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OMAHA, Neb. -- The California energy mess is "asinine."

That's the view of Berkshire Hathaway Vice Chairman Charlie Munger and an opinion shared by one of America's most famous investors, Warren Buffett.

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Berkshire's dynamic duo took on the California issue at a Sunday media confab in conjunction with the company's annual meeting, which was attended by more than 12,000 Berkshire shareholders. When asked about the crisis, Munger, a California resident whose opinion is often sought on issues of business policy in the Golden State, was very candid.

"California got in its mess through extreme stupidity," said Munger. "That is a mild word for what went on, and it is shared across both [political] parties. It was asinine to allow electricity to get short in California."

The problem is now so complex it could take years to fix. "Many things are easier to prevent than to fix," he said. He suggested that the market now needs price signals that "restrict demand" while the state scrambles to add capacity. "If you get a dumb enough problem like trying to beat a train across the track, if you fail you'll have a tangled mess," he says.

Buffett offered one solution to the current conundrum: the appointment of a "czar" who could develop a plan to break through the complexity and avoid the "squabbling constituencies." Buffett said if it weren't so serious, it would be laughable; it "is a joke when ... the largest state in the richest country" can't keep the lights on. "That is a flub in capitalism that is pretty extraordinary," he said.

Berkshire has an interest in the crisis through its investment in MidAmerican Energy. MidAmerican, through its CalEnergy subsidiary, generates nearly 300 megawatts of power in California. CalEnergy recently received court permission to break a long-term power supply agreement with Southern California Edison, the utility subsidiary of Edison International (EIX Quote - Cramer on EIX - Stock Picks) because Edison hadn't paid nearly $140 million it owed for power supplied by CalEnergy beginning in November.

Buffett has also said he would like to expand Berkshire's utility holdings. Currently, the Public Utility Holding Company Act, or PUHCA, restricts Berkshire from acquiring 5% or more of another utility. However, Congress is considering repeal of PUHCA. Buffett talked to a handful of congressional representatives about a year ago about repealing PUHCA.

Munger indicated that California needs to add generation quickly, which might present opportunities for Berkshire. "We already have an interest in generation and transmission but not much interest in" unregulated generation, he said.

But Buffett said that might change. "That's not where we have a lot of money," Buffett indicated. "But we may have more in the future."

If there is a positive from the California crisis, leave it to someone like Munger to find it. California has "done [everyone else] a favor," he said. "For being so perfectly asinine and creating such a huge mess ... we have warned you. We have been way too slow to build more power plants and I think this will [provide a lesson] for the rest of you."

The Best of Berkshire

When Buffett and Munger were asked to identify their favorite Berkshire businesses, they were careful not to pick favorites. "We love all of our children," quipped Munger.

However, that didn't stop an affable Buffett from hinting at his favorites. "In terms of a truly wonderful business, I would say Sees Candy has the highest certainty ... combined with very high returns on capital," Buffett said. "It suffers from the fact it is not expandable in a major way."

For expansion, Buffett turned to his insurance stable. "Geico has a real competitive advantage, and the economics are good, but they are not as good as Sees," he said. "But they are expandable in a major way. If you were trying to get a whole lot richer, you would be more comfortable with Geico."

Buffett says Berkshire owns a stable of stable businesses, stressing that he likes the certainty of slow growth over less certain but more rapid growth. "The companies we have are very strong in fundamental industries. They don't all have strong growth potential," he said. He did note that Berkshire's aircraft time-share business, Executive Jet, has the most growth potential. "They are in their infancy."

What's the "social wrong" that Munger targeted this year? And what were some of the best quips from the meeting? Find out in Part 2 of this column.