Warren Buffett: 'Our Country Has Faced Far Worse Travails': A Paralyzing Fear Has Engulfed the Country. But America's Best Days Lie Ahead.'

Warren Buffett. [Photo Credit: Stan Honda: AFP-Getty Images.]

Businessman, investor, philanthropist and advisor to Presidents, global corporations and governments, Warren Buffett, is a child of, and survivor of, America's "Great Depression."

Buffett, 78, is the founder and chairman of the Omaha, Nebraska-based Berkshire Hathaway Inc. holding company and investment firm.

He acquired Berkshire Hathaway, which at the time was primarily an apparel-making company, producing and marketing men's and women's under-clothing and men's dress and casual apparel mostly under the Fruit of the Loom label, 44-years ago, turning it into the mega-holding company and investment vehicle it is today.

Berkshire Hathaway Inc. owns over 100 corporations, in sectors ranging from food and food distribution (See's Candies and the convenience store distribution company McLane Company are two) to manufacturing (Acme Brick, Johns Mansville and others), apparel-making (Fruit of the Loom, Justin Brands), to furniture-making and retailing (Nebraska Furniture Mart, Jordan's Furniture) and insurance (Geico Auto Insurance), and many others. [Click here for a complete list of Berkshire-owned companies.]

Buffett and Berkshire Hathaway also hold major investments stakes in numerous corporations, including United Kingdom-based Tesco, which owns and operates the 115-store Fresh & Easy Neighborhood Market grocery and fresh foods chain, which has its stores in California, Nevada and Arizona. Buffett also is a major investor in Wal-Mart Stores, Inc., Coca-Cola and numerous other corporations.

Each year as part of Berkshire Hathaway's annual financial report to shareholders, Buffett writes a personal business letter to the company's investors. The Buffett letter has become famous in the financial world because the "Oracle of Omaha" uses his letter to shareholders to not just write about the performance of the Berkshire-owned companies but also to discuss the wider world and environment in which the companies and business in general operate in.

The letter is read closely by analysts as well for Buffett's views on both the current state of the U.S. micro and macro-economy.

Today Warren Buffett issued his annual letter to Berkshire Hathaway shareholders on a day that finds one of the world's biggest corporate success stories, Berkshire Hathaway Inc, reporting its worse year ever in the company's 44-year history, along with a very bad fourth quarter (2008), compared to the same period just a year ago.

Berkshire posted a $117 million quarterly income gain for the fourth quarter 2008, which marked a whopping 96% drop from last year's $2.95 billion in fourth-quarter net income.

For the year, Berkshire Hathaway's net income dropped 59% in 2008, from $12.2 billion, or $8,548 a share, a year earlier, to $4.99 billion, or $3,224 a share, from the previous year. In addition, the holding company's revenue fell 8.8%, from $118.2 billion, in the previous year, to $107.8 billion, for 2008.

Buffett takes much of the responsibility for this performance himself, despite the current global recession and financial crisis. Doing so is characteristically Buffett.

But it's important to note the Berkshire Hathaway didn't loss money in its fourth quarter, like is the case with so many corporations. But without a doubt times are tough in Omaha at Berkshire Hathaway, just like they are elsewhere. [You can read details of the company's fourth quarter financials here and at the link to its just-released financial report here: Annual & Interim Reports (Berkshire Hathaway Inc.)

But the "Oracle of Omaha," the man Forbes magazine ranks as the richest person in the world, says today --despite the devastating performance of his 44-year old (that's when Buffett took it over) Berkshire Hathaway, which over the last 44-years under Buffett's leadership has seen its book value grow from $19 to $70,530, a rate of 20.3 percent compounded annually -- and despite the serious economic recession and financial crisis the U.S. (and the world) finds itself in today -- that: "Our country has faced far worse travails' (than the current recession). A paralyzing fear has engulfed the country. But America's best days lie ahead."

That's the title of Warren Buffett's letter to Berkshire shareholders today, and it's the title of an opinion article he wrote for Newsweek magazine that was just published. Buffett is a member of the board of the Washington Post Company, which owns Newsweek.

