A sudden outbreak of domestic terror threats

An extended period of relatively little news about domestic terrorist threats was shattered this week. A spate of arrests and reports of fearsome plots have Americans back on edge and struggling to make sense of the suspects and continuous headlines. Below, the recent developments:

Last week authorities raided several New York City properties in connection with the arrest of Najibullah Zazi, a legal immigrant from Afghanistan living in Denver who authorities said Friday is believed to have been plotting an attack on the New York City subway system on Sept. 11 similar to the 2004 attacks in Madrid. The AP reported that Zazi criss-crossed the globe hunting for materials to make hydrogen peroxide bombs for al-Qaida, enlisting associates equipped with stolen credit cards to help him purchase massive quantities of hydrogen peroxide, acetone (the main component in nail polish remover) and a component to make the compound called TATP, the main explosive used in the London terror bombings of 2005. Zazi, who operated a coffee cart in New York and drove an airport shuttle in Denver, continues to maintain that he is not a terrorist. He has been transferred to NYC to face charges.

On Thursday a Jordanian named Hosam Maher Husein Smadi, 19, was arrested in Dallas after he parked a car he believed to be loaded with explosives, but were in actuality fakes supplied to him by an undercover FBI operative, in front of a downtown Dallas skyscraper. Undercover Arabic-speaking agents first made contact with Smadi, who's been living illegally in a small Texas town north or Dallas, after they discovered him championing jihad against the U.S. on an extremist, anti-American website. The relationship between the undercover agents and Smadi culminated with the FBI supplying him with a 2001 Ford Explorer Sport Trac laden with what Smadi believed was an explosive device similar to the one used by Timothy McVeigh in the Oklahoma City bombing that could be detonated by cellphone. He was arrested immediately after trying to detonate the impotent explosives.

Michael Finton, who also goes by the name of Talib Islam, was arrested in Illinois on Wednesday for allegedly plotting to blow up a federal building, an act which led him to being charged with attempted murder of federal employees and attempting to detonate a weapon of mass destruction. Finton, who authorities say idolized American citizen turned Taliban soldier John Walker Lindh, visited Saudi Arabia in 2008 and returned wanting to take action against Israel. He mentioned his intentions to an undercover law enforcement source, who in turn introduced Finton to an undercover FBI agent, who then arranged to supply Finton with an explosives-laden vehicle, just as the FBI did in the Smadi case. On Wednesday, Finton parked the vehicle in front of a federal building in Springfield, Illinois and was arrested after he attempted to detonate the fake bomb with a cellphone.

Daniel Patrick Boyd and Hysen Sherifi, two men arrested last month in North Carolina and charged with plotting terrorist acts overseas, were indicted yesterday for conspiring to murder U.S. military personnel by bombing the Marine base in Quantico, Virginia. The official indictment against the two provided little information outside of accusing Boyd and Sherifi of obtaining maps of the base and spending considerable time monitoring its activity. Prosecutors say that Boyd, a U.S. citizen, spent time in terror camps located in Pakistan and Afghanistan and fought on the side of Afghanistan against the Soviets in the early 1990s. Sherifi, a native of Kosovo, is a legal U.S. citizen.

Two men seen recently taking an extensive number of photographs of the Philadelphia subway system have raised concerns for authorities. Thus far, neither man has been positively identified, though police are hoping to track them down to question them on "the nature or the reason for taking the photographs."

Case officials say the individual incidents do not appear to be linked. As for advice to a worried public, for now it's a return to familiar advice: Remain vigilant, says the Department of Homeland Security, and report any suspicious activity to the FBI via their internet tips line ( https://tips.fbi.gov/ ) or by calling 1-800-CALLFBI.

by Brett Michael Dykes, Yahoo! News Blog, September 25, 2009

US, UK, French heads demand Iran nuke site opened

Armed with the disclosure of a secret Iranian nuclear facility, President Barack Obama and the leaders of France and Britain demanded Friday that Tehran fully disclose its nuclear ambitions "or be held accountable" to an impatient world community.

French President Nicolas Sarkozy said Iran has until December to comply or face new sanctions. British Prime Minister Gordon Brown accused Iran of "serial deception."

