Eat Your Greens! In a Pickle! Hell to Pay!

Anti-energy development liberals are squirming. They have been unwilling to dig holes and therefore have nowhere to hide. The public mood is bitter and is seeking to lay blame. Perhaps as Boone Pickens' suggestion for energy independence gains traction the anti-energy development crowd will start eating their Green allies and find them a source of energy. Approving drilling in Anwar would be evidence.

We are in the current energy and financial pickle for a variety of coalescing reasons. The more salient seem to be:

1)Continued deficit spending by the Federal Government sent the wrong societal message. It is somewhat analogous to a child growing up in a family with an out of control drunken father who witnessed constant wife abuse. Monkey does what monkey sees.

In the process, our currency has been debased. Sound as a dollar went out the window when fiscal responsibility was abandoned. Devaluation of a nation's fiat has ramifications beyond economics. It erodes all values. When all else fails lower your standards.

2) Unfunded foreign engagements. Guns and "margarine" have a cost. There is no free lunch. Even legitimate and justifiable wars must be paid for if citizens are to feel engaged and challenged to remain supportive. Players must have some skin in the game.

Johnson set the precedent, Nixon de-linked our currency from gold, and though GW's tax policies re-stimulated the economy and generated enormous revenue, his unwillingness to cut wasteful spending has proven politically perfidious.

3) The dumbing down of America. The Supreme Court was correct and overdue in outlawing Segregation but the method by which it occurred has produced these unintended and tragic consequences:

White flight! Schools have become tolerated refuges of aberrant student behaviour! PC'ism and affirmative efforts helped curriculum go from hard to soft core - consequently learning went from sound reasoning to mindless thinking. Fuzzy relevancy concepts replaced facts. Union opposition to competition and protecting tenure replaced educating children. Consequently, many schools have re-segregated and more children are receiving a lousy education.

4)Greenspan's interest rate levels remained low for too long and had the effect of becoming a tipping point. Cheap money spawned reckless competition and greed, greed spawned stupidity and the belief that escalating housing prices were sustainable and the road to heaven. The result - our nation now has hell to pay. Why, because a poorly educated populace is more prone to make unreasoned and emotional decisions. A poor understanding of economics and simple logic becomes a two edged sword.

We are about to possibly apply the same principles to choosing our next president.

Were I in charge of McCain's advertising campaign I would encourage him to begin a series of ads depicting two chameleons in the image of Obama - one named Flip the other Flop. I would have Flip repeat an earlier position espoused by Obama and then portray Flop reversing that position. Beneath Flip and Flop I would have a running tag line saying change-words have meanings - change- words have meaning etc.

Sometimes you must beat a candidate with his own words. Of course McCain has flipped and flopped on some issues as well. He is a politician, times change and it is sometimes sensible to adjust. In the case of McCain, however, we have a long public history and voting record and thus, some understanding of the man. In the case of Obama we do not.

I believe voters are increasingly incapable of reasoned discernment. White guilt, depression over the Iraq War and the downturn in the economy are more likely to drive emotion than produce clear thinking. Not even supporters of Obama can tell you where he intends to take the nation because he has disavowed many of his earlier positions. What are his core beliefs? If he has any, they have been wrapped in a "burrito" of soaring rhetoric and empty platitudes sauced with clever phraseology.

From a fellow memo reader. (See 1 below.)

More on Olmert's abuses. (See 2 below.)

My instincts proved correct about the sovereign nation of Iraq allowing Israeli jets to train on their land but conflicting comments about the US's positions regarding an Israeli attack on Iran persist. (See 3 below.)

Meanwhile France and that bastion of political morality, Spain, horn their way in and offer their help. (See 4 below.)

A take on Jeff Foxworthy's: "You might be a red neck if..." This was sent to me by a politically middle of the road friend who is a nationally known economist. How very un-PC!(See 5 below.)

Jesse Helms was right when he pointed out biting the hand that feeds you pays off. (See 6 below.)

Buffet,like Obama whom he mentors, has become the media and press', financial messiah. Like GE whose parts sold at a premium until recently, what will Berkshire sell for once Warren is no more? It commands a premium as of now. (See 7 below.)

Dick

1) What Obama could learn from Ayaan Hirsi Ali


Ayaan Hirsi Ali and Barack Obama both made their way to Washington at almost exactly the same time from opposite ends of the planet, Ali from Somalia and Obama presumably from Hawaii.

Before arriving in D.C. to work at the American Enterprise Institute, Ali endured genital mutilation, malaria, a nearly fatal beating by her Quran teacher, a brutal civil war, unspeakable poverty, parental rejection, a knife attack, a coerced marriage and several months of forced hiding after herfilm collaborator, Theo Van Gogh, was murdered and her life threatened.

Before arriving in D.C. to serve as U.S. senator, Obama endured a pleasant childhood in Indonesia, posh private schooling in Hawaii, a subsidized education at America’s best universities and law schools, a comfortable life in Chicago and, oh yeah, a few raised eyebrows about his mixed heritage along the way.

So why was it that when each of the two sat down to write his or her respective memoirs, it was Ali who wrote about her blessings and Obamawho wrote about his grievances?

In the traditional hero saga, like Ayann Hirsi Ali’s brilliant up-from-Islam memoir, “Infidel,” the individual is expected to overcome hardship and injustice.

In the grievance narrative, like Obama's "Dreams From My Father," written in 1995 before Obama ran for anything, the hero nurses his slights like grudges.

If those slights seem inadequate to evoke guilt or anger – the two desired responses from the audience – the grievance narrator reserves the right to embellish or even invent additional offenses as Obama has rather artfully done with the recent invocation of a racist grandma.

Not surprisingly, the literary and journalistic establishments approve. In the way of background, they began encouraging the writing of these shame-on-you narratives in the '60s.

The timely discovery of "institutional racism" and "structural poverty" in that same unfortunate decade has given them the license to continue their encouragement.

This was fortunate for Obama. He had no ties at all to the civil rights struggle, which was pretty much over by the time he was 2. Plus, he came of age in the one state where whites, "haoles," were the scorned minority.