Every year Buffett's letter to Berkshire shareholders is a market-moving event because of his legendary status as an investor. Perhaps that's why he chose to issue it on a Saturday this year, when the markets are closed.

But the letter is vintage Buffett, America's strongest cheerleader, but always from a real and grounded position. The 'Oracle of Omaha" may be a Wall Street wizard but he lives his life firmly on main street.

We strongly suggest reading Buffett's opinion piece on Newsweek online. You can do so here.

You can also view and read Warren Buffett's original letter to Berkshire Hathaway shareholders issued today here: Warren Buffett's Letters to Berkshire Shareholders, February 28, 2009. [We suggest reading Buffett's full shareholder letter even if you read the linked Newsweek piece because the Newsweek version is an abbreviated version of the full shareholder letter.]

Warren Buffett, born of the Great Depression, a man who has lived his entire life in Omaha but is a global citizen, says "America's Best Days Are Ahead." These are words we all need to remember, heed, and work together to make true.

Recession Economics: Fresh & Easy Buzz Flashback - President-Elect Obama Talking Near $1 Trillion Stimulus Today

Recession Street USA - Strong Medicine For A Big Problem

Yesterday in this post about the economic recession [also see here], we wrote that U.S. President-elect Barack Obama and others will soon stop talking about implementing a "mere" $500-$600 million economic stimulus package when he takes office on January 20, 2009, and start talking about an economic stimulus package of about $1 trillion.

But we didn't think soon would actually mean just 24 hours after we wrote and published the post. But then that's "recession time" for you -- in such severe economic downturns everything seems to move faster, with the exception of the upward trend of the economy.

Today President-elect Obama, anxious to jolt the economy back to life, said he is considering a federal stimulus package that could reach a whopping $1 trillion, dwarfing last spring's tax rebates and rivaling drastic government actions in the 1930's to fight the great depression.

The latest figure "Team Obama" is considering appears to be about $850 million. However, since it was about $600 million just a day or two ago (remember we are on "recession time"), it could easily go from $850 million to $1 trillion between now and January 20, when President-elect Obama is sworn-in as the 44th President of the United States, particularly if the December unemployment figures, which come out in early January, 2009, are as bad as most think they will be.

We suggest you read the just breaking story from the Associated Press at the link below:

Obama looking at $850 billion jolt to the economy

Recession Economics: Follow-Up - U.S. Federal Reserve Drops Key Interest Rate to Near-Zero; What Next?

Breaking Follow-Up: Recession Street USA

Earlier today we wrote in this piece [ Recession Economics: U.S. Economy Worsens; Will Get Even Worse Before Gets Better] that it was likely the U.S. Federal Reserve would lower its benchmark lending rate sometime today to near zero.

The Fed has now done just that -- the U.S. Federal Reserve chopped its key target interest rate for overnight lending to a record low of about zero.

Beyond its slashing interest rates to just about zero, the Fed's campaign to save the U.S. economy involves an array of new economic measures to stimulate spending. [Read The Fed statement.]

The Fed also announced it would buy even more corporate debt and securities as part of its attempts to cure the financial crisis and economic recession. The stock market appears to like what the Fed is saying and doing as well, rising about 400 points on the news.

"We are going to do whatever we can, use all the tools we have, and do whatever it takes," Fed chairman Ben Bernanke said this afternoon in announcing the record interest rate reduction and further plans to buy up more debt and securities.

Read more at the links below:

Bloomberg: Fed Cuts Rate to as Low as Zero, Will Use All Tools.... Marketwatch.com: US stocks cheer as Fed cuts rates to record low....New York Times.... CNNMoney.com.... Reuters ....Forbes.

Recession Economics: U.S. Economy Worsens; Will Get Even Worse Before Gets Better

Recession Street USA.

The U.S. economy is going to get worse before it gets better, as we've been saying in Fresh & Easy Buzz for months. President-elect Barack Obama made this very same comment two weeks ago during a news conference in Chicago, Illinois.

Now, the U.S. government is reporting this morning that consumer prices fell the most on record in November and builders broke ground on the fewest new homes in half a century, signaling a deepening of the current U.S. recession.

