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06 сентября 2013, 09:00

British water vole population slumps by more than one-fifth, survey finds

American mink, disappearing water meadows and a loss of riverside vegetation and drought are blamed for declineThe crystal-clear water races over the stones, a heron cries and the smell of wild mint rises on the warm air.But there is one thing missing from this bucolic scene: the telltale swish of the reeds or sudden liquid plop that betrays a water vole.The creature immortalised as Ratty in The Wind in the Willows is vanishing from the British countryside, with the population slumping by more than one–fifth, according to a new five-year survey.On the banks of the River Chess in the Chilterns, Allen Beechey of the Chiltern Conservation Board has no doubt about the culprit: American mink – escapees from fur farms with a voracious appetite for water voles."I saw a mink in broad daylight last month trying to scrag a couple of mallard chicks," said Beechey, as he and Julia Lofthouse, of Berkshire, Buckinghamshire and Oxfordshire Wildlife Trust (BBOWT), scour the river for signs of the elusive water vole.One female mink – small enough to penetrate the vole's only defence, its underwater burrows – can virtually wipe out a population of water voles. In 2001, nearly 350 water vole were recorded on the Chess. Two years later, shortly after the first mink was recorded on the river, the population slumped by 97%.Now the Chess is a rare success story for the water vole, thanks to a "mink control" programme – trapping and shooting the mink – but also to careful habitat restoration by the Environment Agency, BBOWT, and other local charities and landowners. At each count since, numbers have risen and the latest estimate, for 2011, is a return to 345 individuals.But the recovery in the Chilterns has come as populations of water voles vanish across the country with no water voles at all in Cornwall, and no sites west of the M6 in Cumbria.The National UK Water Vole Database and Mapping project, run by the Environment Agency and the Wildlife Trusts, recorded water voles in 874 10km squares across the UK in 2004-08. The latest mapping, for 2007-11, found water voles present in just 683 10km squares – a decline of 22%.Paul Wilkinson of the Wildlife Trusts warned that some of the reduction may be due to less surveying work because of funding cuts but said the figures were still "a real cause for concern"."Not enough is being done to secure this charismatic species' future," he said. "There is clear evidence from some areas, in the south of England for example, that water voles are disappearing fast."As well as mink, the fragmentation and loss of habitat is also critical, according to Alastair Driver, national conservation manager at the Environment Agency and chair of the UK Water Vole Group.Disappearing water meadows and a loss of riverside vegetation on which the herbivorous vole feeds has left populations isolated and more vulnerable to predation.Another problem is extreme weather and drought. "I'm certain that drought is a big problem," said Driver. "If rivers dry up so that water voles' burrows are left high and dry, they are accessible to stoats and weasels."In the Chilterns, landowners have been encouraged to manage riverside land for water voles, creating a mosaic of wetland habitats, with plenty of reeds and tussocky grass cover along the riverside. This month more than 50 local volunteers are surveying the animals, an arduous task involving waders and a scouring of impenetrable vegetation for signs of water vole latrines. Six latrines indicate the presence of one vole.Along the Chess near Chesham, mink rafts float in the water every few hundred yards: these wooden tunnels hide a clay insert which reveals the paw-prints of any mink trotting through. Once paw-prints are spotted, the clay is replaced with a humane trap and the insatiably curious mink is soon captured.On this hunt, the raft shows no trace of the mink Beechey spotted a few weeks before and, happily, signs of water voles are discovered by Lofthouse: a neat pile of reed canary grass stems nibbled off the plant at a 45 degree angle.An hour of searching finally turns up a latrine, featuring hamster-sized green pellets, freshly laid that morning.Whilst the return of otters is a welcome sign of improving water quality, Driver said water voles were able to live in relatively poor-quality water, and in some cases did better on urban rivers and in intensively farmed regions such as the Fens because mink were unlikely to thrive in these areas.Anglers have accused the resurgent otter population of causing the decline in water voles but Driver said that there was no evidence that the two native animals could not coexist as they had for centuries.In the Chilterns, conservationists predicted that water voles would only recover nationwide if other riverside communities came together to monitor numbers, manage mink and restore well-vegetated riverbanks. And there are fears government funding cuts could end projects like this one by 2016."It's a really good demonstration of how habitat enhancement and mink control can reverse a decline in water voles," said Beechey.WildlifeRiversConservationInvasive speciesMarine lifePatrick Barkhamtheguardian.com © 2013 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds

26 марта 2013, 01:24

Markets take fright at idea that Cyprus savings raid could become bailout model

Markets spooked as finance chief suggests Cyprus rescue could set the template for future eurozone bailoutsFears that bank accounts could be raided in any future eurozone bailouts spooked markets on Monday, as Cypriots prepared for their banks to reopen for the first time in over a week on Thursday following a deal to secure a €10bn lifeline.Markets took fright after the head of the group of eurozone finance ministers indicated that the Cyprus rescue could be a template for similar situations. Cyprus is the first of five bailouts in the eurozone where depositors have been hit."What we've done last night is what I call pushing back the risks," Jeroen Dijsselbloem, the Dutch finance minister, told Reuters and the Financial Times after clinching an agreement for Cyprus. "If the bank can't do it, then we'll talk to the shareholders and the bondholders, we'll ask them to contribute in recapitalising the bank, and if necessary the uninsured deposit holders," he said.Bank of Cyprus and Laiki, the two largest domestic banks, will remain shut until Thursday while the latter is split into a good and bad bank and a levy – of potentially 40% – is imposed on accounts of more than €100,000.A big percentage of those deposits belong to Russians. On Monday the Russian president, Vladimir Putin, said there would be a deal to rework the terms of a €2.5bn loan to the Mediterranean island, which had become attractive for its low tax regime and lax vetting laws.Cyprus president Nicos Anastasiades made a televised address in which he admitted that measures would be in place to stop money pouring out of the banks when they reopen. "The central bank will implement capital controls on transactions. I want to assure you that this will be a very temporary measure that will gradually be relaxed," he said.Markets were initially buoyed by news of the "painful" bailout for Cyprus, clinched late on Sunday night following threats by the European Central Bank to switch off liquidity to Cypriot banks, which, carried by international deposits, had grown to eight times the €17bn economy.But markets reacted badly later in the day after Dijsselbloem's remarks. As markets tumbled, he issued a clarification insisting that bailout programmes were "tailor-made" and that "no models or templates are used".Nevertheless, all markets erased their early gains to close down on the day. The FTSE 100 index lost 0.2% and the German stock market fell 0.5%. Bank shares fell across Europe while the euro, which had nudged up through $1.30 initially, fell back to below $1.29. US markets, which had largely shrugged off the Cypriot problem, were also lower, with the Dow Jones Industrial Average down over 70 points, 0.5%.Cypriots had reacted to the agreement with European leaders with relief as it appeared that at least deposits below €100,000 had been spared the levy.In the streets and cafes of Nicosia, and on TV chat shows aired in homes across the nation state, the feeling was that the country had been saved but at a high price.Interior minister Sokratis Hasiko encapsulated the mood, describing the EU-IMF-backed bailout as the best of a bad range of choices."We had got to the point where we were discussing a [depositor] haircut of between 50 and 60%," he said, adding that the Cypriot parliament's rejection of the first accord, with its highly controversial levy on depositors big and small, had been hugely negative for the country's banks. "So this is the best we could get."There were warnings the impact could reach beyond Cyprus, particularly with repercussions from Russia, where the prime minister, Dmitry Medvedev, said: "They are continuing to steal what has already been stolen." This was a phrase Lenin used to answer the allegation that the Bolsheviks were thieves. Russian officials have repeatedly compared the Cypriot bank levy to Soviet-era expropriation."For sure there is anger," said Marios Cosma, head of K Treppides, a firm that serves international clients, mainly rich Russians. "For the first time in Europe, you have a situation where depositors are being called to 'bail in'."While Cyprus' banking sector has exploded, other countries have even larger banking sectors relative to GDP. Malta's and Luxembourg's banking sectors are relatively larger, more than 20 times' GDP in the case of Luxembourg. Malta's finance minister wrote an article in the Malta Times expressing concern about what would happen if it encounters similar problems in the eurozone.In Cyprus there were calls for a referendum on the bailout package. "It is illegal and undemocratic," said Christos Tombazos, general secretary of the Pancyprian Federation of Labour. "We're talking about massive changes to the banking system. It should go to referendum for the Cypriot people to decide."Russian officials attempted to assuage fears over Russian investments on the Mediterranean island. Russian Commercial Bank, a wholly owned subsidiary of state-owned bank VTB, would "not be affected or its losses will be insignificant", said Igor Shuvalov, a deputy prime minister.The Bank of Cyprus is 9.7% owned by Dmitry Rybolovlev, a Russian based in Monaco whose wealth is estimated at $9.1bn according to Forbes.One Russian oligarch, Alexander Lebedev, played down the amount he stood to lose in Cyprus as no more than $10,000. "It's not worth talking about," he said. "Cyprus was always a transit jurisdiction – money would pass through and then go to Lithuania, Latvia, Belize, Switzerland, everywhere. There are plenty of ways [to avoid capital controls], they can split accounts."The multimillionaire owner of the Evening Standard and Independent expressed doubts that capital controls to be imposed by the Cypriot government in order to stem a bank run would work. "Certain schemes can be put into place," Lebedev said by telephone from Moscow. "This is how Cyprus was making money."CyprusEurozone crisisStock marketsSavingsFinancial crisisEconomicsEuropeBankingFinancial sectorEuropean UnionEuropean monetary unionEuropean banksEuroHelena SmithMiriam ElderIan TraynorJill Treanorguardian.co.uk © 2013 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds

22 марта 2013, 04:35

Guest Post: The “Fracking” Revolution Comes to China

Submitted by Elliot Brennan of The Diplomat, As shale gas fever sweeps through Beijing, analysts are looking at the costs and benefits of extracting what is increasingly a controversial source of energy. But for China, with its growing middle class, the immediate and long-term demand for energy has the potential to spark a revolution in shale gas before sufficient and safe technological know-how and regulations are developed. A very vocal debate continues to rage in the U.S. and Europe as to the environmental consequences of shale gas extraction. Meanwhile, China’s National Oil Companies (NOCs) continue to purchase and buy into North American oil and gas companies with specific expertise in shale gas extraction. For better or worse, China’s shale gas revolution looks set to be thrust into the public spotlight, both at home and abroad. Extracting shale gas is tricky. Shale, a sedimentary rock that is typically highly porous and has low permeability, traps hydrocarbons as it is formed. To remove the gas, shale formations must be stimulated, most commonly using hydraulic fracturing, or “fracking.” The technique involves pumping water, sand and chemicals at high pressure into the shale formation, cracking the rock and allowing the gas to be released to the surface. The 1 to 3 million gallons of water that are pumped into the shale formation must then either be recycled or pumped into water disposal wells in subsurface rock formations. In addition to these skill-intensive practices, the extraction process also demands three-dimensional seismic surveying, which evaluates potential subsurface resources, and horizontal drillingtechnology. Both demand expertise and experience, yet the capability of most companies outside of North America, including China’s National Oil Companies (NOCs), to safely and effectively perform such high-tech extraction is limited. The emergence of shale gas is a game changer. Countries that have traditionally relied on hydrocarbon exports for political clout (the Persian Gulf, Russia, Venezuela) will inevitably lose some of their petro power. Europe could become less energy dependent on Russian supply by importing liquid natural gas (LNG) from North America and by exploiting the potentially significant shale gas deposits in Poland and other countries. Australia, which has significant deposits and much of the pre-existing infrastructure to begin extraction, could see its clout in the energy politics of the region increase– forcing a significant redraft of Canberra’s “Australia in the Asian Century” White Paper. In effect, the “shale revolution” signals the end of the peak oil debate. New technology means new resources, which in turn could mean a new geopolitical map. However the mere presence of the resources doesn’t mean that their extraction in the short-term is viable, a problem China knows all too well. China’s oil fields are drying up. The International Energy Agency’s (IAE) World Energy Outlook for 2010predicts China will import 79% of its oil by 2030, a figure that demonstrates the pressing need for China to develop new energy sources. Enter shale gas and the “unconventionals.” Estimates of China’s shale gas resources differ. China’s Ministry of Land and Resources estimates reserves of 886 trillion cubic feet (tcf), while the U.S. Energy Information Administration puts the country’s resources at 1,275 tcf. The upper estimates would mean China sits atop more shale gas than the U.S. and Canada combined. According to China’s 12th Five-Year Plan, by 2015 China should be extracting 6.5 billion cubic meters of shale gas per year, with a view of producing 100 billion cubic meters by 2020. China’s goal is to meet 10 percent of the country’s energy demands from shale gas the same year. To successfully meet the goal, China’s oil and gas industry needs to bridge its large knowledge deficit. Despite some progress, recent successes in domestic extraction technology have been modest. Under the Shale Gas Development Plan for 2011-2015, shale gas has been labeled by the Ministry of Land and Resources as a separate mineral from conventional hydrocarbons. This move frees shale resources from the clutches of “the big three;” Chinese state-owned majors – China National Petroleum Corporation (CNPC), China Petroleum & Chemical Corporation (Sinopec) and China National Offshore Oil Corporation (CNOOC) – allowing Beijing to redistribute exploration contracts. Importantly, the move encourages competition among state-owned majors, local enterprises and foreign companies. China’s NOCs, while not state-run, benefit from state financing. Their capital flows during the global downturn in 2008 gave them the flexibility to expand globally. For China’s NOCs, establishing partnerships with other international oil companies allows them to diversify risks and gain technical know-how through the supply chain. At home and abroad China is making waves. The opening of a recent tender to foreign companies demonstrates the extent to which the often go-it-alone Chinese Communist Party feels it needs to secure a rapid and successful energy boom. Royal Dutch Shell, Chevron, Exxon Mobil and British Petroleum are alljointly surveying the key provinces of Sichuan and Guizhou with local companies. As part of the new tender, other joint ventures are expected to follow. Flush with state financing, China’s NOCs have in recent years begun buying up stakes in North American energy companies and their subsidiaries. Some of their recent buy-ins have been the purchase of Nexen and a stake in Devon Energy Corp, one of the founders of shale gas extraction. Such purchases allow China’s NOCs to absorb expertise. While this in itself isn’t enough to meet their energy needs, it is a step toward building capacity for China’s NOCs in shale gas exploration and extraction. China’s NOCs have been known to employ a “market-for-resources strategy,” whereby access to China’s market is granted to a resource holder in exchange for imports of resources from that country. This now looks to be morphing into a “market-for-know-how strategy.” In the early stages of coal bed methane exploration in China, foreign groups contributed 70 percent of the funding. With already significant foreign involvement, the shale gas industry looks set to emulate this model. However, the all-important extraction process of shale gas, hydraulic fracturing, just as its name suggests, needs water – and large amounts of it. So while shale could provide energy, it will require large volumes of water that will be costly both to consume and to recycle. Water scarcity remains a key concern for the Chinese government, while water pollution is an increasing worry for the Chinese public. One recent report noted that already “up to 40 percent of China’s rivers were seriously polluted” and “20 percent were so polluted their water quality was rated too toxic even to come into contact with.” Experts warn that China will face growing water shortages in coming years. Water-intensive industries such as mining are competing for increasingly scarce water sources. Low rainfall in the northwest of the country, where much of the shale is believed to be, means these areas will have to rely on limited and finite groundwater. In the face of these shortages, China established a special 25 million USD fund for a cloud seeding program in 2012 to operate in “areas prone to drought and haze.” Water can be transported into China’s northwest via pipeline but that would be costly and require significant new infrastructure, such as desalination plants and pipelines that would likely need to stretch across the country for thousands of kilometers – a similar feat to the 4,200 km Xijiang to Shanghai gas pipeline. Shale gas has approximately half the carbon content of coal. For China, the replacement of coal for gas in power generation could reduce emissions and pollution.  It would kill two birds with one big stone, as criticism grows over the country’s pollution levels both in air and water. However, some warn that shale gas may also reduce investment in renewable energy sources. In the U.S., environmental concerns dominate the debate. Public concern over water contamination and the release of harmful gases during shale gas extraction are gaining increasing media attention. This has been exacerbated by claims that research commissioned by industry-friendly lobby groups in the U.S., such as the American Petroleum Institute and the American Natural Gas Alliance, have muddied the water on the environmental impact of shale gas extraction. However, according to an IAE report, Golden Rules for a Golden Age of Gas, the environmental risks inherent in the process can be easily mitigated. The report outlines the “golden rules” required to address the environmental and social impact of developments in unconventional gas. It predicts that major risks can be decreased and safety improved if the cost of drilling and completing of a shale gas well is increased by 7 percent. A dozen or more chemicals may be added to the water and sand pumped into a shale-gas well, including radioactive tracers that help assess the formation and relevant fractures. While these tracers are strictly monitored under guidelines handed down by the Nuclear Regulatory Commission in the U.S., in China the regulations may be less stringent. In addition, other radioactive material may be dislodged in the fracking process and may have to be disposed of from flowback water. If strict regulations are not in place to seal the well from leaching, aquifers and ground water may become contaminated by run-off chemicals, methane or radioactive minerals displaced in the process. A 2011 US Environmental Protection Agency (EPA) report suggests that fracking may have resulted in the contamination of ground water. Recent and successful protests in China to stop the construction of a chemical plant in Ningbo demonstrate growing public concern about some government-backed developments. The October 2012 protests followed other victories to stop the construction of petrochemical plants in Xiamen and Dalian. In Dalian, some 10,000 protesters took to the streets. With a growing middle-class, increasing internet and social media access, and more public involvement and activism in key local concerns, the government and local authorities will likely have to be accommodating of public displeasure in order to maintain stability as China grows. A Tiananmen-style alternative appears unlikely as it could backfire, both at home and abroad. If the current hype proves correct and gas prices remain strong, China’s shale gas could be just the energy boom that Beijing seeks. It could allow China to meet its ambitious growth targets. As many commentators have suggested, however, shale gas may prove less of a blessing and more of a “resource curse,” spelling environmental disaster and nationwide instability. Either way, as Sino-American partnerships are forged and shale gas extraction in China ventures into unchartered waters, one thing is certain: The world will be watching.

21 марта 2013, 21:10

Under CISPA, Who Can Get Your Data?

