In a financial crisis, when banks cannot lend, cash is particularly valuable.

Buffett is a balance sheet guy.  That's where the cash is reported.  Cash is the fuel that drives economic value.

Most CEOs, however, focus on growth in corporate profits more than on cash and balance sheet growth.  The source of the problem is:  some of the reported expenses in these income statements are cash, and some are determined by accounting rules.  As a result, earnings include both cash and noncash (i.e., "accounting") numbers.  Buffett cares most about the cash part.

Cash is real.  Noncash earnings are subject to accounting interpretations.  They can be adjusted to inflate earnings and boost the stock price.  But it is harder to fiddle with the cash numbers.

Buffett's long-term cash obsession creates unique opportunities that others miss.  Buffett keeps a lot of cash on hand in order to be ready for unique crisis-born opportunities.  "Do we panic when the price of filet mignon drops?  No, we rejoice.  Who wouldn't want to buy the highest-quality steaks at chopped meat prices?"

At the end of June 2008, cash represented just over 11 percent of Buffett's balance sheet.  He used some of it to provide high-cost financing for then top-credit-rated companies Goldman Sachs and GE, both desperately in need of cash.  He announced his biggest acquisition to date - buying the Burlington Northern Santa Fe Railway for $34 billion.  At $100 a share, he paid a reasonable, but not a cheap, price.