Said Obama: "Iran is breaking rules that all nations must follow."

Their dramatic joint statement opened the G-20 economic summit.

Obama urged the International Atomic Energy Agency to investigate the site.

Iran has kept the facility, 100 miles southwest of Tehran, hidden from weapons inspectors until a letter it sent to the IAEA on Monday, publicly disclosed for the first time Friday.

But the U.S. has known of the facility's existence "for several years," a senior White House official said. Obama decided to go public with the revelation after Iran learned that Western intelligence agencies were aware of the project, officials said. They spoke on condition of anonymity to let the statements from Obama and the leaders remain the focus.

The plant would be about the right size to enrich enough uranium to produce one or two bombs a year, but inspectors must get inside to know what is actually going on, the official said.

Obama hopes the disclosure will increase pressure on the global community to impose new sanctions on Iran if it refuses to stop its nuclear program. Beyond sanctions, the leaders' options are limited and perilous; military action by the United States or an ally such as Israel could set off a dangerous chain of events in the Islamic world.

In addition, Iran's facilities are spread around the country and well hidden, making an effective military response difficult.

While the leaders did not mention military force, Sarkozy said, "Everything, everything must be put on the table now."

The disclosure comes on the heels of a U.N. General Assembly meeting at which Obama saw a glimmer of success in his push to rally the world against Iranian nuclear ambitions. And it comes days before Iran and six world powers are scheduled to discuss a range of issues including Tehran's nuclear program.

Germany is one of those six powers, and while German Chancellor Angela Merkel is also in Pittsburgh, she did not appear with Obama, Sarkozy and Brown. Speaking to the German press separately, she said her country views the revelation of the second nuclear site as "a grave development" and called on Iran to answer IAEA questions about it "as quickly as possible."

She said Germany, Great Britain, France and the United States had consulted on the issue and agreed to a joint response. She said "we will see" about the reactions of China and Russia, which also are part of the group of six but always more reluctant to take a firm line on Iran.

Merkel did not appear with Obama, Brown and Sarkozy because she had a meeting with Russian President Dmitry Medvedev at the same time.

Earlier this week, Medvedev opened the door to backing potential new sanctions against Iran as a reward to Obama's decision to scale back a U.S. missile shield in Eastern Europe. But it's unclear if that will translate into action.

The senior administration official said Obama told Medvedev about the facility during their meeting in New York earlier this week. The Chinese were informed about 48 hours ago and are "just absorbing these revelations," the official said.

The U.S. has long avoided direct talks with Tehran over its nuclear program.

"The Iranian government must now demonstrate through deeds its peaceful intentions or be held accountable to international standards and international law," Obama said.

Sarkozy and Brown struck an even more defiant tone.

"The level of deception by the Iranian government ... will shock and anger the whole international community, and it will harden our resolve," Brown declared, adding that it's time "to draw a line in the sand."

Iran's president, Mahmoud Ahmadinejad, made no mention of the facility this week while attending the U.N. General Assembly in New York, but said that his country had fully cooperated with international nuclear inspectors.

Iran is under three sets of U.N. Security Council sanctions for refusing to freeze enrichment at what had been its single publicly known enrichment plant, which is being monitored by the IAEA.

Officials who spoke on condition of anonymity because the information was confidential, said that Iran's letter to the IAEA contained no details about the location of the second facility, when — or if — it had started operations or the type and number of centrifuges it was running.

But one of the officials, who had access to a review of Western intelligence on the issue, said it was about 100 miles southwest of Tehran and was the site of 3,000 centrifuges that could be operational by next year.

Iranian semiofficial new agency ISNA on Friday confirmed reports on the country's second enrichment plant.

Iranian officials had previously acknowledged having only the one plant, under IAEA monitoring, and had denied allegations of undeclared nuclear activities.

An August IAEA report said Iran had set up more than 8,000 centrifuges to produce enriched uranium at that underground facility outside the southern city of Natanz. The report said that only about 4,600 centrifuges were fully active.