To be fair, Obama recognizes that he is not exactly Emmett Till. On top of his "ledger of slights," he recounts a fellow seventh-grader calling him a "coon" and a tennis pro making a stupid joke about his color wiping off.

Nor is this memoir quite the racist book its detractors make it out to be, sometimes by citing quotes out of context. It is more cloying and self-conscious than that.

"Dreams" tells of how Obama rose above the race hatred that was his due, given all the false smiles and perceived slights he had suffered throughout his life.

In reading Obama's book back to back with Ali's "Infidel," however, one sees just how impressively trivial Obama's suffering has been. And without in any way intending to, Ali shows why Obama has raised triviality to the level of pathos.

As Ali tells it, when she fled Africa for Holland, she recognized it instantly for the superior civilization that it represented.

This was not just because Holland was vastly cleaner, safer, more orderly and more efficient than the world she had left behind.

"The Dutch value system," Ali writes, "was more consistent, more honest, and gave people more happiness than the one with which we had been brought up."

Yet for all of Holland's virtues, most of Ali's fellow Somalians rejected the Dutch and their system and chose instead to self-segregate much the way Obama has in America.

Unlike Obama, however, Ali moves honestly to the heart of why this is so. "We had always been sure that we, as Muslims, were superior to unbelievers, and here we were, not superior at all."

As a defensive gesture, many withdrew into "an enclave of shared Somaliness." In doing so, they were able "to create a fantasy that they as Somalis knew better than these inferior white people."

The Moroccans of Ali's acquaintance withdrew into their own cocoon as well. One female friend of hers complained of the racism of Dutch shopkeepers in that they always seemed to be staring at her.

Ali explained that the stares from the extravagantly tolerant Dutch were more likely due to the obvious bruises her friend sported, an application of Islamic law generously provided by an unapologetic husband.

"This obsession with identifying racism," Ali observes, "was really a comfort mechanism, to keep people from feeling personally inadequate and to externalize the causes of their unhappiness."

Ali sees this seemingly irrational defensiveness as a universal phenomenon, one that can occur when any group is thrust into a new and confusing situation, however objectively positive that situation might be.

Obama never gets this. The American black community that he desperately hoped would accept him was not reeling under the weight of oppression as he imagined.

Rather like the Somali community in Holland, it was reeling under the weight of a newfound freedom and opportunity that many of its people, including wife Michelle and Rev. Jeremiah Wright, could not quite master.

"White folks' greed runs a world in need," Obama approvingly quotes Wright as saying in "Dreams." In her clear-eyed attack on multiculturalism, Ali would recognize Wright's paranoid nonsense as the "comfort mechanism" that it was. Obama did not.

Indeed, Wright made this statement during Obama's first day at Trinity United 20 years ago. "The reverend spoke of the hardship that the congregation would face tomorrow," Obama remembers, "the pain of those far from the mountaintop."

By Ali's standards, neither Obama nor Wright knows the first thing about pain or hardship. What they do know about, however, are self-pity and white guilt.

Although candidate Obama may now reject Wright's rhetoric as impolitic, the Obama that sat in Wright's pews for 20 unfathomable years learned the grievance narration from a master.

And now America's young learn the same false lesson from Obama. Unfortunately, "Dreams From My Father" is the best-selling book on college campuses today.

Not for the first time, students are wasting their youth on the wrong message and the wrong messenger.

2) ANALYSIS: The latest allegations, what now?
By Yossi Verter


If a few weeks ago we thought that a public figure, an Israeli leader, could not get any more entangled in something lower, more shameful or more embarrassing than the Talansky affair and the envelopes, we were wrong. If the version of the police and the State Prosecutor's Office is correct, his relationship to the elderly fixer with the deep pockets will seem like mischief compared with the alleged affair nicknamed "Olmert Tours."

The new investigation, Olmert's sixth, which blew up Friday about 24 hours before he left for Paris for an important international conference, touches on everything Israel holds dear: the memory of the Holocaust and its survivors, blind students, mentally disabled children, and soldiers.

According to the allegations, Olmert got his hands on the funds of these organizations, for which he raised quite a bit of money over the years, to fly his family around the world. If these allegations are true, Olmert will be spared no word of condemnation in the Israeli lexicon, and rightly so. No other politician will be forced out of office in such shame, to disappear forever from public life.

It is difficult to imagine that law-enforcement authorities would dare level such weighty accusations at an Israeli prime minister if they did not have solid proof. The versions of the investigators and Olmert's attorneys is contradictory: The investigators speak of some $100,000 taken fraudulently; the attorneys speak of much smaller sums, of irregularities and negligence.

The message of Olmert's associates Saturday was clear: The police are aiming to unseat the prime minister. They even used the word "putsch."

However we look at it, woe to us: Either we have been blessed with a prime minister who stops at nothing to line his pockets, or we have a police force and prosecution that has taken out a contract on our senior elected official.

Even before Rishon Tours entered our lives, we could hardly understand how Olmert could continue his public life with the waves of investigations. From Friday, it is inconceivable. This time, he is also dragging his family through the muck.

Last night, in a briefing for legal reporters by those "close to the investigation," his wife Aliza, his son Ariel and his daughter Dana were mentioned specifically.

Olmert's skin is reportedly as thick as an elephant's. But how much more can he take?

People who spoke with Olmert over the weekend said he seemed emotionally drained and beaten. He continues to hang his hopes on the Talansky cross-examination. If the five days of questioning refute a good many of Talansky's statements, it might put the the double-billing affair in a less severe light. If not, Olmert might choose to draw conclusions in some way.

Meanwhile, there is nothing new in the political system. MKs Gideon Sa'ar (Likud), Shelly Yachimovich (Labor) and Zevulun Orlev (National Union-National Religious Party) condemned Olmert. Opposition leader Benjamin Netanyahu was not heard from. He has been burned quite a bit regarding trips abroad. Labor is waiting quietly. In any case, Olmert is being deposed by his party. "Might you issue a new ultimatum?" an associate of Labor Party chairman Ehud Barak was asked Saturday. No need, he answered. You don't kick a dead body.

