Monthly Archives: February 2009

Buffett: Economy will remain in ‘shambles’

Annual letter to shareholders says crisis has led to ‘paralyzing fear’

MSNBC | Feb 28, 2009

NEW YORK – Billionaire investor Warren Buffett predicted Saturday that “the nation’s economy will be in shambles throughout 2009” and probably “well beyond.”

In his annual letter to Berkshire Hathaway Inc. shareholders, Buffett said the credit crisis and falling housing and stock prices have led to “paralyzing fear.”

But the famed investor remained optimistic about America’s resilience.
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“Though the path has not been smooth, our economic system has worked extraordinarily well over time,” he said. “It has unleashed human potential as no other system has, and it will continue to do so. America’s best days lie ahead.”

America has faced bigger economic challenges in the past, Buffett said, including two World Wars and the Great Depression.

Buffett detailed his worst year leading Berkshire, insurance and investment company, in the shareholder letter issued Saturday.

Net worth shrinks

Berkshire barely broke even in the fourth quarter because of losses on derivatives contracts tied to the stock market.

Profit fell 96 percent, the fifth straight quarterly decline, and Berkshire’s net worth tumbled $10.9 billion in the year’s final three months.

Net worth per share fell 9.6 percent for the whole of 2008, only the second decline since Buffett began running Berkshire in 1965. It fell 6.2 percent in 2001.

Berkshire generates about half its results from insurance, including auto insurer Geico Corp, but operates more than 70 businesses that offer such things as carpeting, ice cream, paint, real estate services and underwear.

Buffett said he made at least one major investing mistake last year by buying a large amount of ConocoPhillips stock when oil and gas prices were near their peak.

Berkshire increased its stake in ConocoPhillips from 17.5 million shares in 2007 to 84.9 million shares at the end of 2008.

Buffett said he did not anticipate last year’s dramatic fall in energy prices, so his decision cost Berkshire shareholders several billion dollars.

He said he also spent $244 million on stock in two Irish banks that appeared cheap. But since then, he wrote down the value of those purchases to $27 million.

‘Unsatisfactory’

Berkshire’s results were battered by $4.61 billion of pretax losses on about 251 derivative contracts largely tied to the longer-term performance of four stock market indexes and the credit quality of higher-risk “junk” bonds.

A deteriorating economy and tight credit led to steep declines in stock prices and an increase in junk bond defaults, resulting in losses for Berkshire.

While the losses exist on paper, accounting rules require Berkshire to report them with earnings.

Buffett revealed for the first time which stock indexes he has been using: the Standard & Poor’s 500, Britain’s FTSE 100, Europe’s Euro Stoxx 50, and the Nikkei 225 in Japan.

In his letter, Buffett said he believed each contract that Berkshire owns was “mispriced” at the outset, and that the ups and downs “neither cheer nor bother” him.

He said, though, that Berkshire got $8.1 billion of upfront payments from parties on the other side of the contracts, which the company can invest as it wishes. This, he has said, makes the contracts different from the “financial weapons of mass destruction” that he has called other derivatives.

For all of 2008, profit at Berkshire fell 62 percent to a six-year low of $4.99 billion, or $3,224 per share, from $13.21 billion, or $8,548. Revenue fell 9 percent to $107.8 billion. Buffett called full-year results “unsatisfactory.”

Berkshire Class A shares closed Friday at $78,600 on the New York Stock Exchange. They have fallen 44 percent since the end of February 2008, while the Standard & Poor’s 500 has dropped 45 percent.

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Ghanaian royalty in Maltese knighthood muddle

The decision has angered the official Order of Malta.

Ghana Business News | Feb 27, 2009

By Emmanuel K. Dogbevi

kingsley_fletcherA Ghanaian citizen has stirred controversy in the Island of Malta over plans by an organization to knight him.

