World financial news

Billionaire Warren Buffett wants Berkshire Hathaway shareholders to know that the company has someone in mind to replace him eventually, but he’s emphasizing that he has no plans to leave.

Buffett offered a couple new details about Berkshire’s succession planning in his annual shareholder letter Saturday. Investors have long worried about who will replace Berkshire’s 81-year-old CEO.

Buffett isn’t naming the successor. But he says the Berkshire board is enthusiastic about the executive it has picked. He says there are two good back-up candidates.

Previously, Buffett had said only that the board had three internal candidates for the job.

Berkshire has also cleared up some succession questions by hiring two hedge fund managers. Buffett says those two have the “brains, judgment and character” to manage Berkshire’s entire portfolio eventually.

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French bank Credit Agricole SA reported a euro3.07 billion ($4.06 billion) net loss in the fourth quarter on Thursday, as an intensifying European debt crisis drove down the value of its Greek bonds and shaved billions off the bank’s bottom line.

Credit Agricole _ hit by the Greek debt crisis largely through its ownership of Greek bank Emporiki _ said fourth-quarter net profit plunged nearly tenfold from a loss of euro328 million in the last quarter of 2010. It also posted a net loss for 2011 of euro1.47 billion.

Investors dumped the bank’s stock on the news, driving the share price down nearly 4 percent in early afternoon trading Thursday.

As part of an effort to drastically reduce Greece’s unsustainable debt burden and avoid a chaotic default on the country’s bonds in March, private bondholders are being asked to take substantial losses on their Greek bonds. They hope that if Greece’s finances can be righted, they can draw a line under Europe’s debt crisis, which has threatened to drag down bigger economies like Italy.

In anticipation of the losses on Greek debt, European banks have been writing down the value of those bonds. BNP Paribas and Societe Generale _ French banks that also have substantial Greek holdings _ saw their fourth-quarter profits plummet as they discounted their Greek bonds by 75 percent, roughly in line with what European leaders are asking of private institutions.

Credit Agricole has now taken similar measures. The bank said the overall net loss from Greece _ including losses at Emporiki and the writing down of Greek debt _ was euro2.38 billion for 2011.

Credit Agricole said it was also reducing the amount of money it lends to Emporiki.

However the bank’s problems go beyond Greece. Credit Agriocle said a wide-range of factors had dragged down its bottom line, including “the slowdown in the European economies, the downgrades in European sovereign debt ratings, a particularly difficult situation in Greece and tensions in the financial markets.”

Banks across Europe are also facing European Banking Authority requirements that they keep more funds in case of further market turmoil and are struggling to get the overnight loans they use to fund day-to-day operations on fears that one of them could collapse.

While the European Central Bank has stepped in to offer unlimited funding to banks, Credit Agricole said it was reducing its exposure to U.S. dollar denominated debt which is becoming increasingly expensive for some European banks as U.S. banks pull back on loans.

Despite the large losses, Jean-Paul Chifflet, chief executive of the bank, still called the results satisfactory, underscoring that the bank was now better positioned to operate in the tough economic times, noting in particular it had trimmed its investment banking division, where net income plunged 27 percent in 2011. Net income at its French retail banks, by contrast, was up more than 5 percent.

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In the not-so-distant past, a crusading third-party presidential candidate ran a grass-roots, national campaign on a platform of fiscal responsibility and balanced budgets.

That candidate’s name was Ross Perot, and in 1992 he captured 19% of the popular vote, and at one point even found himself atop the national horse-race polls.

Is America ready for another Perot?

David Walker thinks so.

A former comptroller general of the United States, Walker released a statement Monday saying that 20 years after Perot became a candidate, there are "striking comparisons between the state of the country in 1992 and today."

"I know there is a hunger for it," he told CNNMoney on Monday.

Walker — who has toured the country for years harping on a message of fiscal responsibility — believes it will happen.

"It’s clear there will be a third option," Walker said, citing the influence of Americans Elect, a new group that is raising money to put a third-party challenger on the ballot in all 50 states.

"If you look at the conditions and compare them to 20 years ago, we are demonstrably worse off, and the degree of public discontent is greater," Walker said.

And is Walker, who has been floated by New York Times columnist Thomas Friedman as a potential candidate, the right person to jump in the race?

Walker told CNNMoney on Monday that "there are people who are trying to draft me to run" and "they can do what they want."

"But I’m not a candidate at the present time and don’t expect to be a candidate," he said.

If he were to run, Walker would bring budget wonk credentials that can be matched by few. That’s because he was warning about exploding deficits and long-term debt problems way before it was cool.

"We suffer from a fiscal cancer," Walker told 60 Minutes in 2007. "It is growing within us, and if we don’t treat it, it could have catastrophic consequences for our country."

