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WarrenGood morning. I'm Warren. A hyperkinetic fellow here is Charlie. The government in September, mid-September last year, really did, they were facing a situation that was as close to a total meltdown throughout the financial system as I think you can imagine. You had a couple hundred billion dollars move out of money market funds in a couple of days. You had the commercial paper market freeze up, which meant that companies all over the country that had nothing to do with the financial world, basically. We're going to have trouble meeting payrolls. We really were looking into the abyss at that time, and a lot of action was taken very promptly. And overall, I commend the actions that were taken. When a government is reacting to the biggest financial crisis in 70 years, which threatens important values in the whole world. world. And decisions are being made hurriedly and under pressure and with good faith, I think it's unreasonable to expect perfect agreement with all of one's own ideas. Our job is to make money overtime at Berkshire Hathaway. It does not impinge on capital. We have arranged them so that the collateral posting requirements, which are one of the big dangers in the derivatives field, that we have very, very minimal exposure to that. They have no, they pose no, they pose problems to the world, generally, and that's why I referred to them on a macro basis in the 2002 report as being financial weapons of mass destruction. But I also said in that report that we use them in our own business regularly when we think they're mispriced. I think those are going to be very advantageous contracts. I think our shareholders are intelligent enough to, if they're explained properly, to realize how advantageous they are, and we'll continue to hold them and we'll continue to explain them. If there's a million 300,000 households created in a year and you create 2 million housing starts annually, you are going to run into trouble, and that's what we did. You have three choices. You could blow up a million and a half houses, you know, and if they do that, I hope they blow up yours and not mine, but that's it. We could get rid of it. We could try to create more households. We could have a 14-year-old start getting married and having kids, or we can produce less than the natural demand increase. And that's what we're doing now. And we're going to eat up the inventory, and you can't do it in a day and you can't do it in a week,
[3:03]
Warrenbut it will get done. How would you quantify the financial impact and damage of Berkshire losing its AAA credit I was disappointed when Moody's downgraded us. We didn't really think that was going to happen, but it did. And it doesn't have any material effect on borrowing costs. It does cause us to lose some bragging rights around the world in terms of our insurance promise, although nobody ranks ahead of us, that's for sure. I would say that the AAA change at Moody's is not, it's not going to be material in the future of Berkshire, but it still irritates me. I think the next change at Moody's will be in the opposite direction, and I think that will happen because we deserve a higher rating and they're smart. Gen Re has worked, has worked out well after a terrible, terrible start, and I was dead wrong in 1998 when I bought it in thinking that it was the Gen Rehry of 15 years earlier, which had absolutely the premier reputation in the insurance world. Jen Re is the company now that I thought it was when I purchased it in 1998, so we're proud of them. It was a very tough job. It wasn't one that was going to get done by itself, and that to some extent when you tighten up on an organization that has fallen into some lax ways, it can, you know, that is not an easy job. to have people doing very foolish things with money. I remember on my honeymoon, I was 21, and my wife was 19, and we drove west. I'd never been west, and we went through Las Vegas. It was 1952, and we stopped at the Flamingo, and people were better dressed in the casinos then. But I looked around at that casino, and I saw all kinds of well-dressed people who had traveled thousands of miles to do something very dumb. And I thought this is This is a country where you're going to get very rich. It, yeah, if people are going to get on a plane in New York and fly a couple thousand miles to stand there and do things with a mathematical expectation that's negative on every action they take, that is, it's a world of opportunities.