Rainey ReitmanEFF Under CISPA, companies can collect your information in order to "protect the rights and property" of the company, and then share that information with third parties, including the government, so long as it is for "cybersecurity purposes." Companies aren't required to strip out personally identifiable information from the data they give to the government, and the government can then use the information for purposes wholly unrelated to cybersecurity – such as "national security," a term the bill leaves undefined. One question we sometimes get is: Under CISPA, which government agencies can receive this data? For example, could the FBI, NSA, or Immigration and Customs Enforcement receive data if CISPA were to pass? The answer is yes. Any government agency could receive data from companies if this were to pass, meaning identifiable data could be flowing to the Bureau of Alcohol, Tobacco, Firearms and Explosives, the National Security Agency, or even the Food and Drug Administration. Below is a list of agencies that could get your data under CISPA (Thanks, Wikipedia!). Note that this is just agencies we've identified; it's possible there are even more we haven't listed here.Find this offensive and deeply concerning? Email Congress today to oppose CISPA. google_ad_client = "pub-1897954795849722"; /* 468x60, created 6/30/10 */ google_ad_slot = "8230781418"; google_ad_width = 468; google_ad_height = 60; Under CISPA, which government agencies can get your data? Executive Office of the PresidentAgencies within the Executive Office of the President: Council of Economic Advisers Council on Environmental Quality Domestic Policy Council National Economic Council National Security Council Office of Administration Office of Faith-Based and Neighborhood Partnerships Office of Management and Budget Office of National AIDS Policy Office of National Drug Control Policy Office of Intergovernmental Affairs and Public Engagement Office of Science and Technology Policy Office of the President Office of the First Lady Office of the First Children Office of the Vice President Office of the Second Lady Office of the Second Children President's Economic Recovery Advisory Board President's Intelligence Oversight Board President's Intelligence Advisory Board United States Trade Representative White House Office White House Military OfficeUnited States Department of AgricultureAgencies within the Department of Agriculture: Agricultural Marketing Service Agricultural Research Service Animal and Plant Health Inspection Service Center for Nutrition Policy and Promotion Economic Research Service Farm Service Agency Commodity Credit Corporation Food and Nutrition Service Food Safety and Inspection Service Foreign Agricultural Service Forest Service Grain Inspection, Packers and Stockyards Administration Marketing and Regulatory Programs National Agricultural Statistics Service National Institute of Food and Agriculture 4-H Natural Resources Conservation Service Risk Management Agency Federal Crop Insurance Corporation Rural Business and Cooperative Programs Office of Rural Development Research, Education and Economics Rural Housing Service Rural Utilities ServiceUnited States Department of CommerceAgencies within the Department of Commerce: Census Bureau Bureau of Economic Analysis Bureau of Industry and Security Economic Development Administration Economics and Statistics Administration Export Enforcement Import Administration International Trade Administration Office of Travel and Tourism Industries Invest in America Manufacturing and Services Marine and Aviation Operations Market Access and Compliance Minority Business Development Agency National Oceanic and Atmospheric Administration NOAA Commissioned Corps National Environmental Satellite, Data, and Information Service National Marine Fisheries Service National Oceanic Service National Weather Service National Telecommunications and Information Administration Patent and Trademark Office National Institute of Standards and Technology National Technical Information Service Trade Promotion and the U.S. And Foreign Commercial ServiceUnited States Department of DefenseAgencies within the Department of Defense: Department of the Army United States Army Army Intelligence and Security Command Army Corps of Engineers Department of the Navy United States Navy Office of Naval Intelligence U.S. Naval Academy Marine Corps Marine Corps Intelligence Activity Department of the Air Force United States Air Force Civil Air Patrol Air Force Intelligence, Surveillance and Reconnaissance Agency Joint Chiefs of Staff J-2 Intelligence National Guard Bureau Natural Disaster and Disaster Help Program J-2 Intelligence Directorate Air National Guard Army National Guard America Citizen Militia America Citizen Militia Intelligence Defense Advanced Research Projects Agency Defense Commissary Agency Defense Contract Audit Agency Defense Contract Management Agency Defense Finance and Accounting Service Defense Information Systems Agency Defense Intelligence Agency Defense Logistics Agency Defense Security Cooperation Agency Defense Security Service Defense Technical Information Center Defense Threat Reduction Agency Missile Defense Agency National Security Agency Central Security Service National Reconnaissance Office National Geospatial-Intelligence Agency Naval Criminal Investigative Service Pentagon Force Protection Agency United States Pentagon Police American Forces Information Service Defense Prisoner of War/Missing Personnel Office Department of Defense Education Activity Department of Defense Dependents Schools Defense Human Resources Activity Office of Economic Adjustment TRICARE Management Activity Washington Headquarters Services West Point Military AcademyUnited States Department of EducationAgencies within the Department of Education: Federal Student Aid Institute of Education Sciences National Center for Education Statistics National Center for Education Evaluation and Regional Assistance Education Resources Information Center National Center for Education Research National Center for Special Education Research National Assessment Governing Board National Assessment of Educational Progress Office for Civil Rights Office of Elementary and Secondary Education Office of Safe and Healthy Students Office of Postsecondary Education Office of Special Education and Rehabilitative Services National Institute on Disability and Rehabilitation Research Office of Special Education Programs Rehabilitation Services Administration Special institutions American Printing House for the Blind National Technical Institute for the Deaf Gallaudet University Office of Vocational and Adult EducationUnited States Department of EnergyList of agencies within the Department of Energy: Energy Information Administration Federal Energy Regulatory Commission National Laboratories & Technology Centers University Corporation for Atmospheric Research National Nuclear Security Administration Power Marketing Administrations: Bonneville Power Administration Southeastern Power Administration Southwestern Power Administration Western Area Power AdministrationUnited States Department of Health and Human ServicesAgencies within the Department of Health and Human Services: Administration on Aging Administration for Children and Families Administration for Children, Youth and Families Agency for Healthcare Research and Quality Centers for Disease Control and Prevention National Institute for Occupational Safety and Health Epidemic Intelligence Service National Center for Health Statistics Centers for Medicare and Medicaid Services Food and Drug Administration Reagan-Udall Foundation Health Resources and Services Administration Patient Affordable Healthcare Care Act Program {to be implemented fully in 2014} Independent Payment Advisory Board Indian Health Service National Institutes of Health National Health Intelligence Service Public Health Service Federal Occupational Health Office of the Surgeon General United States Public Health Service Commissioned Corps Substance Abuse and Mental Health Services AdministrationUnited States Department of Homeland Security  Agencies Federal Emergency Management Agency FEMA Corps U.S. Fire Administration National Flood Insurance Program Federal Law Enforcement Training Center Transportation Security Administration United States Citizenship and Immigration Services United States Coast Guard (Transfers to Department of Defense during declared war or national emergency) Coast Guard Intelligence National Ice Center United States Ice Patrol United States Customs and Border Protection Office of Air and Marine Office of Border Patrol U.S. Border Patrol Border Patrol Intelligence Office of Field Operations United States Immigration and Customs Enforcement United States Secret Service Secret Service Intelligence ServiceOffices Domestic Nuclear Detection Office Office of Health Affairs Office of Component Services Office of International Affairs and Global Health Security Office of Medical Readiness Office of Weapons of Mass Destruction and Biodefense Office of Intelligence and Analysis Office of Operations Coordination Office of Policy Homeland Security Advisory Council Office of International Affairs Office of Immigration Statistics Office of Policy Development Office for State and Local Law Enforcement Office of Strategic Plans Private Sector OfficeManagement Directorate for ManagementNational Protection and Programs National Protection and Programs Directorate Federal Protective Service Office of Cybersecurity and Communications National Communications System National Cyber Security Division United States Computer Emergency Readiness Team Office of Emergency Communications Office of Infrastructure Protection Office of Risk Management and Analysis United States Visitor and Immigrant Status Indicator Technology (US-VISIT)Science and Technology Science and Technology Directorate Environmental Measurements LaboratoryPortfolios Innovation/Homeland Security Advanced Research Projects Agency Office of Research Office of National Laboratories Office of University Programs Program Executive Office, Counter Improvised Explosive Device Office of Transition Commercialization Office Long Range Broad Agency Announcement Office Product Transition Office Safety Act Office Technology Transfer OfficeDivisions Border and Maritime Security Division Chemical and Biological Division Command, Control and Interoperability Division Explosives Division Human Factors Division Infrastructure/Geophysical DivisionOffices and Institutes Business Operations Division Executive Secretariat Office Human Capital Office Key Security Office Office of the Chief Administrative Officer Office of the Chief Information Officer Planning and Management Corporate Communications Division Interagency and First Responders Programs Division International Cooperative Programs Office Operations Analysis Division Homeland Security Studies and Analysis Institute Homeland Security Systems Engineering and Development Institute Strategy, Policy and Budget Division Special Programs Division Test & Evaluation and Standards DivisionUnited States Department of Housing and Urban DevelopmentAgenciesFederal Housing Administration Federal Housing Finance AgencyOffices Center for Faith-Based and Neighborhood Partnerships (HUD) Departmental Enforcement Center Office of Community Planning and Development Office of Congressional and Intergovernmental Relations Office of Equal Employment Opportunity Office of Fair Housing and Equal Opportunity Office of Field Policy and Management Office of the General Counsel Office of Healthy Homes and Lead Hazard Control Office of Hearings and Appeals Office of Labor Relations Office of Policy Development and Research Office of Public Affairs Office of Public and Indian Housing Office of Small and Disadvantaged Business Utilization Office of Sustainable Housing and CommunitiesCorporation Government National Mortgage Association (Ginnie Mae)United States Department of the Interior  Agencies: Bureau of Indian Affairs Bureau of Land Management Bureau of Reclamation Fish and Wildlife Service Bureau of Ocean Energy Management (formerly Minerals Management Service) Bureau of Safety and Environmental Enforcement (formerly Minerals Management Service) National Park Service Office of Insular Affairs Office of Surface Mining National Mine Map Repository United States Geological SurveyUnited States Department of Justice  Agencies: Antitrust Division Asset Forfeiture Program Bureau of Alcohol, Tobacco, Firearms and Explosives Civil Division Civil Rights Division Community Oriented Policing Services Community Relations Service Criminal Division Diversion Control Program Drug Enforcement Administration Environment and Natural Resources Division Executive Office for Immigration Review Executive Office for Organized Crime Drug Enforcement Task Forces Executive Office for United States Attorneys Executive Office for United States Trustees Federal Bureau of Investigation Federal Bureau of Prisons UNICOR Foreign Claims Settlement Commission INTERPOL - United States National Central Bureau Justice Management Division National Crime Information Center National Drug Intelligence Center National Institute of Corrections National Security Division Office of the Associate Attorney General Office of the Attorney General Office of Attorney Recruitment and Management Office of the Chief Information Officer Office of the Deputy Attorney General Office of Dispute Resolution Office of the Federal Detention Trustee Office of Information Policy Office of Intergovernmental and Public Liaison Office of Intelligence and Analysis Office of Justice Programs Bureau of Justice Assistance Bureau of Justice Statistics Community Capacity Development Office National Criminal Justice Reference ServiceNational Institute of Justice Office of Juvenile Justice and Delinquency Prevention Office for Victims of Crime Office of Legal Counsel Office of Legal Policy Office of Legislative Affairs Office of the Pardon Attorney Office of Privacy and Civil Liberties Office of Professional Responsibility Office of Public Affairs Office of Sex Offender Sentencing, Monitoring, Apprehending, Registering and Tracking Office of the Solicitor General Office of Special Counsel Office of Tribal Justice Office on Violence Against Women Professional Responsibility Advisory Office Tax Division United States Attorneys United States Marshals United States Parole Commission United States Trustee ProgramUnited States Department of Labor  Agencies and Bureaus Bureau of International Labor Affairs Bureau of Labor Statistics Center for Faith-Based and Neighborhood Partnerships (DOL) Employee Benefits Security Administration Employment and Training Administration Job Corps Mine Safety and Health Administration Occupational Safety and Health Administration Pension Benefit Guaranty Corporation Veterans' Employment and Training Service Wage and Hour Division Women's BureauBoards Administrative Review Board Benefits Review Board Employees' Compensation Appeals BoardOffices Office of Administrative Law Judges Office of the Assistant Secretary for Administration and Management Office of the Assistant Secretary for Policy Office of the Chief Financial Officer Office of the Chief Information Officer Office of Congressional and Intergovernmental Affairs Office of Disability Employment Policy Office of Federal Contract Compliance Programs Office of Labor-Management Standards Office of the Solicitor Office of Worker's Compensation Program Ombudsman for the Energy Employees Occupational Illness Compensation ProgramUnited States Department of State  Agencies and Bureaus National Council for the Traditional ArtsReporting to the Secretary Bureau of Intelligence and Research Bureau of Legislative Affairs Office of the Legal AdviserReporting to the Deputy Secretary for Management and Resources Executive Secretariat Office of the Chief of Protocol Office for Civil Rights Office of the Coordinator for Counterterrorism Office of the United States Global AIDS Coordinator Office of Global Criminal Justice Policy Planning 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09 марта 2013, 22:58

"What Looks Like A Rally May Just Be The Elites Passing Money Among Themselves"

Authored by Chrstopher Caldwell, originally posted at The FT, Why are citizens of the developed world looking a gift horse in the mouth? The Dow Jones Industrial Average rallied beyond 14,300 points this week, passing the highs it reached in 2007 just as the world economy was starting to wobble. Sure, there are reasons to be sceptical about the Dow. It is weighted, rather arbitrarily, by share price. But at least it is a quantifiable index of something. We look at 1954 – the year the Dow returned to its 1928 pre-depression high – as marking an epoch. And yet, this week, investors and pundits warned us not to read too much into it. They have a point. In the half-decade since the western financial system almost collapsed, the relationship between stock markets and the “real” economy has seemed more tenuous. The Dow owes some of its robustness to expectations of a strong Friday employment report. Then again, European stocks rose to a four-year high following a rise in unemployment to 11.9 per cent. Other solid-looking economic correlations are melting into air. The US property market rebounded in 2012, according to the Case-Shiller index, but the Yale economist who devised it, Robert Shiller, warned in January: “Any short-run increase in inflation-adjusted home prices has been virtually worthless as an indicator of where home prices will be going over the next five or more years.” Part of the reason people get less giddy about the Dow than they did five years ago is because they have learnt a bit about inequality. They suspect, more than they used to, that significant developments in the economy go on over their heads. What looks like a recovery, a rally or an increase in consumer confidence may just be the effect of elites passing money among themselves. Most western leaders hold power today because they weren’t in power during the bleakest days of September 2008. (Germany is the important exception.) They claimed a mandate for radical action, but the economy stumped them. So they have been radical on non-economic matters instead: Barack Obama with healthcare reform, David Cameron with gay marriage and Ireland’s Enda Kenny with abortion. If you were to examine their rhetoric of a few years ago, you might suspect these initiatives were hocus-pocus. Their economic policies don’t differ much from those of their predecessors. The West’s leaders are vulnerable to the accusation that the policies they lay out on behalf of society as a whole are benefiting only a small group. Joseph Stiglitz, the Nobel Prize winning economist, accuses the Obama administration of trying to rebuild the economy from the top down, not the bottom up. The Occupy movement and the Spanish indignados filled squares with young people eager to make a similar point. Last summer the leftwing Syriza movement won a quarter of the seats in the Greek parliament. In effect, party leader Alexis Tsipras asked Greeks not to take seriously the warnings that Greece would be cut off from the European financial system if it rejected austerity, arguing that they were cut off from the fruits of the system anyway. The strong performance of Beppe Grillo in Italy’s elections is a sign other countries’ voters are willing to call the system’s bluff. Remedying inequality is harder than it looks. Unless you want to govern like a communist, you must work with existing institutions and social customs. That means you can wind up making society less equal. In the US, the first-time homebuyer tax credit, broached by George W. Bush and continued by Mr Obama, lured more people into the housing market. Those who bought in poor states – where property was hard-hit – generally fared badly, sometimes seeing their house values fall by more than the value of the credit. People who bought in wealthier markets got their good investments subsidised. Similarly, in the latest issue of Foreign Affairs magazine, the intellectual historian of capitalism Jerry Muller argues that the age-old Washington remedy for inequality – “investing” in education – may actually exacerbate inequality. Prof Muller quotes the late political scientist Edward Banfield in The Unheavenly City Revisited: “All education favours the middle and upper-class child, because to be middle or upper class is to have qualities that make one particularly educable.” Education is a good that benefits the already well-positioned, rather as stimulus tends to benefit the cronies of those in government. A sense that some, but not all, are benefiting from the stock market’s rise is what has muted the response to this week’s news. The US Federal Reserve has added more than $2tn to its balance sheet since 2007. In general, that tide of liquidity ought to lift all boats in the harbour. But when the harbour is an equity market, you won’t find your yacht lifted unless you own one.