You can read further at the following links:

Bloomberg: US Economy: Consumer Prices, Housing Starts Post Record Slide....Market Watch: Drop in consumer prices is most since 1932....Washington Post - New York Times - Reuters.

Meanwhile, it's suspected the U.S. Federal Reserve will today cut the key target interest rate for overnight lending, which is the benchmark rate, to near zero, 0.5%. [More here: Dollar Declines to Two-Month Low Before Fed’s Rate Decision]

In a news conference this morning, President-elect Barack Obama, asked about the Fed's likely decision to cut the key rate to near zero said: "It's not prudent for an incoming President to question the Fed's decision. What I will say though is the Federal Reserve is running out of ammunition to fight the recession (once at 0.5% all the Fed can do is lower the rate next to zero), which is why our economic stimulus plan when we take office becomes even more important," to implement. [Read more about the Obama plan here: Obama calls for broad strategy to fight recession.]

The U.S. dollar weakened beyond $1.38 per Euro for the first time in two months today amid the speculation the Fed will cut the target rate for overnight lending to near zero today.

That could offer a ray of hope for U.S. exporters. However, with the recession and financial crisis being global, demand for U.S. goods has dropped significantly, as has the demand for goods exported into the U.S. A bright spot though has been for agriculture exportation, particularly U.S. tree crops and some commodities.

If the Fed cuts the key rate today as expected, it will do little for both Wall-Street and Main Street, according to most economists, who say the current recession appears to be much more severe that can be managed by the Fed with its interest rate-cutting tool kit, which is almost empty.

Instead, everyone from Wall Street and Main Street, from corporate America to small business and consumers, is waiting for 'Obamanomics,' the huge economic stimulus package the President-elect wants to implement just days after taking office on January 20, 2009.

The stimulus amount seems to be growing by the day. Initial talk was something on the order of about $300 billion. That stimulus estimate was quickly pushed aside for suggestions it needs to be in at least the $500 billion range in order to have any impact on the going to hell in a handbasket U.S. economy.

In the last couple weeks, many in Washington, D.C., along with a number of economists, have started mentioning numbers like a one trillion dollar stimulus package. We suspect with today's worsening economic news, along with what's suspected to be even higher unemployment numbers for December, talk of a near-trillion dollar stimulus package will increase. in the days and weeks ahead.

Food & Grocery Retailing in the Recession: Wal-Mart CEO Describes Changes in Consumer Behavior-More Cheap Basics, More Cooking at Home; More Leftovers

If it's Sunday, it's "Meet the Press." But it's likely that the coffee viewers were drinking while watching the news program early Sunday morning was a basic brand brewed at home rather than a Mocha Latte from Starbucks.

NBC's "Meet the Press," America's Sunday morning news program of record, where U.S. Presidential candidates (and President-elect Barack Obama who appeared last week), foreign leaders and sometimes heads of major U.S. corporations go to address the leading political, social and economic issues of the day, featured a round table discussion yesterday on the news show which had outgoing Wal-Mart Stores, Inc. president and CEO Lee Scott as a member.

Scott recently retired from his CEO position at Wal-Mart and will be replaced at the end of January, 2009 by head of global operations Mike Duke. Scott will remain with the U.S.-based global mega-retailer in an advisory capacity for a couple years.

Wal-Mart CEO Scott joined a roundtable discussion moderated by NBC News' David Gregory, who was recently named as the permanent replacement for the late Tim Russert as moderator of the news program, on yesterday's "Meet the Press," which also featured: Michigan Gov. Jennifer Granholm; former Massachusetts Governor, Republican Candidate for President, investment banker and entrepreneur Mitt Romney; former Hewlett-Packard CEO and economic advisor to John McCain's campaign for President, Carly Fiorina; and Google CEO Eric Schmidt. The discussion topic was the state of the U.S. economy, the financial crisis and recession, and American consumers.

The Wal-Mart CEO said on the program yesterday that the retailer is seeing major changes in the ways its customers are behaving in the current, serious economic recession.

