that the nation’s economy is in better shape than the presidential candidates make it seem, though businesses like his still face challenges.

In his annual letter to Berkshire Hathaway shareholders, Buffett didn’t name specific candidates or issues but noted that the negative drumbeat about the economy, health care reform and income inequality may get voters down about the future.

“It’s an election year, and candidates can’t stop speaking about our country’s problems (which, of course, only they can solve),” wrote Buffett, who has endorsed Democratic Hillary Clinton. “That view is dead wrong: The babies being born in America today are the luckiest crop in history.”

Buffett struck an optimistic tone in the wide-ranging letter, which largely focused on what contributed to his conglomerate’s US$24 billion profit last year and discussed Berkshire’s prospects for the future. The letter also touched on climate change.

Buffett defended the lending practices at its mobile home unit, Clayton Homes, and Berkshire’s association with the 3G Capital investment firm.

Clayton’s lending practices have been questioned over the past year in stories by The Seattle Times and The Center for Public Integrity that suggested the company was using predatory lending practices. Buffett said Clayton follows state and federal regulation and retains ownership of every mortgage it finances. He included a copy of a disclosure form Clayton uses to inform customers about lending options.

Berkshire teamed up with 3G Capital to buy Kraft Foods and Heinz — and promptly announced layoffs at both firms. Buffett said Berkshire has always craved efficiency and tends to buy lean companies, while 3G looks for investments that need costs reduced.

Edward Jones analyst Jim Shanahan said Saturday the fact that Buffett devoted space to defending 3G and Clayton suggests he’s still hearing criticisms. Buffett has addressed both topics at shareholder meetings in the past.

The letter also noted that Berkshire shareholders will be asked this year to vote on a proposal requiring the company to prepare a report on the threat climate chance poses for its insurance operation.

Buffett said it’s reasonable to worry about climate change’s effect on the world, but it shouldn’t hurt insurance companies because policy prices are set annually based on that year’s risks.