Published Wednesday, October 16, 2013 at 7:08 am / Updated at 3:05 pm
Warren Buffett: Allowing U.S. default would be idiocy

OMAHA (AP) — Billionaire Warren Buffett said Wednesday it would be idiocy for the nation's leaders to allow the United States to default on its bills.

Buffett, the renowned investor who leads the Berkshire Hathaway conglomerate, appeared Wednesday on CNBC.

Buffett said he thinks it would be absurd for American politicians to do anything to damage the country's reputation for paying its bills that has been established over the past 237 years.

"I don't think it will happen, but if it does happen, it's a pure act of idiocy," Buffett said about the possibility of default.

Congressional leaders were still working Wednesday on a deal to end the partial government shutdown and prevent default. Buffett said both political parties should agree not to use the debt limit as a bargaining chip in the future because it is "a political weapon of mass destruction."

"Credit worthiness is like virginity. It can be preserved but not restored very easily, so it is crazy to play around with it," Buffett said on CNBC.

But Buffett said he hasn't changed Berkshire's spending because of the budget battle, and it didn't factor in his decision to complete a $1.1 billion acquisition.

Berkshire said Wednesday it will buy the beverage dispenser business from Britain's IMI PLC on behalf of its Marmon Group subsidiary.

"I wouldn't have changed the price a penny based on what's happened," Buffett said.

The deal is relatively small by Berkshire's standards. The company spent $12.25 billion earlier this year to acquire half of ketchup maker H.J. Heinz Co. in a $23.3 billion deal. Buffett said Wednesday that another similar-sized deal recently got away from Berkshire.

Buffett also said he hasn't yet seen an effect on consumer spending in the reports he gets from Berkshire subsidiaries like its furniture and jewelry stores, but that would change if the government defaults.

Buffett said he hasn't sold off any of Berkshire's short-term treasury bills because of the budget battle. He said he's not worried about the government paying those.

Berkshire Hathaway Inc. owns about 80 subsidiaries, including clothing, brick, carpet and paint firms. Its insurance and utility businesses typically account for more than half of the company's net income. It also has major investments in such companies as Coca-Cola Co. and Wells Fargo & Co.

The Omaha World-Herald Co. is owned by Berkshire Hathaway Inc.

Copyright 2013 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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