"The number one concern among consumers today is their job, plain and simple," Scott said yesterday on "Meet the Press."

He offered this example and analysis from Wal-Mart USA's pharmacy group: "In our pharmacy group, we have increases in prescription drugs, but not at the same rate it was," he said. "What we're seeing is an increase in self-treatment."

Scott also said customers are changing the types of foods they buy at Wal-Mart.

"We're seeing an increase in food storage as people are cooking more at home," he said. They are "using leftovers more extensively," and buying more frozen food.

Scott also said on "Meet the Press" yesterday that small businesses, which comprise a significant segment of Wal-Mart shoppers, particularly at the chain's Sam's Club wholesale stores, are changing their buying patterns and behavior. For example, he said cash-strapped restaurant owners, a group that buys regularly from Sam's Club, are shopping the stores more frequently to buy supplies as one day's cash flow allows them to buy supplies for the following day. No food storage among these small business customers, according to Wal-Mart's research.

Lee Scott also made a bit of news yesterday on the news program, saying the chain, which is the largest corporation and retailer in the world, as well as being the number one retailer of all products, including food and groceries in the U.S., has reached out to the incoming Obama Administration, offering to share its expertise in the health care and environmental areas with the President-elect, along with working in both areas with the new administration when it takes office in January 2009.

Scott said these are two areas that profoundly are effecting Wal-Mart shoppers and the companies that do business with Wal-Mart as vendors and service providers.

Wal-Mart "has reached out to President-elect Obama's team to work on the U.S. health care and energy issues," he said, adding that people critical of Wal-Mart's involvement in political debates were "on the wrong track."

"These are not times to be self-serving," Scott said. "We have a responsibility to participate."

[You can view a video of yesterday's roundtable discussion on "Meet the Press" here.]

Some would say, particularly in this serious recession where new customers are flocking to Wal-Mart daily in search of bargains as the chain's sales and profits the last two quarters have reflected, to paraphrase that old saying about automaker General Motors ("What's good for GM is good for America," an ironic quote today), 'What's consumer behavior today at Wal-Mart is likely similar if not the same consumer behavior in general today in the U.S.'

As such, the trends Lee Scott reported yesterday on "Meet the Press," particularly this one: "We're seeing an increase in food storage as people are cooking more at home," he said. They are "using leftovers more extensively," and buying more frozen food, is something all U.S. food and grocery retailers should take to heart, and focus their respective merchandising and marketing efforts around now.

Regarding Tesco's Fresh & Easy Neighborhood Market, Fresh & Easy Buzz has been writing now for months that the grocery chain needs to focus on a value proposition in its merchandising and then create a marketing and communications program to tout that value proposition in a strong, clear, concise and repetitive way.

Instead Fresh & Easy's merchandising and marketing focus all year has been more like that of a specialty foods retailer operating in good economic times.

For example, Fresh & Easy promotes mostly prepared foods (a little prepared foods promo is fine but far less than it's doing now in this recession would be wise). Read Lee Scott's research observation above. More cooking at home. Using more leftovers. Buying more frozen food. Buying more basic groceries on sale and storing them.

For Thanksgiving Fresh & Easy promoted a gourmet turkey wrapped in smoked bacon and sage rather than a basic bird at a cheap price like nearly all other major chains did.

And when it comes to its public relations campaign, Fresh & Easy issues news release after news release about "green" retailing, premium, prepared foods and new store openings, but near-none about the values offered in its stores.

It's fortnightly (bi-weekly) advertising circulars reflect mostly this specialty foods retailer in good economic times promotional activity as well. The grocery chain has yet to produce one value-packed advertising circular similar say to what the small-format discount grocery chain Aldi USA does each week. (http://www.aldiusa.com/.]

After all, according to Tesco, Fresh & Easy is a convenient neighborhood grocery and fresh foods store designed for "everybody" to shop at for food and groceries, featuring everyday low prices at least 15% below the everyday prices of its competitors.

