Buffett says bank woes are ‘justice’

The woes in the U.S. financial sector are “poetic justice” for bankers who designed and sold complex investments that have since gone sour, billionaire investor Warren E. Buffett said Wednesday.

The head of the Berkshire Hathaway Inc. group of companies also played down worries about a credit crunch by saying that recent interest rate cuts mean that low-cost funds are readily available.

But Buffett warned that the U.S. dollar would continue to slide unless the country could rein in its yawning trade deficit -- the “biggest factor” behind the decline. Still, he said, the U.S. economy will “do very well over time.”

Buffett, one of the world’s wealthiest people, appeared to see irony in the fact that many of the banks that marketed complex investments that later crashed were bearing much of the fallout.

“It’s sort of a little poetic justice, in that the people that brewed this toxic Kool-Aid found themselves drinking a lot of it in the end,” he said.

Buffett, a legendary investor who has amassed a huge fortune through plays in a variety of industries, has bet against the U.S. dollar in the past.

In 2005, Berkshire made a $21.8-billion bet that the U.S. dollar would fall. It later unwound that successful position as it found other non-U.S. investments.

In Toronto on Wednesday, Buffett said the turmoil that had rocked the U.S. economy in recent months had imbued the markets with a healthy degree of caution, while the rate-cutting response from central bankers had ensured that cheap money would remain available for borrowing.

“I wouldn’t quite call it a credit crunch,” he said. “Money is available, and it’s really quite cheap because of the lowering of rates that has taken place.”

He added: “What has happened is a repricing of risk and an unavailability of what I might call ‘dumb money,’ of which there was plenty around a year ago.”