3) Report: Pentagon official says Israel has 'amber light' for Iran strike


U.S. President George W. Bush has given Israel an "amber light" to begin preparations for a military attack on Iran, a Pentagon official told The Sunday Times this week.

"Amber means get on with your preparations, stand by for immediate attack and tell us when you're ready," the official said.

The official told the Times that Bush informed the Israeli government he would back an Israeli plan to strike Iran's main nuclear sites with long-range aerial weapons if diplomatic talks over Tehran's contentious atomic program broke down.

Bush's voice of support comes despite U.S. military officials' opposition to the risks of an aerial strike on Iran, the official told The Times. However, the U.S. would not deploy American forces for such a strike nor would Israel be able to depend on U.S. military bases in Iraq for logistical support, the official said.

The U.S. would not necessarily give the "green" light for an attack without unquestionable proof that Iran is involved in military preparations of its own, the official told The Times.

Iran last week test launched a series of medium-range ballistic missiles it claimed were capable of striking Israel. The tests were seen as provocative and prompted Israel to showcase its Eitam plane, released last year, which it said is capable of spying on Iran.

An image surfaced in all the major media outlets on the day Iran announced its first round of test launches, depicting four missiles being fired simultaneously.

However, the AFP and the Associated Press subsequently retracted the photo and replaced it with an image containing only three missiles.
After being shown the photograph by AFP, Mark Fitzpatrick of the London-based International Institute for Strategic Studies said "it very much does appear that Iran doctored the photo to cover up what apparently was a misfiring of one of the missiles."

Ahmadinejad: Iran will 'cut hands' off anyone who tries to attack

Iran's president said that even before its enemies "get their hands on the trigger" the country's military would cut them off, media said on
Sunday, in an escalating war of words that has stoked Middle East tension.

The comments by President Mahmoud Ahmadinejad came a day after a senior Iranian official said Iran would strike Israel and U.S. bases in the region if the Islamic Republic was attacked over its disputed nuclear program.

"Before the enemies get their hands on the trigger the armed forces will cut off their hands," the official IRNA news agency quoted Ahmadinejad as telling reporters.

Israel, long assumed to have its own atomic arsenal, has sworn to prevent Iran from emerging as a nuclear-armed power.

Last month Israel staged an air force exercise that stoked speculation about a possible assault on Iranian nuclear sites.

Iran has vowed to strike back at Tel Aviv, as well as U.S. interests and shipping, if it is attacked, asserting that missiles fired during wargames last week included ones that could hit Israel and U.S. bases in the region.

Ahmadinejad said the weaponry displayed in the Revolutionary Guards' missile exercise, which was condemned by Western powers, was only a small part of Iran's defense capability.

"In the event of necessity, additional parts of our defense capability will be put on display for the world to see," the president said.

4) Text: Joint French-Syrian Declaration

The President of the French Republic, Mr. Nicolas SARKOZY, and the President
of the Syrian Arab Republic, Mr. Bashar Al Assad, made a wide-ranging,
referring to bilateral issues, regional and international interest.

In the light of regional developments positive, the two Presidents agreed on
a work plan to ensure the revival of bilateral relations, with a common goal
to strengthen political ties, economic and cultural ties between the two
countries, particularly in education , Academic and linguistic diversity.

In this context, the French President will visit Syria at the invitation of
President Bashar Al Assad, before mid-September 2008.

This visit will be prepared by a trip to Paris, Deputy Prime Minister
DARDARI, 21 and 22 July in Paris and a visit to Damascus from French
Minister of Foreign Affairs, Mr. Bernard Kouchner.

Both Presidents emphasized the importance of Syrian-Israeli peace process
and noted the progress already made in the proximity talks held between
Syria and Israel under the auspices of Turkey.

The Syrian President said that he hoped that France, with the USA, can make
its full contribution to a future peace agreement between Israel and Syria
in the phase of direct negotiation as in the implementation of the
agreement, including for security arrangements as may be necessary. The
President marked the availability of France to respond to any request
to that effect, if the parties were interested.

The two presidents reiterated their full support for the Doha agreement. The
French President welcomed the strong determination of President of Syria to
establish diplomatic relations with Lebanon, after the formation of a
government of national unity of Lebanon.

The French President, on behalf of the Presidency of the European Council,
will initiate the appropriate procedures for signing the association
agreement between the EU and Syria, and the launch of the ratification
process as soon as possible.

The two countries will cooperate in an active manner to ensure the success
of the Union for the Mediterranean.

4a) France and Spain offer to fill security role in Syria-Israel peace agreement

0nce playing a role in the "implementation of the peace agreement, including future security arrangements" according to the joint statement that Syria president Assad issued with French President Nicolas Sarkozy after their meeting.

European diplomats told Stern yesterday that "Syria won't agree that the
Bush Administration will be involved in the security arrangements. The big
question is if Israel will agree to such European involvement." According
to the sources, France and Spain discussed this matter with senior Syrian
officials.

In contrast, the Syrian news agency (SANA) reports that "President al-Assad
expressed the hope that France and the U.S. will be able to fully take part
in a future peace agreement between Syria and Israel during all of the
direct talks stage and to implement the peace agreement, including the
future security arrangements which could be necessary."

5) "YOU MAY BE A TALIBAN IF..."

1. You refine heroin for a living, but you have a moral objection to beer.
2. You own a $3,000 machine gun and $5,000 rocket launcher, but you can't afford shoes.
3. You have more wives than teeth.
4. You wipe your butt with your bare left hand, but consider bacon unclean.
5. You think vests come in two styles: bullet-proof and suicide.
6. You can't think of anyone you HAVEN'T declared Jihad against.
7. You consider television dangerous, but routinely carry explosives in your clothing.
8. You were amazed to discover that cell phones have uses other than setting off roadside bombs.
9. You've often uttered the phrase, "I love what you've done with your cave."
10. You have nothing against women and think every man should own at least one.
11. You bathe at least monthly whether necessary or not.
12. You have a crush on your neighbor's goat.