This model and message isn't being communicated, nor is Fresh & Easy's merchandising emphasising this positioning in its stores, even though it is what it should be doing with a near 100% focus in this current down economy, which is even more down in California, Nevada and Arizona where Tesco operates its 104 Fresh & Easy stores than it is in many other U.s. states.

Based on Tesco's description of what Fresh & Easy is, that they are no frills stores for "everybody," with about the lowest prices around vis-a-vis the competition, the stores should be doing very well right now. They aren't.

While Scott and Wal-Mart learn about this new, recessionary customer, and focus the chain's stores on this customer which is paying big dividends for the chain, Tesco's Fresh & Easy Neighborhood Market USA seems oblivious to the current recessionary marketplace realities in its merchandising and marketing.

If at the helm of Fresh & Easy, we would be focusing near all of our merchandising, marketing and operational efforts in a laser beam like fashion on that value proposition, on the basic grocery and related categories like Wal-Mart is doing, and is winning out by doing so, across the board.

Perhaps a mission statement something like this: Fresh & Easy: "We are a no frills grocery market where you can get food and groceries for the best prices. No gimmicks. No fancy displays. Just the best prices available on groceries and fresh foods (and a few special treats as well) when you need them. We know the times aren't easy. That's why Fresh & Easy is here for you."

'Barack the Builder:' U.S. President-elect Obama Announces Plans For Biggest Public Works Program Since the 1950's

The U.S. economy will begin to look much more like the European economic model beginning next year as President-elect Barack Obama proposes a major government-funded public works program to jump-start the mortibound U.S. economy.

President-elect Barack Obama said today in a radio address to the nation he plans to revive the frozen U.S. economy through a job-saving and creating public works plan on a scale unseen since the building program of the interstate highway system in the 1950s.

The interstate highway program, along with numerous other large-scale infrastructure projects, came under the administration of Republican President and former General Dwight David Eisenhower, who as the Supreme Allied Commander who led the defeat of Nazi Germany in World War II, implemented major public works programs in the United States similar to those the U.S and Europe paid for and carried out to rebuild Germany and other European nations following the war.

President-elect Obama's plans for the massive building program were welcomed today by nearly all of the nation's Governors, who have been pressing him to announce such a program since meeting with the next U.S. President last week at a special session in Pennsylvania arranged by that state's governor, Edward Rendell, who is the current president of the National Governor's Association, along with being one of three Governors who last year launched a national campaign to rebuilt America's crumbling infrastructure. The other two Governors are California Governor Arnold Schwarzenegger and Michael Bloomberg, the Governor of New York. Rendell is a Democrat, Schwarzenegger a Republican and Bloomberg is an Independent.

President-elect Obama laid out a broad outline of his plans during his radio address today. He plans to talk more about the specifics of the program between now and when he takes office on January 20, he said today.

However, based on what we heard from President-elect Obama today, if supported by Congress, which is likely, it will be the biggest public works program the U.S. has seen since the Eisenhower Administration.

In fact, we have respectively given President-elect Obama the new nickname: "Barack the Builder," following his announcement today of his proposed massive public works program. Remember you read it here first.

Below is a transcript, as well as a video, of President-elect Obama's radio address today. After that are some links to selected news reports of President-elect Obama's plans as laid out in his radio address to the American people today:

>Transcript: President-Elect Obama's Radio Address

>Video: Obama: Nation Will Meet Economic Challenge

Associated Press: Obama banking on large-scale public works project....Politico.com: Governors applaud Obama spending plans....Bloomberg News: Obama Plans Largest Building Program Since 1950s (Update1)....Chicago Tribune: Obama pledges massive stimulus package....BBC News - UK: Obama pledges to rebuild US....

Examiner.com: Obama's new, new deal.... American Thinker: New "New Deal" just like the old one....Gather.com: The Day Obama Made History....Voice Of America: US President-Elect: Do Not Despair over Economy....xchange Magazine: Economic Stimulus Plan Accounts for Broadband.

Yesterday it was learned that over 500,000 jobs were lost in the U.S. in the month of November alone. This startling number has changed the mood in Washington, DC in terms of how severe the recession really is, and in terms of how much money the government needs to spend to stimulate it.

