Berkshire Hathaway 2013 Annual Meeting Audience Question # 60

Warren is perfectly willing to look at business opportunities in Europe despite its debt problems

Warren Buffett:

OK. Station 1.

Audience Member:

Hi, Warren. Hi, Charlie. My name is George Islets from Cologne.

Do you see investment opportunities in the eurozone? For example, extending your stake in Munich Re?

Do you trust in the policy of the ECB to bring the things together? Thank you.

Warren Buffett:

Yeah. Well, we’re perfectly willing to look at business opportunity in the eurozone, and we bought a couple of bolt-on acquisitions, one for a couple hundred million in the farm equipment area. And we’ll be happy if we find a business in any one of the 17 countries tied to the euro.

There might be a few of them we may be a little less inclined than others.

But… you know, it may create opportunities for us to buy businesses. We’d be happy to. Europe is not going to go away. But the European monetary union was… you know, had a major flaw, and they’re grappling with a way to correct that flaw.

And with 17 political bodies and a lot of diverse cultures, it’s really tough for them to do so.

They’ll do it in time, in my view. But essentially they synchronized a currency without synchronizing much else.

And nature finds the fatal flaw always, and so does economics, and they found it fairly quickly, in terms of the euro. And the structure that was put in place will not work, and they’ll have to find something that does work.

And they will, eventually, but they may go through a fair amount of pain in the process.
Charlie?

Charlie Munger:

Yeah. Structured as Europe was structured, letting in Greece into the European Union was a lot like using rat poison as whipping cream.

It just… it was an exceptionally stupid idea.

It’s not a responsible capitalistic country, a place where people don’t pay taxes and so on and so… it just… and…

Warren Buffett:

I’ve tried for years to get him to use ‘Country A’ and ‘Country B,’ but he…

Charlie Munger:

… and committed fairly extreme fraud in the course of getting into the union. They lied about their debt.

And so Europe made terrible mistakes. They have politicians, too.

Warren Buffett:

You think it’ll be behind them in ten years?

Charlie Munger:

I think Europe will muddle through.

Warren Buffett:

Sure.

Charlie Munger:

Think what Europe has already muddled through.

Warren Buffett:

But we would be delighted, even with that dire forecast, not overly… we would be delighted, tomorrow, to buy a big business in Europe that we liked, and we’d pay cash for it.

Charlie Munger:

I hope you’ll call me if it’s in Greece.

Warren Buffett:

I make these small suggestions, but you can see it doesn’t help much.

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