02 марта 2013, 02:05

Warren Buffetts 2012 Letter to Berkshire Hathaway Shareholders - Feb 28 2013

Berkshire’s Corporate Performance vs. the S&P 500 Annual Percentage Change Year in Per-Share Book Value of Berkshire (1) in S&P 500 with Dividends Included (2) Relative Results (1)-(2) 1965 ........................................................ 23.8 10.0 13.8 1966 ........................................................ 20.3 (11.7) 32.0 1967 ........................................................ 11.0 30.9 (19.9) 1968 ........................................................ 19.0 11.0 8.0 1969 ........................................................ 16.2 (8.4) 24.6 1970 ........................................................ 12.0 3.9 8.1 1971 ........................................................ 16.4 14.6 1.8 1972 ........................................................ 21.7 18.9 2.8 1973 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.7 (14.8) 19.5 1974 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.5 (26.4) 31.9 1975 ........................................................ 21.9 37.2 (15.3) 1976 ........................................................ 59.3 23.6 35.7 1977 ........................................................ 31.9 (7.4) 39.3 1978 ........................................................ 24.0 6.4 17.6 1979 ........................................................ 35.7 18.2 17.5 1980 ........................................................ 19.3 32.3 (13.0) 1981 ........................................................ 31.4 (5.0) 36.4 1982 ........................................................ 40.0 21.4 18.6 1983 ........................................................ 32.3 22.4 9.9 1984 ........................................................ 13.6 6.1 7.5 1985 ........................................................ 48.2 31.6 16.6 1986 ........................................................ 26.1 18.6 7.5 1987 ........................................................ 19.5 5.1 14.4 1988 ........................................................ 20.1 16.6 3.5 1989 ........................................................ 44.4 31.7 12.7 1990 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4 (3.1) 10.5 1991 ........................................................ 39.6 30.5 9.1 1992 ........................................................ 20.3 7.6 12.7 1993 ........................................................ 14.3 10.1 4.2 1994 ........................................................ 13.9 1.3 12.6 1995 ........................................................ 43.1 37.6 5.5 1996 ........................................................ 31.8 23.0 8.8 1997 ........................................................ 34.1 33.4 0.7 1998 ........................................................ 48.3 28.6 19.7 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.5 21.0 (20.5) 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5 (9.1) 15.6 2001 ........................................................ (6.2) (11.9) 5.7 2002 ........................................................ 10.0 (22.1) 32.1 2003 ........................................................ 21.0 28.7 (7.7) 2004 ........................................................ 10.5 10.9 (0.4) 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4 4.9 1.5 2006 ........................................................ 18.4 15.8 2.6 2007 ........................................................ 11.0 5.5 5.5 2008 ........................................................ (9.6) (37.0) 27.4 2009 ........................................................ 19.8 26.5 (6.7) 2010 ........................................................ 13.0 15.1 (2.1) 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.6 2.1 2.5 2012 ........................................................ 14.4 16.0 (1.6) Compounded Annual Gain – 1965-2012 ........................... 19.7% 9.4% 10.3 Overall Gain – 1964-2012 ....................................... 586,817% 7,433% Notes: Data are for calendar years with these exceptions: 1965 and 1966, year ended 9/30; 1967, 15 months ended 12/31. Starting in 1979, accounting rules required insurance companies to value the equity securities they hold at market rather than at the lower of cost or market, which was previously the requirement. In this table, Berkshire’s results through 1978 have been restated to conform to the changed rules. In all other respects, the results are calculated using the numbers originally reported. The S&P 500 numbers are pre-tax whereas the Berkshire numbers are aftertax. If a corporation such as Berkshire were simply to have owned the S&P 500 and accrued the appropriate taxes, its results would have lagged the S&P 500 in years when that index showed a positive return, but would have exceeded the S&P 500 in years when the index showed a negative return. Over the years, the tax costs would have caused the aggregate lag to be substantial. 2 BERKSHIRE HATHAWAY INC. To the Shareholders of Berkshire Hathaway Inc.: In 2012, Berkshire achieved a total gain for its shareholders of $24.1 billion. We used $1.3 billion of that to repurchase our stock, which left us with an increase in net worth of $22.8 billion for the year. The per-share book value of both our Class A and Class B stock increased by 14.4%. Over the last 48 years (that is, since present management took over), book value has grown from $19 to $114,214, a rate of 19.7% compounded annually.* A number of good things happened at Berkshire last year, but let’s first get the bad news out of the way. Š When the partnership I ran took control of Berkshire in 1965, I could never have dreamed that a year in which we had a gain of $24.1 billion would be subpar, in terms of the comparison we present on the facing page. But subpar it was. For the ninth time in 48 years, Berkshire’s percentage increase in book value was less than the S&P’s percentage gain (a calculation that includes dividends as well as price appreciation). In eight of those nine years, it should be noted, the S&P had a gain of 15% or more. We do better when the wind is in our face. To date, we’ve never had a five-year period of underperformance, having managed 43 times to surpass the S&P over such a stretch. (The record is on page 103.) But the S&P has now had gains in each of the last four years, outpacing us over that period. If the market continues to advance in 2013, our streak of five year wins will end. One thing of which you can be certain: Whatever Berkshire’s results, my partner Charlie Munger, the company’s Vice Chairman, and I will not change yardsticks. It’s our job to increase intrinsic business value – for which we use book value as a significantly understated proxy – at a faster rate than the market gains of the S&P. If we do so, Berkshire’s share price, though unpredictable from year to year, will itself outpace the S&P over time. If we fail, however, our management will bring no value to our investors, who themselves can earn S&P returns by buying a low-cost index fund. Charlie and I believe the gain in Berkshire’s intrinsic value will over time likely surpass the S&P returns bya small margin. We’re confident of that because we have some outstanding businesses, a cadre of terrific operating mangers and a shareholder-oriented culture. Our relative performance, however, is almost certain to be better when the market is down or flat. In years when the market is particularly strong, expect us to fall short. Š The second disappointment in 2012 was my inability to make a major acquisition. I pursued a couple of elephants, but came up empty-handed. * All per-share figures used in this report apply to Berkshire’s A shares. Figures for the B shares are 1/1500th of those shown for A. 3Our luck, however, changed early this year. In February, we agreed to buy 50% of a holding company that will own all of H. J. Heinz. The other half will be owned by a small group of investors led by Jorge Paulo Lemann, a renowned Brazilian businessman and philanthropist. We couldn’t be in better company. Jorge Paulo is a long-time friend of mine and an extraordinary manager. His group and Berkshire will each contribute about $4 billion for common equity in the holding company. Berkshire will also invest $8 billion in preferred shares that pay a 9% dividend. The preferred has two other features that materially increase its value: at some point it will be redeemed at a significant premium price and the preferred also comes with warrants permitting us to buy 5% of the holding company’s common stock for a nominal sum. Our total investment of about $12 billion soaks up much of what Berkshire earned last year. But we still have plenty of cash and are generating more at a good clip. So it’s back to work; Charlie and I have again donned our safari outfits and resumed our search for elephants. Now to some good news from 2012: Š Last year I told you that BNSF, Iscar, Lubrizol, Marmon Group and MidAmerican Energy – our five most profitable non-insurance companies – were likely to earn more than $10 billion pre-tax in 2012. They delivered. Despite tepid U.S. growth and weakening economies throughout much of the world, our “powerhouse five” had aggregate earnings of $10.1 billion, about $600 million more than in 2011. Of this group, only MidAmerican, then earning $393 million pre-tax, was owned by Berkshire eight years ago. Subsequently, we purchased another three of the five on an all-cash basis. In acquiring the fifth, BNSF, we paid about 70% of the cost in cash, and for the remainder, issued shares that increased the amount outstanding by 6.1%. Consequently, the $9.7 billion gain in annual earnings delivered Berkshire by the five companies has been accompanied by only minor dilution. That satisfies our goal of not simply growing, but rather increasing per-share results. Unless the U.S. economy tanks – which we don’t expect – our powerhouse five should again deliver higher earnings in 2013. The five outstanding CEOs who run them will see to that. Š Though I failed to land a major acquisition in 2012, the managers of our subsidiaries did far better. We had a record year for “bolt-on” purchases, spending about $2.3 billion for 26 companies that were melded into our existing businesses. These transactions were completed without Berkshire issuing any shares. Charlie and I love these acquisitions: Usually they are low-risk, burden headquarters not at all, and expand the scope of our proven managers. Š Our insurance operations shot the lights out last year. While giving Berkshire $73 billion of free money to invest, they also delivered a $1.6 billion underwriting gain, the tenth consecutive year of profitable underwriting. This is truly having your cake and eating it too. GEICO led the way, continuing to gobble up market share without sacrificing underwriting discipline. Since 1995, when we obtained control, GEICO’s share of the personal-auto market has grown from 2.5% to 9.7%. Premium volume meanwhile increased from $2.8 billion to $16.7 billion. Much more growth lies ahead. The credit for GEICO’s extraordinary performance goes to Tony Nicely and his 27,000 associates. And to that cast, we should add our Gecko. Neither rain nor storm nor gloom of night can stop him; the little lizard just soldiers on, telling Americans how they can save big money by going to GEICO.com. When I count my blessings, I count GEICO twice. 4Š Todd Combs and Ted Weschler, our new investment managers, have proved to be smart, models of integrity, helpful to Berkshire in many ways beyond portfolio management, and a perfect cultural fit. We hit the jackpot with these two. In 2012 each outperformed the S&P 500 by double-digit margins. They left me in the dust as well. Consequently, we have increased the funds managed by each to almost $5 billion (some of this emanating from the pension funds of our subsidiaries). Todd and Ted are young and will be around to manage Berkshire’s massive portfolio long after Charlie and I have left the scene. You can rest easy when they take over. Š Berkshire’s yearend employment totaled a record 288,462 (see page 106 for details), up 17,604 from last year. Our headquarters crew, however, remained unchanged at 24. No sense going crazy. Š Berkshire’s “Big Four” investments – American Express, Coca-Cola, IBM and Wells Fargo – all had good years. Our ownership interest in each of these companies increased during the year. We purchased additional shares of Wells Fargo (our ownership now is 8.7% versus 7.6% at yearend 2011) and IBM (6.0% versus 5.5%) Meanwhile, stock repurchases at Coca-Cola and American Express raised our percentage ownership. Our equity in Coca-Cola grew from 8.8% to 8.9% and our interest at American Express from 13.0% to 13.7%. Berkshire’s ownership interest in all four companies is likely to increase in the future. Mae West had it right: “Too much of a good thing can be wonderful.” The four companies possess marvelous businesses and are run by managers who are both talented and shareholder-oriented. At Berkshire we much prefer owning a non-controlling but substantial portion of a wonderful business to owning 100% of a so-so business. Our flexibility in capital allocation gives us a significant advantage over companies that limit themselves only to acquisitions they can operate. Going by our yearend share count, our portion of the “Big Four’s” 2012 earnings amounted to $3.9 billion. In the earnings we report to you, however, we include only the dividends we receive – about $1.1 billion. But make no mistake: The $2.8 billion of earnings we do not report is every bit as valuable to us as what we record. The earnings that the four companies retain are often used for repurchases – which enhance our share of future earnings – and also for funding business opportunities that are usually advantageous. Over time we expect substantially greater earnings from these four investees. If we are correct, dividends to Berkshire will increase and, even more important, so will our unrealized capital gains (which, for the four, totaled $26.7 billion at yearend). Š There was a lot of hand-wringing last year among CEOs who cried “uncertainty” when faced with capitalallocation decisions (despite many of their businesses having enjoyed record levels of both earnings and cash). At Berkshire, we didn’t share their fears, instead spending a record $9.8 billion on plant and equipment in 2012, about 88% of it in the United States. That’s 19% more than we spent in 2011, our previous high. Charlie and I love investing large sums in worthwhile projects, whatever the pundits are saying. We instead heed the words from Gary Allan’s new country song, “Every Storm Runs Out of Rain.” We will keep our foot to the floor and will almost certainly set still another record for capital expenditures in 2013. Opportunities abound in America. ************ A thought for my fellow CEOs: Of course, the immediate future is uncertain; America has faced the unknown since 1776. It’s just that sometimes people focus on the myriad of uncertainties that always exist while at other times they ignore them (usually because the recent past has been uneventful). 5American business will do fine over time. And stocks will do well just as certainly, since their fate is tied to business performance. Periodic setbacks will occur, yes, but investors and managers are in a game that is heavily stacked in their favor. (The Dow Jones Industrials advanced from 66 to 11,497 in the 20th Century, a staggering 17,320% increase that materialized despite four costly wars, a Great Depression and many recessions. And don’t forget that shareholders received substantial dividends throughout the century as well.) Since the basic game is so favorable, Charlie and I believe it’s a terrible mistake to try to dance in and out of it based upon the turn of tarot cards, the predictions of “experts,” or the ebb and flow of business activity. The risks of being out of the game are huge compared to the risks of being in it. My own history provides a dramatic example: I made my first stock purchase in the spring of 1942 when the U.S. was suffering major losses throughout the Pacific war zone. Each day’s headlines told of more setbacks. Even so, there was no talk about uncertainty; every American I knew believed we would prevail. The country’s success since that perilous time boggles the mind: On an inflation-adjusted basis, GDP per capita more than quadrupled between 1941 and 2012. Throughout that period, every tomorrow has been uncertain. America’s destiny, however, has always been clear: ever-increasing abundance. If you are a CEO who has some large, profitable project you are shelving because of short-term worries, call Berkshire. Let us unburden you. ************ In summary, Charlie and I hope to build per-share intrinsic value by (1) improving the earning power of our many subsidiaries; (2) further increasing their earnings through bolt-on acquisitions; (3) participating in the growth of our investees; (4) repurchasing Berkshire shares when they are available at a meaningful discount from intrinsic value; and (5) making an occasional large acquisition. We will also try to maximize results for you by rarely, if ever, issuing Berkshire shares. Those building blocks rest on a rock-solid foundation. A century hence, BNSF and MidAmerican Energy will continue to play major roles in the American economy. Insurance, moreover, will always be essential for both businesses and individuals – and no company brings greater resources to that arena than Berkshire. As we view these and other strengths, Charlie and I like your company’s prospects. Intrinsic Business Value As much as Charlie and I talk about intrinsic business value, we cannot tell you precisely what that number is for Berkshire shares (or, for that matter, any other stock). In our 2010 annual report, however, we laid out the three elements – one of which was qualitative – that we believe are the keys to a sensible estimate of Berkshire’s intrinsic value. That discussion is reproduced in full on pages 104-105. Here is an update of the two quantitative factors: In 2012 our per-share investments increased 15.7% to $113,786, and our per-share pre-tax earnings from businesses other than insurance and investments also increased 15.7% to $8,085. Since 1970, our per-share investments have increased at a rate of 19.4% compounded annually, and our per-share earnings figure has grown at a 20.8% clip. It is no coincidence that the price of Berkshire stock over the 42-year period has increased at a rate very similar to that of our two measures of value. Charlie and I like to see gains in both areas, but our strong emphasis will always be on building operating earnings. ************ Now, let’s examine the four major sectors of our operations. Each has vastly different balance sheet and income characteristics from the others. Lumping them together therefore impedes analysis. So we’ll present them as four separate businesses, which is how Charlie and I view them. Insurance Let’s look first at insurance, Berkshire’s core operation and the engine that has propelled our expansion over the years. Property-casualty (“P/C”) insurers receive premiums upfront and pay claims later. In extreme cases, such as those arising from certain workers’ compensation accidents, payments can stretch over decades. This collectnow, pay-later model leaves us holding large sums – money we call “float” – that will eventually go to others. Meanwhile, we get to invest this float for Berkshire’s benefit. Though individual policies and claims come and go,the amount of float we hold remains quite stable in relation to premium volume. Consequently, as our business grows, so does our float. And how we have grown, as the following table shows: Year Float (in $ millions) 1970 $ 39 1980 237 1990 1,632 2000 27,871 2010 65,832 2012 73,125 Last year I told you that our float was likely to level off or even decline a bit in the future. Our insurance CEOs set out to prove me wrong and did, increasing float last year by $2.5 billion. I now expect a further increase in 2013. But further gains will be tough to achieve. On the plus side, GEICO’s float will almost certainly grow. In National Indemnity’s reinsurance division, however, we have a number of run-off contracts whose float drifts downward. If we do experience a decline in float at some future time, it will be very gradual – at the outside no more than 2% in any year. If our premiums exceed the total of our expenses and eventual losses, we register an underwriting profit that adds to the investment income our float produces. When such a profit is earned, we enjoy the use of free money – and, better yet, get paid for holding it. That’s like your taking out a loan and having the bank pay you interest. Unfortunately, the wish of all insurers to achieve this happy result creates intense competition, so vigorous in most years that it causes the P/C industry as a whole to operate at a significant underwriting loss. This loss, in effect, is what the industry pays to hold its float. For example, State Farm, by far the country’s largest insurer and a well-managed company besides, incurred an underwriting loss in eight of the eleven years ending in 2011. (Their financials for 2012 are not yet available.) There are a lot of ways to lose money in insurance, and the industry never ceases searching for new ones. As noted in the first section of this report, we have now operated at an underwriting profit for ten consecutive years, our pre-tax gain for the period having totaled $18.6 billion. Looking ahead, I believe we will continue to underwrite profitably in most years. If we do, our float will be better than free money. So how does our attractive float affect the calculations of intrinsic value? When Berkshire’s book value is calculated, the full amount of our float is deducted as a liability, just as if we had to pay it out tomorrow and were unable to replenish it. But that’s an incorrect way to look at float, which should instead be viewed as a revolving fund. If float is both costless and long-enduring, which I believe Berkshire’s will be, the true value of this liability is dramatically less than the accounting liability. A partial offset to this overstated liability is $15.5 billion of “goodwill” that is attributable to our insurance companies and included in book value as an asset. In effect, this goodwill represents the price we paid for the floatgenerating capabilities of our insurance operations. The cost of the goodwill, however, has no bearing on its true value. For example, if an insurance business sustains large and prolonged underwriting losses, any goodwill asset carried on the books should be deemed valueless, whatever its original cost. 7 Fortunately, that’s not the case at Berkshire. Charlie and I believe the true economic value of our insurance goodwill – what we would happily pay to purchase an insurance operation producing float of similar quality – to be far in excess of its historic carrying value. The value of our float is one reason – a huge reason – why we believe Berkshire’s intrinsic business value substantially exceeds its book value. Let me emphasize once again that cost-free float is not an outcome to be expected for the P/C industry as a whole: There is very little “Berkshire-quality” float existing in the insurance world. In 37 of the 45 years ending in 2011, the industry’s premiums have been inadequate to cover claims plus expenses. Consequently, the industry’s overall return on tangible equity has for many decades fallen far short of the average return realized by American industry, a sorry performance almost certain to continue. A further unpleasant reality adds to the industry’s dim prospects: Insurance earnings are now benefitting from “legacy” bond portfolios that deliver much higher yields than will be available when funds are reinvested during the next few years – and perhaps for many years beyond that. Today’s bond portfolios are, in effect, wasting assets. Earnings of insurers will be hurt in a significant way as bonds mature and are rolled over. ************ Berkshire’s outstanding economics exist only because we have some terrific managers running some extraordinary insurance operations. Let me tell you about the major units. First by float size is the Berkshire Hathaway Reinsurance Group, run by Ajit Jain. Ajit insures risks that no one else has the desire or the capital to take on. His operation combines capacity, speed, decisiveness and, most important, brains in a manner unique in the insurance business. Yet he never exposes Berkshire to risks that are inappropriate in relation to our resources. Indeed, we are far more conservative in avoiding risk than most large insurers. For example, if the insurance industry should experience a $250 billion loss from some mega-catastrophe – a loss about triple anything it has ever experienced – Berkshire as a whole would likely record a significant profit for the year because it has so many streams of earnings. All other major insurers and reinsurers would meanwhile be far in the red, with some facing insolvency. From a standing start in 1985, Ajit has created an insurance business with float of $35 billion and a significant cumulative underwriting profit, a feat that no other insurance CEO has come close to matching. He has thus added a great many billions of dollars to the value of Berkshire. If you meet Ajit at the annual meeting, bow deeply. ************ We have another reinsurance powerhouse in General Re, managed by Tad Montross. At bottom, a sound insurance operation needs to adhere to four disciplines. It must (1) understand all exposures that might cause a policy to incur losses; (2) conservatively assess the likelihood of any exposure actually causing a loss and the probable cost if it does; (3) set a premium that, on average, will deliver a profit after both prospective loss costs and operating expenses are covered; and (4) be willing to walk away if the appropriate premium can’t be obtained. Many insurers pass the first three tests and flunk the fourth. They simply can’t turn their back on business that is being eagerly written by their competitors. That old line, “The other guy is doing it, so we must as well,” spells trouble in any business, but none more so than insurance. 8Tad has observed all four of the insurance commandments, and it shows in his results. General Re’s huge float has been better than cost-free under his leadership, and we expect that, on average, it will continue to be. We are particularly enthusiastic about General Re’s international life reinsurance business, which has achieved consistent and profitable growth since we acquired the company in 1998. ************ Finally, there is GEICO, the insurer on which I cut my teeth 62 years ago. GEICO is run by Tony Nicely, who joined the company at 18 and completed 51 years of service in 2012. I rub my eyes when I look at what Tony has accomplished. Last year, it should be noted, his record was considerably better than is indicated by GEICO’s GAAP underwriting profit of $680 million. Because of a change in accounting rules at the beginning of the year, we recorded a charge to GEICO’s underwriting earnings of $410 million. This item had nothing to do with 2012’s operating results, changing neither cash, revenues, expenses nor taxes. In effect, the writedown simply widened the already huge difference between GEICO’s intrinsic value and the value at which we carry it on our books. GEICO earned its underwriting profit, moreover, despite the company suffering its largest single loss in history. The cause was Hurricane Sandy, which cost GEICO more than three times the loss it sustained from Katrina, the previous record-holder. We insured 46,906 vehicles that were destroyed or damaged in the storm, a staggering number reflecting GEICO’s leading market share in the New York metropolitan area. Last year GEICO enjoyed a meaningful increase in both the renewal rate for existing policyholders (“persistency”) and in the percentage of rate quotations that resulted in sales (“closures”). Big dollars ride on those two factors: A sustained gain in persistency of a bare one percentage point increases intrinsic value by more than $1 billion. GEICO’s gains in 2012 offer dramatic proof that when people check the company’s prices, they usually find they can save important sums. (Give us a try at 1-800-847-7536 or GEICO.com. Be sure to mention that you are a shareholder; that fact will usually result in a discount.) ************ In addition to our three major insurance operations, we own a group of smaller companies, most of them plying their trade in odd corners of the insurance world. In aggregate, these companies have consistently delivered an underwriting profit. Moreover, as the table below shows, they also provide us with substantial float. Charlie and I treasure these companies and their managers. Late in 2012, we enlarged this group by acquiring Guard Insurance, a Wilkes-Barre company that writes workers compensation insurance, primarily for smaller businesses. Guard’s annual premiums total about $300 million. The company has excellent prospects for growth in both its traditional business and new lines it has begun to offer. Underwriting Profit Year end Float (in millions) Insurance Operations 2012 2011 2012 2011 BH Reinsurance . . . . . . . . . $ 304 $(714) $34,821 $33,728 General Re . . . . . . . . . . . . . 355 144 20,128 19,714 GEICO ................ 680* 576 11,578 11,169 Other Primary . . . . . . . . . . 286 242 6,598 5,960 $1,625 $ 248 $73,125 $70,571 *After a $410 million charge against earnings arising from an industry-wide accounting change. Among large insurance operations, Berkshire’s impresses me as the best in the world. It was our lucky day when, in March 1967, Jack Ringwalt sold us his two property-casualty insurers for $8.6 million. 