One trillion dollars of economic stimulus is now being discussed.

Additionally, Democratic leader Nancy Pelosi and President George W. Bush appear to have agreed on a compromise that will get an immediate $15 billion dollars to the 'Big 3' Detroit Automakers. Sources in the nation's capital tell us the surprise compromise only came about because of the half a million jobs lost in November. Economists are expecting similar numbers of lost jobs for the months ahead, even without a failure of one or more of the U.S. Automakers.

President-elect Obama's announcement of his massive public works-stimulus plan today also were prompted (particularly the size and scope of the program) by the 500,000-plus November jobs loss number, along with predictions by nearly every economist and financial analyst that things are likely to get even worse in 2009.

The U.S. food and grocery retailing industry has been far less hurt by the recession than other retailing segments. For example, 91,300 non-grocery industry retailing jobs were lost in November. [Retail industry loses 91,300 jobs in November.]

Consumers have dramatically cut back on away-from-home eating, spending that money at the grocery store because they are cooking and eating more at home because they have to. This has helped the food and grocery retailing industry in the recession.

However, the industry is a "main street" business, and despite the fact people still have to eat during a severe recession, they can't afford to eat like they desire, which means they aren't buying like they do in better times. They also are searching out the stores where they can spend the less for groceries, which isn't good news to many segments of the food retailing industry.

Therefore, we believe the U.S. food and grocery industry will embrace and support President-elect Obama's massive public works jobs plan because having fewer people lose their jobs and putting out of work people back to work means Americans will have more money to spend at the grocery store. We expect industry trade associations like FMI to come out in support of the Obama plan soon.

Following the November jobs loss report last week, there is a growing consensus in Washington, including among many Republicans, as well as in the private sector, that it is going to take the invisible hand (although not so invisible in recent months) of government to right the free market ship at present and into 2009. And that hand has to be a big one.

There's also an increasing consensus that the only way to do so is to spend big, which is why we are starting to hear stimulus package numbers like 1 trillion being talked about.

Fresh & Easy Buzz Friday Essay: As Warren Buffet's Berkshire Hathaway Goes, So Goes America; But Like the Eternal Optimist Buffett is, 'Yes We Can'

It appears even America's smartest and wisest investor, Berkshire Hathaway, Inc. founder and Chairman, and major Tesco plc shareholder Warren Buffett, isn't immune from the United State's (and now the world's) worst financial crisis since the 1930's great depression and the stuck dead in the mud U.S. economy.

Berkshire Hathaway's third quarter operating earnings fell 19.3 percent to $1,335 a share from $1,655 a share in the same period the year before, the company reported today.

That's below the average forecast of $1429 from the two top analysts following the stock, as tracked by Thomson One Analytics.

Berkshire Hathaway owns a number of companies in the insurance industry, which is fairing about as badly as the financial services industry is in the current domestic and global financial crisis and recessionary economy.

Reflecting this industry reality, operating earnings for Berkshire Hathaway's insurance-underwriting activities took a big hit, falling to $81 million from $486 million in the year-ago quarter.

Overall, Berkshire Hathaway's net earnings plunged a whopping 77% to $1.06 billion ($682 per share) from $4.55 billion ($2942 per share.) A major factor behind these numbers are investment and derivative losses of $1.01 billion, compared to gains of $1.99 billion in last year's quarter.

Buffet said today though that last year's substantial derivative gains were do in large measure to Berkshire's year-ago period profitable sale of PetroChina stock.

The derivative portion of the gains and losses are on paper only. Buffett said the derivative contracts held by Berkshire will eventually be profitable, but right now they're losers, as they are for everybody who is holding them.

Berkshire Hathaway said today in a statement its net worth declined slightly to $120.15 billion over the first three quarters of the year. But it adds that net worth fell by roughly $9 billion in October amid all the carnage in the financial markets. That's not the kind of October surprise Warren Buffett, the "Oracle of Omaha" likes to receive.

[You can read additional, detailed information in Berkshire Hathaway's 10-Q filing for the quarter. You can read a press release issued today by Berkshire Hathaway at the link here: News Releases.]

