US Economy: Warren Buffett to invest $5 billion in Bank of America "and makes out like a bandit " - by Ben Berkowitz and Joe Rauch,

Buffett and the Bank of America said he made an unsolicited call to the bank on Wednesday morning, offering to make an investment. Even though the bank has said it did not need to raise capital, investors widely believed the bank needed more money and to show it could raise funds easily. The deal proved again that Buffett has become something of a lender of last resort to the financial system, as he did with Goldman and also GE. Buffett’s role in aiding the economy and the financial system has become symbolically important given the lack of policy options left for the U.S. government and the Federal Reserve to stimulate demand.

Buffett’s Berkshire Hathaway will in many ways make out even better financially than the Bank of America did in the deal. Berkshire had a position in the bank that he sold in the fourth quarter of 2010 when the stock had an average price of $12.24. The warrants to buy 700 million shares of common stock he gets in this deal are priced at just over $7.14 per share, with an unusually long 10-year exercise period.

One long-term Berkshire shareholder said the warrants were the best part of the deal by far. “He could well make a 100-per-cent return on his investment in a few years,” said James Armstrong, president of Henry H. Armstrong Associates.

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Moneynews - Buffett Loads Up on Debt Ahead of Inflation - by Forrest Jones

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Buffett Loads Up on Debt Ahead of Inflation - by Forrest Jones

Warren Buffet is buying more corporate and foreign-government bonds and less stock these days, a possible sign that he is concerned about rising U.S. inflation. Buffett warned on inflation earlier this year. The explosive rise of the U.S. budget deficit and debt burden will lead to serious inflation down the road, Buffett told CNBC in early May. Buffett warned that U.S. debt as a ratio of GDP might surpass 80 percent, unless there are significant spending cuts or tax increases. “A country that continuously expands its debt as a percentage of GDP and raises much of the money abroad to finance that, at some point, it’s going to inflate its way out of the burden of that debt,” Buffett said.

SmartCompany: Warren Buffett says US economy is still a “shambles” - by James Thomson

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Warren Buffett says US economy is still a “shambles” - by James Thomson

The world's second richest man, veteran investor Warren Buffet, has given a blunt assessment of the state of the United States economy - it's still in a shambles. In an interview with US business television channel CNBC, Buffet said that he doubts whether the economy has made much progress since May, when he declared the economy was at war. "I get figures on 70-odd businesses, a lot of them daily," Buffet said. "Everything that I see about the economy is that we've had no bounce."

Guardian.co.uk: Financial crisis brings sobriety ( and questions) to Warren Buffett's capitalist jamboree - by Greame Wearden

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Financial crisis brings sobriety ( and questions) to Warren Buffett's capitalist jamboree - - by Greame Wearden

Warren Buffett's army of loyal investors will make their usual pilgrimage to Omaha this weekend for the Berkshire Hathaway annual meeting, where the mood promises to be unusually sombre. In previous years, the Nebraska shindig has enjoyed a reputation as a capitalist "love-in". Devoted Buffett fans would arrive in their tens of thousands, queue to buy commemorative T-shirts, and devour the pithy wit of the Sage of Omaha. But this year the temperature of the event will be decidedly chillier. Shares in Berkshire Hathaway are down 40% on their all-time peak, and the net worth of the company shrank by 9.6% during 2008.

The company will make changes to the meeting's format; half the questions will come from three journalists, in an attempt to prevent too many offbeat inquiries about Buffett's health, favorite foods or religious beliefs. This will mean that Buffett and vice-chairman Charlie Munger will face tougher probing about Berkshire's exposure to derivatives contracts, and the tricky issue of succession planning.