At a time when business titans are being dismissed as the dumbest guys in the room, one icon–Warren Buffett, head of Berkshire Hathaway–has not been afraid to speak out optimistically about the future of the economy in general and the insurance business in particular.

As usual, Mr. Buffett doesn't pull any punches. In his annual letter to shareholders, he warned that “the economy will be in shambles throughout 2009–and, for that matter, probably well beyond–but that conclusion does not tell us whether the stock market will rise or fall.”

Refreshingly, he took full responsibility for major investments that went south, and which cost his firm a bundle. The tennis crowd would call my mistakes unforced errors, he joked. (For more on what Mr. Buffett said about his insurance holdings, click here.)

Yet despite reporting a sharply lower profit of $4.99 billion in 2008, down from $13.21 billion the year before (hey, at least he had profits to report!), and even after getting hammered by nearly $7.5 billion in investment and derivative losses, Mr. Buffett remains optimistic about the country's long-term economic future, and insists times have been worse.

Indeed, America faced far greater challenges during a pair of World Wars and The Great Depression, he noted.

“Though the path has not been smooth, our economic system has worked extraordinarily well over time,” he said. “It has unleashed human potential as no other system has, and it will continue to do so.”

He boldly concluded that “America's best days lie ahead.”

As for insurance, he remains bullish. Clearly our insurance CEOs have not had the wind at their back, he wrote, yet these managers have excelled to a degree…I never dreamed possible in the early days, noting that his insurance units have generally outperformed the overall market in terms of underwriting profitability.

He was particularly high (and colorful) on opportunities for GEICO, noting that he and CEO Tony Nicely feel like two hungry mosquitoes in a nudist camp. Juicy targets are everywhere.”

Is Mr. Buffett being bullish, or is he just full of bull?

There aren't many CEOs left with the credibility of Mr. Buffett. If he says it could be worse, and things will turn around eventually, who am I to argue?

Indeed, I base my own hope on the fact that so much cash is sitting in “piggybanks”–personal and institutional. So many investors are on the sidelines, holding onto whatever money they have left, that at some point, when the economy finally stabilizes, I expect an explosion of capital back into the market.

People are bound to get antsy watching their holdings earn nothing (or actually costing them money to park), but they won't get back into the game until the Obama administration somehow regains the public's confidence that banks are reasonably sound and credit starts flowing again.

At that point, consumers will look to buy cars and other big-ticket items, and perhaps even the housing market will show signs of life. The stock market would then reboot and soar upward, prompting more job growth and launching a snowball effect on the positive side for a change.

This economy is just too damned big to stall for long, in my humble opinion.

What do you folks think?

Special Reports /

Is Buffett Bullish, Or Just Full Of Bull?

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