Warren Buffett, Charlie Munger, Bill Gates on Dave Sokol Scandal, European Debt Crisis & The Giving Pledge

Charlie Munger's first reaction to the Dave Sokol scandal: 'Saw it instantly as tragedy. Super talented person, flaw. A very old plot - tragedy we've seen since the days of the Greeks.' Was it greed? Warren defends Sokol's character by recalling that 8-9 years ago when presented with a $75 million incentive contract ($50M for him, $25M for his number two), Sokol immediately said he wanted it split 37.5/37.5 - moving $12.5 million from his pocket to the other person's. 'That is not somebody consumed by greed.' Warren admits he wrote the 'now infamous press release' that ended up imperfect after talking to Dave and changing it. Charlie on whether things need to change at Berkshire: 'Very little.'

Interviewer notes many think sovereign debt is 'old story now.' Warren: 'Sort of an old story the way the housing bubble was kind of an old story in 2005 or 2006. We are not better off than a year ago in terms of European sovereign debt situation. Greek bonds are now yielding over 20 percent - that's a lot higher than they were a year ago. That indicates worry.' He frames the fundamental problem: '17 countries tied to a common monetary unit, incapable of issuing their own debt in their own currency, simultaneously following vastly different fiscal policies and having different attitudes among their people about government. We don't know the answer to that one yet.' Warren believes the European Union has 'grossly underestimated the problem.'

Charlie's characteristically blunt take on Greece earns him the joking title of being 'in charge of diplomacy at Berkshire.' Munger: 'It's just so extreme. The Greeks - they got a nice undredged country, I can't understand their attitude. Whether the rest of Europe wants to allow countries that really don't want to work and don't want to suffer and don't want to pay taxes to be in the monetary union with them so that in fact that country has a credit card which you can draw on the others...' Warren draws historical parallel: 'When we tried something similar in the United States before we had our Constitution, the colonies issued a lot of worthless debt.' On whether the euro survives: Charlie says 'I suspect the euro will survive but there may be fewer members' - hinting Greece could get kicked out.

Both Buffett and Munger said greater chunk of Berkshire investment will be in United States. Warren explains why: 'That's the place that has the most companies that want to join Berkshire. We need sizable acquisitions and America is still all by itself in terms of size. More people are familiar with us still here. In some countries there's much more of a tradition of keeping them in the family forever. We hope we get calls from around the world and we will get some calls from around the world. We'll get more calls from the US.' Focus on US not because of quality but because of size requirements, brand recognition, and cultural differences around family businesses in other countries.

Asked if US should have extended Bush tax cuts given gigantic deficit, Charlie says 'No. I would argue that we could stand a little higher taxes on people like me.' Warren and Bill Gates both agree. Charlie invokes Roman history: 'The interesting example here is Rome during one of the Punic Wars - the Roman public paid off more than half the war debt before the war was over. That's my kind of a country. It was a long time ago. And when they started just printing in the money and shaving the coins they just slowly went to hell.' Historical lesson about fiscal responsibility versus monetary debasement.

Asked if higher taxes on wealthy would hurt philanthropy and The Giving Pledge, Bill Gates says no. 'I really don't think so. There's going to continue to be people who are very successful and have large fortunes. The question will be do they want to get involved in giving that money back or perhaps starting a dynasty - there aren't that many choices. Warren and I have both had a chance to meet people who have amazing passion about giving their money away in the right way and they don't talk a lot about the tax system when they're talking about their commitments.' Gates reveals they have '69 people or couples that have signed up to the Giving Pledge' and it isn't just at death - 'during the lifetime with most of these people.' Taxes don't come up: 'These people would not change their behavior if the tax rate were either higher or lower in my opinion.'

When asked which billionaire was 'toughest nut to crack' for The Giving Pledge, the group laughs and refuses to answer. 'We don't talk about any names, we don't know about who turned us down or anything of the sort.' Asked what the number one pitch is, Bill explains: 'It's just explaining it. But I think that it is helped by the fact that we do ask people to write these letters explaining why they're doing it and we post those on the internet. I think that some of them may prove persuasive not only to some people now but 10 years from now or 20 years from now.' The strategy is long-term: published letters from current signers will inspire future generations to give.