9 Regulated, Capital-Intensive Businesses We have two major operations, BNSF and MidAmerican Energy, that have important common characteristics distinguishing them from our other businesses. Consequently, we assign them their own section in this letter and split out their combined financial statistics in our GAAP balance sheet and income statement. A key characteristic of both companies is their huge investment in very long-lived, regulated assets, with these partially funded by large amounts of long-term debt that is not guaranteed by Berkshire. Our credit is in fact not needed because each business has earning power that even under terrible conditions amply covers its interest requirements. In last year’s tepid economy, for example, BNSF’s interest coverage was 9.6x. (Our definition of coverage is pre-tax earnings/interest, not EBITDA/interest, a commonly-used measure we view as deeply flawed.) At MidAmerican, meanwhile, two key factors ensure its ability to service debt under all circumstances: the company’s recession-resistant earnings, which result from our exclusively offering an essential service, and its great diversity of earnings streams, which shield it from being seriously harmed by any single regulatory body. Every day, our two subsidiaries power the American economy in major ways: Š BNSF carries about 15% (measured by ton-miles) of all inter-city freight, whether it is transported by truck, rail, water, air, or pipeline. Indeed, we move more ton-miles of goods than anyone else, a fact making BNSF the most important artery in our economy’s circulatory system. BNSF also moves its cargo in an extraordinarily fuel-efficient and environmentally friendly way, carrying a ton of freight about 500 miles on a single gallon of diesel fuel. Trucks taking on the same job guzzle about four times as much fuel. Š MidAmerican’s electric utilities serve regulated retail customers in ten states. Only one utility holding company serves more states. In addition, we are the leader in renewables: first, from a standing start nine years ago, we now account for 6% of the country’s wind generation capacity. Second, when we complete three projects now under construction, we will own about 14% of U.S. solar-generation capacity. Projects like these require huge capital investments. Upon completion, indeed, our renewables portfolio will have cost $13 billion. We relish making such commitments if they promise reasonable returns – and on that front, we put a large amount of trust in future regulation. Our confidence is justified both by our past experience and by the knowledge that society will forever need massive investment in both transportation and energy. It is in the self-interest of governments to treat capital providers in a manner that will ensure the continued flow of funds to essential projects. And it is in our self-interest to conduct our operations in a manner that earns the approval of our regulators and the people they represent. Our managers must think today of what the country will need far down the road. Energy and transportation projects can take many years to come to fruition; a growing country simply can’t afford to get behind the curve. We have been doing our part to make sure that doesn’t happen. Whatever you may have heard about our country’s crumbling infrastructure in no way applies to BNSF or railroads generally. America’s rail system has never been in better shape, a consequence of huge investments by the industry. We are not, however, resting on our laurels: BNSF will spend about $4 billion on the railroad in 2013, roughly double its depreciation charge and more than any railroad has spent in a single year. 10 In Matt Rose, at BNSF, and Greg Abel, at MidAmerican, we have two outstanding CEOs. They are extraordinary managers who have developed businesses that serve both their customers and owners well. Each has my gratitude and each deserves yours. Here are the key figures for their businesses: MidAmerican (89.8% owned) Earnings (in millions) 2012 2011 U.K. utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 429 $ 469 Iowa utility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 236 279 Western utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 737 771 Pipelines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 383 388 HomeServices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 39 Other (net) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91 36 Operating earnings before corporate interest and taxes ................... 1,958 1,982 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 314 336 Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172 315 Net earnings .................................................... $ 1,472 $ 1,331 Earnings applicable to Berkshire .................................... $ 1,323 $ 1,204 BNSF Earnings (in millions) 2012 2011 Revenues ....................................................... $20,835 $19,548 Operating expenses ............................................... 14,835 14,247 Operating earnings before interest and taxes ........................... 6,000 5,301 Interest (net) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 623 560 Income taxes .................................................... 2,005 1,769 Net earnings .................................................... $ 3,372 $ 2,972 Sharp-eyed readers will notice an incongruity in the MidAmerican earnings tabulation. What in the world is HomeServices, a real estate brokerage operation, doing in a section entitled “Regulated, Capital-Intensive Businesses?” Well, its ownership came with MidAmerican when we bought control of that company in 2000. At that time, I focused on MidAmerican’s utility operations and barely noticed HomeServices, which then owned only a few real estate brokerage companies. Since then, however, the company has regularly added residential brokers – three in 2012 – and now has about 16,000 agents in a string of major U.S. cities. (Our real estate brokerage companies are listed on page 107.) In 2012, our agents participated in $42 billion of home sales, up 33% from 2011. Additionally, HomeServices last year purchased 67% of the Prudential and Real Living franchise operations, which together license 544 brokerage companies throughout the country and receive a small royalty on their sales. We have an arrangement to purchase the balance of those operations within five years. In the coming years, we will gradually rebrand both our franchisees and the franchise firms we own as Berkshire Hathaway HomeServices. Ron Peltier has done an outstanding job in managing HomeServices during a depressed period. Now, as the housing market continues to strengthen, we expect earnings to rise significantly. 11 Manufacturing, Service and Retailing Operations Our activities in this part of Berkshire cover the waterfront. Let’s look, though, at a summary balance sheet and earnings statement for the entire group. Balance Sheet 12/31/12 (in millions) Assets Liabilities and Equity Cash and equivalents .............. $ 5,338 Notes payable ............... $ 1,454 Accounts and notes receivable ....... 7,382 Other current liabilities ........ 8,527 Inventory ....................... 9,675 Total current liabilities ........ 9,981 Other current assets . . . . . . . . . . . . . . . 734 Total current assets................ 23,129 Deferred taxes............... 4,907 Goodwill and other intangibles ...... 26,017 Term debt and other liabilities . . 5,826 Fixed assets ..................... 18,871 Non-controlling interests ...... 2,062 Other assets ..................... 3,416 Berkshire equity ............. 48,657 $71,433 $71,433 Earnings Statement (in millions) 2012 2011* 2010 Revenues ............................................ $83,255 $72,406 $66,610 Operating expenses .................................... 76,978 67,239 62,225 Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146 130 111 Pre-tax earnings ....................................... 6,131 5,037 4,274 Income taxes and non-controlling interests .................. 2,432 1,998 1,812 Net earnings .......................................... $ 3,699 $ 3,039 $ 2,462 *Includes earnings of Lubrizol from September 16. Our income and expense data conforming to Generally Accepted Accounting Principles (“GAAP”) is on page 29. In contrast, the operating expense figures above are non-GAAP. In particular, they exclude some purchase-accounting items, primarily the amortization of certain intangible assets. We present the data in this manner because Charlie and I believe the adjusted numbers more accurately reflect the real expenses and profits of the businesses aggregated in the table. I won’t explain all of the adjustments – some are small and arcane – but serious investors should understand the disparate nature of intangible assets: Some truly deplete over time while others never lose value. With software, for example, amortization charges are very real expenses. Charges against other intangibles such as the amortization of customer relationships, however, arise through purchase-accounting rules and are clearly not real expenses. GAAP accounting draws no distinction between the two types of charges. Both, that is, are recorded as expenses when calculating earnings – even though from an investor’s viewpoint they could not be more different. In the GAAP-compliant figures we show on page 29, amortization charges of $600 million for the companies included in this section are deducted as expenses. We would call about 20% of these “real” – and indeed that is the portion we have included in the table above – and the rest not. This difference has become significant because of the many acquisitions we have made. “Non-real” amortization expense also looms large at some of our major investees. IBM has made many small acquisitions in recent years and now regularly reports “adjusted operating earnings,” a non-GAAP figure that excludes certain purchase-accounting adjustments. Analysts focus on this number, as they should. 12A “non-real” amortization charge at Wells Fargo, however, is not highlighted by the company and never, to my knowledge, has been noted in analyst reports. The earnings that Wells Fargo reports are heavily burdened by an “amortization of core deposits” charge, the implication being that these deposits are disappearing at a fairly rapid clip. Yet core deposits regularly increase. The charge last year was about $1.5 billion. In no sense, except GAAP accounting, is this whopping charge an expense. And that ends today’s accounting lecture. Why is no one shouting “More, more?” ************ The crowd of companies in this section sell products ranging from lollipops to jet airplanes. Some of the businesses enjoy terrific economics, measured by earnings on unleveraged net tangible assets that run from 25% after-tax to more than 100%. Others produce good returns in the area of 12-20%. A few, however, have very poor returns, a result of some serious mistakes I made in my job of capital allocation. More than 50 years ago, Charlie told me that it was far better to buy a wonderful business at a fair price than to buy a fair business at a wonderful price. Despite the compelling logic of his position, I have sometimes reverted to my old habit of bargain-hunting, with results ranging from tolerable to terrible. Fortunately, my mistakes have usually occurred when I made smaller purchases. Our large acquisitions have generally worked out well and, in a few cases, more than well. Viewed as a single entity, therefore, the companies in this group are an excellent business. They employ $22.6 billion of net tangible assets and, on that base, earned 16.3% after-tax. Of course, a business with terrific economics can be a bad investment if the price paid is excessive. We have paid substantial premiums to net tangible assets for most of our businesses, a cost that is reflected in the large figure we show for intangible assets. Overall, however, we are getting a decent return on the capital we have deployed in this sector. Furthermore, the intrinsic value of the businesses, in aggregate, exceeds their carrying value by a good margin. Even so, the difference between intrinsic value and carrying value in the insurance and regulatedindustry segments isfar greater. It is there that the huge winners reside. ************ Marmon provides an example of a clear and substantial gap existing between book value and intrinsic value. Let me explain the odd origin of this differential. Last year I told you that we had purchased additional shares in Marmon, raising our ownership to 80% (up from the 64% we acquired in 2008). I also told you that GAAP accounting required us to immediately record the 2011 purchase on our books at far less than what we paid. I’ve now had a year to think about this weird accounting rule, but I’ve yet to find an explanation that makes any sense – nor can Charlie or Marc Hamburg, our CFO, come up with one. My confusion increases when I am told that if we hadn’t already owned 64%, the 16% we purchased in 2011 would have been entered on our books at our cost. In 2012 (and in early 2013, retroactive to yearend 2012) we acquired an additional 10% of Marmon and the same bizarre accounting treatment was required. The $700 million write-off we immediately incurred had no effect on earnings but did reduce book value and, therefore, 2012’s gain in net worth. The cost of our recent 10% purchase implies a $12.6 billion value for the 90% of Marmon we now own. Our balance-sheet carrying value for the 90%, however, is $8 billion. Charlie and I believe our current purchase represents excellent value. If we are correct, our Marmon holding is worth at least $4.6 billion more than its carrying value. Marmon is a diverse enterprise, comprised of about 150 companies operating in a wide variety of industries. Its largest business involves the ownership of tank cars that are leased to a variety of shippers, such as oil and chemical companies. Marmon conducts this business through two subsidiaries, Union Tank Car in the U.S. and Procor in Canada. 13 Union Tank Car has been around a long time, having been owned by the Standard Oil Trust until that empire was broken up in 1911. Look for its UTLX logo on tank cars when you watch trains roll by. As a Berkshire shareholder, you own the cars with that insignia. When you spot a UTLX car, puff out your chest a bit and enjoy the same satisfaction that John D. Rockefeller undoubtedly experienced as he viewed hisfleet a century ago. Tank cars are owned by either shippers or lessors, not by railroads. At yearend Union Tank Car and Procor together owned 97,000 cars having a net book value of $4 billion. A new car, it should be noted, costs upwards of $100,000. Union Tank Car is also a major manufacturer of tank cars – some of them to be sold but most to be owned by it and leased out. Today, its order book extends well into 2014. At both BNSF and Marmon, we are benefitting from the resurgence of U.S. oil production. In fact, our railroad is now transporting about 500,000 barrels of oil daily, roughly 10% of the total produced in the “lower 48” (i.e. not counting Alaska and offshore). All indications are that BNSF’s oil shipments will grow substantially in coming years. ************ Space precludes us from going into detail about the many other businesses in this segment. Company specific information about the 2012 operations of some of the larger units appears on pages 76 to 79. Finance and Financial Products This sector, our smallest, includes two rental companies, XTRA (trailers) and CORT (furniture), as well as Clayton Homes, the country’s leading producer and financer of manufactured homes. Aside from these 100%- owned subsidiaries, we also include in this category a collection of financial assets and our 50% interest in Berkadia Commercial Mortgage. We include Clayton in this sector because it owns and services 332,000 mortgages, totaling $13.7 billion. In large part, these loans have been made to lower and middle-income families. Nevertheless, the loans have performed well throughout the housing collapse, thereby validating our conviction that a reasonable down payment and a sensible payments-to-income ratio will ward off outsized foreclosure losses, even during stressful times. Clayton also produced 25,872 manufactured homes last year, up 13.5% from 2011. That output accounted for about 4.8% of all single-family residences built in the country, a share that makes Clayton America’s number one homebuilder. CORT and XTRA are leaders in their industries as well. Our expenditures for new rental equipment at XTRA totaled $256 million in 2012, more than double its depreciation expense. While competitors fret about today’s uncertainties, XTRA is preparing for tomorrow. Berkadia continues to do well. Our partners at Leucadia do most of the work in this venture, an arrangement that Charlie and I happily embrace. Here’s the pre-tax earnings recap for this sector: 2012 2011 (in millions) Berkadia . . . . . . . . . . . . . . . . . . . . . . . . $ 35 $ 25 Clayton . . . . . . . . . . . . . . . . . . . . . . . . . 255 154 CORT . . . . . . . . . . . . . . . . . . . . . . . . . . 42 29 XTRA . . . . . . . . . . . . . . . . . . . . . . . . . . 106 126 Net financial income* . . . . . . . . . . . . . 410 440 $848 $774 *Excludes capital gains or losses 14 Investments Below we show our common stock investments that at yearend had a market value of more than $1 billion. 12/31/12 Shares Company Percentage of Company Owned Cost* Market (in millions) 151,610,700 American Express Company .............. 13.7 $ 1,287 $ 8,715 400,000,000 The Coca-Cola Company . . . . . . . . . . . . . . . . . 8.9 1,299 14,500 24,123,911 ConocoPhillips . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 1,219 1,399 22,999,600 DIRECTV . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.8 1,057 1,154 68,115,484 International Business Machines Corp. . . . . . . 6.0 11,680 13,048 28,415,250 Moody’s Corporation .................... 12.7 287 1,430 20,060,390 Munich Re ............................ 11.3 2,990 3,599 20,668,118 Phillips 66 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 660 1,097 3,947,555 POSCO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1 768 1,295 52,477,678 The Procter & Gamble Company . . . . . . . . . . . 1.9 336 3,563 25,848,838 Sanofi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 2,073 2,438 415,510,889 Tesco plc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2 2,350 2,268 78,060,769 U.S. Bancorp . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 2,401 2,493 54,823,433 Wal-Mart Stores, Inc. . . . . . . . . . . . . . . . . . . . . 1.6 2,837 3,741 456,170,061 Wells Fargo & Company . . . . . . . . . . . . . . . . . 8.7 10,906 15,592 Others ................................ 7,646 11,330 Total Common Stocks Carried at Market .... $49,796 $87,662 *This is our actual purchase price and also our tax basis; GAAP “cost” differs in a few cases because of write-ups or write-downs that have been required. One point about the composition of this list deserves mention. In Berkshire’s past annual reports, every stock itemized in this space has been bought by me, in the sense that I made the decision to buy it for Berkshire. But starting with this list, any investment made by Todd Combs or Ted Weschler – or a combined purchase by them – that meets the dollar threshold for the list ($1 billion this year) will be included. Above is the first such stock, DIRECTV, which both Todd and Ted hold in their portfolios and whose combined holdings at the end of 2012 were valued at the $1.15 billion shown. Todd and Ted also manage the pension funds of certain Berkshire subsidiaries, while others, for regulatory reasons, are managed by outside advisers. We do not include holdings of the pension funds in our annual report tabulations, though their portfolios often overlap Berkshire’s. ************ We continue to wind down the part of our derivatives portfolio that involved the assumption by Berkshire of insurance-like risks. (Our electric and gas utility businesses, however, will continue to use derivatives for operational purposes.) New commitments would require us to post collateral and, with minor exceptions, we are unwilling to do that. Markets can behave in extraordinary ways, and we have no interest in exposing Berkshire to some out-of-the-blue event in the financial world that might require our posting mountains of cash on a moment’s notice. Charlie and I believe in operating with many redundant layers of liquidity, and we avoid any sort of obligation that could drain our cash in a material way. That reduces our returns in 99 years out of 100. But we will survive in the 100th while many others fail. And we will sleep well in all 100. 15The derivatives we have sold that provide credit protection for corporate bonds will all expire in the next year. It’s now almost certain that our profit from these contracts will approximate $1 billion pre-tax. We also received very substantial sums upfront on these derivatives, and the “float” attributable to them has averaged about $2 billion over their five-year lives. All told, these derivatives have provided a more-than-satisfactory result, especially considering the fact that we were guaranteeing corporate credits – mostly of the high-yield variety – throughout the financial panic and subsequent recession. In our other major derivatives commitment, we sold long-term puts on four leading stock indices in the U.S., U.K., Europe and Japan. These contracts were initiated between 2004 and 2008 and even under the worst of circumstances have only minor collateral requirements. In 2010 we unwound about 10% of our exposure at a profit of $222 million. The remaining contracts expire between 2018 and 2026. Only the index value at expiration date counts; our counterparties have no right to early termination. Berkshire received premiums of $4.2 billion when we wrote the contracts that remain outstanding. If all of these contracts had come due at yearend 2011, we would have had to pay $6.2 billion; the corresponding figure at yearend 2012 was $3.9 billion. With this large drop in immediate settlement liability, we reduced our GAAP liability at yearend 2012 to $7.5 billion from $8.5 billion at the end of 2011. Though it’s no sure thing, Charlie and I believe it likely that the final liability will be considerably less than the amount we currently carry on our books. In the meantime, we can invest the $4.2 billion of float derived from these contracts as we see fit. We Buy Some Newspapers. . . Newspapers? During the past fifteen months, we acquired 28 daily newspapers at a cost of $344 million. This may puzzle you for two reasons. First, I have long told you in these letters and at our annual meetings that the circulation, advertising and profits of the newspaper industry overall are certain to decline. That prediction still holds. Second, the properties we purchased fell far short of meeting our off-stated size requirements for acquisitions. We can address the second point easily. Charlie and I love newspapers and, if their economics make sense, will buy them even when they fall far short of the size threshold we would require for the purchase of, say, a widget company. Addressing the first point requires me to provide a more elaborate explanation, including some history. News, to put it simply, is what people don’t know that they want to know. And people will seek their news – what’s important to them – from whatever sources provide the best combination of immediacy, ease of access, reliability, comprehensiveness and low cost. The relative importance of these factors varies with the nature of the news and the person wanting it. Before television and the Internet, newspapers were the primary source for an incredible variety of news, a fact that made them indispensable to a very high percentage of the population. Whether your interests were international, national, local, sports or financial quotations, your newspaper usually was first to tell you the latest information. Indeed, your paper contained so much you wanted to learn that you received your money’s worth, even if only a small number of its pages spoke to your specific interests. Better yet, advertisers typically paid almost all of the product’s cost, and readers rode their coattails. Additionally, the ads themselves delivered information of vital interest to hordes of readers, in effect providing even more “news.” Editors would cringe at the thought, but for many readers learning what jobs or apartments were available, what supermarkets were carrying which weekend specials, or what movies were showing where and when was far more important than the views expressed on the editorial page. 16 In turn, the local paper was indispensable to advertisers. If Sears or Safeway built stores in Omaha, they required a “megaphone” to tell the city’s residents why their stores should be visited today. Indeed, big department stores and grocers vied to outshout their competition with multi-page spreads, knowing that the goods they advertised would fly off the shelves. With no other megaphone remotely comparable to that of the newspaper, ads sold themselves. As long as a newspaper was the only one in its community, its profits were certain to be extraordinary; whether it was managed well or poorly made little difference. (As one Southern publisher famously confessed, “I owe my exalted position in life to two great American institutions – nepotism and monopoly.”) Over the years, almost all cities became one-newspaper towns (or harbored two competing papers that joined forces to operate as a single economic unit). This contraction was inevitable because most people wished to read and pay for only one paper. When competition existed, the paper that gained a significant lead in circulation almost automatically received the most ads. That left ads drawing readers and readers drawing ads. This symbiotic process spelled doom for the weaker paper and became known as “survival of the fattest.” Now the world has changed. Stock market quotes and the details of national sports events are old news long before the presses begin to roll. The Internet offers extensive information about both available jobs and homes. Television bombards viewers with political, national and international news. In one area of interest after another, newspapers have therefore lost their “primacy.” And, as their audiences have fallen, so has advertising. (Revenues from “help wanted” classified ads – long a huge source of income for newspapers – have plunged more than 90% in the past 12 years.) Newspapers continue to reign supreme, however, in the delivery of local news. If you want to know what’s going on in yourtown – whether the news is about the mayor or taxes or high school football – there is no substitute for a local newspaper that is doing its job. A reader’s eyes may glaze over after they take in a couple of paragraphs about Canadian tariffs or political developments in Pakistan; a story about the reader himself or his neighbors will be read to the end. Wherever there is a pervasive sense of community, a paper that serves the special informational needs of that community will remain indispensable to a significant portion of its residents. Even a valuable product, however, can self-destruct from a faulty business strategy. And that process has been underway during the past decade at almost all papers of size. Publishers – including Berkshire in Buffalo – have offered their paper free on the Internet while charging meaningful sums for the physical specimen. How could this lead to anything other than a sharp and steady drop in sales of the printed product? Falling circulation, moreover, makes a paper less essential to advertisers. Under these conditions, the “virtuous circle” of the past reverses. The Wall Street Journal went to a pay model early. But the main exemplar for local newspapers is the Arkansas Democrat-Gazette, published by Walter Hussman, Jr. Walter also adopted a pay format early, and over the past decade his paper has retained its circulation far better than any other large paper in the country. Despite Walter’s powerful example, it’s only been in the last year or so that other papers, including Berkshire’s, have explored pay arrangements. Whatever works best – and the answer is not yet clear – will be copied widely. ************ Charlie and I believe that papers delivering comprehensive and reliable information to tightly-bound communities and having a sensible Internet strategy will remain viable for a long time. We do not believe that success will come from cutting either the news content or frequency of publication. Indeed, skimpy news coverage will almost certainly lead to skimpy readership. And the less-than-daily publication that is now being tried in some large towns or cities – while it may improve profits in the short term – seems certain to diminish the papers’ relevance over time. Our goal is to keep our papers loaded with content of interest to our readers and to be paid appropriately by those who find us useful, whether the product they view is in their hands or on the Internet. 