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1 Crimea on ‘brink of war’ as Putin tightens grip (Ian Traynor, Shaun Walker & Jon Swaine in The Guardian) The fledgling government in Kiev put the country on a war footing on Sunday as the Russian president, Vladmir Putin, tightened his grip on the Ukrainian Black Sea peninsula of Crimea and western powers were left scrambling to find a response to the escalating crisis. “We are on the brink of disaster,” said Arseniy Yatsenyuk, Ukraine’s acting prime minister, as Kiev called for help from Washington and London, co-signatories of a 1994 pact with Russia guaranteeing Ukraine’s security and its borders.
As John Kerry, the US secretary of state, described Russia’s gambit as “an incredible act of aggression”, western powers pondered their limited options. Nato ambassadors met in Brussels, with Lithuania and Poland arguing that Russia’s actions threatened them as Nato members bordering Russia and Ukraine, and pushing for appropriate action.
However, Kerry ruled out a military response. “The last thing anybody wants is a military option in this kind of situation,” he said. Instead, leading western countries dropped out of preparatory work for a G8 summit hosted by Russia in June, with Kerry saying Moscow could be expelled from the organisation and economic sanctions aimed at the Russian elite, moves unlikely to have much impact.
Kiev ordered a call-up of military reserves, but also instructed its troops not to respond to Russian military “provocations” for fear of triggering a bloodbath as Russian forces in Crimea restricted Ukrainian units’ movements and demanded they surrender their weapons. The first president of an independent Ukraine, Leonid Kravchuk, said: “I’m 80, but I will take my gun and will be defending my land.”
2 Record profit for Berkshire Hathaway (BBC) The investment firm run by the US billionaire Warren Buffett has reported a record profit for 2013. Berkshire Hathaway made $19.5bn last year, up from $14.8bn in 2012. “On the operating front, just about everything turned out well for us last year – in some cases very well,” Mr Buffet wrote to shareholders. However it underperformed the S&P 500 share index for the fifth year in a row.
The growth in the company’s book value – that is the company’s assets minus its liabilities and Mr Buffett’s preferred measure of Berkshire’s performance – was 18.2% in 2013, while the S&P 500 rose 32.4%. But Mr Buffett said that was to be expected when the S&P performed well.
He added that the fund had outperformed the stock market between 2007 and 2013 and that through a full six year cycle he expected to do that again. “If we fail to do so, we will not have earned our pay,” he wrote. Mr Buffett, ranked fourth on the Forbes rich list, pointed to a strong performance in the firm’s insurance, rail and energy businesses for the increase in profit.
3 Losses invite ‘Bitcoin police’ (Ryan Tracy & Stephanie Armour in The Wall Street Journal) The recent loss of nearly a half-billion dollars from a major bitcoin exchange is forcing US regulators to confront burgeoning questions about their authority—and responsibility—to oversee the fledgling virtual currency. So far, US financial regulators have avoided stepping into the fray. But they are trying to determine whether their oversight extends to bitcoin, according to government officials.
Some, like the Federal Reserve, have indicated they can’t oversee bitcoin without legislative action. Fed Chairwoman Janet Yellen said at a Senate hearing last week that the central bank doesn’t have the authority to regulate bitcoin as long as the currency remains separate from the banking system the Fed oversees.
For now, bitcoin and other digital-payment systems are operating in a sort of regulatory vacuum, with exchanges and money transmitters free to start up and solicit US customers without the same type of oversight or protections that apply to credit cards, banks or other financial-services businesses. The currency is subject to money-laundering rules.
The lack of protection comes amid mounting concerns about the security of bitcoin, which are currently worth about $550 each. Mt. Gox, the major exchange that shut down last week and filed for bankruptcy, said it had lost almost 750,000 of its customers’ bitcoins. A study of 40 bitcoin exchanges set up over the past three years found 18 closed, with customer accounts often wiped out—in some cases because of fraudsters.
Bitcoin is a payment system introduced in 2009 that allows computer users to create digital “coins” by solving complex mathematical problems. Owners can send and receive bitcoin using software and swap it on exchanges for dollars or other fiat currencies, and a small but rising number of merchants accept it. All the bitcoins in the world are currently worth about $6.9 billion, according to a recent estimate by Coindesk.com.