Berkshire Hathaway Inc. (NYSE:BRK.B) Chairman Warren Buffett believes Detroit is on the road to recovery, and that small businesses will be the driving force paving the way. Buffett sat down for a round table discussion on Bloomberg’s In the Loop that included Bloomberg’s own founder Michael Bloomberg, Michigan Governor Rick Snyder, and Goldman Sachs Group Inc (NYSE:GS) CEO Lloyd Blankfein. The Berkshire Hathaway Inc. (NYSE:BRK.B) CEO was asked first to assess Detroit’s economic situation.
“Well Detroit is getting to clean the slate, and it’s important that they get through the bankruptcy in relatively prompt order, and it looks like they’re doing that to me; they need a fresh slate financially and they’re getting it,” Buffett said.
Berkshire Hathaway Inc. (NYSE:BRK.B) has some direct involvement and vested interest in the bankruptcy proceedings, as Buffett’s bond insurance firm Berkshire Hathaway Assurance Corp. insured more than $380 million of Detroit’s secured sewer debt.
Buffett stressed however that business growth, and particularly the launch and growth of small businesses will be key to fueling their economic recovery, citing the incredible growth and financial impact some of those businesses can evolve into and have on the economy, including ones purchased in the past by Berkshire Hathaway Inc. (NYSE:BRK.B) themselves.
“What’s really important is to have vibrant headquarters companies, and now, developing a small business, who knows what comes out of that. We bought three businesses that were started with less than $10,000 at Berkshire, and paid people in the billions for it. That’s where the jobs come from, that’s where prosperity, just generally comes from,” Buffett said.
Buffett added that the U.S as a whole has come out of the 2009 recession even better than he had anticipated, and pointed to booming auto sales in the country, of some 17 million, nearly double what they were just five years ago. Berkshire Hathaway Inc. (NYSE:BRK.B) has a large stake in General Motors Company (NYSE:GM), with over 32 million shares of the Detroit automaker.
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