US trade gap feeding sovereign wealth funds: Buffett news
01 March 2008

Mumbai: Billionaire investor and chairman of Berkshire Hathaway Inc Warren Buffett has blamed US's overseas spending for the emergence of sovereign wealth funds and the huge investment flows into the US. He said these investments are solely fuelled by US spending overseas and cannot be seen as politically motivated.

``This is our doing, not some nefarious plot by foreign governments,'' Buffett said in his annual letter to shareholders released along with Berkshire's 2007 full-year and fourth-quarter financial results

``Our trade equation guarantees massive foreign investment in the US. When we force-feed $2 billion daily to the rest of the world, they must invest in something here.''

Investment funds, controlled by countries, including China, Russia and Dubai, wield as much as $2.9 trillion in investible funds and have deployed record central bank reserves to set up funds.

Funds based in Singapore, Korea, Kuwait and Abu Dhabi have bought stakes in some of the largest US firms like Citigroup Inc, Merrill Lynch & Co.

US authorities, including the Treasury and the Securities and Exchange Commission, see a risk that government-controlled funds may invest to achieve political rather than commercial ends.

Buffett's holding company Berkshire Hathaway saw its stock rise 29 per cent in 2007 and about 4,700 per cent in the 20 years through December 31 - six times more than the Standard & Poor's 500 Index, dividends included.

Buffett, 77, owns businesses ranging from insurance operations and jet leasing to candy making, giving Buffett an insider's perspective on many facets of the economy and finance.

Berkshire's net income in the quarter fell 18 per cent to $2.95 billion, or $1,904 a share as profit from insurance units fell. The company's shares dropped $250, or 0.2 per cent, to $140,000 yesterday.

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US trade gap feeding sovereign wealth funds: Buffett