5) How various Arabic?Islamic States vote in the United Nations:


Below are the actual voting records of various Arabic/Islamic States which are recorded in both the US State Department and United Nations records:


Kuwait votes against the United States 67% of the time


Qatar votes against the United States 67% of the time


Morocco votes against the United States 70% of the time


United Arab Emirates votes against the U. S.. 70% of the time.


Jordan votes against the United States 71% of the time.


Tunisia votes against the United States 71% of the time.


Saudi Arabia votes against the United States 73% of the time.


Yemen votes against the United States 74% of the time.


Algeria votes against the United States 74% of the time.


Oman votes against the United States 74% of the time.


Sudan votes against the United States 75% of the time.


Pakistan votes against the United States 75% of the time.


Libya votes against the United States 76% of the time.


Egypt votes against the United States 79% of the time.


Lebanon votes against the United States 80% of the time.


India votes against the United States 81% of the time.


Syria votes against the United States 84% of the time.


Mauritania votes against the United States 87% of the time.


U S Foreign Aid to those that hate us:


Egypt, for example, after voting 79% of the time against the United States, still receives $2 billion annually in US Foreign Aid.


Jordan votes 71% against the United States but receives $192,814,000 annually in US Foreign Aid.


Pakistan votes 75% against the United States and receives $6,721,000 annually in US Foreign Aid.


India votes 81% against the United States while Receiving $143,699,000 annually.

7) Why Buffett Is Buying
By Richard Teitelbaum

The Omaha investor is taking advantage of the market turmoil to fire up Berkshire Hathaway's acquisition machine. Yet a string of recent takeovers has done little to buttress the conglomerate's flagging growth.



Warren Buffett is in Toronto, fielding questions from a crowd of 300 executives. One asks what makes people want to sell their companies to him.

The Berkshire Hathaway Inc. chief executive officer replies that he tells a prospective seller to think of the company as a work of art.

``You can sell it to Berkshire, and we'll put it in the Metropolitan Museum; it'll have a wing all by itself; it'll be there forever,'' he says at the February meeting. ``Or you can sell it to some porn shop operator, and he'll take the painting and he'll make the boobs a little bigger and he'll stick it up in the window, and some other guy will come along in a raincoat, and he'll buy it.''

Buffett, 77, can afford to throw a little mud on his competitors in the private equity industry. Wall Street's acquisition machine has seized up, while Buffett, in the valedictory chapter of a career stretching back more than 60 years, is on a buying spree.

He has $35.6 billion in cash to spend, and he's looking for companies that he can buy at a reasonable price, that have experienced managers he trusts, products with strong market positions or other competitive advantages.

Buffett's biggest catch so far in 2008 was Marmon Holdings Inc., a conglomerate owned by Chicago's Pritzker family. On March 18, Berkshire announced it had bought 60 percent of Marmon from the Pritzkers for $4.5 billion. Buffett is buying the rest in increments during the next five to six years.

Needle-Moving Events

In April, he agreed to pay $2.1 billion for an undisclosed stake in Chicago's Wm. Wrigley Jr. Co. as part of McLean, Virginia-based Mars Inc.'s $23 billion purchase of the gum maker. Buffett, who already owns See's Candies, is helping to fund the deal with $4.4 billion in subordinated debt.

``This is the kind of market where you would expect the pace of Berkshire acquisitions to pick up,'' says Keith Trauner, senior analyst of Fairholme Capital Management LLC in Short Hills, New Jersey. ``In a weaker business environment, sellers moderate their expectations.''

At the same time, Berkshire is now so big that Buffett is having a hard time turning acquisitions into growth. Most of Berkshire's more than two dozen purchases since 2000 are too small to have much impact. ``The larger the company becomes, the harder it is to find needle-moving events,'' Citigroup Inc. analyst Joshua Shanker says.

Past Performance

Buffett agrees. ``Anyone who thinks we will come close to repeating our past performance should sell their stock,'' Buffett told investors at Berkshire Hathaway's annual meeting in May. He declined to comment for this story.

Buffett's focus has turned to philanthropy in recent years. In June, 2006 he pledged 10 million Class B shares of Berkshire stock, worth about $31 billion at the time, to the Bill & Melinda Gates Foundation. The first installment of 500,000 shares was made in 2006, the second of 475,000 in July, 2007.

Each year, Buffett also auctions off a lunch on EBay Inc. to benefit one of his late wife Susan's favorite charities -- San Francisco's Glide Foundation, which provides meals, healthcare and other services to San Francisco's needy. ``It takes people who have hit bottom and brings them back.'' Buffett told Bloomberg TV. ``It's an enormously efficient organization.''

Today Buffett is treating money managers Mohnish Pabrai and Guy Spier to a meal at New York's Smith & Wollensky's after their record joint bid of $650,100. This year's Ebay auction began on June 22 and runs to 10 p.m. Eastern time on June 27.

Affinity for Insurance

The Sage of Omaha, by his own count, now owns 76 companies outright, a number that rises to about 200 if Marmon's 125 subsidiaries, which make everything from water treatment gear to brake drums, are taken into account. Among the Buffett companies are names familiar to most Americans: Geico car insurance, best known for the Cockney-accented gecko in its television commercials; Dairy Queen restaurants; Benjamin Moore paints; and Fruit of the Loom underwear.

Berkshire also owns 8.6 percent of Coca-Cola Co., 13.1 percent of American Express Co. and 8.8 percent of Wells Fargo & Co. Those three investments alone amounted nearly $25 billion on June 24.

Insurance firms dominate the list of Berkshire-owned companies. Buffett controls a dozen of them -- Berkshire Hathaway Reinsurance, General Re Corp. and Geico Corp. are the biggest -- accounting for 31 percent of Berkshire's 2007 revenue.

``I would say we have a special affinity for insurance,'' Buffett said at the 2007 annual meeting's news conference.

Competitive Advantage

One reason is that Buffett loves float -- the premiums collected from policy holders that can be invested at a profit until claims need to be paid. As of the end of December, Berkshire had $58.7 billion of float.

