Tags: Buffett | QE | panacea | economy

Buffett: QE No Panacea but May Be Helping Economy

Thursday, 19 Sep 2013 05:56 PM

By Dan Weil

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The Federal Reserve's quantitative easing hasn't met the hopes of Fed Chairman Ben Bernanke, but it hasn't hurt and may be helping the economy, says legendary investor Warren Buffett, CEO of Berkshire Hathaway.

The economy might be faring even worse if the Fed wasn't purchasing bonds, he told CNBC. "Maybe if they hadn't been doing it, you'd have seen even less than 2 percent [growth]. Who knows?"

The economy grew 2.5 percent in the second quarter.

Editor’s Note: 5 Reasons Stocks Will Collapse . . .

The expansion may remain sluggish "quite a while," Buffett said. "It just creeps along." But he says he doesn't put great focus on economic forecasts.

As for who should be the next Fed chairman, Buffett says he would have liked to see Bernanke keep the job. "When you have a .400 hitter in the lineup, you don't take him out," he said.

Bernanke may want to depart, Buffett says. "But since the panic of five years ago, I think he's done a terrific job. And I think he ought to get a little bit more of a chance to play out the hand."

Even with Bernanke clearly exiting, Buffett says he has no second choice for the position.

Meanwhile, stocks have moved from "ridiculously cheap" five years ago to "more or less fairly priced now," Buffett said.

The Standard & Poor's 500 Index has soared 158 percent since March 2009.

"We don't find bargains around, but we don't think things are way overvalued either," Buffett said. "We're having a hard time finding things to buy."

Nonetheless, Birinyi Associates sees room for further stock price gains. It said in a report obtained by MarketWatch that in each year since 1928 when the S&P 500 gained more than 15 percent over the first three quarters, it rose in 80 percent of the fourth quarters, with an average gain of 4.45 percent.

The S&P 500 is up 22.6 percent so far this year.

Editor’s Note: 5 Reasons Stocks Will Collapse . . .

Related stories:

Ex-FDIC Chief Isaac to Moneynews: Fed's QE Succeeds Only in Confusing

Newsmax FBA Member Naroff: Fed Shouldn't Begin Tapering Yet, but Probably Will

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