The man, known as Kingsley Fletcher, is a preacher, businessman and traditional ruler. He is the founder of the Kingsley Fletcher Ministries, a charismatic Christian organization based in the US and owner of a number of businesses in the country and overseas.

According to news reaching ghanabusinessnews.com from Malta, Mr. Fletcher whose traditional title is Nene Adamtey I and is the Suapolor of the Se Kingdom in the Greater Accra region, was due to be invested into the Knights of Malta, but the decision has angered the official Order of Malta.

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First African King to be Knighted in Malta

Nene Adamtey I is due to be knighted in a ceremony at the Castello dei Baroni, Wardija by the “historic Knights of Malta,” the report says.

It also added that his status as a traditional ruler would make him the third highest ranked individual in the order.

The Sovereign Military Order of Malta (SMOM), however, is objecting to this claim, pointing out that the “historic knights” are actually another organisation, calling itself the Knights Hospitallers of the Sovereign Order of St John of Jerusalem. Although bearing a similar name, the order, frequently referred to as the Ecumenical Order, is not affiliated with the SMOM, which is considered to be the main successor to the Knights which ruled Malta between 1530 and 1798, and which has formal diplomatic relations with over 100 countries. But no diplomatic relations have yet been established between the order and Ghana.

The SMOM also objected to the group’s plan to organise a Solemn Mass on Sunday, March 1 at St John’s Co-Cathedral. It contacted the Co-Cathedral’s rector Lawrence Mifsud who, following an investigation of the matter, stopped the church function from taking place, the reports said.

While still able to attend Mass at the Co-Cathedral on the day, members of the Ecumenical Order will not be admitted in uniforms or church robes, and no special seats will be reserved for them.

Mr. Fletcher was quoted as saying that it was unusual for an African leader to be invited into knighthood, but added that “because it is an effort of nobility, I gladly accepted”.

He is set to arrive in Malta today Friday February 27, 2009 and leave on Sunday.

Selling body parts to make ends meet a sign of the times

Digital Journal | Feb 25, 2009

By Sandy Sand

Throughout the ages, people have been doing whatever is necessary to keep body and soul together. The world has seen everything from men selling off their daughters for a few cows and sheep, to women being prostitutes. Today, it’s selling body parts.

Today, the cash-strapped people who earn meager salaries, or have run out of unemployment benefits and can’t find work, are literally selling parts of themselves as their only means of carrying on.

Selling body parts is not a new idea, but it’s being done more and more by more people today who never dreamed of doing such things.

For years, male college student have been using the bounty of their sperm to earn money for everything from books to beer busts. More people are taking lessons from them and giving up parts of themselves to meet expenses.

Selling off one’s hair, sperm, eggs, blood or participating in medical studies may be one of the ultimate signs of just how bad the economy is for many people.

“Economic times are hard now, but for me they were also hard last semester and the semester before. This is a good way where I am making money and not having to work a full-time job,” Melanie Burnett, a kinesiology (study of how the body moves) major at California State University, Northridge.

Last year Burnett earned $6,000 selling her eggs to a fertility clinic, and this spring she expects to earn a similar amount.

Fertility clinics in and around Los Angeles are reporting an up-tick in business. California Cryobank reported that during the past 18 months, donations by men are up 15 percent, and egg donations up by 25 percent.

Some women are even resorting to renting out their uteruses to be surrogate mothers.

Dr. Jeffrey Steinberg, director of the Fertility Institutes California-Nevada, said some women, who are able to make several egg donations a year have been earning as much as $40,000 annually.

“We’ve had a spike not only in egg donors but also in surrogates,” Steinberg added. “People are looking at more creative ways to get money. Even donors from two and three years ago are coming back to do it again.”

When it comes to sperm donations, UCLA senior Jordan Meyers said, “Every so often you see ads in The Daily Bruin where they’re seeking sperm donors, but they’ve got to attend UCLA, USC, Stanford or Harvard.” Although he said he’s never been a donor, he knows students who have been.

