Warren Buffett spent three hours on CNBC’s Squawk Box this morning discussing the economy and stock market from all angles. Buffett says the economy will turn around, but that it won’t happen quickly — and he says government actions will be crucial in how quickly it gets back on track.

“I’ve never seen the consumer, or the Americans just generally, more fearful than this,” Buffett said. “And they’re also confused. And you can get fearful very quickly but you don’t get confident in five minutes. … If you’re confused and fearful, you don’t get over being fearful till you aren’t confused. I mean, the message has to be very, very clear as to what government will be doing. And I think we’ve had — and it’s the nature of the political process, somewhat, but we’ve had muddled messages, and the American public does not know what — they feel that they don’t know what’s going on and their reaction, then, is to absolutely pull back.”

Buffett says the actions the Federal Reserve took as the crisis set in were crucial, however, in keeping the economy from imploding. “If they hadn’t have insured money market accounts, and in effect commercial paper, you and I would be meeting at McDonald’s this morning,” he told CNBC’s Becky Quick (who was interviewing Buffett at the Nebraska Furniture Mart, one of the many businesses owned by Buffett’s Berkshire Hathaway).

To view the first segment of Buffett’s appearance, click here. Alex Crippen of CNBC’s Warren Buffett Watch also offers an excellent summary of what Buffett had to say. A few of the key Buffett comments he highlights:

• Buffett says inflation has the “potential” to be worse than the 1970s.
• Most banks are in “pretty good shape” and can “earn their way out” of the current problems given the low cost of funds. But Buffett says banks “need to get back to banking.”
• Buffett wishes he had written the New York Times “Buy American” piece a few months later, but stands by the basic argument that you’ll do better over a ten-year period with stocks that you will with Treasuries. He said in the article he wasn’t calling the bottom of the stock market, and he still isn’t.
• Five years from now, the economy will be running fine, Buffett says. The strength of the American system will pull it through, just as it has many times in the past.