Iran says it has the right to enrich uranium for a nationwide chain of nuclear reactors. But because enrichment can also produce weapons-grade uranium, the international community fears Tehran will make fissile material for nuclear warheads.

by Ben Feller and George Jahn, Associated Press (Pittsburgh), September 25, 2009

GM says bondholder offer fails; bankruptcy likely

A General Motors Corp. bankruptcy filing seemed inevitable after a rebellion by its bondholders forced it to withdraw on Wednesday a plan to swap bond debt for company stock.

GM has until Monday to complete a government-ordered restructuring that includes debt reduction, labor cost cuts and plant closures. But a bankruptcy reorganization is likely after the company said its offer to exchange $27 billion in unsecured debt for 10 percent of the company's stock had failed. GM has received $19.4 billion in federal loans.

The move came as crosstown rival Chrysler LLC headed to court Wednesday to ask bankruptcy judge for permission to sell the bulk of its assets to a group headed by Italy's Fiat Group SpA in hopes of saving itself from liquidation. Attorneys for Chrysler maintain that the Fiat deal is the company's only hope to avoid being sold piece by piece, but car dealers, debtholders, former employees and others are protesting.

Chrysler filed for bankruptcy protection April 30, after the government ended talks with a group of holdout debtholders. Both automakers were pulled down by overwhelming debt, high pension, health care and other labor costs relative to competitors, a global auto sales slump and a dismal U.S. housing market that pulled down demand for pickup trucks, their top-selling vehicles.

News of the failed GM bond exchange offer sent its shares down 22 cents, or 15.3 percent, to $1.22 in afternoon trading.

John Pottow, a professor at the University of Michigan who specializes in bankruptcy, said GM evading bankruptcy now is almost impossible.

"They said no. That's it. They tried. That's why they're going to have to file for bankruptcy," Pottow said.

GM spokesman Tom Wilkinson said the board will meet later this week to decide its next move, but he would not say exactly when. He also would not say if the company would soon file for protection, nor would he reveal what percentage of bondholders took the offer.

"The principal amount of notes tendered was substantially less than the amount required by GM to satisfy the debt reduction requirement under its loan agreements with the U.S. Department of the Treasury," GM said in a statement issued Wednesday.

The Obama administration has said it would only provide more funds if 90 percent of the bondholders, as well as unionized workers, agreed to concessions that substantially reduced GM's costs.

A GM bankruptcy would be the fourth-largest in U.S. history based on its $91 billion in assets, and the largest for an industrial company. The top bankruptcy by assets was the September 2008 filing by Lehman Brothers Holdings Inc. at $691 billion, followed by Washington Mutual Inc. at $327.9 billion, according to BankrupctyData.com. WorldCom Inc. ranks third at $103.9 billion, while Chrysler LLC's bankruptcy filing would be seventh at $39.3 billion.

There was a small hope Tuesday that GM could avoid a bankruptcy filing when the United Auto Workers union disclosed that it would take a 20 percent stake in GM -- down from the original plan of 39 percent. That seemingly freed 19 percent of the Detroit-based company's shares to sweeten the pot for its recalcitrant bondholders.

Wilkinson would not say why GM didn't make the offer to bondholders more attractive. The deadline for GM's bondholders to tender their debt was midnight Tuesday.

Because the bondholder deal did not go through, the equity freed by the UAW deal now apparently will go to the U.S. government, which may have to commit billions more for GM's restructuring in court.

The government's stake in the company originally was to be 50 percent, according to GM's regulatory filings. But it now could be as high as 69 percent. The Canadian government also could get equity for up to $8 billion in aid for the automaker.

Automakers worldwide are struggling as the global recession has reduced demand for new vehicles.

The UAW disclosed Tuesday it agreed to take a much smaller 17.5 percent stake in GM, plus a warrant for 2.5 percent more to partially fund the $20 billion that GM must put into a trust that will start paying retiree health care costs next year.

In exchange for agreeing to a lower equity ownership stake, GM promised the union $6.5 billion of preferred shares that pay 9 percent interest, plus a $2.5 billion note. The union, facing the possibility that it may not be able to quickly sell GM shares to fund its trust, preferred the certainty of the $585 million annual preferred stock dividend.