Since then, the national debt has ballooned to $15 trillion, and little has been done to curb the rising costs of health care and federal entitlement spending.

Walker said he wasn’t very impressed with President Obama’s latest budget proposal, calling it "inadequate." But he does give the president credit for drawing a distinction between short-term deficits and the long-run structural problems the country faces.

Still the president’s plan doesn’t go far enough. "We are still running deficits of $700 billion 10 years from now," Walker said.

At the same time, Walker said "Republicans haven’t developed [a credible plan] either."

America’s Choice 2012

Specifically, Republicans need to acknowledge that adding revenue to federal coffers is essential to bringing down the deficit. Walker said the country needs roughly $1 dollar in additional revenue for ever $3 in spending cuts.

The additional revenue should come as part of a plan that reforms the overly complicated tax code.

Walker gave few details on what he would do specifically to help bring down runaway deficits, but he did say that the hyper-partisan atmosphere on Capitol Hill was acting as an impediment to good legislation.

"I don’t advocate a specific reform proposal because in the end you have to consider good ideas from multiple sources," Walker said.

Policy aside, Walker does appear to be right about a hunger existing for a third-party candidate.

According a Washington Post-ABC News poll conducted last month, 46% of Americans said they would consider voting for an independent third-party candidate they agreed with on the issues.

An additional 22% said they would "definitely" vote for such a candidate.

That’s a lot of votes. And if Friedman has his way, some could be going to Walker — who already has something of a ready-made message:

"A lot of people are talking about the problems, but not a lot of people are talking about solutions," Walker said Monday. "I focus on three things: truth, leadership and solutions. And those are the three biggest deficits that we have." 

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Mining company Anglo American PLC posted Friday a record operating profit for last year following big advances in its coal and diamonds operations.

The group reported a record operating profit before special items and remeasurements of $11.1 billion, up 14 percent on the year before. Underlying earnings per share were 23 percent higher and the full-year dividend was raised 14 percent to $0.74 per share.

However, its net profit declined 6 percent to $6.17 billion from $6.54 billion in 2010, when it posted a big gain on asset disposals. Gains on asset disposals last year fell to $183 million compared to $1.6 billion in 2010, as the company said sales of noncore operations have been largely completed.

Anglo American shares were up 1.2 percent at 2,675 pence in early trading on the London Stock Exchange.

Chief Executive Cynthia Carroll said the group completed three major projects in 2011: the Kolomela iron ore mine in South Africa, the expansion of the Los Bronces copper mine in Chile and the Barro Alto nickel operation in Brazil.

Anglo American agreed in November to sell its 24.5 percent stake in Anglo American Sur, its copper assets in Chile, to Mitsubishi for $5.4 billion. That sale is being challenged by Codelco, Chile’s state-owned copper miner, which has an option to take a 49 percent stake.

A more detailed look at the results shows that overall revenues swelled 11 percent to $36.5 billion.

The company also reported record operating profits for coal and diamonds. The operating profit for iron ore and manganese, the biggest sector within Anglo American, was up 23 percent.

Anglo American raised its stake in the De Beers diamond business to 85 percent in November when it bought the Oppenheimer family’s shares. DeBeers’ sales were up 26 percent last year to $7.4 billion

“Despite short term uncertainty persisting in the global economy, particularly in Europe, the longer term outlook for Anglo American’s diversified mix of commodities remains strong,” Carroll said.

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President Barack Obama feels he has struck just the right budget balance between providing more short-term support for the economy while putting forth a long-term plan to get control of the government’s soaring budget deficits.

Republicans vehemently disagree, attacking his 2013 budget as a replay of the failed economic policies they say have resulted in an economy growing at subpar rates and government debt soaring to record highs.

Both parties would agree that Obama’s latest budget, released Monday, will feature heavily as a debating point in the November elections to determine who will win the White House and whether Democrats or Republicans win control of the House and Senate.

Republican Mitt Romney, who is campaigning for the GOP nomination to challenge Obama in the fall, called the budget Obama released Monday “an insult to the American taxpayer.” GOP candidates Rick Santorum, Newt Gingrich and Ron Paul are all advocating bigger spending cuts to control the deficits, and all the GOP candidates oppose Obama’s tax increases.

Treasury Secretary Timothy Geithner, the administration’s chief economic spokesman, was scheduled to testify before the Senate Finance Committee on Tuesday in what will be the first of four congressional appearances this week by Geithner to explain and defend Obama’s budget plan.

Judging from the GOP reaction Monday, Geithner could be in for some sharp questioning.

“The president’s budget is a gloomy reflection of his failed policies of the past, not a bold plan for America’s future,” House Speaker John Boehner, R-Ohio, said. “The president offered a collection of rehashes, gimmicks and tax increases that will make our economy worse.”

