Buffett calls recession, rescinds bond offer

Billionaire investor Warren Buffet said the U.S. economy is in a recession, even though the requisite two consecutive quarters of negative gross domestic product growth have not been posted. "I would say, by any common-sense definition, we are in a recession. Business is slowing down. We have retail stores in candy, home furnishings and jewelry; across the board, I'm seeing a significant slowdown, " said the chief executive of Omaha, Neb.-based Berkshire Hathaway Inc. on CNBC television yesterday. Mr. Buffett also announced the withdrawal of his offer to reinsure $800 billion of municipal bonds guaranteed by Ambac Financial Group Inc. of New York, Armonk, N.Y.-based MBIA Inc. and New York-based Financial Guaranty Insurance Co. Mr. Buffett made the offer because each of the insurers was in danger of losing their AAA rating due to problems with subprime mortgages and other loans (InvestmentNews, Feb. 12) . Mr. Buffett said the offer was made as part of an effort to take advantage of market vulnerability and that at least one of those insurers rejected Berkshire's proposal and on Monday. "We tossed our hat into the ring and they tossed it right back," he said.