The remaining $10 billion will come from health care trust funds that GM already has set up. The trust will get a seat on GM's board as well, although it will have to vote at the direction of GM's other independent directors. The concession deal, on which roughly 61,000 workers will vote by Thursday, also froze wages and cut retiree health care benefits, performance bonuses and cost-of-living raises.

When GM announced its debt exchange last month, the company offered bondholders 225 shares of common stock for every $1,000 in debt -- or a 10 percent stake in the restructured company. In addition to the UAW's share, the federal government was to take 50 percent for exchanging a combined $20 billion of their debt to equity. Current stockholders would end up owning just 1 percent of the company.

A committee representing GM's biggest bondholders -- mostly big banks and other institutional investors -- has opposed the debt-for-equity swap from the start.

Smaller bondholders -- individual investors like retirees and families -- have also railed against the terms of the exchange. Both groups say the offer gives them too small a stake for the amount they are owed, and some have pledged to fight in bankruptcy court.

GM had said previously that the government was preventing it from offering bondholders more than 10 percent of the restructured company.

Some analysts said GM's bondholders may be holding out for better terms in bankruptcy, where they would normally get up to 40 percent of their holdings back.

Another factor complicating the decision of GM's bondholders: Many large investors hold insurance policies known as credit default swaps. Such policies would reimburse bondholders if there is a bankruptcy filing.

Analysts speculated that few bondholders agreed to GM's offer because they differed with the company's view of its stock value.

"They clearly have different valuation opinions as to how much the shares are worth," Pottow said. "If you're bullish on the prospects of the company, you might think that's a great deal. If you're bearish on the prospects of the company, you might not think that's a great deal."

Associated Press (Detroit), May 27, 2009

Feds unveil plan to sop up bad bank assets

The Obama administration, striving to ease lending in the struggling economy, moved Monday with private investors to sop up bad bank assets. The administration said the program could grow to $1 trillion in purchases eventually, if it proves successful in attacking the bad-books problem that has been at the heart of the banking crisis.

In a lengthy fact sheet, the administration said it plans to use $75 billion to $100 billion from the government's existing $700 billion bailout program for this purpose, and it predicted participation from a broad array of investors ranging from pension funds and insurance companies to hedge funds.

To achieve the goal of freeing up more lending, the program would entice private investors with low-cost loans provided by the Federal Deposit Insurance Corporation and the Federal Reserve. The government would also shoulder the vast bulk of the risk.

In one example used in the fact sheet, the purchase of a batch of bad mortgage loans would see the private investor put up 6 percent of the cost with the rest provided by the government, with the FDIC covering 84 percent of the cost with a loan and the remaining 6 percent coming from funds from the $700 billion bailout program.

Stocks were pointing to a sharply higher opening Monday as investors began getting details of the new program. That offered a sharp contrast to the reaction that Treasury Secretary Timothy Geithner got on Feb. 10 when he unveiled the new administration's first bailout initiative. Investor disappointment sent the Dow Jones industrial average crashing by 380 points that day.

Geithner's unveiling of the new program was taking place Monday morning at the Treasury Department with an off-camera briefing. President Barack Obama was scheduled to discuss the program later in the day.

In opinion piece in Monday's Wall Street Journal, Geithner said the new program was designed to "resolve the crisis as quickly and effectively as possible at the least cost to the taxpayer. ... Simply hoping for banks to work these assets off over time risks prolonging the crisis."

"This has never been about helping Wall Street or helping a firm that made mistakes," Christina Romer, head of the Council of Economic Advisers, said Monday. "It's absolutely about helping a system so that people can get their student loans, and that families can buy their house and buy their cars, and small businesses can get their loans."

To encourage investors to be more supportive, the government is offering sizable financial enticements, from shouldering much of the financial risk to providing low-interest loans to purchase the assets.

But the program is coming after a week of Wall Street-bashing in Congress, where lawmakers were outraged with the action by troubled insurance company American International Group Inc. to distribute $165 million in bonuses after obtaining more than $170 billion in government bailouts to remain in business.

