Warren Buffett on US economy, Fannie Freddie, Oil

Warren Buffett appeared on CNBC Friday morning and spoke on various topics covering US economy, Fannie/Freddie, Housing, Financial companies, Inflation, Oil etc.

Excerpts below:

* Fannie Mae and Freddie Mac-Buffett says due to implicit government backing, the two GSEs could borrow without the usual checks and balances. Then needed to keep earnings growing to keep stock market happy and turned to accounting to do it. Agrees they are "too big to fail." Buffett says they would have been gone a long time ago if the government hadn't been behind them. He thinks Freddie and Fannie will survive but shareholders could "lose a lot of money."

*Buffett says that while Fannie and Freddie have looked for cash from the private sector, it won't be enough to save them. Government will have to step in.

*Oil Sands-Asked if he's interested in investing in oil sands, he said no, but that the information he learned about the industry has been filed away and could become useful at some point in the future.

*Economy -he repeats his view that the negative ripples will continue to spread for awhile. He sees no "early end" to the problems although they will end eventually.

*Oil-Asked about the oil market, Buffett says demand and supply for crude has changed significantly in the past five years. He thinks Boone Picken's energy plan is "on the right track" and warns that the world can not keep increasing its demand for oil.

* Dollar-Buffett says he has no bets against the U.S. dollar right now and no direct currency plays. he also notes that stocks are generally more attractive now than they were a year ago.

*Inflation-The Fed "has real problems on inflation." Some Berkshire businesses are being squeezed on prices. For example, carpet manufacturing involves a lot of oil. The price of making carpets keeps going up, but it's hard to pass those costs on to consumers due to weak spending. Wholesale prices will "have to" show up in consumer prices. Once inflation is "ignited" it gets difficult to bring it under control.

*Would Buffett buy additional shares in the financials he already owns like American Express and Wells Fargo if prices come down? Is he buying shares now? Buffett replies that he has indeed been buying shares in one of those two names lately, but won't say which one. He points out that both companies were both started by the same people.

*Buffett repeats his belief that a windfall profits tax on oil doesn't make any sense, despite the fact that his favored candidate, Barack Obama, has expressed support for such a tax. He notes that no one is calling for a tax on other commodities that have gone up in price like soybeans. The oil companies are an easy target.

*Financial Firms-Buffett says it's possible there could be another financial firm implosion along the lines of Bear Stearns, but it would be "inappropriate" to comment on any specific companies right now because it could undermine confidence. He notes that while it is hard to find the sources, rumor-mongers should be punished.

*Housing-Buffett predicts housing market recovery will take some time, probably years. "A lot of blame to go around." The market won't really come back until you get to a normal inventory of unsold homes. No interest right now in buying any homebuilder stocks. They still have plenty of problems.