In May, an acquisition-minded Buffett took a tour of Europe -- stopping in Germany, Italy, Spain and Switzerland -- where the media and business establishment treated him like a rock star. ``I'm not looking for Pet Rock or Hula Hoop businesses,'' he said at a Frankfurt news conference. ``I'm hoping to make big deals, whether it's in the United States or Germany or Italy or Denmark.''

In Europe, Buffett repeatedly praised the company headed by the man who sat beside him during his European tour, Eitan Wertheimer, chairman of Tefen, Israel-based Iscar Metalworking Cos. Buffett bought an 80 percent stake in Iscar, a maker of metal-cutting tools, in 2006 for $4 billion, his first big overseas acquisition.

Loyal Customers

A close look at Iscar's main factory complex in northern Israel shows why Buffett took an immediate interest when Wertheimer faxed him a letter declaring that Berkshire would be an ideal home for Iscar. The company has the ``durable competitive advantage'' Buffett told the Europeans he always looks for. It's a market leader in the design and production of a variety of metal-cutting tools.

And Iscar has loyal customers. A disposable tungsten carbide insert used to slice steel can wear out in 20 minutes or less, meaning that Iscar must deliver a steady supply of new blades to every customer that uses them.

Buffett's purchase of Iscar made the Wertheimers celebrated billionaires, so it's no surprise that he receives hundreds of letters from other entrepreneurs offering to be bought out.

Among those that have made the grade in the past 10 years are: MidAmerican Energy Holdings Co., which can generate a set return on equity of 10-11 percent from its regulated utilities; electronic parts distributor TTI Inc., which has never posted an annual loss nor laid off an employee; and Business Wire, one of two companies that dominate the niche of sending news and financial releases around the world.

Quick Dividends

Becoming a Berkshire company can pay quick dividends. On June 30, 2005, Berkshire purchased Medical Protective Corp., a Fort Wayne, Indiana-based malpractice insurer, from General Electric Co. for $825 million. The next day, Standard & Poor's raised the firm's A financial rating to AAA. ``It's hard to imagine how MedPro could have done any better than being owned by Berkshire,'' CEO Tim Kenesey, 41, says.

Sometimes the benefit is more subtle. ``There's definitely a halo effect,'' says Steve McKenzie, CEO of Norcross, Georgia- based Larson-Juhl Inc., a custom picture frame maker Buffett acquired in 2002 for $223 million. ``It's realized in the higher- quality recruits we hire and in potential acquisitions' readiness to talk to us,'' says McKenzie, 46.

Buying on Faith

Buffett often decides to buy a company after what looks like a cursory examination of its operations. He agreed to purchase Larson-Juhl after a 90-minute talk with its founder, Craig Ponzio. During his European tour, Buffett told questioners that he had bought Iscar without any due diligence and after just a few days of talks with its top executives, who traveled to the U.S. three times to meet with Buffett and his investing partner, Charles Munger.

No one from Berkshire ever stepped inside an Iscar factory before the deal was done, Buffett says.

``He's buying on faith, and especially with larger acquisitions, that's certainly perilous,'' says analyst Chuck Hamilton, who follows insurance at FTN Midwest Securities Corp. ``If he were to spend $20 billion-$30 billion on a major company, without due diligence, that would really be cause for heartburn.''

With a staff of only 19 at Berkshire headquarters in Omaha, Nebraska's Kiewit Plaza, Buffett says he won't buy a company without management in place that he's sure of.

Modest Backgrounds

``We have to see it in their eyes,'' he said at the May 3 annual meeting, where 31,000 investors converged on Omaha's Qwest convention center to hear Buffett and Munger, 84, answer shareholder questions between mouthfuls of See's candies.

In the case of Victor Mancinelli, CEO of CTB Inc., a maker of poultry feeding systems and other agricultural equipment in Milford, Indiana, Buffett could see it on the balance sheet. Mancinelli had paid off nearly $80 million in leveraged buyout and other debt in just three years. Berkshire bought CTB in 2002 for about $180 million.

One quality Buffett firms usually have in common: CEOs from modest backgrounds, often without Ivy League degrees on their resumes. Mancinelli's father was a truck driver, and his mother was an autoworker.

MidAmerican Chairman David Sokol worked his way through the University of Nebraska at Omaha as a night manager at a grocery chain. TTI's Paul Andrews is a former oil rig roughneck who once sold Bibles door-to-door. Business Wire's Cathy Baron Tamraz is a former taxi driver.

Wagering Billions

Buffett is famous for his lack of pretension. He has honed the fine art of ukulele playing. He still lives in the Dutch colonial home he bought for $31,500 with his late first wife, Susan, in 1958, according to ``Of Permanent Value: The Warren Buffett Story'' by Andrew Kilpatrick (self-published, 2008).

When he eats out, it's often at Gorat's Steak House on Center Street in Omaha, where a luncheon steak will set you back $8.25 -- including soup and a side of mostaccioli pasta. Buffett personally drives visitors to and from the airport. He prefers Cherry Coke to fine wine and saves money buying it by the case.

Buffett's just-plain-folks posture is a bit of a feint. His father, Howard, was an investment banker and a Republican U.S. congressman. Warren attended the Wharton School of the University of Pennsylvania and got a master's degree in economics from Columbia University.

In terms of the businesses he buys, Buffett never tires of telling questioners that he invests only in simple, straightforward industries whose operations he can grasp. Yet he wagers billions on everything from hedge funds to junk bonds. Through December, Buffett had made $2.3 billion in pretax earnings during the past five years on foreign-exchange bets.

Put Options

And as of March, he had tens of billions of dollars riding on two kinds of derivatives -- instruments he dubbed ``financial weapons of mass destruction'' in his 2002 letter to shareholders. The first is a variety of credit-default swap guaranteeing payment on certain high-yield bonds. Credit-default swaps, which are contracts to protect against or speculate on default, pay the buyer face value if a company fails to adhere to its debt agreements.

