Buffett: U.S. trade deficit is a threat

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 more of us than we own of them," Buffett told business students and faculty at the University of Nevada, Reno.

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. Buffett said he expects it to top $700 billion this year.

Fifteen years ago, the U.S. had no trade deficit with China, he said. "Now it's $200 billion. If we don't change the course, the rest of the world could own $15 trillion of us. That's pretty substantial. That's equal to the value of all American stock," Buffett said.

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