Giving up a pint of blood to buy a pint of whiskey has long been a Skid Row tradition. No longer.

A representative of Advance Biological Services Blood and Plasma Center said that on “any given day” their waiting room is pack with people. Many are averaging $240 a month for bi-weekly donations.

Its shades of O’Henry’s Gift of the Magi for thehairtrader.com, which is getting their cut of the business, too. They pay from $150 to $2,500 for hair depending on its length, texture and color.

“Because of the economy, we’ve experienced about a 40 percent increase over the last few months,” a company spokesman said.

For those not willing or able to give up part of themselves, they are taking advantage of hundreds of medical studies that are offered across the country.

Thousands of dollars can be earned by participating in clinical trials where various medical conditions are studied, or by being human guinea pigs and testing experimental drugs.

Taking a dim view of all of this is Beverly Hills psychiatrist Dr. Nancy Lieberman, whose specialty is human behavior.

“What makes it really sad and distressing is that these are people who wouldn’t ordinarily choose to sell parts of themselves,” Lieberman said. “It’s just so primitive and animalistic: selling a part of yourself and being forced to reach down to the bottom of your resources.”

Taking a less critical view is Allen Martin, a professor of family finances at CSUN.

“It’s a sign of how hard times are and that when people are desperate, they will do anything to make some extra cash,” Martin said.

New Hampshire’s Resolution to Reaffirm Its Sovereignty

The Exception | Feb 27th, 2009

By Scott McPherson

To the victor go the spoils, and the winners write the history books, this latter coming unavoidably with the former. Still, facts persist, despite their inconvenience.

One fact that seems particularly inconvenient to the editors of New Hampshire’s Nashua Telegraph is that the government of the United States is a limited government. Their specific complaint is against “HCR6,” a resolution introduced in the New Hampshire House of Representatives that reaffirms the principles laid out in the Tenth Amendment of the US Constitution, namely, that the federal government exists to exercise delegated powers only, and that all other powers are retained by the states and the people.

A similar resolution was passed by the Oklahoma legislature last year, and about ten other states are considering sovereignty-related legislation. It makes perfect sense: following eight years of an Imperial Presidency like George Bush’s – not to mention 80 years of welfare-statism – state lawmakers should be anxious to tell Washington that they are not branch managers for the federal government. The people, in their sovereign capacity, established the governments of the states, and in turn, the people of the several states ratified the Constitution, creating the federal government. The states are equal agents in this compact, with relation to each other and the entity they created. HCR6 is an attempt to remind folks of this historic fact.

“Resolutions such as this,” write the Telegraph’s editors, “exploit the democracy of the Legislature to pursue an ideological agenda with no practical impact on public policy.” Resolutions stating broad principles or making grand declarations are far from unheard of, and are always used to “pursue an ideological agenda.” That’s the whole point. But whether it has any chance of making a “practical impact on public policy” cannot be known unless and until the resolution is properly discussed and debated. What the Telegraph really means is that they just don’t like HCR6, so ipso facto it is a waste of time. What arrogance.

Worse, the editors betray an incredible ignorance, not just of history, but of the rules of basic decency. They write, “The notion that the Republic is a creation of the states and can be dissolved by the states may have been viable – until 1865…the Civil War settled the debate at the cost of more than 600,000 American lives.” What the Telegraph is ultimately saying is that because the North won the war, the history of our government was automatically re-written and the deaths of 600,000 people – not to mention the jailing of state legislators, congressmen and newspaper editors(!) – are therefore justified. Like the main character in Orwell’s 1984, just burn that inconvenient little scrap of paper and a new truth is unveiled. The problem is, the little scrap of paper they wish us to burn is the Constitution.

Joseph Stalin oversaw the murder of millions in the name of protecting the Soviet Union. If body count is a measure of righteousness, he was an ideal leader. To quote Will Smith from the recent film Hancock, “Are you boys sure you want to ride that train?”