Click on the links below for additional coverage of Berkshire Hathaway's 77% drop in third quarter earnings:

Associated Press: Berkshire reports 77 percent drop in 3Q earnings....Financial Times: Berkshire profit plunges 77%....MarketWatch.com: Berkshire quarterly net income falls 77%....Bloomberg: Berkshire Hathaway Profit Falls 77% to $1.06 Billion (Update2)....Reuters: Berkshire Hathaway profit tumbles 77 percent.

Warren Buffett holds about $1.4 billion in Tesco plc stock, which amounts to an approximate 3-4% ownership stake in the company, which is the third-largest food, grocery and general merchandise retailer in the world. United Kingdom-based Tesco owns and operates Fresh & Easy Neighborhood Market in the Western U.S.

Buffett is among the largest, if not the largest, single investors in Tesco.

Berkshire Hathaway's 77% third quarter earnings plunge demonstrates that not even one of the world's smartest, best and most prudent investors, Warren Buffett, is immune from the potentially negative investment results which are becoming a part of the most serious financial crisis in the U.S. since the great depression and recessionary economy gripping America and the world.

Unlike the investment banks that have now either been acquired for pennies on the dollar or have merely gone away, Buffett is a prudent investor. His Berkshire Hathaway, Inc. holding company owns "main street" companies, about 60 of them, including food and grocery industry sector companies like convenience store wholesaler McLane Company, candy maker and retailer See's Candies, and the International Dairy Queen, Inc. fast food chain.

Despite his practice of owning "main street" companies -- he also owns GEICO Auto Insurance, which is famous for its television commercials, the underwear and hosiery company Fruit of the Loom® and many others -- it is many of those "main street" companies that are hurting because of the bad economy.

For example, Berkshire Hathaway also owns a number of home building and related construction industry companies, a couple business services firms, additional insurance companies, furniture and jewelery retailers, and other main street-type companies that are seriously hurt when consumers have little money to spend and credit is super-tight. [Click here for a complete list of companies owned by Berkshire Hathaway.]

Warren Buffett was characteristically himself today though, despite Berkshire's Q-3 77% earnings drop. Still bullish on the stock market and optimistic about the future of the U.S. economy. Still looking to acquire new companies and get in on what he says are numerous great investments out there right now in companies that are seriously undervalued for the long term. And doing what he can to help the economy and country along.

In fact, Warren Buffett spent most of the day today in Chicago with U.S. President-elect Barack Obama, former chairman of the U.S. Federal Reserve Paul Volker, former U.S. Treasury Secretary (and current Chairman of Citicorp's executive committee) Robert Rubin, former head of Treasury and ex-president of Harvard University Larry Summers, and a group of other top Obama economic advisers, discussing and mapping out strategies to get the U.S. out of the current financial crisis and economic recession.

What Berkshire Hathaway's 77% drop in third quarter earnings should demonstrate to these policy makers giving advice to the new President-elect, and offer to those who don't think the U.S. is really in a historically severe financial and economic crisis situation, is to hammer home the urgency of the situation and the urgency of solving it.

After all, if a holding company, Berkshire Hathaway, owned and operated by a prudent, wise and historically successful investor, Warren Buffett, with arguably the best track record in the world, can experience such a dramatic drop in quarterly earnings, it means the financial crisis and economic meltdown has fully hit main street.

Things are unfortunately going to get a whole lot worse -- more firings and thus increased unemployment, continued tight credit, more business failings and more debt for taxpayers -- before they get better. This is especially true of unemployment, which is always a lagging indicator in a recession.

That's why it was good to watch President-elect Obama focus like a laser beam at his economic press conference in Chicago today, along with seeing Warren Buffett standing behind him with many other smart and good men and woman, Democrat, Republican and Independent.

President Franklin Delano Roosevelt (FDR) assembled what historians later came to call his "Brain Trust" to advise and help him pull the United States out of the great depression in the 1930's. FDR's "Brain Trust" included Democrats like himself and Republicans like the challenger he beat to win the Presidency of the United States.

