Like the swallows returning to San Juan Capistrano, Warren Buffett's acolytes arrive every year at the annual meeting of Berkshire Hathaway Inc (BRK.A) in Omaha, hoping to absorb the wisdom of the greatest investor ever. Unfortunately, today he did not offer them much reason for optimism.

"It has been a very extraordinary year," Buffett told the record crowd gathered to hear him. "When the American public pulls back the way they have, the government does need to step in. . . . It is the right thing to do, but it won't be a free ride."

Not surprisingly, Buffett defended the Obama administration's handling of the economy. He was an informal advisor to the Obama campaign. As Fortune magazine noted, Buffett said, "efforts such as the Treasury's $700 billion Troubled Asset Relief Program and the $787 billion fiscal stimulus plan passed this year by Congress will have to be paid for, one way or another."

During the meeting, Buffett defended his investments in Wells Fargo & Co. (WFC) and Moody's Corp. (MCO). He also declined to offer much information on who might replace him. Buffett is 78 and appears in good health but it's only natural that investors want to know about Buffett's successor since the billionaire won't live forever.

Buffett told the assembled Parrotheads -- wait that's Jimmy Buffett -- that the company had snapped up some corporate bonds very, very cheaply a few months ago. The Oracle of Omaha also rejected the notion of spinning off any Berkshire businesses though investment bankers have pitched him the idea for years.

Inflation looms on the horizon, especially since government officials are reluctant to raise taxes to pay for the additional spending. This, of course, is bad news for bondholders and other fixed income securities. Meanwhile, surging stock prices and record-low mortgage rates caused consumer confidence to post its biggest gain in April in more than two years.

But dark clouds continue to loom over the horizon.

Buffett, a major shareholder in the Washington Post Co. (WPO) and owner of the the Buffalo News, like many other investors is pretty downbeat on the prospects of newspapers. In response to a question, Buffett said he has no plans to sell the Washington Post shares he owns but has no interest in investing further in the sector either, because of the "possibility of going to just unending losses."

Though the market will react negatively to Buffett's statements, remember he never promised anyone a rose garden.

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