THANKS, W:

Warren Buffett: The U.S. is moving toward plutocracy: Capitalism is like Cinderella, the Berkshire billionaire says in an exclusive interview with TheMarker. 'She knew at midnight that everything was going to turn into pumpkins and mice, but it was just so much damn fun, dancing there.' (Guy Rolnik, 3/23/11, Ha'aretz)

What would you say are the key lessons you took from the financial crisis?

"They are not new lessons. Never owe any money you can't pay tomorrow morning. Never let the markets dictate your actions. Always be in a position to play your own game. Never take on more risks than you can handle. But all of those were old lessons, unfortunately. Even though I didn't see it coming, those lessons which are timeless allowed us to in effect profit from it rather than suffer from it. Good businesses, good management, plenty of liquidity, always having a loaded gun; if you play by those principles you will do fine no matter what happens. And you don't ever know what's going to happen."

What would have happened if the U.S. government had not bailed out the banks?

"[The problem] wasn't the banks so much - the number-one part of the bailout was to the American public. Immediately post-Lehman, there were $3.5 trillion in money market accounts. That was half of all the domestic deposits at the banks of the United States: 30 million people had their money in money market accounts. They did not have FDIC insurance and the first three days of the week following Lehman, $175 billion disappeared from those accounts.

"It was a cascade of fear, and if the government had not stepped in to bail out those 30 million people .... They were bailing out everybody, and as a practical matter they were trying to save the American economy, which was sputtering, from coming to a complete stop.

"I give enormous credit to [U.S. Federal Reserve Chairman Ben] Bernanke and [Hank] Paulson [Treasury secretary at the time] and to President [George W.] Bush and Sheila Bair [chairwoman of the U.S. Federal Deposit Insurance Corporation] and [U.S. Treasury Secretary] Tim Geithner.

"They acted in a way that was absolutely necessary, and only government could have done it. And they did it, they did the right things."

How worried were you?

"I wasn't worried because I knew the government would do the right thing. I knew they had the tools to do the right thing, they were the only ones that had the tools and I knew the people in charge were not the type to freeze in the headlights. I knew the president came out and said that he supported action.

"Congress wasn't worried for a while ... but I felt that Congress would do the right thing once they understood the situation. I didn't feel like they understood the situation as fast as some of the others."

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