Some hedge funds and other investors have expressed reluctance to participate in the new program for fear that Congress will subject them to what they view as onerous restrictions on executive compensation.

But administration officials insisted that they believe they have found the right mix to attract private investors and make a dent in what, by some estimates, could be more than $2 trillion in troubled assets on banks' books.

They said the program has the capacity to purchase $500 billion and possibly as much as $1 trillion in troubled loans, which go back to the collapse of the housing boom and the subsequent tidal wave of foreclosures.

But private analysts believe that with the $700 billion bailout fund nearly tapped out by capital injections to banks and lifelines provided to the auto companies and AIG, there are only enough resources left to get the asset purchase program launched.

Mark Zandi, an economist with Moody's Economy.com, estimated the government will need another $400 billion to make a sufficient dent in the bad asset problem.

Administration officials said they want to get the new program launched and see how successful it is before deciding whether to ask Congress for more resources.

The administration included a placeholder in its budget request to Congress last month for an additional $750 billion, more than doubling the financial rescue effort, but many lawmakers have said the current bailout fatigue among voters dims the prospect of getting further resources.

According to administration officials, the toxic asset program will include a public-private partnership to back private investors' purchases of bad assets, with government support coming from the $700 billion bailout fund. The government would match private investors dollar for dollar and share any profits equally.

The administration's revamped program for toxic assets is the latest in a string of banking initiatives which have also included efforts to deal with mortgage foreclosures, boost lending to small businesses and unfreeze the market for many types of consumer loans.

by Martin Crutsinger, Associated Press (Washington), March 23, 2009

Fed to pump another $1 trillion into U.S. economy

The Federal Reserve sharply stepped up its efforts to bolster the economy on Wednesday, announcing that it would pump an extra $1 trillion into the financial system by purchasing Treasury bonds and mortgage securities.

Having already reduced the key interest rate it controls nearly to zero, the central bank has increasingly turned to alternatives like buying securities as a way of getting more dollars into the economy, a tactic that amounts to creating vast new sums of money out of thin air. But the moves on Wednesday were its biggest yet, almost doubling all of the Fed's measures in the last year.

The action makes the Fed a buyer of long-term government bonds rather than the short-term debt that it typically buys and sells to help control the money supply.

The idea was to encourage more economic activity by lowering interest rates, including those on home loans, and to help the financial system as it struggles under the crushing weight of bad loans and poor investments.

Investors responded with surprise and enthusiasm. The Dow Jones industrial average, which had been down about 50 points just before the announcement, jumped immediately and ended the day up almost 91 points at 7,486.58. Yields on long-term Treasury bonds dropped markedly, and analysts predicted that interest rates on fixed-rate mortgages would soon drop below 5 percent.

But there were also clear indications that the Fed was taking risks that could dilute the value of the dollar and set the stage for future inflation. Gold prices rose $26.60 an ounce, hitting $942, a sign of declining confidence in the dollar. The dollar, which had been losing value in recent weeks to the euro and the yen, dropped sharply again on Wednesday.

In its announcement, the central bank said that the United States remained in a severe recession and listed its continuing woes, from job losses and lost housing wealth to falling exports as a result of the worldwide economic slowdown.

"In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability," the central bank said.

As expected, policy makers decided to keep the Fed's benchmark interest rate on overnight loans in a range between zero and 0.25 percent.

But to the surprise of investors and analysts, the committee said it had decided to purchase an additional $750 billion worth of government-guaranteed mortgage-backed securities on top of the $500 billion that the Fed is already in the process of buying.

In addition, the Fed said it would buy up to $300 billion worth of longer-term Treasury securities over the next six months. That would tend to push down longer-term interest rates on all types of loans.

All these measures would come in addition to what has already been an unprecedented expansion of lending by the Fed. The central bank also said it would probably expand the scope of a new program to finance consumer and business lending, which gets under way this week.

In effect, the central bank has been lending money to a wider and wider array of borrowers, and it has financed that lending by using its authority to create new money at will.

