Most times you can use a number of methods to make a single loop that does the same thing as a double loop.
In your example, you can use itertools.product to replace your code snippet with
import itertools
for word1, word2 in itertools.product(buf1, buf2):
if word1 == word2:
print "BINGO " + word1 + ":" + word2
break
The other itertools functions are good for other patterns too.