Warren Buffett says U.S. trade deficit could create 'political turmoil'

The U.S. trade deficit is a bigger threat to the domestic economy than either the federal budget deficit or consumer debt and could lead to "political turmoil," billionaire investor Warren Buffett warned.

"Right now, the rest of the world owns $3 trillion (Ђ2.47 trillion) more of us than we own of them," Buffett told business students and faculty Tuesday at the University of Nevada, Reno. "In my view, it will create political turmoil at some point. ... Pretty soon, I think there will be a big adjustment," he said without elaborating.

Buffett, head of Omaha, Nebraska-based Berkshire Hathaway Inc., spoke the same day the company disclosed its purchase of Business Wire, a privately held distributor of press releases, for an undisclosed amount.

The U.S. trade deficit for the first 11 months of 2005 totaled $661.8 billion, surpassing the previous annual record of $617.6 billion set in 2004. Economists say when December figures are included, the final deficit for 2005 will top $710 billion (Ђ585.5 billion). Buffett said he expects it to top $700 billion (Ђ577.3 billion) in 2006.

Fifteen years ago, the U.S. had no trade deficit with China. Meanwhile, Buffett said U.S. companies generally are enjoying some of their best times ever.

U.S. corporations also seem to be acting more ethically in the wake of scandals at Enron and elsewhere, but that' primarily due to bad publicity rather than new federal checks and balances, the AP reported.

A.M.