The Telegraph claims that “The Supreme Court of the United States gets to decide if the federal government has exceeded the authority granted by the Constitution, not the state of New Hampshire or any other state.” As the Southern statesman and Senator – and Vice-President – John C. Calhoun consistently argued in the first half of the nineteenth century, the Supreme Court is an agent of the federal government; if the federal government gets to determine its own limits, then any idea of a limited government must logically be abandoned.

Full Article

Obama Budget Projects Never Ending Rise In National Debt

The debt will have soared $6.3-trillion during his term. Double it if he wins a second term.

CBS Hotsheet | Feb 26, 2009

by Mark Knoller

Despite the budget cuts and tax increases in the Administration’s new budget plan, federal spending and indebtedness will continue to rise as far as the eye can see.

The federal deficit this year spikes to $1.75-trillion dollars – by far the largest in U.S. history. In fact, the deficit this year is larger than the entire federal budget just ten years ago when all government outlays amounted to $1.70-trillion.

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Democrats on track to double national debt by 2010

The new budget reflects President Obama’s commitment to cut the annual federal deficit in half by the end of his term in office. Starting next year, the yearly deficit is projected to decrease from $1.1-trillion to $533-billion in the year 2013.

But – if you check the very last chart in the budget book, it shows the National Debt continuing to soar year after year after year.

As of today, it’s $10.8-trillion. The administration projects it’ll climb to $14-trillion next year and in 2013 wind up at $17.1-trillion dollars – very close to matching the size of the entire economy as measured by the projected Gross Domestic Product. And taxpayers will be paying hundreds of billions in interest on the debt each year.

The budget, which carries the title “A New Era of Responsibility,” shows that at the end of ten years, the National Debt will hit $23.1-trillion dollars – exactly matching the GDP that year.

In his budget message, Mr. Obama explains that “our problems are rooted in past mistakes.”

“We arrived at this point as a result of an era of profound irresponsibility,” taking an unmistakable swipe at the budget policies of his immediate predecessor. And in his remarks to his Summit on Financial Responsibility on Monday, he went still further.

“For too long, our budget process in Washington has been an exercise in deception — a series of accounting tricks to hide the extent of our spending and the shortfalls in our revenue and hope that the American people won’t notice: budgeting certain expenditures for just one year, when we know we’ll incur them every year for five or 10; budgeting zero dollars for the Iraq war — zero — for future years, even when we knew the war would continue; budgeting no money for natural disasters, as if we would ever go 12 months without a single flood, fire, hurricane or earthquake.”

That attack was too much for one time White House spokesman Tony Fratto to bear in silence. He served President Bush as deputy press secretary and as a spokesman in the Budget Office and Treasury Department.

He calls the Obama Administration’s budget “the height of audacity.”

Speaking for himself, Fratto charges the current White House is trying to “mask huge spending increases under the cloak of ‘fiscal responsibility.’” And he rejects the current president’s charge that the previous Administration’s budgets were full of hidden numbers and omissions.

“Our budgets were honest, open, and transparent. Every dime spent was presented, debated, voted on, and counted,” said Fratto in a statement e-mailed to CBS News.

And he defended the Bush White House practice of putting war spending in “supplemental” appropriations bills.

“(It) was done to avoid permanently baking those appropriations into the Defense Department’s baseline budget. That’s good budgeting, not a ‘gimmick.’”.

Until now, Mr. Bush ran up the biggest deficits and the largest amount of National Debt in U.S. history. The National Debt increased $4.9-trillion on his watch. The new budget plan shows the title of biggest spender will fall to Mr. Obama.

If his numbers prove true, the debt will have soared $6.3-trillion during his term. Double it if he wins a second term.

Scientists to fight “global warming” with 100,000 square mile sun shade costing $350 trillion

Scientists claim they can fight global warming by firing trillions of mirrors into space to deflect the sun’s rays forming a 100,000 square mile “sun shade”.