Since last September, the Fed's lending programs have roughly doubled the size of its balance sheet, to about $1.8 trillion, from $900 billion. The actions announced on Wednesday are likely to expand that to well over $3 trillion over the next year.

Despite a trickle of encouraging data in the last few weeks, Fed officials were clearly still worried and in no mood to cut back on their emergency efforts.

Fed policy makers sharply reduced their economic forecasts in January, predicting that the economy would continue to experience steep contractions for the first half of 2009, that unemployment could approach 9 percent by the end of the year and that there was at least a small risk of a drop in consumer prices like those that Japan experienced for nearly a decade.

The Fed rarely buys long-term government bonds. The last occasion was nearly 50 years ago under different economic circumstances when it tried to reduce long-term interest rates while allowing short term rates to rise.

Ben S. Bernanke, the Fed chairman, has been extremely cautious in recent weeks about predicting an end to the recession, saying that he hoped to see the start of a recovery later this year but warning that unemployment, a lagging indicator, would probably keep climbing until some time in 2010.

In contrast to several recent Fed decisions, with the presidents of some regional Fed banks dissenting, the decision at Wednesday's meeting of the 10 members of the Federal Open Market Committee, the central bank's policy making group, was unanimous.

Jan Hatzius, chief economist at Goldman Sachs, said the Fed had adopted a "kitchen sink" strategy of throwing everything it had to jolt the economy out of its downward spiral.

But while Mr. Hatzius applauded the decision, he cautioned that the central bank could not solve the economy's problems by expanding cheap money.

"Even if the Fed could make interest rates negative, that wouldn't necessarily help," Mr. Hatzius said. "We're in a deep recession mainly because the private sector, for a variety of reasons, has decided to save a lot more. You can have a zero interest rate, but if you just offer more money on top of the money that is already available, it doesn't do that much."

Fed officials have been wrestling for months with the fact that lenders remain unwilling to lend and borrowers are unwilling or unable to borrow. Even though the Fed has been creating money at the fastest rate in its history, much of that money has remained dormant.

The Fed's action is an expansion of its effort to bypass the private banking system and act as a lender in its own right.

The Fed and the Treasury are starting a joint venture this week called the Consumer and Business Lending Initiative in their latest effort to thaw the still-frozen credit markets. The program will start out with $200 billion in financing for consumer loans, small-business loans and some corporate purposes.

Fed officials have said they hope to expand the program next month, possibly to include the huge market for commercial mortgages, and both the Fed and Treasury hope the program will eventually provide up to $1 trillion in total financing.

by Edmund L. Andrews, International Herald Tribune, March 18, 2009

U.S. economy has fallen off a cliff, according to Buffett

Billionaire Warren Buffett remains confident that America's best days are ahead, but he says the nation likely will face higher unemployment and eventually inflation because of the current economic crisis. Buffett said the nation's leaders need to emphasize a consistent message, and they should support President Barack Obama's efforts to repair the economy because fear is dominating Americans' behavior.

Buffett said the economy has basically followed the worst-case scenario he envisioned six months ago.

"It's fallen off a cliff," Buffett said Monday during a live appearance on cable network CNBC. "Not only has the economy slowed down a lot, but people have really changed their habits like I haven't seen."

Buffett said the changes are reflected in the results of Berkshire Hathaway Inc.'s subsidiaries. He said Berkshire's jewelry companies have suffered, but more people have been willing to switch to Geico to save money on car insurance. The three-hour-long interview aired from another Berkshire subsidiary that has been hampered by the economy, the Nebraska Furniture Mart store in Omaha.

He predicted that unemployment will climb a lot higher before the recession is done, but he also reiterated his optimistic long-term view: "Everything will be all right. We do have the greatest economic machine that man has ever created."

Fear and confusion have been driving consumer and investor behavior in recent months, Buffett said.

The nation's leaders need to clear up the confusion before anyone will become more confident, and he said all 535 members of Congress should stop the partisan bickering about solutions. He said politicians should also stop trying to use the current economic crisis to force through other policy changes.

"We ought to defer most of the things that get people riled up," Buffett said.

Buffett said he believes patriotic Republicans and Democrats will realize the nation is engaged in an economic war.

