Opinion: Warren Buffett bets $1 that unemployment will drop to 8% by November 2012

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Warren Buffett, one of the richest men in the world, knows a few things about money. He’s putting his money where his mouth is, betting that unemployment will sink by late 2012.

During an interview Thursday on CNBC, Buffett revealed that he has a bet with Peter Orszag, the former director of the Office of Management and Budget, that unemployment will fall from its current rate of 9.1% to below 8% before the next presidential election.

‘I think the number that went around yesterday was that you would need 217,000 jobs created every month between now and the election in order to get that number below [an] 8 1/2 or 8 percent unemployment rate. How likely do you think it is that when we get to the election next year we’ll be looking at unemployment below 8 percent?’ CNBC ‘Squawk Box’ host Becky Quick asked the billionaire philanthropist.

‘I’ve got a bet with a fellow that it will be -- and he’s a very smart fellow, ... if you asked any economist who you should bet on, they would bet on the other fellow,’ Buffett said, referring to Orszag, who last July stepped as President Obama’s budget director to become the vice chairman of global banking at Citigroup.

‘But I’ve got ... a bet with a fellow that -- it’s only for $1 -- I’ve got a bet with him that it’ll be below that figure [of 8%]. But ... that’s because I think housing will come back before that,’ Buffett explained. ‘If I’m wrong about housing, I lose the bet.’

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During a 2007 meeting with workers of TaeguTec in Daegu, South Korea, Warren Buffett counts the money from his wallet after an employee asked how much money he had in it. Credit: Jo Yong-Hak / Reuters.

Andrew Malcolm is on assignment.