17 Our confidence is buttressed by the availability of Terry Kroeger’s outstanding management group at the Omaha World-Herald, a team that has the ability to oversee a large group of papers. The individual papers, however, will be independent in their news coverage and editorial opinions. (I voted for Obama; of our 12 dailies that endorsed a presidential candidate, 10 opted for Romney.) Our newspapers are certainly not insulated from the forces that have been driving revenues downward. Still, the six small dailies we owned throughout 2012 had unchanged revenues for the year, a result far superior to that experienced by big-city dailies. Moreover, the two large papers we operated throughout the year – The Buffalo News and the Omaha World-Herald – held their revenue loss to 3%, which was also an above-average outcome. Among newspapers in America’s 50 largest metropolitan areas, our Buffalo and Omaha papers rank near the top in circulation penetration of their home territories. This popularity is no accident: Credit the editors of those papers – Margaret Sullivan at the News and Mike Reilly at the World-Herald — for delivering information that has made their publications indispensable to community-interested readers. (Margaret, I regret to say, recently left us to join The New York Times, whose job offers are tough to turn down. That paper made a great hire, and we wish her the best.) Berkshire’s cash earnings from its papers will almost certainly trend downward over time. Even a sensible Internet strategy will not be able to prevent modest erosion. At our cost, however, I believe these papers will meet or exceed our economic test for acquisitions. Results to date support that belief. Charlie and I, however, still operate under economic principle 11 (detailed on page 99) and will not continue the operation of any business doomed to unending losses. One daily paper that we acquired in a bulk purchase from Media General was significantly unprofitable under that company’s ownership. After analyzing the paper’s results, we saw no remedy for the losses and reluctantly shut it down. All of our remaining dailies, however, should be profitable for a long time to come. (They are listed on page 108.) At appropriate prices – and that means at a very low multiple of current earnings – we will purchase more papers of the type we like. ************ A milestone in Berkshire’s newspaper operations occurred at yearend when Stan Lipsey retired as publisher of The Buffalo News. It’s no exaggeration for me to say that the News might now be extinct were it not for Stan. Charlie and I acquired the Newsin April 1977. It was an evening paper, dominant on weekdays but lacking a Sunday edition. Throughout the country, the circulation trend was toward morning papers. Moreover, Sunday was becoming ever more critical to the profitability of metropolitan dailies. Without a Sunday paper, the News was destined to lose out to its morning competitor, which had a fat and entrenched Sunday product. We therefore began to print a Sunday edition late in 1977. And then all hell broke loose. Our competitor sued us, and District Judge Charles Brieant, Jr. authored a harsh ruling that crippled the introduction of our paper. His ruling was later reversed – after 17 long months – in a 3-0 sharp rebuke by the Second Circuit Court of Appeals. While the appeal was pending, we lost circulation, hemorrhaged money and stood in constant danger of going out of business. Enter Stan Lipsey, a friend of mine from the 1960s, who, with his wife, had sold Berkshire a small Omaha weekly. I found Stan to be an extraordinary newspaperman, knowledgeable about every aspect of circulation, production, sales and editorial. (He was a key person in gaining that small weekly a Pulitzer Prize in 1973.) So when I was in big trouble at the News, I asked Stan to leave his comfortable way of life in Omaha to take over in Buffalo. He never hesitated. Along with Murray Light, our editor, Stan persevered through four years of very dark days until the News won the competitive struggle in 1982. Ever since, despite a difficult Buffalo economy, the performance of the News has been exceptional. As both a friend and as a manager, Stan is simply the best. 18 Dividends A number of Berkshire shareholders – including some of my good friends – would like Berkshire to pay a cash dividend. It puzzles them that we relish the dividends we receive from most of the stocks that Berkshire owns, but pay out nothing ourselves. So let’s examine when dividends do and don’t make sense for shareholders. A profitable company can allocate its earnings in various ways (which are not mutually exclusive). A company’s management should first examine reinvestment possibilities offered by its current business – projects to become more efficient, expand territorially, extend and improve product lines or to otherwise widen the economic moat separating the company from its competitors. I ask the managers of our subsidiaries to unendingly focus on moat-widening opportunities, and they find many that make economic sense. But sometimes our managers misfire. The usual cause of failure is that they start with the answer they want and then work backwards to find a supporting rationale. Of course, the process is subconscious; that’s what makes it so dangerous. Your chairman has not been free of this sin. In Berkshire’s 1986 annual report, I described how twenty years of management effort and capital improvements in our original textile business were an exercise in futility.  I wanted the business to succeed and wished my way into a series of bad decisions. (I even bought another New England textile company.) But wishing makes dreams come true only in Disney movies; it’s poison in business. Despite such past miscues, our first priority with available funds will always be to examine whether they can be intelligently deployed in our various businesses. Our record $12.1 billion of fixed-asset investments and bolton acquisitions in 2012 demonstrate that this is a fertile field for capital allocation at Berkshire. And here we have an advantage: Because we operate in so many areas of the economy, we enjoy a range of choices far wider than that open to most corporations. In deciding what to do, we can water the flowers and skip over the weeds. Even after we deploy hefty amounts of capital in our current operations, Berkshire will regularly generate a lot of additional cash. Our next step, therefore, is to search for acquisitions unrelated to our current businesses. Here our test is simple: Do Charlie and I think we can effect a transaction that is likely to leave our shareholders wealthier on a per-share basis than they were prior to the acquisition? I have made plenty of mistakes in acquisitions and will make more. Overall, however, our record is satisfactory, which means that our shareholders are far wealthier today than they would be if the funds we used for acquisitions had instead been devoted to share repurchases or dividends. But, to use the standard disclaimer, past performance is no guarantee of future results. That’s particularly true at Berkshire: Because of our present size, making acquisitions that are both meaningful and sensible is now more difficult than it has been during most of our years. Nevertheless, a large deal still offers us possibilities to add materially to per-share intrinsic value. BNSF is a case in point: It is now worth considerably more than our carrying value. Had we instead allocated the funds required for this purchase to dividends or repurchases, you and I would have been worse off. Though large transactions of the BNSF kind will be rare, there are still some whales in the ocean. The third use of funds – repurchases – is sensible for a company when its shares sell at a meaningful discount to conservatively calculated intrinsic value. Indeed, disciplined repurchases are the surest way to use funds intelligently: It’s hard to go wrong when you’re buying dollar bills for 80¢ or less. We explained our criteria for repurchases in last year’s report and, if the opportunity presents itself, we will buy large quantities of our stock. We originally said we would not pay more than 110% of book value, but that proved  unrealistic. Therefore, we increased the limit to 120% in December when a large block became available at about 116% of book value. 19 But never forget: In repurchase decisions, price is all-important. Value is destroyed when purchases are made above intrinsic value. The directors and I believe that continuing shareholders are benefitted in a meaningful way by purchases up to our 120% limit. And that brings us to dividends. Here we have to make a few assumptions and use some math. The numbers will require careful reading, but they are essential to understanding the case for and against dividends. So bear with me. We’ll start by assuming that you and I are the equal owners of a business with $2 million of net worth. The business earns 12% on tangible net worth – $240,000 – and can reasonably expect to earn the same 12% on reinvested earnings. Furthermore, there are outsiders who always wish to buy into our business at 125% of net worth. Therefore, the value of what we each own is now $1.25 million. You would like to have the two of us shareholders receive one-third of our company’s annual earnings and have two-thirds be reinvested. That plan, you feel, will nicely balance your needs for both current income and capital growth. So you suggest that we pay out $80,000 of current earnings and retain $160,000 to increase the future earnings of the business. In the first year, your dividend would be $40,000, and as earnings grew and the onethird payout was maintained, so too would your dividend. In total, dividends and stock value would increase 8% each year (12% earned on net worth less 4% of net worth paid out). After ten years our company would have a net worth of $4,317,850 (the original $2 million compounded at 8%) and your dividend in the upcoming year would be $86,357. Each of us would have shares worth $2,698,656 (125% of our half of the company’s net worth). And we would live happily ever after – with dividends and the value of our stock continuing to grow at 8% annually. There is an alternative approach, however, that would leave us even happier. Under this scenario, we would leave all earnings in the company and each sell 3.2% of our shares annually. Since the shares would be sold at 125% of book value, this approach would produce the same $40,000 of cash initially, a sum that would grow annually. Call this option the “sell-off” approach. Under this “sell-off” scenario, the net worth of our company increases to $6,211,696 after ten years ($2 million compounded at 12%). Because we would be selling shares each year, our percentage ownership would have declined, and, after ten years, we would each own 36.12% of the business. Even so, your share of the net worth of the company at that time would be $2,243,540. And, remember, every dollar of net worth attributable to each of us can be sold for $1.25. Therefore, the market value of your remaining shares would be $2,804,425, about 4% greater than the value of your shares if we had followed the dividend approach. Moreover, your annual cash receipts from the sell-off policy would now be running 4% more than you would have received under the dividend scenario. Voila! – you would have both more cash to spend annually and more capital value. This calculation, of course, assumes that our hypothetical company can earn an average of 12% annually on net worth and that its shareholders can sell their shares for an average of 125% of book value. To that point, the S&P 500 earns considerably more than 12% on net worth and sells at a price far above 125% of that net worth. Both assumptions also seem reasonable for Berkshire, though certainly not assured. Moreover, on the plus side, there also is a possibility that the assumptions will be exceeded. If they are, the argument for the sell-off policy becomes even stronger. Over Berkshire’s history – admittedly one that won’t come close to being repeated – the sell-off policy would have produced results for shareholders dramatically superior to the dividend policy. Aside from the favorable math, there are two further – and important – arguments for a sell-off policy. First, dividends impose a specific cash-out policy upon all shareholders. If, say, 40% of earnings is the policy, those who wish 30% or 50% will be thwarted. Our 600,000 shareholders cover the waterfront in their desires for cash. It is safe to say, however, that a great many of them – perhaps even most of them – are in a net-savings mode and logically should prefer no payment at all. 20 The sell-off alternative, on the other hand, lets each shareholder make his own choice between cash receipts and capital build-up. One shareholder can elect to cash out, say, 60% of annual earnings while other shareholders elect 20% or nothing at all. Of course, a shareholder in our dividend-paying scenario could turn around and use his dividends to purchase more shares. But he would take a beating in doing so: He would both incur taxes and also pay a 25% premium to get his dividend reinvested. (Keep remembering, open-market purchases of the stock take place at 125% of book value.) The second disadvantage of the dividend approach is of equal importance: The tax consequences for all taxpaying shareholders are inferior – usually far inferior – to those under the sell-off program. Under the dividend program, all of the cash received by shareholders each year is taxed whereas the sell-off program results in tax on only the gain portion of the cash receipts. Let me end this math exercise – and I can hear you cheering as I put away the dentist drill – by using my own case to illustrate how a shareholder’s regular disposals of shares can be accompanied by an increased investment in his or her business. For the last seven years, I have annually given away about 41 ⁄4% of my Berkshire shares. Through this process, my original position of 712,497,000 B-equivalent shares (split-adjusted) has decreased to 528,525,623 shares. Clearly my ownership percentage of the company has significantly decreased. Yet my investment in the business has actually increased: The book value of my current interest in Berkshire considerably exceeds the book value attributable to my holdings of seven years ago. (The actual figures are $28.2 billion for 2005 and $40.2 billion for 2012.) In other words, I now have far more money working for me at Berkshire even though my ownership of the company has materially decreased. It’s also true that my share of both Berkshire’s intrinsic business value and the company’s normal earning power is far greater than it was in 2005. Over time, I expect this accretion of value to continue – albeit in a decidedly irregular fashion – even as I now annually give away more than 41 ⁄2% of my shares (the increase having occurred because I’ve recently doubled my lifetime pledges to certain foundations). ************ Above all, dividend policy should always be clear, consistent and rational. A capricious policy will confuse owners and drive away would-be investors. Phil Fisher put it wonderfully 54 years ago in Chapter 7 of his Common Stocks and Uncommon Profits, a book that ranks behind only The Intelligent Investor and the 1940 edition of Security Analysis in the all-time-best list for the serious investor. Phil explained that you can successfully run a restaurant that serves hamburgers or, alternatively, one that features Chinese food. But you can’t switch capriciously between the two and retain the fans of either. Most companies pay consistent dividends, generally trying to increase them annually and cutting them very reluctantly. Our “Big Four” portfolio companies follow this sensible and understandable approach and, in certain cases, also repurchase shares quite aggressively. We applaud their actions and hope they continue on their present paths. We like increased dividends, and we love repurchases at appropriate prices. At Berkshire, however, we have consistently followed a different approach that we know has been sensible and that we hope has been made understandable by the paragraphs you have just read. We will stick with this policy as long as we believe our assumptions about the book-value buildup and the market-price premium seem reasonable. If the prospects for either factor change materially for the worse, we will reexamine our actions. The Annual Meeting The annual meeting will be held on Saturday, May 4th at the CenturyLink Center. Carrie Sova will be in charge. (Though that’s a new name, it’s the same wonderful Carrie as last year; she got married in June to a very lucky guy.) All of our headquarters group pitches in to help her; the whole affair is a homemade production, and I couldn’t be more proud of those who put it together. 21 The doors will open at 7 a.m., and at 7:30 we will have our second International Newspaper Tossing Challenge. The target will be the porch of a Clayton Home, precisely 35 feet from the throwing line. Last year I successfully fought off all challengers. But now Berkshire has acquired a large number of newspapers and with them came much tossing talent (or so the throwers claim). Come see whether their talent matches their talk. Better yet, join in. The papers will be 36 to 42 pages and you must fold them yourself (no rubber bands). At 8:30, a new Berkshire movie will be shown. An hour later, we will start the question-and-answer period, which (with a break for lunch at the CenturyLink’s stands) will last until 3:30. After a short recess, Charlie and I will convene the annual meeting at 3:45. If you decide to leave during the day’s question periods, please do so while Charlie is talking. The best reason to exit, of course, is to shop. We will help you do so by filling the 194,300-square-foot hall that adjoins the meeting area with products from dozens of Berkshire subsidiaries. Last year, you did your part, and most locations racked up record sales. In a nine-hour period, we sold 1,090 pairs of Justin boots, (that’s a pair every 30 seconds), 10,010 pounds of See’s candy, 12,879 Quikut knives (24 knives per minute) and 5,784 pairs of Wells Lamont gloves, always a hot item. But you can do better. Remember: Anyone who says money can’t buy happiness simply hasn’t shopped at our meeting. Last year, Brooks, our running shoe company, exhibited for the first time and ran up sales of $150,000. Brooks is on fire: Its volume in 2012 grew 34%, and that was on top of a similar 34% gain in 2011. The company’s management expects another jump of 23% in 2013. We will again have a special commemorative shoe to offer at the meeting. On Sunday at 8 a.m., we will initiate the “Berkshire 5K,” a race starting at the CenturyLink. Full details for participating will be included in the Visitor’s Guide that you will receive with your credentials for the meeting. We will have plenty of categories for competition, including one for the media. (It will be fun to report on their  performance.) Regretfully, I will forego running;someone has to man the starting gun. I should warn you that we have a lot of home-grown talent. Ted Weschler has run the marathon in 3:01. Jim Weber, Brooks’ dynamic CEO, is another speedster with a 3:31 best. Todd Combs specializes in the triathlon, but has been clocked at 22 minutes in the 5K. That, however, is just the beginning: Our directors are also fleet of foot (that is, some of our directors are). Steve Burke has run an amazing 2:39 Boston marathon. (It’s a family thing; his wife, Gretchen, finished the New York marathon in 3:25.) Charlotte Guyman’s best is 3:37, and Sue Decker crossed the tape in New York in 3:36. Charlie did not return his questionnaire. GEICO will have a booth in the shopping area, staffed by a number of its top counselors from around the country. Stop by for a quote. In most cases, GEICO will be able to give you a shareholder discount (usually 8%). This special offer is permitted by 44 of the 51 jurisdictions in which we operate. (One supplemental point: The discount is not additive if you qualify for another, such as that given certain groups.) Bring the details of your existing insurance and check out whether we can save you money. For at least half of you, I believe we can. Be sure to visit the Bookworm. It will carry about 35 books and DVDs, including a couple of new ones. Carol Loomis, who has been invaluable to me in editing this letter since 1977, has recently authored Tap Dancing to Work: Warren Buffett on Practically Everything. She and I have cosigned 500 copies, available exclusively at the meeting. The Outsiders, by William Thorndike, Jr., is an outstanding book about CEOs who excelled at capital allocation. It has an insightful chapter on our director, Tom Murphy, overall the best business manager I’ve ever met. I also recommend The Clash of the Cultures by Jack Bogle and Laura Rittenhouse’s Investing Between the Lines. Should you need to ship your book purchases, a shipping service will be available nearby. The Omaha World-Herald will again have a booth, offering a few books it has recently published. Redblooded Husker fans – is there any Nebraskan who isn’t one? – will surely want to purchase Unbeatable. It tells the story of Nebraska football during 1993-97, a golden era in which Tom Osborne’s teams went 60-3. 22 If you are a big spender – or aspire to become one – visit Signature Aviation on the east side of the Omaha airport between noon and 5:00 p.m. on Saturday. There we will have a fleet of NetJets aircraft that will get your pulse racing. Come by bus; leave by private jet. Live a little. An attachment to the proxy material that is enclosed with this report explains how you can obtain the credential you will need for admission to the meeting and other events. Airlines have sometimes jacked up prices for the Berkshire weekend. If you are coming from far away, compare the cost of flying to Kansas City versus Omaha. The drive between the two cities is about 21 ⁄2 hours, and it may be that you can save significant money, particularly if you had planned to rent a car in Omaha. Spend the savings with us. At Nebraska Furniture Mart, located on a 77-acre site on 72nd Street between Dodge and Pacific, we will again be having “Berkshire Weekend” discount pricing. Last year the store did $35.9 million of business during its annual meeting sale, an all-time record that makes other retailers turn green. To obtain the Berkshire discount, you must make your purchases between Tuesday, April 30th and Monday, May 6th inclusive, and also present your meeting credential. The period’s special pricing will even apply to the products of several prestigious manufacturers that normally have ironclad rules against discounting but which, in the spirit of our shareholder weekend, have made an exception for you. We appreciate their cooperation. NFM is open from 10 a.m. to 9 p.m. Monday through Saturday, and 10 a.m. to 6 p.m. on Sunday. On Saturday this year, from 5:30 p.m. to 8 p.m., NFM is having a picnic to which you are all invited. At Borsheims, we will again have two shareholder-only events. The first will be a cocktail reception from 6 p.m. to 9 p.m. on Friday, May 3rd. The second, the main gala, will be held on Sunday, May 5th, from 9 a.m. to 4 p.m. On Saturday, we will be open until 6 p.m. In recent years, our three-day volume has far exceeded sales in all of December, normally a jeweler’s best month. Around 1 p.m. on Sunday, I will begin clerking at Borsheims. Last year my sales totaled $1.5 million. This year I won’t quit until I hit $2 million. Because I need to leave well before sundown, I will be desperate to do business. Come take advantage of me. Ask for my “Crazy Warren” price. We will have huge crowds at Borsheims throughout the weekend. For your convenience, therefore, shareholder prices will be available from Monday, April 29th through Saturday, May 11th. During that period, please identify yourself as a shareholder by presenting your meeting credentials or a brokerage statement that shows you are a Berkshire holder. On Sunday, in the mall outside of Borsheims, a blindfolded Patrick Wolff, twice U.S. chess champion, will take on all comers – who will have their eyes wide open – in groups of six. Nearby, Norman Beck, a remarkable magician from Dallas, will bewilder onlookers. Additionally, we will have Bob Hamman and Sharon Osberg, two of the world’s top bridge experts, available to play bridge with our shareholders on Sunday afternoon. Don’t play them for money. Gorat’s and Piccolo’s will again be open exclusively for Berkshire shareholders on Sunday, May 5th. Both will be serving until 10 p.m., with Gorat’s opening at 1 p.m. and Piccolo’s opening at 4 p.m. These restaurants are my favorites, and I will eat at both of them on Sunday evening. Remember: To make a reservation at Gorat’s, call 402-551-3733 on April 1st (but not before) and at Piccolo’s call 402-342-9038. At Piccolo’s, order a giant root beer float for dessert. Only sissies get the small one. (I once saw Bill Gates polish off two of the giant variety after a full-course dinner; that’s when I knew he would make a great director.) We will again have the same three financial journalists lead the question-and-answer period at the meeting, asking Charlie and me questions that shareholders have submitted to them by e-mail. The journalists and their e-mail addresses are: Carol Loomis, of Fortune, who may be emailed at [email protected]; Becky Quick, of CNBC, at [email protected], and Andrew Ross Sorkin, of The New York Times, at [email protected] 23 From the questions submitted, each journalist will choose the six he or she decides are the most interesting and important. The journalists have told me your question has the best chance of being selected if you keep it concise, avoid sending it in at the last moment, make it Berkshire-related and include no more than two questions in any email you send them. (In your email, let the journalist know if you would like your name mentioned if your question is selected.) Last year we had a second panel of three analysts who follow Berkshire. All were insurance specialists, and shareholders subsequently indicated they wanted a little more variety. Therefore, this year we will have one insurance analyst, Cliff Gallant of Nomura Securities. Jonathan Brandt of Ruane, Cunniff & Goldfarb will join the analyst panel to ask questions that deal with our non-insurance operations. Finally – to spice things up – we would like to add to the panel a credentialed bear on Berkshire, preferably one who is short the stock. Not yet having a bear identified, we would like to hear from applicants. The only requirement is that you be an investment professional and negative on Berkshire. The three analysts will bring their own Berkshire-specific questions and alternate with the journalists and the audience in asking them. Charlie and I believe that all shareholders should have access to new Berkshire information simultaneously and should also have adequate time to analyze it, which is why we try to issue financial information after the market close on a Friday and why our annual meeting is held on Saturdays. We do not talk one-on-one to large institutional investors or analysts. Our hope is that the journalists and analysts will ask questions that will further educate shareholders about their investment. Neither Charlie nor I will get so much as a clue about the questions to be asked. We know the journalists and analysts will come up with some tough ones, and that’s the way we like it. All told, we expect at least 54 questions, which will allow for six from each analyst and journalist and 18 from the audience. If there is some extra time, we will take more from the audience. Audience questioners will be determined by drawings that will take place at 8:15 a.m. at each of the 11 microphones located in the arena and main overflow room. ************ For good reason, I regularly extol the accomplishments of our operating managers. They are truly AllStars, who run their businesses as if they were the only asset owned by their families. I believe their mindset to be as shareholder-oriented as can be found in the universe of large publicly-owned companies. Most have no financial need to work; the joy of hitting business “home runs” means as much to them as their paycheck. Equally important, however, are the 23 men and women who work with me at our corporate office (all on one floor, which is the way we intend to keep it!). This group efficiently deals with a multitude of SEC and other regulatory requirements, files a 21,500-page Federal income tax return as well as state and foreign returns, responds to countless shareholder and media inquiries, gets out the annual report, prepares for the country’s largest annual meeting, coordinates the Board’s activities – and the list goes on and on. They handle all of these business tasks cheerfully and with unbelievable efficiency, making my life easy and pleasant. Their efforts go beyond activities strictly related to Berkshire: Last year they dealt with 48 universities (selected from 200 applicants) who sent students to Omaha for a Q&A day with me. They also handle all kinds of requests that I receive, arrange my travel, and even get me hamburgers for lunch. No CEO has it better; I truly do feel like tap dancing to work every day. This home office crew, along with our operating managers, has my deepest thanks and deserves yours as well. Come to Omaha – the cradle of capitalism – on May 4th and chime in. March 1, 2013 Warren E. Buffett Chairman of the Board Discuss this topic @ Share Investor Forum - Register free Read the full transcript of the October 24 2012 Squawk Box Interview with Warren BuffettDownload the 2010 Berkshire Hathaway Annual ReportDownload the 1977 - 2011 Warren Buffett Letter's to Berkshire Hathaway Shareholders Warren Buffett @ Amazon Tap Dancing to Work: Warren Buffett on Practically Everything, 1966-2012: A Fortune Magazine Book by Carol J. Loomis Buy new: $16.66 / Used from: $11.95Usually ships in 24 hours Warren Buffett's 3 Favorite Books: A guide to The Intelligent Investor, Security Analysis, and The Wealth of Nations by Preston George Pysh Buy new: $12.99 / Used from: $16.04Usually ships in 24 hours