"What is required is a commander in chief that's looked at like a commander in chief in a time of war," Buffett said.

Whatever the government does to help the economy will likely benefit some people who made poor financial decisions, but Buffett said Americans should realize that everyone is in the same boat.

"The people that behaved well are no doubt going to find themselves taking care of the people who didn't behave well," Buffett said.

The current efforts to help revive the economy are likely to produce inflation that could be worse than what the country suffered in the late 1970s, Buffett said.

But even though the nation will have to pay for current policies with future inflation, Buffett said, the U.S. government still needs to act.

"We're in a big war, and we're going to use money to fight it," he said.

Maintaining faith in the nation's banking system will be important to restoring the economy's health, Buffett added. He said President Barack Obama needs to make it very clear that consumers won't lose money in banks even if more fail.

"If you don't trust where you have your money, the world stops," Buffett said.

Most banks are in good shape, Buffett said, and even some of the troubled banks will be able to remedy their problems over time by reducing dividends and collecting the difference between interest payments they receive on loans and the interest they pay on deposits.

"The banking system largely will cure itself," Buffett said.

A little over a week ago, Buffett released his annual letter to shareholders describing the worst of his 44 years at the helm of Berkshire. The Omaha, Neb.-based company reported sharply lower profit because of its largely unrealized $7.5 billion investment and derivative losses.

Overall, Berkshire's 2008 profit of $4.99 billion, or $3,224 per Class A share, was down 62 percent from $13.21 billion, or $8,548 per share, in 2007.

Berkshire's fourth-quarter numbers were even worse. Buffett's company reported net income of $117 million, or $76 per share, down 96 percent from $2.95 billion, or $1,904 per share, a year earlier.

Buffett said he doesn't regret writing a commentary in the fall encouraging people to buy U.S. stocks, but he joked that in hindsight he wishes he'd waited a few months to publish the piece. Since that commentary appeared on Oct. 17, the Dow Jones industrial average has fallen from 8,852.22 to close at 6,626.94 on Friday.

Buffett stands by his overall advice that owning stocks over time will profit people greater than so-called safe investments.

"Overall, equities are going to do far better than U.S. government bonds at these prices," he said.

Buffett said he doesn't regret investing $8 billion of Berkshire's money in investment bank Goldman Sachs Group Inc. and conglomerate General Electric Co. last fall. Both companies gave Berkshire preferred shares paying 10 percent interest that Buffett said he doesn't think he could get now.

Buffett also said on CNBC:

• That General Motors Corp. needs a new business plan to survive because its costs are too high, but it's difficult to predict how a solution will be reached. "You are in a terrible, terrible time period for the car makers every place."

• Berkshire has made several large investments over the past year and reduced its cash on hand to $24.3 billion at the end of 2008. Buffett said that means Berkshire will likely write fewer insurance policies on catastrophic events in 2009 because he wants to make sure the company always has at least $10 billion on hand.

"My job is to be absolutely sure Berkshire doesn't need help from anyone in the worst of times," Buffett said.

• Any deal negotiated last summer made the sellers very happy and the buyers unhappy today. That's part of why Buffett said Dow Chemical Co.'s $15 billion bid to buy rival chemical maker Rohm & Haas Co. has not been consummated. "The world has changed like nobody ever believed it would," he said.

But Buffett said the $3 billion Berkshire committed to the Dow deal remains solid if the two chemical companies can agree on how to close the deal.

by Josh Funk, Associated Press (Omaha), March 9, 2009

Chavez invites Obama to follow road to socialism

Venezuelan President Hugo Chavez on Friday called upon US President Barack Obama to follow the path to socialism, which he termed as the "only" way out of the global recession. "Come with us, align yourself, come with us on the road to socialism. This is the only path. Imagine a socialist revolution in the United States," Chavez told a group of workers in the southern Venezuelan state of Bolivar.

The controversial Venezuelan leader, who taunted the United States as a source of capitalistic evil under former president George W Bush, added that the United States needs a leader who can take it to a "higher" destiny and bring it out of "the sad role that it has been given, as a murderous, attacking power that is hated all around the world."

