Buffett says economy's troubles will continue

OMAHA -- Billionaire investor Warren Buffett said Friday that the economy continues to be in a recession, by his definition, and will continue to be for at least several more months.

Buffett said during a live appearance on CNBC that ripples of the credit crunch continue to cause problems in financial businesses and the economy.

He said the financial crisis revealed which players have been "swimming naked."

Since 1965, Buffett has transformed Berkshire from a failing textile company into a $180 billion conglomerate with about 76 businesses that sell a range of products from bricks, carpeting, manufactured housing and paint to ice cream and underwear.

Buffett said the businesses Berkshire owns, especially those related to housing construction such as Shaw carpet and Acme Brick, continued to slow during the summer.

He said he's confident the nation will be doing better five years from now, but the economy could be worse five months from now.

"President Obama is going to have plenty on his plate in January," Buffett said.

Buffett is supporting Barack Obama, the presumptive Democratic nominee, in November's U.S. presidential election, but he said he admires Republican rival John McCain.

Regarding the credit crunch, Buffett said he believes mortgage giants Fannie Mae and Freddie Mac are too big to fail, but that doesn't mean all the shareholder equity in those companies can't be wiped out.

"They're looking for help, obviously. And the scale of help is such that I don't think it can come from the private sector," Buffett said.

Buffett acknowledged that he had been approached by Freddie and Fannie and passed on getting involved. The timing of the incident was not immediately clear.

Berkshire was the largest Freddie shareholder around 2000 and 2001, he said. The company sold its shares after Buffett realized that both companies were trying "to report quarterly earnings to please Wall Street."