Buffett also has sold put options -- contracts that provide the right, but not the obligation, to sell a security, currency or commodity at a set price within a set period -- on four stock indexes. In his 2007 shareholder letter, Buffett wrote that because Berkshire holds the cash connected to the derivatives, there is no risk the parties on the other side of the transaction won't pay.

Slow to Sell

Buffett's investment choices have yielded a conglomerate that's profitable in all kinds of weather. Through May, Berkshire's Class A stock, which traded on June 24 for $122,700 a share, has returned an average of 19.3 percent annualized in the past 20 years, nearly double the 11.2 percent return of the S&P 500 Index. From June 30, 2007, through June 24, Berkshire stock rose 12.1 percent, while the S&P 500 Index returned a negative 10.8 percent.

As of Feb. 29, Buffett himself owned 28.1 percent of the combined value of Berkshire's Class A and B shares, worth $53.44 billion on June 24. Class B shares have 1/30th of the value of Class A shares' value and 1/200th of their voting rights.

Buffett could be even richer if he had bent some of his own rules. For instance, he prides himself on buying and holding companies forever -- and is slow to sell his stocks. That has cost him and his shareholders' money. Berkshire's 8.6 percent stake in Coca-Cola was worth $17.6 billion when it hit its high in July 1998. Nearly a decade later, it's valued at just $10.67 billion -- and Buffett hasn't sold a share.

Underwriting Losses

Buffett has stumbled, most notably in 1998, when he spent $22 billion in Berkshire stock to buy Stamford, Connecticut-based General Re, one of the world's biggest reinsurance companies.

``General Re's name has stood for quality, integrity and professionalism in reinsurance,'' Buffett wrote in that year's shareholder letter. He lauded CEO Ronald Ferguson for his leadership.

Yet, as Buffett has pointed out in several annual reports since, the company was selling insurance way too cheaply. From 1999 through 2005, Gen Re ran up a total of $7.69 billion in underwriting losses. FTN Midwest's Hamilton estimates that those losses have been largely offset by investment income.

In 2001, Ferguson stepped down, replaced by executive vice president Joe Brandon. In that year's letter, Buffett compared Brandon to former General Electric CEO Jack Welch. ``He is smart, energetic, hands-on,'' Buffett wrote.

`A Sinkhole'

In 2006, prosecutors accused Ferguson, former CFO Elizabeth Monrad and two other former General Re executives of helping American International Group Inc. inflate reserves by writing sham, no-risk reinsurance contracts beginning in late 2000.

Jurors convicted all four of fraud in February, along with one former AIG executive. They are still awaiting sentencing. Two other former Gen Re executives pleaded guilty to their role in the fraud in 2005.

Buffett was interviewed by prosecutors in connection with the case. He wasn't charged with any crime. Brandon, named by prosecutors as an unindicted co-conspirator, resigned on April 14, and was replaced by Gen Re President Tad Montross.

``It's been a sinkhole,'' Hamilton says. ``Buffett's lost more than a shred of reputation.''

General Re isn't Berkshire's only regulatory entanglement. Connecticut Attorney General Richard Blumenthal said in May that he's investigating whether Moody's Investors Service, which was 19.6 percent owned by Buffett as of March 31, was guilty of a conflict of interest when it gave a AAA rating to Berkshire's new municipal bond insurance firm.

`Purse Strings'

``It is one symptom of a system rife with possible conflicts of interest and problematic relationships,'' Blumenthal said in a May 1 interview with Bloomberg News.

Buffett says his company deserves its rating. ``If Berkshire isn't AAA, I'm not sure what company would be,'' he told Bloomberg Television.

As pressure has grown for Berkshire to spend its cash, Buffett has been willing to travel farther afield in search of companies to buy, says David Carr, chief investment officer of Oak Value Capital Management Inc.

``I think in the past five years, he's loosened his purse strings,'' Carr says. ``There's nothing off limits as long as he understands the model.''

Analyst Hamilton says Buffett is finding it hard to replicate his previous returns. ``The returns on equity and capital are not what they were in years past,'' he says.

Intrinsic Value

Berkshire's growth is slowing. The annual median increase in per share book value, or net worth, averaged 10.3 percent in the eight years ended on Dec. 31, 2007, compared with 26.1 percent in the 1990s and 28.8 percent in the '80s, according to Citigroup's Shanker. He says Buffett is turning Berkshire into a conservative capital preservation vehicle.

``If you're interested in capital appreciation, you have to ask yourself whether Berkshire Hathaway is the right investment,'' Shanker says.

Buffett says there's only a limited number of good, big companies for sale at reasonable prices. As he put it in a May 2007 interview with TV host Charlie Rose, ``The real goal at Berkshire is just to keep building more and more earning power from operating companies.''

What makes Buffett want to buy? He himself says there's no secret formula, because each company's dynamic is unique. Berkshire is most active when markets go awry and companies' market capitalizations dip below their true worth -- their ``intrinsic value'' in Buffett-speak.

`Deal Velocity'

MidAmerican Energy's Sokol turned to Buffett during the stock market bubble of 1999. Investors, infatuated with Internet and technology stocks, were undervaluing the shares of relatively staid utilities such as Des Moines, Iowa-based MidAmerican, which looked especially pallid next to booming energy trader Enron Corp.

``You do two to three deals a year,'' Sokol recalls one analyst telling him. ``Your competitors are doing two to three a month; they have deal velocity.''

Shares of MidAmerican slumped to less than $27 in late 1999 from $42 in '97. ``The irrational behavior was driving me crazy,'' Sokol says.

What Buffett saw in MidAmerican was a company positioned to take advantage of utility deregulation and grow through a string of acquisitions. It now operates regulated utilities in 10 states, plus the U.K. It also owns plants in Australia and the Philippines. State regulatory commissions typically allow returns on equity of 10-11 percent.

`A Fool's Game'

``Warren thinks of our business as a good place to invest money on a long-term basis,'' Sokol says.