We were pleased to see President-Elect Obama's version of his "Brain Trust" standing behind him at the press conference this afternoon. He's reached out and brought in some of the best and the brightest -- and is preparing well to hit the ground running in 74 days, when he becomes the 44th President of the United States.

Regardless if we share President-Elect Obama's politics completely or not, it would be wise to get behind him to solve the current financial crisis and recession. It's our (taxpayer's) money that will be used to do so after all, as already is the case with President Bush's $700 billion taxpayer-financed financial institutions bailout package.

Obama is approaching the economy in a much more serious and measured way though. And he is bringing in a bi-partisan group of experts, his version of FDR's "Brain Trust," to work on the economy.

It looks positive so far to us. He looks serious, calm and resolute. He isn't afraid to get advice from people who know more than he does. He is talking realistically about the nature of the problem but also is always optimistic, like Ronald Reagan was.

In the deepest hours of war and depression, FDR urged Americans not to fear. "Fear Nothing But Fear Itself," he said over and over in his characteristically optimistic way.

Barack Obama has been saying the same thing in his own way for two years during the long Presidential campaign -- just using different words: "Yes We Can." He offers optimism and hope for a better tomorrow, which is why he was elected in the main.

Like Ronald Reagan said often: "Hope and optimism are enduring American traits." Neither are a substitute for a good, well executed plan. But without hope and optimism it's hard to come up with such a plan or policy and get the American people to make it work. But of course..."Yes We Can."

Resources:

>Click here to read a selection of past stories about Warren Buffett from Fresh & Easy Buzz.

Breaking U.S. Economic News: U.S. President George W. Bush Speaks to the Country About the Financial Crisis

From the Fresh & Easy Buzz Editor's Desk

Just a few minutes ago in a prime-time speech carried by every U.S. television network and radio station, U.S. President George W. Bush, looking less than self-assured, addressed Americans from the White House, issuing a dire warning that unless lawmakers pass a $700 billion financial rescue plan, the result likely will be closed businesses, more housing foreclosures, more lost jobs and the wiping out of retirement savings.

In other words the U.S. President warned Americans they face a potential economic crisis unlike any experienced in the nation in recent history. [The Associated Press photograph at top, left is of President Bush posing for photographers right after giving his speech tonight.]

A dire warning and crisis situation it is indeed.

Of course, the Devil is in the details of that $700 billion financial rescue package which the U.S. House of Representatives and U.S. Senate are currently conducting hearings on, saying it would be irresponsible for them to merely rubber stamp the proposal, which among other things calls for the Secretary of the Treasury to be given extraordinary powers, including not having any of his actions being subject to review by any U.S. court of law, in his role as the government's economic bailout Czar.

The Associated Press has just filed the first story about President George W. Bush's talk to the American people this evening.

You can read that report here.

Additionally, you can read a complete transcript of Bush's speech given from the White House tonight. Click here to view the transcript

In his speech this evening the U.S. President also invited Presidential candidates Barack Obama and John McCain to meet with him, cabinet officials and a selected group of others at an emergency meeting at the White House tomorrow to discuss the financial crisis gripping the financial markets and the country.

Republican candidate for President John McCain also has announced he is suspending his campaign until further notice because of the financial crisis.

His campaign also asked the Obama campaign to cancel Friday's nationally televised Presidential debate, which is to be on the topic of foreign policy. An Obama campaign spokesman told cable news network channel CNN earlier tonight that its team wants the debate to go forward, and that it hopes the financial crisis and the U.S. economy can be discussed in Friday's debate, along with foreign policy, since it is the most pressing issue facing Americans.

The potential economic damage the current financial crisis has already and can further cause is grave, not only in the U.S. but globally. A plan that protects both Wall Street and main street needs to be devised rapidly. But not in a sloppy fashion like the current one before Congress was developed.

Hopefully that plan can be fixed at the grand White House meeting tomorrow, agreed to on a bi-partisan basis in Congress, and rapidly passed and enacted.

The Devil may be in the details. But additional lost jobs and retirement savings, a global economic meltdown, business failures, and numerous other related economic negatives lie in the balance, as does the well being of the American people.