Democrats in Congress were for the most part supportive of the president’s proposals. Sen. Kent Conrad, D-N.D., chairman of the Senate Budget Committee, said Republicans forget that Obama inherited an economic mess when he took office, with the economy struggling to emerge from the worst economic downturn since the 1930s.

“The reality is that the president inherited a fiscal and economic disaster,” Conrad said Monday. “The only true way forward is through a comprehensive and balanced deficit-reduction agreement. We need to come together on a plan that modernizes our tax system, reforms our entitlement programs and attacks wasteful spending.”

Republicans are arguing for deeper spending cuts and a frontal assault on the biggest drivers of the deficit, the soaring costs of Medicare and Medicaid, whose already sizable costs are projected to double in future years as baby boomers retire.

Rep. Paul Ryan, R-Wis., chairman of the House Budget Committee, said Monday that he expected the Republican-controlled House would in coming weeks pass an alternative to the Obama budget that would gain control of the deficit, not by raising taxes but by curtailing Medicare and Medicaid.

“President Obama’s irresponsible budget is a recipe for a debt crisis and the decline of America,” Ryan said.

Obama’s cuts in Medicare and Medicaid avoid cuts in benefits and instead make modest trims in payments to health care providers. In contrast, the Republican House last year approved Ryan’s plan, which would essentially transform Medicare into a voucher system in which future seniors would get a fixed amount to buy medical insurance.

The Obama budget proposes spending $3.8 trillion in the 2013 budget year, which begins Oct. 1. It would achieve $4 trillion in deficit cuts in part through restraining the growth of many government programs, adhering to the agreement Congress approved in August for spending caps to achieve $900 billion in deficit reduction over a decade.

Obama’s plan also proposes additional deficit reduction in order to avoid $1.2 trillion in across-the-board cuts scheduled to take effect next January.

But the president relies on $1.5 trillion in tax increases, mainly by allowing the Bush-era tax cuts to expire on families making more than $250,000 per year, imposing additional taxes on those making more than $1 million per year and eliminating various corporate tax breaks.

The tax increases all have been rejected by Republicans.

With both parties holding entrenched positions, it is very likely that no solution will be found before the November elections, with both sides preferring to use the debate to score political points.

If that occurs, Congress will probably be back in Washington after the November elections for a lame-duck session to resolve the battle over taxes and spending cuts.

Lawmakers are facing end-of-the-year deadlines when the Bush-era tax cuts on all taxpayers expire and across-the-board spending cuts will go into effect if lawmakers can’t agree on $1.2 trillion in further deficit reduction over the next decade.

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India

The era of falling food prices has come to an end with the world population set to add another 2 billion people, according to Cargill Inc., the U.S. farm commodities trader.

The United Nations

The European Central Bank is likely to refuse to show its hand on how it will help cut Greece

Americans’ incomes rose last month by the most in nine months, a hopeful sign after a year of weak wage gains.

The Commerce Department says incomes rose 0.5 percent, the strongest increase since a similar gain in March. Consumer spending was unchanged, following weak gains of 0.1 percent in both October and November.

The income increase after paying taxes and adjusting for inflation was 0.3 percent in December. For the year, inflation-adjusted incomes rose 0.9 percent, just half the modest 1.8 percent rise in 2010.

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Haiti’s biggest employer has named a new chief executive to run Digicel, the mobile phone company announced Wednesday.

The Jamaica-based private company is bringing in Damian Blackburn to replace Maarten Boute, who will be leaving in March to spend more time with his family, Digicel spokeswoman Antonia Graham said.

Boute added in an email message that he was going “to do a deep recharge of (his) batteries” as he and his wife await the birth of their second child.

The new head, Blackburn, recently CEO for Digicel Honduras, has more than 14 years of experience in the telecommunications industry. He will oversee operations for the company’s largest market, Haiti, which accounts for about a quarter of its 11.1 million subscribers.

Digicel, whose Irish CEO Denis O’Brien promoted development in Haiti before the 2010 quake, has invested $600 million in the impoverished Caribbean nation since it began work in 2006 short term personal loan. The company’s foundation has also done charitable work such as building schools and helping with other infrastructure projects.

In recent months, the company erected street signs in the capital and road signs in the countryside and last year spent $18 million to renovate the historic Iron Market damaged in the quake.

In November, Digicel and Marriott International announced plans to build a $45 million, 173-room hotel in Port-au-Prince. The hotel is slated to open in 2014.

Digicel’s competitors include Voila and Natcom, a joint venture created last year between Vietnam’s Viettel and the Haitian government to replace the state-run Teleco.

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