With $50 trillion losses world economy will still revive, thinks Warren Buffet

According to the estimates of the study titled as “Global Financial Turmoil and Emerging Market Economies: Major Contagion and a Shocking Loss of Wealth?” and conducted by the Philippines based Asian Development Bank (ADB) $50 trillion of financial assets worldwide were wiped off by the economy downturn last year. On Monday the ADB President Haruhiko Kuroda said that the current turmoil is the most serious ever seen by the world since the Great Depression.

Meantime in his speech on the CNBC television Warren Buffet, the 78-year-old billionaire, noted that the economy of the U.S. had "fallen off a cliff". Yet he said that there are chances for eventual recovery which will likely be accompanied by the inflation worse than in the late 1970s. Buffet outlined the course politicians, businesses and ordinary customers should follow.

He noted that Republicans and Democrats need to cease playing their partisans games and conjointly work with Barack Obama to get America out of the crisis and restore consumers’ confidence in the financial industry.

Buffet stressed that Americans should get rid of their habit to rely on credit. "I can't make money borrowing money at 18 or 20 percent," said Buffett, ranked as the second-richest American by Forbes magazine in October. "I'd go broke."

In regards to the efforts of the Federal Reserve to stimulate the economy Buffet noted that while they will bring their positive results in the future nothing in economics comes as a free lunch saying that these efforts will surely result in inflation once demand is revived.

As for the banks Buffet called on them to "get back to banking" and said that the majority of them would "earn their way out" of the recession. Saying that "a bank that's going to go broke should be allowed to go broke," Buffett nevertheless added that the "paralysis of confidence" in the sector is "silly" because of safeguards such as deposit insurance.