Sokol didn't need to join a long line of company owners trying to get Buffett's attention. One investor in MidAmerican was Walter Scott Jr., a Berkshire director and Buffett friend. He is chairman emeritus of Omaha-based construction contractor Peter Kiewit Sons' Inc.

Scott suggested the meetings that resulted in the sale. Berkshire paid $1.7 billion for 85 percent of MidAmerican. Sokol, Scott, now 77, and MidAmerican President Gregory Abel paid some $310 million for the rest.

Midamerican dips into Berkshire's till for acquisitions, while keeping true to Buffett's reputation for thrift by scooping up companies on the cheap.

``With regulated assets, overpaying is a fool's game,'' Sokol says.

Deep Pockets

In 2002, the company paid $450 million for Salt Lake City- based Kern River Gas Transmission Co. Also in 2002, it bought Northern Natural Gas Co. from Dynegy Inc. for $928 million. Dynegy had purchased the pipeline company, now based in Omaha, less than nine months earlier from a collapsing Enron for $1.5 billion.

``It was a brilliant acquisition,'' says Gordon Howald of Calyon Securities (USA) Inc. ``Using standard industry multiples, we could see these assets worth more than $2 billion in today's market.''

Sokol has kept up his buying. He paid $5.1 billion for PacifiCorp, a Portland, Oregon-based utility, in March 2006. That month, Berkshire also agreed to give him up to $3.5 billion in cash for new purchases or other purposes, in exchange for MidAmerican stock.

NetJets Inc.'s Richard Santulli also had Buffett's deep pockets in mind when he made a call to Omaha. The year was 1998, and his partner, Goldman Sachs Group Inc., which owned 20 percent of the company, was pushing for a public offering. In 1986, Santulli had invented the notion of ``fractional'' jet ownership, in which individuals and companies buy shares of a private plane's flying time in lieu of buying the entire jet.

`25-Year-Old Kids'

By 1998, several other companies, including Montreal-based Bombardier Inc. and Waltham, Massachusetts-based Raytheon Co., had crowded into the field. To keep his dominant market share, Santulli expanded both the number and variety of aircraft in his fleet.

Santulli balked at the idea of an IPO for Woodbridge, New Jersey-based NetJets because going public would subject his company to the scrutiny of Wall Street analysts. ``I wasn't going to answer to 25-year-old kids telling me how to run my business,'' he says in his thick Brooklyn accent.

Like Sokol, Santulli had ready access to Buffett, who was a customer and had told him in the past to give Berkshire a call if he ever wanted to sell. Less than a week after he made the call, Buffett picked Santulli up at Omaha's Eppley Airfield in his Town Car and took him to his office. ``The deal was done in 5 minutes, maybe 10 minutes,'' he says. Berkshire paid about $725 million in cash and stock.

Expanding to Europe

Berkshire not only bankrolled NetJets' fleet of Boeings, Citations and Gulfstreams, it also underwrote the company's expansion to Europe. From 2000 to '05, NetJets lost $212 million building up a European fractional jet ownership program. ``If I were public, I would have had to close the European business down,'' Santulli says, adding that today the unit is profitable.

``If I were to sell that business -- which of course we're not -- I would start at more than a billion and go from there,'' he says. According to Jetnet LLC, a Utica, New York-based research firm, NetJets now has more than 50 percent of the U.S. fractional jet market and virtually no competition in Europe.

Business Wire's Tamraz, 54, had no special entree to Buffett's office when she faxed him a letter, along with financial data, in November 2005. Eight days later, her receptionist buzzed her.

``Warren Buffett's on line 2,'' she said.

``Hello, Mr. Buffett,'' Tamraz said, as she scrambled to find her copy of the letter.

``Call me Warren,'' he responded.

Job Security

Tamraz says Buffett asked for more financial information on New York- and San Francisco-based Business Wire and for an idea of the price she was asking for the enterprise.

What appealed to Buffett about Business Wire was its business model, Tamraz says. The firm, founded in 1961, delivers 250,000 news releases a year for 25,000 corporate clients around the world. In 2007, it had more than $125 million in sales, which have been growing about 8 percent a year for the past three years, according to Tamraz.

One reason: Regulation Fair Disclosure, a U.S. Securities and Exchange Commission rule implemented in October 2000 that requires companies to disclose market-moving information to all investors simultaneously.

Tamraz is thrifty. She has no secretary and decorates her office with posters. She's been known to pitch in to format press releases when earnings season picks up. Another feature Buffett liked is that Business Wire has only one significant rival, London-based United Business Media Plc's PR Newswire, which had an operating margin of 35 percent in 2007.

`Cheap Parts'

Tamraz had spent four years trying to sell her business. No private equity or media firm would agree to her roster of demands, including job security for her 500 employees and a free hand to run the company. Two weeks after she talked to him, Buffett agreed to all of her conditions. The price he paid was ``more than several hundred million dollars,'' Tamraz says.

Fort Worth, Texas-based TTI, which Buffett bought in 2007, is also in the distribution business. It buys components that are used in an array of electronic devices and sells them to manufacturers around the world. ``We sell cheap parts better than anyone,'' CEO Andrews declares in his Texas drawl, before correcting himself: ``We sell inexpensive parts better than anyone.''

No Losses

TTI has carved out a niche in so-called passive components - - connectors, capacitors and resistors. They sell for an average of less than 4 cents each. With 2007 revenue of $1.4 billion, TTI operates in an industry with thin margins. Everything about TTI is low cost: Its Spartan headquarters is tucked inside a 276,000- square-foot (25,600-square-meter) warehouse.

Andrews, 65, started TTI in his living room in 1971 after being laid off from a purchasing job at General Dynamics Corp. Over the years, he plowed profits back into inventory and rode out the cycles of the electronics industry that forced many rivals to sell or fold. Andrews says TTI has never posted an annual loss and has never laid off an employee.

Today, TTI's inventory is enormous. An Apple iPod may have about 500 components, and TTI says it stocks 450 of them. All told, the company sells more than a million different kinds of parts. TTI buys them from manufacturers such as Malvern, Pennsylvania-based Vishay Intertechnology Inc. and Greenville, South Carolina-based Kemet Corp. ``When you come down to it, they are an extension of our sales force,'' Kemet CEO Per-Olof Loof says.