21 февраля 2013, 04:02

The Kitchen Sink is Here

Anthony Freda ArtDan and Sheila GendronActivist Post With all that is going on now, it brings to mind something I was told by a friend 15 years ago: when you see a kitchen sink fly by your face you'll know that the end is near. What brings it to mind is that I could swear I just noticed a kitchen sink fly past my face. This friend is the same person who introduced me to William Cooper so many years ago. What he said in full was “When they are ready to collapse the economy and bring us to the predicted WW3 (See Pike, Manzinni) they will come at us on all fronts:  Economic, Political, Societal, Religion, Gun Control, and TPTB's favorite, War! The reason for the all-fronts in this war against us is that we are in the process of being liquidated, and just like the pick-pocket uses distraction to lift your wallet, TPTB are now in the process of using distraction to pick our pockets one last time. While some of us may notice TPTB picking our pockets, that too is only a distraction. The real end game is the upcoming WAR!While most people are busy noticing their paychecks are much smaller due to increased payroll taxes (Obamacare) and reduced hours that so many people are having to live with, the war drums are beating louder and louder. China and Japan are mobilizing for war over some worthless islands and Korea has become an ICBM nuclear power and now has the capability of sending a Hiroshima-type bomb to the center of the USA to create an EMP blast that will knock out the electrical grid for most of the USA. We are busy complaining about increased payroll taxes and lack of jobs, while on the western front Israel and the USA are pounding the war drums over Syria and Iran and doing everything they can -- up and and not limited to -- calling the Syrians and Iranians little sissies to prompt the war! google_ad_client = "pub-1897954795849722"; /* 468x60, created 6/30/10 */ google_ad_slot = "8230781418"; google_ad_width = 468; google_ad_height = 60; The truth is TPTB need a good war to clear the books and hide their crimes. Hegel and Machiavelli to name a couple, have advised to make sure to leave the thieves in charge when you exit the office, and TPTB all seem to have taken that advice very seriously. Brings to mind a joke a recently heard....A dying priest living in Wash DC (the District of Criminals) has one last dying request: to meet with Obama and Harry Reid before he died. Both granted the old priest's request and met with him. Upon meeting the old priest Obama asked why his last request was to meet with them. The priest's answer was, “I wanted to be like Jesus. He died between two liars and thieves.”The point is that all the above-mentioned details are only distractions to the main event, and that main event is WAR! It will matter very little if you have a good-paying job once you hear the air raid sirens blaring – if you are lucky enough to get that much warning. I know that some may say that this is an extreme view, but “they” (you know, “they” – like the “they” Edmond O'Brien speaks of in the Sam Peckinpah movie, The Wild Bunch, who substituted iron washers for gold coins). Are always known only after the fact. We are seeing unfold the same type of circumstances that brought about the Second World War and then, like now, people were distracted – because it was planned that way. To quote FDR “nothing happens in Washington, DC unless it was planned that way”. The thing to notice is the level of distraction TPTB are using today to hide their real plans. So getting back to the topic at hand, in our opinion the time is now to get ready. The time for waiting is over and you must begin now to prepare for the inevitable and that inevitability is WAR! This war is not going to be over land or resources; it will be a population reduction war, plain and simple. The question you must ask yourself is, do you want to be one of the many who will be eliminated? If you did not notice the kitchen sink fly past your head, there is a name for that condition. It's called Cognitive Dissonance. Festinger's (1957) cognitive dissonance theory suggests that we have an inner drive to hold all our attitudes and beliefs in harmony and avoid disharmony (or dissonance). In simple terms, it is insisting that facts are not facts because we don't want them to be. This is your wake-up call! TPTB are very predictable, if you take the time to notice their “modus operandi”. There is a Season of Sacrificial Rites during which they tend to begin wars. This is between March 19th and 22nd, the Spring Equinox (Mark Passio, WhatOnEarthIsHappening.com Podcast #36). Look at the dates we invaded Iraq, Afghanistan and Lybia. Coincidence? What to do? Here is a “To Do List” for your consideration:First and foremost GET FOOD NOW! You can do little to save your self when you are dying of hunger. I know that most say “ I'm going to get around to that some day soon,” but the time is now and if not now the chances are good it will be never. It makes no difference to me if the food you decide to store is some of the food many companies are hawking on the Net or just a load of beans and rice. The time to do this is NOW!  Have a source of water. It can be filters that can make non-potable water drinkable, or cases of bottled water. Every person in your group will need at least one gallon of potable water per day or death will come in a matter of days.  Have a safe place to be. If you live in a highly populated area, GET OUT NOW! Having storage food and guns and ammo will do you little good if the bombs fall on your head. The key here is knowing what a safe place is. The greatest threat will be crowds of people who are not prepared. If you live in a densely populated area the threat will be greatest. So if you live in a densely populated area think of places you can go SOON that have the least threat.  Guns and Ammo. I know that the cost of semi auto rifles has gone through the roof, but for those of you who have up to now put off purchasing a gun and ammo will have to pay some pretty high prices for what up till recently was affordable (I have heard that M4s and Mini 14 have gone through the roof. Some reports have it that even M1 carbines are going for $2500) So for those who have waited till the last minute, I have some suggestions. The Ruger 10-22 22 caliber semi auto (an old favorite) and a Mossberg pump shotgun may be the way to go if you can find one to buy. The reason to have guns is not so that you can join in the “fun” of starting a revolution. It is for defense and for hunting.  I have heard all the excuses...My wife/husband/children, etc. will think I'm crazy.  My job is here and I need my job. I'm not sure the time is now.... I must have more time!  I don't have enough money!  ETC., ETC., ETC  All these excuses will do you no good once war breaks out. I recently heard an ad for storage food and the catchy tag line was “better one year too early then one day too late”. Truer words were never spoken. But again, the time to finish your preps is NOW – not sometime in the future. I know that some may say that I'm being alarmist, but you should know that “THEY” always have said people were alarmist in the past when good advice was given. At least you won't be able to say that someone did not tell you.From the authors of Surviving Survivalism – How to Avoid Survivalism Culture Shock available at survivingsurvivalism.com var linkwithin_site_id = 557381; linkwithin_text='Related Articles:' Enter Your Email To Receive Our Daily Newsletter Close var fnames = new Array();var ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';fnames[1]='FNAME';ftypes[1]='text';fnames[2]='LNAME';ftypes[2]='text';var err_style = ''; try{ err_style = mc_custom_error_style; } catch(e){ err_style = 'margin: 1em 0 0 0; padding: 1em 0.5em 0.5em 0.5em; background: FFEEEE none repeat scroll 0% 0%; font- weight: bold; float: left; z-index: 1; width: 80%; -moz-background-clip: -moz-initial; -moz-background-origin: -moz- initial; -moz-background-inline-policy: -moz-initial; color: FF0000;'; } var mce_jQuery = jQuery.noConflict(); mce_jQuery(document).ready( function($) { var options = { errorClass: 'mce_inline_error', errorElement: 'div', errorStyle: err_style, onkeyup: function(){}, onfocusout:function(){}, onblur:function(){} }; var mce_validator = mce_jQuery("#mc-embedded-subscribe-form").validate(options); options = { url: 'http://activistpost.us1.list-manage.com/subscribe/post-json? u=3ac8bebe085f73ea3503bbda3&id=b0c7fb76bd&c=?', type: 'GET', dataType: 'json', contentType: "application/json; charset=utf-8", beforeSubmit: function(){ mce_jQuery('#mce_tmp_error_msg').remove(); mce_jQuery('.datefield','#mc_embed_signup').each( function(){ var txt = 'filled'; var fields = new Array(); var i = 0; mce_jQuery(':text', this).each( function(){ fields[i] = this; i++; }); mce_jQuery(':hidden', this).each( function(){ if ( fields[0].value=='MM' && fields[1].value=='DD' && fields[2].value=='YYYY' ){ this.value = ''; } else if ( fields[0].value=='' && fields [1].value=='' && fields[2].value=='' ){ this.value = ''; } else { this.value = fields[0].value+'/'+fields[1].value+'/'+fields[2].value; } }); }); return mce_validator.form(); }, success: mce_success_cb }; mce_jQuery('#mc-embedded-subscribe-form').ajaxForm(options); }); function mce_success_cb(resp){ mce_jQuery('#mce-success-response').hide(); mce_jQuery('#mce-error-response').hide(); if (resp.result=="success"){ mce_jQuery('#mce-'+resp.result+'-response').show(); mce_jQuery('#mce-'+resp.result+'-response').html(resp.msg); mce_jQuery('#mc-embedded-subscribe-form').each(function(){ this.reset(); }); } else { var index = -1; var msg; try { var parts = resp.msg.split(' - ',2); if (parts[1]==undefined){ msg = resp.msg; } else { i = parseInt(parts[0]); if (i.toString() == parts[0]){ index = parts[0]; msg = parts[1]; } else { index = -1; msg = resp.msg; } } } catch(e){ index = -1; msg = resp.msg; } try{ if (index== -1){ mce_jQuery('#mce-'+resp.result+'-response').show(); mce_jQuery('#mce-'+resp.result+'-response').html(msg); } else { err_id = 'mce_tmp_error_msg'; html = ' '+msg+''; var input_id = '#mc_embed_signup'; var f = mce_jQuery(input_id); if (ftypes[index]=='address'){ input_id = '#mce-'+fnames[index]+'-addr1'; f = mce_jQuery(input_id).parent().parent().get(0); } else if (ftypes[index]=='date'){ input_id = '#mce-'+fnames[index]+'-month'; f = mce_jQuery(input_id).parent().parent().get(0); } else { input_id = '#mce-'+fnames[index]; f = mce_jQuery().parent(input_id).get(0); } if (f){ mce_jQuery(f).append(html); mce_jQuery(input_id).focus(); } else { mce_jQuery('#mce-'+resp.result+'-response').show(); mce_jQuery('#mce-'+resp.result+'-response').html(msg); } } } catch(e){ mce_jQuery('#mce-'+resp.result+'-response').show(); mce_jQuery('#mce-'+resp.result+'-response').html(msg); } } } BE THE CHANGE! 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30 января 2013, 23:48

Afghan Media Faces Uncertain Future As U.S. Withdraws

Danish Karokhel, like all Afghan journalists, couldn’t report freely during Taliban rule in the 1990s. The Islamic fundamentalist regime allowed only a single, state-run outlet, Radio Sharia, on the air. And with music banned and an independent press nonexistent, the broadcasts were essentially propaganda. Then came the bombs, followed by the boom. Since U.S.-led forces toppled the Taliban government in the months after the Sept. 11, 2011 attacks, U.S. government agencies and international aid organizations have poured hundreds of millions of dollars into building up the Afghan media industry. That sector now boasts over 75 television stations, 175 FM radio stations, hundreds of print publications –- including more than a dozen daily newspapers -– and several news agencies. “Around 10,000 journalists are working in those media outlets,” Karokhel said, “which is a big achievement." Karokhel, 36, is one of those thousands of journalists currently working in Afghanistan, having returned from a daily newspaper in Peshawar, a city in northwest Pakistan, after war broke out in the fall of 2001. He covered the bombing of Kabul for NBC, later working with the Institute for War and Peace Reporting. In 2004, Karokhel helped launch Pajhwok Afghan News, now Afghanistan’s largest independent news agency, with financial backing from the U.S. Agency for International Development (USAID). Pajhwok publishes articles in Pashto, Dari and English, and produces photos and videos that may be licensed by wire services and television stations. There’s a clear reason for governments and aid organizations to support Afghan media: a burgeoning democratic country not only deserves, but needs, a functioning and free press. Given that U.S. officials have long spoken of needing to win “hearts and minds” amid warfare, funding for media outlets -- offering not just news, but entertainment and music options -- is one way to try doing so. By supporting Afghan media, the U.S. also helps ensure that its policy positions aren’t missing from coverage of and debate over the war and continued presence of troops in the country. The U.S. has funded foreign media before, most notably in broadcasting Radio Free Europe and Radio Liberty into Soviet-occupied countries during the Cold War. Because there isn't a thriving advertising market or potentially large subscriber base in Afghanistan, news outlets have often relied on foreign aid for support. But as coalition forces prepare to withdraw troops in 2014, Afghan journalists are concerned that international funding could also dry up, potentially reversing the upward trajectory of their industry since the Taliban was toppled. “Just a decade ago, there were no independent media in Afghanistan,” a USAID spokesman said in a statement to The Huffington Post. “In recognition of the essential role that independent media and information play in a free and democratic society, USAID and the Department of State have provided $166 million to support media development in Afghanistan.” Since 2002, USAID and the State Department have supported numerous media projects in Afghanistan, such as the Salam Watandar radio network, which includes 53 independent FM radio stations, and Tolo TV and Arman FM, the most popular TV and radio stations. They’ve supported initiatives to expand cellular, TV and radio accessibility, according to a spokesman, along with establishing Nai Supporting Open Media, an organization that’s trained over 15,000 media professionals and promotes media advocacy. It’s not only the U.S. government funding the media in Afghanistan; international aid organizations and NGOs from other countries have also supported news outlets, radio and TV stations there. A 2012 BBC Media Action report described the role of donors in supporting media in Afghanistan as “probably greater than in any other country at any time." Due to the Afghan government’s reputation for corruption, there are understandable fears that international aid won’t reach the intended recipient. Yet in Pajhwok's case, donations haven’t gone missing. The news agency is widely regarded as a journalistic success, with the Committee to Protect Journalists honoring Karokhel and Farida Nekzad, a former managing editor, in 2008 for their work in "one of the world's most dangerous countries for the press." Nekzad, who left Pajhwok in 2009 to become director and editor-in-chief of the Wakht News Agency, said in an email that the situation for journalists gets “worse day by day,” with censorship, threats, and even killing. She wrote that journalists started with a “big hope for the good and better future , but unfortunately since 2005, [it’s] getting worse.” Nekzad, who is president of an organization for South Asian female journalists, also noted that despite some progress, women still don’t have the same opportunities as men in Afghanistan, who are more likely to be managers of most media organizations there. Although journalists have more opportunities to write and speak as they see fit than during the Taliban days, the country still ranked 150th out of 179 countries last year on Reporter Without Borders’ press freedom index. Journalists face intimidation from government bureaucrats and military officials or may choose to self-censor to avoid retribution. There is also continued violence against journalists, according to Nai’s annual media watch report, which counted 69 cases in 2012. Two reporters were killed, while others were injured, detained, beaten, insulted and threatened, according to the report. Pajhwok hasn’t been immune from the dangers facing journalists in Afghanistan. Three Pajhwok journalists have been killed in the news agency’s nine-year existence, including Ahmad Omaid Khpalwak, a 25-year-old reporter mistakenly shot by an American soldier responding to a series of insurgent suicide attacks in July 2011. Still, the Kabul-based Pajhwok grew to eight regional bureaus and over 100 employees, before beginning to scale back in 2012 following a funding deficit. Karokhel estimated that about 500 to 700 journalists lost their jobs nationwide last year. If 2012 was bad, several Afghan journalists told The Huffington Post they expect the coming years to be even worse -- especially if international donors follow coalition forces out of the country in 2014, a crucial year that will also feature a presidential election and the chance to see whether Afghanistan’s own military can successfully fight Taliban and insurgent fighters. LOOKING BLEAK As he discussed Pajhwok’s future, Karokhel spoke optimistically about the possibility of generating revenue through advertising and subscriptions in order for the organization to become more self-sustaining. For the immediate future, that seems like wishful thinking. Like other print-focused news outlets, Pajhwok faces an uphill battle, given still-widespread illiteracy in Afghanistan and low Internet penetration. Only three percent of Afghans have Internet access, according to Gallup, making it unlikely that someone could fund and run a news agency using online advertising. (The Afghan government recently pushed back on that study). Bob Dietz, coordinator for the Committee to Project Journalists’ Asia Program, and a booster of Pajhwok’s journalism for several years, acknowledges the financial obstacles ahead. In a chapter from CPJ’s forthcoming book, “Attacks on The Press,” Dietz wrote about visiting Pajhwok in September and seeing that “the agency had fallen on hard times, its staff was hollowed out, many of its reporters across the country unpaid for several months.” In an interview, Dietz described Pajhwok as a “terrific project,” while noting that the Afghan outlet -- along with others -– has to try to “figure out ways to survive.” Pajhwok currently receives support through USAID and the U.S. Embassy’s Public Diplomacy program. A USAID spokesman said the agency is "providing technical assistance" in "the areas of management and business development in order to ensure that it will be financially sustainable in the long term." The State Department "provided a grant to meet operational needs in transition, while encouraging Pajhwok to adjust its business model to better meet the market’s financial realities, focusing on products, demand and pricing," according to the spokesman. USAID and the State Department will also continue funding the Salam Watandar radio network, which a spokesman said is “poised to retain a strong presence in the Afghan independent radio sector beyond 2014.” The situation for many news outlets, however, looks bleak, and one already closed its doors. The Kabul Weekly, which launched in 2002 and drew praise for its independent streak, folded in 2011 as a result of financial pressures following its critical coverage of Afghan President Hamid Karzai. The paper quickly lost ads sponsored by the government and prominent businesses. The Guardian reported at the time that editor Mohammad Faheem Dashty was convinced “he had no choice but to shut down after more than a year of losses in a media market where most publications are simply bankrolled by warlords.” It’s not only warlords who fund publications to promote their viewpoints. Afghan journalists say Iran and Pakistan are looking for opportunities to fund news outlets in Afghanistan, presumably to put their own spin on the news, which some argue the U.S. is doing through its funding. Karokhel said he’s turned down Iranian offers to provide financial support, but is “worried some of the media outlets will accept that kind of offering.” Nekzad, too expressed concerns about the potential “misuse of the media by some warlord, political parties, even neighbor countries” if current donors -- namely the U.S. -- decrease funding. Parwiz Kawa, the 36-year-old editor-in-chief of the daily newspaper Hasht-e Subh, which translates as “8 A.M.” in English, also suggested to The Huffington Post that money-losing Afghan news outlets may increasingly look to neighboring countries like Iran and Pakistan for help. Hasht-e Subh was launched in 2007 with support from the Afghanistan Human Rights Commission, which Kawa said sponsors a page of each issue. A German NGO sponsors another, he said. The 15,000-circulation newspaper has also received support from the National Endowment for Democracy since 2009. Last month, Reporters Without Borders awarded its 2012 Press Freedom prize to Hasht-e Subh, describing the newspaper as “living evidence that freely-reported quality journalism can develop in the most difficult corners of the planet.” However, despite journalistic success in Afghanistan and recognition abroad, Hasht-e Subh has been forced to reduce its staff from a high of 150 employees in 2011 to around 100 today. Kawa also expects outside funding to news outlets to decrease in 2014, which, he said, “would be a loss for the freedom of speech and freedom of the press in Afghanistan.” A SUCCESS STORY While print outlets struggle to find a workable business model post-2014, television channels and radio stations may have a better chance of survival. There is more advertising money in TV and radio and those mediums aren’t negatively affected by high levels of illiteracy and lack of widespread Internet access. One of Afghanistan media’s biggest success stories in recent years has been on the broadcast side. In 2010, The New Yorker described Saad Mohseni, chairman of The Moby Group, as “Afghanistan’s first media mogul.” In addition to Afghan TV and radio holdings, Moby owns a record company, ad agency and production company, and it partnered with News Corp. on the Farsi 1 satellite network beamed into Iran. The Mohseni family, which operated businesses in Australia before the war, received $2.7 million in USAID grants to help launch their diversified media company. The company has claimed it takes in annual revenues of over $20 million, according to The New Yorker profile. In the launch of Arman FM and Tolo TV, USAID was the “biggest contributor” outside of the family, The New Yorker reported. “Funding from organizations like USAID was crucial to our decision to invest in Afghanistan,” Zaid Mohseni, a director of Moby Group, said in an email to The Huffington Post. “We certainly had the will to do it, but the funding allowed the project to be feasible commercially. Without the USAID funding, we would never have made those initial investments in the media sector.” Mohseni said that his family was told when they first received USAID funding “we should not expect further funding for that project and so we made sure that we made the business sustainable.” He noted that his brothers Saad and Jahid and sister Wajma all gained significant business experience in Australia before starting their company in Afghanistan. “We also invested everything we had into the business,” Mohseni said. “All property assets and savings were liquidated to invest in our Afghan business. So we had no choice but to succeed.” The Moby Group, which in 2010 launched Tolo News, the country’s only 24-hour satellite news channel, also owns channels focused primarily on entertainment, offering shows like "Afghan Star,” a version of “American Idol.” While the entertainment operation may be able to subsidize Tolo News to an extent, the news side did lay off some staff in the past year due to restructuring. “It is difficult to say if a news channel is sustainable on its own in Afghanistan,” Mohseni said. “It may still take some time for the market to grow to be able to support such channels in the future without assistance from other profitable divisions or outside assistance.” OUR JOBS AS JOURNALISTS Sami Mahdi, director of news and current affairs at the network 1TV, has similar concerns about the future of Afghan media beyond 2014, but he’s also quick to point out how far journalists have come over the past decade. “I think the media is doing a very good job in Afghanistan,” Mahdi said, by phone from Kabul. “You cannot compare it with our past. During the Taliban or, before that, during the Soviet presence in Afghanistan, or even during the king, we didn’t have an environment for our media and free expression.” “The media environment in Afghanistan is much better than if you compare it with the neighboring countries of the region,” Mahdi added. “You cannot find this in Central Asia, not in Iran, not in China, not in Pakistan. I think the situation is very good.” In December, the International Center for Journalists presented Mahdi with its Knight International Journalism Award for having “revolutionized Afghanistan’s media landscape.” “In a country where the Taliban once starved people of information, Mahdi is one of the most reliable sources of news,” the organization stated. “More than that, he has engaged Afghans in a way no other newscaster has.” Mahdi, whose career began at Tolo TV in 2007, has created innovative programing in Afghanistan tackling taboo subjects, like rape and domestic abuse. He launched the show “Niqab” (Mask), which allowed Afghan woman to wear masks while discussing the violence inflicted upon them before a live audience. Currently, Mahdi hosts the public affairs show “Kabul Debate Live” before a live TV audience and allows mobile users –- a growing segment of the population –- to engage with the program by voting on issues via text message. The show, which has featured interviews with prominent business and political leaders, also continues to generate controversy, a testament to the more open press that’s developed and matured over the past decade. “We are getting messages, letters from different groups, asking us to stop specific programming,” Mahdi said. “Four or five months ago, we got a letter from an insurgent group asking us to not put on the air news against them. We were not putting anything against anyone. We are doing our jobs as journalists.” This article is the first installment in “Dangerous Datelines,” a Huffington Post series on journalists working in difficult situations around the world. WATCH: 2011 CNN report on "Niqab," featuring Sami Mahdi.