Chavez said that people are calling Obama a "socialist" for the measures of state intervention he is taking to counter the crisis, so it would not be too far-fetched to suggest that he might join the project of "21st century socialism" that the Venezuelan leader is heading.

"Nothing is impossible. Who would have thought in the 1980s that the Soviet Union would disappear? No one," he said.

"That murderous, genocidal empire has to end, and some day there has to come a leader ... who interprets the best of a people who also include human beings who suffer, endure, weep and laugh," the outspoken Chavez said.

The Earth Times, March 6, 2009

============================

Chavez Tells Obama He Should Follow Venezuela’s Socialist Path

Venezuelan President Hugo Chavez comments on U.S. President Barack Obama and the state of the U.S. economy. He made the remarks today on Venezuelan state television.

“It’s regrettable the crisis that the U.S. is living through. Millions of workers are being left in the street, thousands of companies are closing, in the U.S. there isn’t a single new infrastructure project. Go look for a highway there, the country has gone bust.”

“Now President Obama arrived with some announcements, hopefully, but the capitalist model and its perverse values have failed.”

“I recommend to Obama -- they’re criticizing him because they say he’s moving towards socialism -- come Obama, ally with us on the path to socialism, it’s the only road.”

“Imagine a socialist revolution in the U.S. Nothing is impossible.”

by Daniel Cancel, Bloomberg.com, March 6, 2009

Chavez calls Venezuela vote mandate for socialism

President Hugo Chavez says a referendum victory that removed limits on his re-election is a mandate to intensify his socialist agenda for decades to come. Opponents warn of an impending dictatorship.

Both sides had called the outcome of Sunday's vote key to the future of this South American country, split down the middle between those who worship the president for redistributing Venezuela's oil riches and those who see him as a power-hungry autocrat.

"Those who voted "yes" today voted for socialism, for revolution," Chavez thundered to thousands of ecstatic supporters jamming the streets around the presidential palace. Fireworks lit up the Caracas skyline, and one man walked though the crowd carrying a painting of Chavez that read: "Forever."

Josefa Dugarte stared at the crowd from the stoop of her apartment building with look of dismay.

"These people don't realize what they have done," she muttered.

With 94 percent of the vote counted, official results showed the amendment passing 54 percent to 46 percent, an irreversible trend, and opposition leaders accepted the results. Tibisay Lucena, president of National Electoral Council, said turnout was 67 percent.

The constitutional overhaul allows all public officials to run for re-election as many times as they want, removing barriers to a Chavez candidacy in the next presidential elections in 2012 and beyond.

"In 2012 there will be presidential elections, and unless God decides otherwise, unless the people decide otherwise, this soldier is already a candidate," Chavez said to applause. First elected in 1998, he has said he might stay in power until 2049, when he'll be 95.

But analysts said Chavez shouldn't count on getting re-elected just yet.

"Chavez's intention is clear: He aspires to be president for life," said Michael Shifter of the Inter-American Dialogue in Washington. "He is convinced he embodies the popular will and is indispensable to the country's progress. But his capacity to pull this off is far from assured."

He said the global financial crisis and the plunging price of oil, which accounts for 94 percent of Venezuela's exports and nearly half its federal budget, will limit Chavez's ability to maintain the level of public spending that has fueled his popularity.

"The greatest challenge the government now faces is governing in the face of crisis and not falling into triumphalism," said Miguel Tinker Salas, a professor at Pomona College in Claremont, California.

At their campaign headquarters, Chavez opponents hugged one another, and some cried. They said the results were skewed by Chavez's broad use of state resources to get out the vote, through a battery of state-run news media, pressure on 2 million public employees and frequent presidential speeches which all television stations were required to air.

With the courts, the legislature and the election council all under his influence, and now with no limits on his re-election, officials say Chavez is virtually unstoppable.

"Effectively this will become a dictatorship," opposition leader Omar Barboza told The Associated Press. "It's control of all the powers, lack of separation of powers, unscrupulous use of state resources, persecution of adversaries."

by Christopher Toothaker, Associated Press (Caracas), February 16, 2009