Hamburgers and Cokes

Receiving, ``picking'' and packaging orders at TTI is largely automated. For high-volume items, automatic lifts pluck the appropriate bar-coded part -- say, a reel of capacitors -- from a revolving carousel and send it off on a conveyor to be combined with the balance of the order. Given the company's low- priced goods, any error in the process will eat up TTI's profits.

Andrews got his foot in Berkshire's door through John Roach, a friend of Andrews's who had sold Justin Industries Inc., a Fort Worth building supply maker, to Berkshire in 2000 for $600 million. Roach overnighted TTI's 3-inch (7.6-centimeter) thick book of financial information to Buffett and set up a meeting.

Andrews arrived with Roach at Buffett's offices at 10 a.m. on Nov. 15, 2006, for a scheduled two-hour meeting. It lasted twice as long, with Buffett peppering Andrews with questions about his business and family. Buffett treated his visitors to hamburgers and Cokes at a country club, and then they returned to his office.

``Warren made an offer, and Paul made a quick response,'' says Roach.

``OK, let's do it,'' Buffett said and called in CFO Marc Hamburg to work out the details. The price wasn't disclosed.

Katyusha Rockets

Andrews agreed to stay at TTI for at least three years. ``There's nothing in writing, except a handshake and a gentleman's agreement that I'm going to be here to do what I said I was going to do,'' he says.

One reason Andrews says he sold to Buffett was he had no desire to see his company loaded with debt by a private equity firm or gutted by a cost-cutting rival. Iscar's Wertheimer, 56, had the same notion. ``We are very proud of what we've built,'' he says. ``We want it to continue.''

In buying an Israeli company, Buffett took on the kind of geopolitical risk he's accustomed to as an insurer. Within days after the deal closed in July 2006, fighting broke out between Israel and the Shiite Hezbollah group that dominates southern Lebanon.

Wertheimer called Buffett to tell him that Katyusha rockets were slamming into the sun-baked hills around his plants and there was a chance his machinery would be damaged and that his employees would lose workdays.

20-Year Perspective

``I'm not interested in what happens next quarter,'' Wertheimer says Buffett told him. ``I'm interested in the next 20 years.'' Some of Wertheimer's staff did move south while the rockets were falling. Iscar didn't miss a shipment.

Wertheimer says that in the eight months and three face-to- face visits leading up to the Iscar deal, he and the Omaha investor had wide-ranging discussions about everything from philanthropy to ``how to look on life,'' in Wertheimer's words. At one point, Buffett sent him a biography of the Jewish-American educator Abraham Flexner, who helped found the Institute for Advanced Study in Princeton, New Jersey. Both Buffett and Wertheimer have a longstanding interest in education.

``I love talking to him,'' Wertheimer says. ``For me, he's a teacher.''

Wertheimer took over as CEO of Iscar in 1984, when his father, Stef, now 81, who founded the company after fleeing Nazi Germany, was injured in a car accident.

Jews, Arabs and Druse

He transformed it from a local exporter of metal-cutting tools into an international enterprise with 7,500 employees, plants from Barcelona to Bangkok and more than $1 billion in 2007 sales. In 1995, he turned over the CEO position to his colleague, Jacob Harpaz, 57.

``I was just getting in Jacob's way, so I fired myself,'' says Wertheimer, who remains chairman.

On a rainy day in March, Wertheimer leads a tour through some of the 20 buildings that comprise the company's hillside campus. The company's Israeli workers are a combination of Jews, Arabs and Druse, many of whom Wertheimer greets by name.

Iscar's tools are used by makers of cars, appliances and other durable goods to cut metal to exacting specifications. The inserts, as they're called, sell for anywhere from a few dollars to more than $100 each. Teams of Iscar designers are at work every day looking for ways to make them cut faster and more efficiently.

Sharper Tools

One customer is Bolton, Ontario-based Husky Injection Molding Systems Ltd. In April, manufacturing engineer Noel Pinto was looking for a way to improve the milling of the steel plates Husky makes at its Milton, Vermont plant. They are used in plastic bottle manufacturing, among other processes. Iscar's Thomas Raun devised a new tooling process, improving the speed of the operation by 40 percent.

``They find ways to implement new technology,'' says Pinto.

Wertheimer says he's very comfortable linking up with Buffett. ``Warren has a message to the world,'' he says. ``It's balance.'' He points with his index finger to his head, to his heart and finally to his wallet. ``And he does it in a fair, clean and nice way,'' he says.

One of the companies Buffett owns is expected to yield a new Berkshire top executive if the Omaha investor passes from the scene anytime soon. Buffett updates shareholders regularly on the subject of succession and did again at the annual meeting in May. Berkshire's board, he said, has identified three candidates with the qualifications to succeed him as CEO, and one has been selected.

`Nobody Replaces Warren'

Analysts, including Citigroup's Shanker, say based on their ages and accomplishments, the most likely candidates are NetJets' Santulli, 63; MidAmerican's Sokol, 51; Berkshire Re head Ajit Jain, 56; and Geico CEO Tony Nicely, 65.

Four money managers have also been selected as candidates to replace Buffett in his role as chief investor. The board and new CEO will decide which of those candidates he will work with.

These plans could change if Buffett remains in place for an extended period, and men like Santulli and Nicely are seen as too old to don his mantle. The new CEO could end up being the head of a Berkshire company that has yet to be acquired.

Sokol doesn't let the issue trouble him. ``There is more than adequate talent to keep the Berkshire Hathaway way of doing things going forward,'' he says. ``But nobody replaces Warren Buffett.''

Buffett treats the issue of his mortality with characteristic wisecracking humor. One Saturday morning several months ago, CTB's Mancinelli says he called Buffett, as he occasionally does. Buffett asked to call him back, saying he had an appointment with his barber.

``The way I figure it, I have just so many haircuts left in my life,'' Buffett said. ``I don't want to miss any of them.'