He bought a piece of a company that actually manufactures useful things - such as ones you can’t live without. Compare that to investing into irresponsible banks who loaned money (that they didn’t have) as if there is no tomorrow.
In other words, he invested into a manufacturer of inelastic demand goods:
http://en.wikipedia.org/wiki/Elasticity_%28economics%29
These are products that people need no matter what, and pretty much regardless of the cost. Oil is one of them, some food, but you can see many more around.
Investing into, say, fashion industry or jewelry would result in goods with very elastic demand, and if the money supply dries out then consumers won’t be buying that and won’t feel any hardship.
To me it seems that Buffett does not expect any sudden prosperity in the country, and he is battening the hatches down for a period of limited spending. At such a time only true necessities will be bought.
Oh, I think if someone made the same thing cheaper and could deliver it on time, one might find out that there is some stretch to that inelasticity. Its called competition.
Inelasticity might be if I have food on a desert island and no money and you have a thousand dollars and no food.
Now if I have twice as much food as you on that island and we both have $1000, I might be willing to test elasticity if I know a boat will arrive tomorrow and you don't.
In any event, Buffets wire and water processing equipment are not inelastic.
"Price elasticity, for example, is the sensitivity of quantity demanded or supplied to changes in prices. "
He’s investing against inflation. Producers will raise cost of goods to cover inflation whereas banks will not. The banks’ 13% and 20% rates offered to Dubai and Singapore offer insight into the anticipated real inflation rate over the life of those loans.