09 января 2013, 04:23

Huh…It Must Be Something in the Water

Daisy Luther, ContributorActivist Post There’s definitely something in the water, and none of it is good. There is so much garbage in our water that you practically need an advanced degree in chemistry to just to figure it out.  It’s not a subject that can be ignored, though, because water is the most vital and life-sustaining substance that we can store. We want to store the most pure, high-quality consumables that we can, in order to maintain our optimum wellness during any type of disaster scenario, and that includes the water we store. Most preppers know the “Survival Rule of Three”:3 minutes without air3 days without water3 weeks without foodBased on that hierarchy, if the SHTF and you’re still breathing, your next focus needs to be on drinking water.  A well-prepared person will have that taken care of this by storing at least a one month supply of water for all members of the household, including pets. The basic rule for water storage is one gallon per day per person (and pet), and more if it is hot weather or you will be doing strenuous physical labor.When I first began prepping, I used to get people to give me their empty 2 liter soda pop bottles. I blithely filled those bottles up with tap water and squirreled them away in my attic.  I had, quite literally, hundreds of 2 liter bottles full of water. I’d washed them carefully, filled them up from my faucet, and added a drop of unscented chlorine bleach, just as all the prepping forums recommended. google_ad_client = "pub-1897954795849722"; /* 468x60, created 6/30/10 */ google_ad_slot = "8230781418"; google_ad_width = 468; google_ad_height = 60; Then I began to learn more about the dangers that were rife in tap water.  I switched to bottled water….then began to learn about contaminants in bottled water.  I was stymied – how do you provide your family with a proper water supply when it all seems to be contaminated?  Moreover, what are you supposed to drink on a day-to-day basis?  I had already cut out all sugary beverages – we drank nothing but water throughout the day.  But was I still poisoning my family?Environmentally Toxic Tap Water The toxins present in municipal water supplies vary from city to city.  In the US Midwest, for example, there are high levels of pesticides (in particular, weed killer) due to agricultural practices that contaminate the groundwater (this also affects well water in the area).  In 22 states with military contractors, percholate, the explosive component of rocket fuel, has been found in the tap water.   In 2008, the AP released a report informing us that water treatment centers were unable to remove all traces of pharmaceutical drugs from the water supply.  (The drugs were introduced into the water by human and animal urine.)To determine the extent of drinking water contamination, an Associated Press investigative team surveyed the water providers of the 50 largest cities in the United States and 52 smaller communities, analyzed federal databases and scientific reports, and interviewed government and corporate officials. The investigation found widespread evidence of drinking water contaminated with both over-the-counter and prescription drugs, including painkillers, hormones, antibiotics, anti-convulsants, anti-depressants, and drugs for cancer or heart disease. Of the 28 major cities that tested their water supplies for pharmaceuticals, only two said those tests showed no pharmaceutical contamination. In Philadelphia, 56 different drugs and drug byproducts were found in treated drinking water, and 63 were found in the city’s watershed. SourceAlso found in tap water are contaminants like aluminum, arsenic and lead (more on lead below).Chemical Cocktails – It’s All for Your Own Good If the outside contaminants aren’t enough of a worry, how about the chemicals that are deliberately added to the water supply by the treatment facilities themselves?First of all, in North America, tap water is chlorinated.  This removes disease-causing bacteria, which is great, but it also creates numerous toxic byproducts, like chloroform and trihalomethanes. According to Dr. Michael J. Plewa, a genetic toxicology expert at the University of Illinois, chlorinated water is carcinogenic.Individuals who consume chlorinated drinking water have an elevated risk of cancer of the bladder, stomach, pancreas, kidney and rectum as well as Hodgkin’s and non-Hodgkin’s lymphoma.Some facilities are also adding ammonia to the chlorinated water, which creates “chloraminated” water. Anyone who has ever cleaned a house knows that mixing bleach (chlorine) and ammonia is a no-no – so why are the facilities doing so?  Apparently it reduces the carcinogenic byproducts created by adding chlorine – which must be done to meet EPA standards.  Unfortunately, it creates a brand new variety of toxins.  Fish and reptiles die when subjected to chloraminated water, and the effects on humans are just now being studied.To make matters worse, chloraminated water reacts with the lead in water pipes, releasing yet another toxin into the public water system.  In Washington DC, when chloramination of the water first began, lead levels were found to be 4,800 times the UN’s acceptable level for the toxic heavy metal! No discussion on water would be complete without a dishonorable mention for the inclusion of fluoride any many municipalities.  The fluoride added to the water supply is sodium fluoride, and is also sold as pesticide, bearing the warning “deadly to humans”. While the talking heads of media and government are telling consumers that the fluoride in drinking water will assure them of good dental health, people are actually being poisoned.  The consumption of fluoride lowers IQs, causes infertility, has been linked to cancer and causes hardening of the arteries.  In fact, one study “published in the January edition of the journal Nuclear Medicine Communications, the research highlights the fact that mass fluoride exposure may be to blame for the cardiovascular disease epidemic that takes more lives each year than cancer. In 2008, cardiovascular killed 17 million people. According to the authors of the study:The coronary fluoride uptake value in patients with cardiovascular events was significantly higher than in patients without cardiovascular events. (Source)It’s also important to note that the inclusion of fluoride in drinking water has no discernible positive effect on dental health. In fact, it can cause dental fluorosis,  a visible overexposure to fluoride resulting in  subtle white flecks in the tooth enamel all the way to a pronounced brown staining,. “Health Ranger” Mike Adams blows the lid off fluoride in this 9 minute video.Bottled Isn’t Better To add to the frustration, most bottled water is not that much safer than tap water.  In fact, the Environmental Working Group (EWG) found 38 contaminants in the top 10 brands of bottled water sold in the United States.  The contaminants included disinfection byproducts, fertilizer residue, and pain medication, to name a few. Two brands, Walmart and Giant, were chemically identical to tap water, but sold at approximately 1900 times the price of the water from your faucet. In fact, according to some reports, more than 40% of bottled waters on the market are nothing more than tap water (including Pepsi’s Aquafina).In a report, the Environmental Protection Agency warns consumers that you just don’t know what you are getting with bottled water.Some bottled water is treated more than tap water, while some is treated less or not treated at all. Bottled water costs much more than tap water on a per gallon basis… Consumers who choose to purchase bottled water should carefully read its label to understand what they are buying, whether it is a better taste, or a certain method of treatment.Another issue with bottled water is that chemicals leach into the water from the bottle it is contained in.   Chemicals like BPA and phthalates mimic hormones in your body, causing symptoms like brain damage, early puberty, prostrate problems, decreased sperm counts, decreased immune functions, obesity and learning issues.What Can You Do? With all of the bad news about the water supply, you’re probably feeling as frustrated as I was.  The good news is, there are actions you can take to ensure the best possible supply of water in our  increasingly contaminated world.Get spring water right from the source.Absolutely the best option for drinking water is finding a spring nearby and filling your own bottles with it.  There is probably a spring nearby with water free for the taking.  Use this interactive map to find a spring close to you. (Unfortunately, not all countries are represented on this map, but the US and many European countries are.) Spring water is naturally filtered by the earth, leaving a clear delicious water loaded with healthy minerals. Even better, in many places, spring water is free – just bring your containers and fill them up!Filter your water. Get a good, gravity-fed water filter.  This will allow you to remove many of the toxins found in tap water or surface water.  I have the Big Berkey and have been very pleased with it.  If your municipality adds fluoride to the water, it is necessary to also purchase a specific filter to remove the fluoride. A gravity fed filter does not require power to work, making it an excellent choice post-disaster. Choose your containers carefully. Glass is the most healthful option for water storage; however, large glass containers full of water are heavy and can break.   If you are using plastic containers, the safest ones are marked Polyethylene terephthalate (PET or PETE) or High density polyethylene (HDPE).  Plastic containers that formerly contained juice or water are already compromised from the enzymes in those liquids. Water stored in plastic bottles should not be exposed to extremes of temperature, as this can also cause the plastic to leach chemicals into the water.Reverse Osmosis and distillation alone are not enough. The purification processes of Reverse Osmosis and distillation do not remove do not remove bacteria, viruses, or certain chemicals.  These processes, while good, should be followed by filtration. google_ad_client = "ca-pub-1897954795849722"; /* 468x60, created 7/28/12 */ google_ad_slot = "9833874419"; google_ad_width = 468; google_ad_height = 60; Water stored or purified with bleach should be filtered. If you store your water with a couple of drops of bleach in it, you should put it through your water filter if possible.  I no longer store my water with bleach because I use my stored water on a rotating basis.  We only drink spring water, and the 5 gallon jugs are used within 6 weeks.Daisy Luther is a freelance writer and editor. Her website, The Organic Prepper, where this article first appeared, offers information on healthy prepping, including premium nutritional choices, general wellness and non-tech solutions. 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07 января 2013, 16:34

Frontrunning: January 7

Secret and Lies of the Bailout (Rolling Stone) Banks Win 4-Year Delay as Basel Liquidity Rule Loosened (BBG) Hedge Funds Squeezed With Shorts Beating S&P 500 (BBG) Bankruptcy regime for nations urged (FT) Is the Fed Doing Enough—or Too Much—to Aid Recovery (WSJ) Cracks widen in US debt ceiling debate (FT) McConnell Takes Taxes Off the Table in Debt Limit Negotiations (BBG) Abe Seen Spending 12 Trillion Yen to Boost Japan’s Economy (BBG) Monti, Berlusconi Spar on Taxes in Weekend Media Barrage (BBG) Cameron Sets New Priorities for U.K. Coalition (BBG) Defiant Assad Rules Out Talks With Rebels (WSJ) Korea Seen Resisting Rate Cut as Won Threatens Exports (BBG)   Overnight Media Recap WSJ * Republicans won't accept further tax increases in the United States in coming budget and debt negotiations, the party's Senate leader said on Sunday, putting Republican lawmakers on a collision course with Democrats over raising the government's borrowing limit. * Global banking regulators watered down a key element of their plan for creating a safer financial system, giving ground to banks that argued the rules were unworkable and financially risky. * Banks were closing in on a $10 billion foreclosure-abuse settlement with U.S. regulators that could be announced as soon as on Monday, according to people familiar with the talks. * ExxonMobil Corp said it will spend $14 billion to develop the Hebron oil field off the shore of eastern Canadian province Newfoundland and Labrador, a project it expects to yield 700 million barrels of oil. * Syrian President Bashar al-Assad issued a defiant call to war to defend the country against what he called a foreign-inspired rebellion, ruling out talks with rebels and rejecting international peace efforts for a political plan of his own that keeps him in power. * Flowers Foods and Grupo Bimbo are in discussions to acquire pieces of Hostess Brands Inc's bread business, as the maker of Wonder Bread and Twinkies sells off assets and liquidates, said people familiar with the talks. * Oprah Winfrey's OWN Network unveiled six new original series on Saturday aimed at bolstering the fledgling network's audiences.   FT Headlines 'MASSIVE SOFTENING' OF BASEL BANK RULES SONY REJOINS BMG FOR PARLOPHONE BID TERRA FIRMA EYES BIG PICTURE IN PLANS TO SELL ODEON CHAINMORRISON LOSES MANAGER BEFORE SALES UPDATE AXA SEEKS 1 BLN STG FOR LONG-LEASE UK FUND COMPANIES PAY HEED TO INVESTOR PROTESTS OVER EXECUTIVE SALARIES Overview 'MASSIVE SOFTENING' OF BASEL BANK RULES Regulators have announced that the first-ever global liquidity standards will be less tough than expected and will not be fully enforced until 2019, four years later than expected. SONY REJOINS BMG FOR PARLOPHONE BID BMG, a joint venture between Bertelsmann and KKR , has teamed up with Sony to bid for Parlophone from Vivendi's Universal Music Group. TERRA FIRMA EYES BIG PICTURE IN PLANS TO SELL ODEON CHAIN Private equity group Terra Firma is looking to sell assets this year that may include European cinema chain Odeon & UCI Group. MORRISON LOSES MANAGER BEFORE SALES UPDATE Wm Morrison's company secretary Greg McMahon is leaving the supermarket chain, people familiar with the situation said, marking the sixth senior management change at the company over the past year. AXA SEEKS 1 BLN STG FOR LONG-LEASE UK FUND AXA Real Estate, the property arm of the French insurer, is raising 1 billion pounds ($1.6 billion) from investors to buy buildings in the UK with long leases. COMPANIES PAY HEED TO INVESTOR PROTESTS OVER EXECUTIVE SALARIES Britain's biggest firms are set to rein back executive pay as shareholders ramp up their campaign to keep pay and bonuses under control.   NYT * A $10 billion settlement with U.S. regulators to resolve claims of foreclosure abuses by 14 major lenders is expected to be announced as early as Monday, several people with knowledge of the discussions said on Sunday. * A group of top regulators and central bankers on Sunday gave banks around the world more time to meet new rules aimed at preventing financial crises, saying they wanted to avoid the possibility of damaging the economic recovery. * Two pension funds that agreed to a relatively small settlement with the directors of Bank of America over its acquisition of Merrill Lynch are being ordered by a federal judge to strike a better deal beginning on Monday. * Patrick Dempsey, best known for playing a hearthrob doctor on "Grey's Anatomy," said on Friday that he had prevailed in an auction of Tully's Coffee, a bankrupt coffee chain based in Seattle.   Canada THE GLOBE AND MAIL * Ontario Liberal leadership contender Glen Murray is calling for a "paradigm shift" in the way the province finances and develops public transit projects. Many people have difficulty getting to their offices, he said, because 90 percent are a kilometre or more away from subways, streetcars and other public transit systems. * With fiscal prudence poised to take the spotlight in the British Columbia election, a special committee with a Liberal majority has decided to replace the province's outspoken auditor general John Doyle instead of renewing his term, according to the NDP Opposition. Reports in the business section: * Shaw Communications Inc's strategy to fend off competition from Telus Corp will come under scrutiny when the cable company releases its fiscal first-quarter results. The Calgary-based company is scheduled to report its financial results on Wednesday, just hours before its annual general meeting of shareholders. NATIONAL POST * Canada was on a list of terrorist targets found by U.S. Navy SEALs during the May 2011 raid on Osama bin Laden's compound in Abbottabad, Pakistan, according to a newly declassified intelligence report by the Integrated Threat Assessment Centre. * The Canadian navy's joint support ship program is expected to come under the political microscope within weeks in what is likely another defence equipment embarrassment for the Harper government. The parliamentary budget officer has been examining the program and is poised to release his findings once MPs return from their Christmas break.   China CHINA SECURITIES JOURNAL -- More than 90 percent of Chinese fund managers recently polled by this newspaper forecast that China's stock market will stage a rebound this year. The market was generally weak over the past few years due in part to a slowdown of the world's second-largest economy. -- China may not resume initial public offerings (IPOs) of shares in the first quarter of this year as firms which intend to float shares will be asked to add information on their 2012 annual results. IPOs were suspended in November due to the weak domestic stock market. SHANGHAI SECURITIES -- Top Chinese steel maker Baoshan Iron & Steel Co said it had so far bought back 1.92 billion yuan ($308 million) of its own shares in response to a regulatory call last year for listed companies to buy back their own shares to support the stock market. SECURITIES TIMES -- Livzon Pharmaceutical Group Inc said trading in its shares will be suspended starting Monday pending a major announcement. Analysts said the company may be planning to convert its Shenzhen-listed B-shares into Hong Kong-listed H-shares. CHINA DAILY -- With the majority of private enterprises in China faced with passing on the family business to the second generation, young entrepreneurs are facing a huge challenge in taking over family brands and presenting them to the world. PEOPLE'S DAILY -- A commentary urges government departments to stop sending gifts to each other during the Chinese lunar new year in mid-February to help fight against official corruption.     Fly On The Wall 7:00 AM Market Snapshot ANALYST RESEARCH Upgrades British American Tobacco (BTI) upgraded to Buy from Hold at Deutsche BankCanon (CAJ) upgraded to Buy from Hold at JefferiesCredit Suisse (CS) upgraded to Outperform from Sector Perform at RBC CapitalCtrip.com (CTRP) upgraded to Equal Weight from Underweight at BarclaysFamily Dollar (FDO) upgraded to Overweight from Equal Weight at BarclaysFlowers Foods (FLO) upgraded to Buy from Hold at Deutsche BankGeorgia Gulf (GGC) upgraded to Neutral from Reduce at SunTrustHarmon (HAR) upgraded to Outperform from neutral at RW BairdHess Corp. (HES) upgraded to Buy from Hold at Deutsche BankHexcel (HXL) upgraded to Buy from Neutral at GoldmanMettler-Toledo (MTD) upgraded to Buy from Neutral at BofA/MerrillNorthrop Grumman (NOC) upgraded to Sector Perform from Underperform at RBC CapitalTextron (TXT) upgraded to Outperform from Sector Perform at RBC CapitalWalgreen (WAG) upgraded to Buy from Hold at Jefferies Downgrades ArcelorMittal (MT) downgraded to Sector Perform from Outperform at RBC CapitalBNY Mellon (BK) downgraded to Sell from Neutral at GoldmanCree (CREE) downgraded to Hold from Buy at CanaccordDSW (DSW) downgraded to Hold from Buy at Brean CapitalFamily Dollar (FDO) downgraded to Equal Weight from Overweight at Morgan StanleyFinish Line (FINL) downgraded to Neutral from Buy at Janney CapitalIngersoll-Rand (IR) downgraded to Market Perform from Outperform at Wells FargoLowe's (LOW) downgraded to Sell from Hold at CanaccordO'Reilly Automotive (ORLY) downgraded to Neutral from Overweight at Piper JaffrayRexnord (RXN) downgraded to Sell from Hold at Deutsche BankSpirit AeroSystems (SPR) downgraded to Sector Perform from Outperform at RBC CapitalUnder Armour (UA) downgraded to Equal Weight from Overweight at Morgan StanleyWatts Water (WTS) downgraded to Hold from Buy at Brean Capital Initiations SolarCity (SCTY) initiated with a Buy at GoldmanSolarCity (SCTY) initiated with a Buy at Roth CapitalSolarCity (SCTY) initiated with an Outperform at Credit SuisseSpectrum Brands (SPB) coverage reinstated with a Buy at Deutsche Bank HOT STOCKS A.M Best withdrew rating of six life insurance units of AIG (AIG)Nebraska Governor Heineman to review final Keystone pipeline (TRP) route proposalUS Airways (LCC), American Airlines (AAMRQ) pilots announced framework of employment agreementHumana (HUM) expects higher sales for individual Medicare Advantage plans in 2013Lenovo (LNVGY) introduced "Interpersonal Computing" with company’s first table PC Illumina (ILMN) acquired Verinata Health for $350M NEWSPAPERS/WEBSITES U.S. businesses took on new office space at a sluggish pace in Q4, as employers remained cautious about adding jobs, the Wall Street Journal reportsThis week Walgreen Co. (WAG) executives will outline what's ahead for the drugstore chain in 2013, with some analysts saying a busy flu season and firmer prescription orders could help the company outperform its rivals, the Wall Street Journal reportsMajor U.S. technology companies could miss estimates for Q4 earnings as "fiscal cliff" concerns likely led some corporate clients to tighten their belts last month and hold off on spending all of their 2012 IT budgets, Reuters reportsThe U.S. dominates the list of places that global commercial real estate investors would prefer to invest their money this year, while China has lost some luster and Turkey has drawn more interest, according to an annual survey by the Association of Foreign Investors in Real Estate, Reuters reportsChina Investment Corp. may acquire a holding of 4% to 10% in Daimler AG (DDAIF), according to the Chinese newspaper People’s Daily which  reported the country’s sovereign-wealth fund may buy a stake in the luxury car maker, Bloomberg reportsThe return of $10B-plus drug deals may be here as pharmaceutical companies including Pfizer (PFE) and Bristol-Myers Squibb (BMY) may be ready to start buying again. Five of the largest U.S. drug makers had more than $70B in cash, near cash and short-term investments at the end of the Q3, Bloomberg reports BARRON’S Delta Air Lines (DAL) is best-of-breed, could reach $18.00 per shareWith new TLDs, VeriSign (VRSN) could see emulators emerge SYNDICATE lululemon (LULU) files to sell 5.7M shares of stock for Chairman Dennis Wilson

