(May 2, 2009) As the country continued to stagger just months after the credit crisis exploded, Buffett endorses the government's response to "a situation that was as close to a total meltdown throughout the financial system as I think you can imagine." He details how GEICO benefited from the crisis, and predicts a full housing recovery will take some time.
In 2008, a credit crisis sparked by the housing bubble's collapse left investors "bloodied and confused," and a "paralyzing fear" led to an essentially "non-functional" credit market. In his letter, Buffett added that the resulting "freefall" in business activity accelerated "at a pace I have never before witnessed." Berkshire's 9.6 percent drop in per-share book value was dwarfed by the S&P's 37.0 percent plunge. Buffett called the government's massive economic stimulus "essential" despite the prospect of "unwelcome aftereffects." Noting, however, that the nation had faced "far worse travails," he predicted "America's best days lie ahead."READ 2008 LETTER (DATED FEB. 27, 2009)