Buffett comments on economic 'fear'

The credit crunch is "sucking blood" from the economy, legendary investor Warren Buffett has claimed.

According to the Sage of Omaha, the recent market turmoil and wave of bank bailouts has left the American financial system "flat on the floor".

The seizing-up of the credit markets has left many firms vulnerable to being either taken over or going bankrupt.

Mr Buffett, 77, has made high-profile investments in Goldman Sachs and General Electric recently, which many have interpreted as a powerful vote of confidence in the US economy.

However, he has told shareholders that his investment strategy is to be "greedy when others are fearful" - and has negotiated attractive terms from both deals, including a guaranteed ten per cent dividend.

Speaking to Charlie Rose on PBS, Mr Buffett commented: "In my adult lifetime I don't think I've ever seen people as fearful, economically, as they are now.

"The economy is going to be getting worse for a while."

Mr Buffett's interview will be broadcast in the US tonight.