Telegraph | Feb 26, 2009

According to astronomer Dr Roger Angel, at the University of Arizona, the trillions of mirrors would have to be fired one million miles above the earth using a huge cannon with a barrel of 0.6 miles across.

The gun would pack 100 times the power of conventional weapons and need an exclusion zone of several miles before being fired.

Despite the obvious obstacles – including an estimated $350 trillion (£244trn) price tag for the project – Dr Angel is confident of getting the project off the ground.

He said: “What we have developed is certainly effective and a method guaranteed to work.

“Tests are ongoing but we expect to be ready to launch within 20 or 30 years time. Things that take a few decades are not that futuristic.”

Dr Angel has already secured NASA funding for a pilot project and British inventor Tod Todeschini, 38, was commissioned to build a scaled-down version of the gun.

He constructed the four-metre long cannon in his workshop in Sandlake, Oxfordshire, for a TV documentary investigating the sun shield theory.

He said: “The gun was horrendously dangerous. This was the first gun I’d ever built.

“I knew I could put it together safely but at the end of it all I didn’t know what I was going to get.

“It was immensely dangerous. I was attempting to build a gun to produce 1,500G of force but it ended up creating about 10,000G and we had to turn the power down.

“Most weapons used by the army produce 100Gs of force so our gun was about 100 times more powerful.

“The main danger was electrocution because it used enough power to boil 44,000 kettles.

“If you were working with normal levels of electricity you could get a shock and be fine, but if you got a shock off this you would be dead – no question.

“We’ve proved it’s possible to build a scaled-down version of the gun needed to get these lenses into the air so it’s just a matter of scaling up the designs for the real thing.”

If Dr Angel’s sun shield is successful he says the mirrors will last 50 years before needing to be replaced.

“What you are talking about is a project which will stop global warming for centuries to come,” he said.

“At the moment the sums involved sound huge but in the greater scheme of things it’s a price worth paying.

“Over 50 years the mirrors will become damaged and therefore fresh lenses will need to be fired into space to ensure the shield is constant.”

Dr Angel, who pioneers solar energy, is developing cheaper methods of making the lenses to bring the cost of the project down.

In the meantime researchers at the University of Victoria, Canada, are testing the sun shield theory by using computer simulations of the project.

Dr Angel’s sun shield theory will feature on Ways to Save the Planet on the Discovery Channel at 7pm on Sunday.

Tiananmen Mothers Call for Investigation of 1989 massacre

Tiananmen mothers group calls on China to investigate 1989 crackdown ahead of 20th anniversary

Possibly thousands of people were believed to have been killed, but the government has never allowed for a full accounting of the events.

ABC News | Feb 26, 2009

tiananmentankman2A group of mothers whose children were killed in the 1989 protests in Tiananmen Square have renewed calls to China’s leaders for a full investigation as the 20th anniversary approaches.

The Tiananmen Mothers — a group of mothers and relatives who lost family in the June 4 pro-democracy crackdown — called for an official investigation, compensation to the victims’ families and punishment for those responsible.

In the open letter made public Friday, Chinese leaders were also urged to “break the taboo” of the demonstrations and seek the truth behind the military crackdown against student-led protesters.

BBC News – June 4, 1989, Tiananmen Square Massacre

China’s leaders sent tanks and troops to crush the peaceful protests on June 3-4, which were deemed a threat to Communist Party rule. Hundreds — possibly thousands — of people were believed to have been killed, but the government has never allowed for a full accounting of the events.

“This will require each deputy to demonstrate extraordinary courage and resourcefulness, political courage and wisdom, to break the taboo and face head-on the unspeakable tragedy that took place 20 years ago and resolve “June Fourth” with the truth,” said the letter, referring to delegates to the annual legislature.

The activist group has released a version of the letter every year for two decades ahead of the annual session of the National People’s Congress, which starts March 5.

The Tiananmen Square Massacre-Hymn To The Fallen