06 января 2013, 19:41

British astronomers launch advanced planet search to look for signs of life

Robotic telescopes in Chile's Atacama desert will conduct Next Generation Transit Survey to analyse atmospheres for cluesThe art of hunting planets has come so far that astronomers can now list hundreds of alien worlds that orbit stars so faint they are not even visible as pinpricks in the clear night sky.Little is known of these far-flung planets. The most conspicuous are huge, the size of Jupiter, and scorched from circling so close to their suns. Others are giant iceballs, or waterworlds, or even rocky like Earth. But the finer details are a mystery, the stuff of speculation more than science.To find out more about these other worlds, a team led by British astronomers is launching an ambitious search for planets that orbit the nearest, brightest stars to Earth. Their aim is to find prime candidates for the most important question of all: is there life elsewhere?"In the end, this is about understanding our place in all this around us. Why are we here? What are the chances that similar things can occur elsewhere? What range of life is there?" says Don Pollacco, a planet hunter at the University of Warwick. "We are at a point in history where we are close to being able to answer these questions."Construction work on the £2m Next Generation Transit Survey (NGTS) starts early this year when the first of a dozen robotic telescopes is hauled to the top of the 2,635-metre (8,645ft) Paranal mountain in Chile's Atacama desert. The isolated site is home to several other facilities, including the European Southern Observatory's Very Large Telescope, and has excellent atmospheric conditions for stargazing.The NGTS telescopes stand as high as a person on their mounts. They are steered remotely, and send information back to the astronomers over the internet. Once fully installed, the telescopes will stare up at the sky through the open roof of a protective building made by a Cornish firm noted for its odour-trapping covers for sewage works and glass-fibre cat flaps.The telescopes are exquisitely sensitive to changes in the brightness of stars. Working in unison, they will keep watch for fleeting shadows cast by unknown planets as they cross the faces of their suns. A planet wandering in front of its star – as seen from Earth – causes a momentary dimming of light, imperceptible to the human eye, which repeats with every orbit.The team expects to take four years to complete its survey of bright and nearby stars. Every year, each telescope will look at four patches of sky the size of a hand spread wide at arm's length. The group, which includes astronomers from the German Aerospace Centre and the Geneva Observatory, hope to spot scores of planets two to five times the diameter of Earth.Astronomers use the so-called transit technique to hunt for new planets all the time. But NGTS is unique in targeting smallish planets around very bright stars. These planets should be ripe for having their atmospheres analysed, to reveal what gases make up their alien air. If life exists on another world, the atmosphere should carry its signature.On Earth, the air contains a mix of gases that betrays the presence of living organisms. For example, only plants and photosynthetic bacteria churn out large volumes of oxygen. Indirectly, water vapour in the air points to liquid water on the ground. All life on Earth depends on water, and the same may apply to life as we know it elsewhere.There are two ways to measure the atmosphere of a transiting planet. Both are fiendishly difficult, but made marginally easier if the star the planet orbits is bright. The most common way is to measure the various wavelengths of light coming from a planet's host star, and see how these change as the planet moves across its face. In transit, some starlight passes through the thin ring of the planet's atmosphere, and is absorbed according to the gases it contains.The second method is trickier still. It looks for changes in light coming from the planet as it moves behind the star. Just as the moon appears bright because it reflects sunlight our way, so faraway planets reflect light from their own suns to Earth. This desperately faint light has passed through the planet's atmosphere and so carries the signature of its constituent gases.Astronomers have already used Nasa's Hubble Space Telescope and Spitzer, the agency's orbiting infra-red observatory, to take a quick look at the thick atmospheres of some gas giants beyond the solar system. But measuring the thin bands of atmosphere around rocky – and potentially habitable – planets will require more impressive know-how than exists today."A lot of planets we will find will be rocky, but we will not be able to measure their atmospheres straight off," says Pollacco. "These will be the ones that get done first when we have the technology."To get the planet survey under way, the astronomical equipment must be hauled to the Chilean desert from several countries. The steerable mounts are in the US and ready to be shipped to South America. The optics for the telescopes are in Austria. All but one of the detectors are in the UK. The outer building to house the array is due to reach the site from Cornwall around March.Pollacco said the team would draw on a range of other land and space-based telescopes to study the atmospheres of the planets they found. First in line will be the Very Large Telescope, which is already up and running on Paranal mountain, and the Spitzer Space Telescope. But more hope rests on Nasa's James Webb Space Telescope, a successor to Hubble, which is due to launch in five years, and the European Extra Large Telescope, approved for construction at Paranal at a council meeting of the European Southern Observatory in December last year.Two other much smaller space observatories will join the effort if they are not cancelled in coming years. Nasa's Finesse (Fast Infra-red Exoplanet Spectroscopy Survey Explorer) mission, and the European Space Agency's Echo mission (Exoplanet Characterisation Observatory), are both designed to study and characterise the atmospheres of exoplanets.Even with all this technology, the task is formidable. To capture starlight that has passed through a planet's atmosphere is hard enough. To spot how its spectrum has changed as a result is harder still. Then those changes must be attributed to individual gases in the alien air, all as the star's brightness varies over time, and changes in temperature and pressure subtly change the properties of the telescopes on Earth. "It's a nightmare. It's incredibly difficult to do," says Pollacco. "But if this was easy to do, it would have been done already."AstronomyAlien lifeSpaceChileAmericasIan Sampleguardian.co.uk © 2013 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds

02 января 2013, 23:33

Don't Show Bernanke This Chart Of Gold Loans In India

One of the Fed Chairman's most memorable lines in recent history is that "gold is not money... it is tradition." Perhaps he was merely listening to the Fed's computers, Ferbus, Edo and Sigma, which we now know form the backbone of US central planning and whose DSGE model output is usually spot on until it happens to be catastrophically wrong, on the issue. Or perhaps that is merely what one is taught (and teaches) in the Princeton economics department. Whatever the reason for Bernanke's belief, don't show him this chart from a just released "Report of the Working Group to Study the Issues Related to Gold Imports and Gold Loans by NBFCs" in India, part of a coordinated campaign to minimize Indian gold demand and imports whose direct substitution to "(un)sound money" in the country is one of the reason being attributed for the nation's high current account deficit (as reported earlier) and why the finance minister said "demand for gold must be moderated." The chart shows the staggering eightfold increase in India's gold loans "which monetize the idle gold in the country", in just four short years. In short it proves that in India, gold is the only real money, and is the only fallback option in a country where inflation is still rampant, and where even simple peasants prefer to keep their wealth not in the local paper currency, which has been losing its value aggressively in recent years, but in the shiny metal. Must be "tradition." Here are some of the salient points from the report on the relentless surge of gold's popularity in India where it is now effectively, a parallel currency, and is accepted as money good (and in many cases, better) collateral for those who need short-term liquidity and funding: Possession of gold has been a symbol of prosperity in India and is considered a safest form of investment that provides hedge against inflation. Gold has always been a highly coveted product not only in the form of jewellery, gold bars or bullion, but also has the ready acceptability as collateral for the lenders because of its high liquidity character. According to an estimate of World Gold Council, about 10 per cent of world’s gold is in India’s possession. Accumulated Gold stock in India is around 18,000 to 19,000 tonnes as per independent estimates. During 2002-2012, annual gold demand has remained relatively stable at around between 700 to 900 tonnes despite the rise in prices from Rs. 13,333 to Rs. 86,958 per troy ounce (as on May 25, 2012). In India, the demand for gold has not been adversely impacted by rising prices.   Genesis of Gold Loan Market in India   In India, it is believed that most of the gold is held by people in rural areas and in many cases this is the only asset they have in their possession though in small quantity. All the while, rural Indians know that if his crop fails or his family is sick, he can raise cash in a moment from the goldsmith or may be pawnbrokers and moneylenders, because the rural India lags in availing banking facilities. Therefore, even the pattern of saving in India differs for various income groups. While richer sections diversify their portfolio according to risk-return equation, the poor rely more on commodities like gold as well as silver. The jewellery bought in times of prosperity has been pawned or sold for cash in periods of distress or need. Over the years, some portion of this is being used as collateral for borrowing in the informal market, though estimates is not available. It is a common practice in India that gold is pawned, bought back and re-pawned to manage day-to-day needs of the poor and middle class. The pledging of gold ornaments and other gold assets to local pawnbrokers and money lenders to avail loans has been prevalent in the Indian society over ages. Due to the increased holding of gold as an asset among large section of people as also the borrowing practices against gold in the informal sector have encouraged some loan companies to provide loans against the collateral of used gold jewelleries for years and over a period to emerge as ‘specialised gold loan companies’.   Some independent estimates indicate that rural India accounts for about 65 per cent of total gold stock in the country. At times of emergency, gold ensures a loan almost instantaneously for the poor and without any documentation process. Most of the loans are for meeting unforeseen contingencies and may be categorized as personal. Further, growth in middle income classes and increase in the earning capacity of women, a core customer group for gold is expected to further boost the demand of gold. The demand for gold has a regional bias with southern Indian states accounting for around 40 per cent of the annual demand, followed by the west (25 per cent), north (20-25 per cent) and east (10-15 per cent). Accordingly, even the gold loan market has also developed on the same lines where a large portion of market is concentrated in southern India. India continues to be one of the largest gold markets in the world. The attraction towards gold in India stems from varied historical and cultural factors and its perceived safety in times of economic stress.   Since 1990, with the repeal of Gold Control Act, Indians have been allowed to hold gold bars. In the year 1993, the provisions of Foreign Exchange Regulation Act (FERA) relating to gold were repealed and imports were allowed by NRIs and since 1997 gold imports were brought under Open General License. All these gave fillip for the development of not only the gold market but also the gold loans market. With a view to bring the gold holdings to the core financial market, several gold based financial products have been made available to retail consumers in the Indian market from time to time. Recently, Exchange Traded Gold Funds (ETF) has also been allowed in the Indian markets, which have received a positive response from investors.   Structure of the Players in Gold Loan Market   Borrowing against gold is one of the popular instruments based on physical pledge of gold and it has been working well with Indian rural household’s mindset, which typically views gold as an important saving instrument that is liquid and can be converted into cash instantly to meet any urgent needs. The market is very well established in the Southern states of India, which accounts for the highest accumulated gold stock. Further, traditionally gold holders in Southern India are more open to accept and exercise the option of pledging gold as compared to other regions in the country which are reluctant to pledge jewellery or ornaments for borrowing money. All of the above is purely on the regulated side of things. It is in the gold "black market" in India where things get really exciting: In addition to a growing organised gold loans market, there is a large long-operated, un-organised gold loans market which is believed to be several times the size of organised gold loans market. There are no official estimates available on the size of this market, which is marked with the presence of numerous pawnbrokers, moneylenders and land lords operating at a local level. These players are quite active in rural areas of India and provide loans against jewellery to families in need at interest rates in excess of 30 percent. These operators have a strong understanding of the local customer base and offer an advantage of immediate liquidity to customers in need, with extreme flexible hours of accessibility, without requirements of any elaborate formalities and documentation. However, these players are completely unregulated leaving the customers vulnerable to exploitation at the hands of these moneylenders and pawn-brokers. So in other words, in India gold is the most fungible asset, and the most rapidly converted into other forms of liquidity, to the point where it is not only the currency but also the true store of value. Sure enough: Gold as an asset is liquid and can be readily exchanged for cash even in the informal market. With the gold market getting more organized within a formal setup, in recent years there has been rapid growth in the gold loans market particularly in gold loans disbursed by Banks and NBFCs (Table 6.1). Both demand and supply side factors have played important roles in bringing about this  growth. From the demand side, holders of gold were able to get cash in lieu of their gold in a formal setup and at higher loan to value ratios at relatively less rate of interest with better terms when compared with the informal segment. From the supply side, banks and NBFCs were able to disburse loans against collateral whose value was stable even in times of financial turmoil. There's more: As gold loans are issued solely on the basis of gold jewellery as collateral, the high growth rates observed for gold loans in recent years could be reflecting the emergence of a liquidity motive apart from the conventional saving motive to acquire gold. The strengthening of liquidity motive over time could result in increased demand for gold loans. The rapid growth in gold loans in recent years indicates unleashing the latent demand for liquidity from significant proportion of the population who faced severe borrowing constraints in the past. This could also be viewed as an offshoot of the huge rise in gold price along with liberal loan to value ratios that existed till the recent past. The prospects of gold value appreciation together with easy and flexible availability of gold loans increase the demand for gold and thereby to gold imports.   It is known that the gold demand in India is influenced strongly by the feature of gold as an attractive investment option. The recent gold loan growth phase coincided with the rise in growth of imports of gold, which grew, despite the rise in gold prices. A quiet swing in savings from financial products to assets, showing propensity for further growth, is visible in the Indian economy. There were apprehensions that liberal loan to value ratio and consistent rise in gold prices could result in an incentive for individuals, to consider investment in gold jewellery as an arbitrage opportunity, by pledging the purchased jewellery and use the proceeds to buy gold jewellery to take advantage of future appreciation. Thus, gold loans and demand for gold (jewellery) can theoretically become mutually reinforcing in the long term. But don't worry, it is not money. It is only "tradition." Needless to say, the overarching theme of this report, whose purpose is to isolate the attractiveness of gold to the general population, and most importantly, prevent it, is that gold demand must be limited as the only control a collapsing central-bank based statist system has is in controlling "money" that is infinitely dilutable and can inflate away debt, not the type that actually has value, and that a central bank can't create out of thin binary air. Hence the report's conclusion: Summing-up:   There is a need to moderate the demand for gold imports, as ensuring external sector’s stability is critical. But, it is necessary to recognise that demand for gold is not strictly amenable to policy changes and also is price inelastic due to varied reasons. What is critical is to ensure provision of real returns to investors through various financial savings products. What is also relevant is the need for banks to introduce new gold-backed financial products that may reduce or postpone the demand for gold imports. The Working Group believes that providing real rate of return to investors through alternative instruments holds the key to reducing the excessive  demand for gold. Meanwhile, there is also a need to increase monetisation of idle gold stocks in the economy for productive purposes. As of now, there appears to be no close substitute to wean away investors’ attention from gold. Investors’ awareness and education is important, in this context, to channel the investment to gold-backed financial products. Banks and NBFCs may continue to deliver gold jewellery loans, which monetises the idle gold in the country. The gold loan market has grown well in recent years. It is time for consolidation of the operations of the gold loan NBFCs. The gold loans NBFCs need to transform themselves into institutions free of complaints, have proper documentation and auction procedures, with rationalised interest rate structure and have a branch network that is fully safe and secure. Gold loans NBFCs’ linkage with formal financial institutions may be reduced gradually. Such transformation ensures the gold loans NBFCs’ future growth more robust, besides making them a contributing segment to the financial inclusion process. One can almost feel the panic. And yet the real message here is between the lines: just like the US government's veiled threat to curb gun sales, and/or to adjust the second amendment altogether resulted in precisely the opposite reaction to that intended, i.e., a record surge in purchases of all gun related products, so India's ever more aggressive attempts to curb gold as a monetary equivalent will simply force the population to hoard ever more gold, result in even greater gold imports, both using legal and less than legal means, but most importantly, lead to a surge in the gold black market as the government's more explicit intervention in the definition of what is and isn't money forces more and more Indians to seek the safety of the yellow metal in ever greater numbers. What this means for the supply and demand dynamics of not paper, but real physical gold, we leave to our readers to decipher. Failing that, they can always just sunmit an inquiry into the Princeton economics department.