Black Monday for Workers

By Daniel PolitiPosted Tuesday, Jan. 27, 2009, at 6:08 AM ET

It was a depressing Monday for tens of thousands of workers as several big U.S. companies announced massive job cuts that illustrate how the Great Recession is hitting almost every corner of the labor market. The Washington Post says U.S. employers cut more than 55,000 jobs in what it calls "a staggering one-day toll." The New York Times reports that more than 75,000 jobs around the world disappeared yesterday. The Los Angeles Times adds it all up and notes that 187,550 jobs have been slashed so far this month, which is more than double the number in January of last year. And the pain is far from over. USA Today highlights that "far more job cuts are likely" in the near future, and some economists expect 3 million people will lose their jobs this year।

थेWall Street Journal leads its world-wide newsbox with the Senate confirming Timothy Geithner as Treasury secretary with a 60-34 vote. Now that Geithner is in place, the Obama administration is expected to quickly outline its plan to prop up the financial system, which is expected to have a strong focus on helping homeowners. As early as today, Geithner is expected to announce new rules to limit the influence of lobbyists and special interests in determining who will get help from Uncle Sam.

Job losses are nothing new as companies have been laying off workers for more than a year. But these losses were once concentrated in companies related to the housing and finance industries. "Now the ax is falling across large swaths of manufacturing, retailing and information technology," points out the NYT. The WP notes that 22 of the 30 companies that make up the Dow Jones industrial average have cut jobs since October. No other company cut more positions yesterday than Caterpillar, which announced that 15,000 jobs would be eliminated by the end of this week and 5,000 more by the end of the first quarter. Among the other companies that announced job cuts were Sprint Nextel, which shed 8,000; Home Depot, which cut 7,000; and Texas Instruments, which made 3,400 positions disappear.

And that's only part of the equation. USAT points out that while the huge numbers from big firms may hog the headlines, smaller companies are also hurting and many are also resorting to layoffs in order to stay afloat. Indeed, in a front-page story about the layoff woes at a tile factory in Ohio, the WSJ notes that "tiny firms … have an outsized role in employment." More than half of private-sector workers are employed by companies that have fewer than 500 employees.

The new round of job cuts increased the pressure on Washington to pass the economic stimulus package. "These are not just numbers on a page," President Obama said as he urged lawmakers to act quickly. "These are working men and women whose lives have been disrupted. We owe it to each of them, and to every single American, to act with a sense of urgency and common purpose." But it's becoming increasingly unclear whether even a massive stimulus would be enough to get companies to start hiring.

Economists estimate that the stimulus package would save or create somewhere around 3 to 4 million jobs within the next two years. But, as the LAT points out, 2.6 million jobs were slashed last year, and 2 million more are expected to go the same way during the first six months of the year. The package "is as much psychological, to get people to think that even if we're in a recession, it's going to be temporary so I don't have to lay people off," an economist tells the LAT. The NYT also notes that even if business does improve in the next few months, it's unlikely that companies will rush to rehire workers because layoffs often spur companies to restructure their business models. "There is nothing in the economic tea leaves that suggest someone is going to be hiring," one economist tells the WP, "every aspect of this economy is in a free-fall."

Amidst all the depressing economic developments, there was a bit of good news from the unlikeliest of places: housing. The WSJ goes high with new figures that show U.S. home sales increased 6.5 percent from November, representing the biggest one-month jump in almost seven years. But no one thinks this means the market is headed for a comeback since it seems clear that buyers are taking the plunge largely due to the sharp decline in prices as sales of foreclosed homes were partly responsible for this surge. In all, 45 percent of homes sold in December were characterized as "distressed sales."

The WP fronts a harrowing account of the Israeli attack on Zaytoun, in the Gaza Strip, where at least 29 members of one family were killed over a period of two weeks. What happened in Zaytoun has become particularly significant in the narrative of the Israeli incursion into Gaza because the Red Cross concluded that by preventing rescue efforts to reach the area for several days, Israel "failed to meet its obligation under international humanitarian law." Survivors say there is no way Israeli soldiers didn't know that wounded civilians were in desperate need of help. In fact, some say they tried to communicate the gravity of the situation to Israeli soldiers but were summarily ignored.

In a piece inside, the NYT says that even though the vast majority of Israelis supported the Gaza invasion, it looks like those who planned and executed the military operation aren't the ones who will benefit politically. With two weeks to go before elections, Israelis appear to have shifted "further to the right" in what appears to be a general belief that the government needs to take an even stronger stance against Hamas. Benjamin Netanyahu's Likud Party has kept its lead, and support has grown for the nationalist Yisrael Beiteinu Party.

While most of the attention on the young administration has focused on its plan to close down the detention center at Guantanamo, the NYT points out that Obama has another tough decision to make regarding the prison that currently holds 600 detainees at Bagram in Afghanistan. By all accounts, the living conditions at Bagram make Guantanamo look like a nice place to be. Most of the prisoners at Bagram are suspected Taliban fighters who are being held indefinitely without charge. The detainee population in Bagram has increased "nearly sixfold" over the past four years, partly because the Bush administration largely stopped sending prisoners to Guantanamo in late 2004.

The LAT fronts the results of a depressing new study that says global warming will be with us for a long time to come, no matter what we do. Even if every country in the world suddenly decided to drastically cut back its carbon dioxide levels, it would still take 1,000 years or more to reverse changes in the climate that have already begun to take place. "People have imagined that if we stopped emitting carbon dioxide, the climate would go back to normal in 100 years, 200 years," the study's lead author said. "That's not true."

The recession may be in full swing, but that doesn't mean companies aren't willing to shell out as much as $3 million for 30 seconds of airtime during this year's Super Bowl, reports the LAT. Viewers will even be able to watch 2.5 minutes of commercials with special 3-D glasses. "There is no platform anywhere in the world that is as effective as this one," said Jeffrey Katzenberg, chief executive of DreamWorks Animation. "The Super Bowl is the single greatest shared American event."

But TV advertising on any regular old day is drying up. The WP's Paul Farhi points out that TV viewers in prime time are being subjected to an unusual number of infomercials. "It won't make most economists' radar screens," writes Farhi, "but the rise of such ads might be a leading economic indicator." As the price of airtime continues to plummet now that banks, automakers, and car dealers are cutting back, viewers are getting used to seeing the likes of Vince Offer of ShamWow fame.

If you're looking to charter a private jet for the Super Bowl weekend, there are still plenty available, notes the NYT. "It's sure not 2008 any more," the chief executive officer of Jets.com said.

USAT reports on a new study that suggests rhythm could be an innate ability that is "hard-wired into the human brain." Scientists discovered that babies as young as two days old can detect a musical pattern and appear to notice when the pattern is broken. Although further study is needed to come to any set conclusions, it could change the long-held idea that babies learn about music by listening to adults.

The CIA Vs. the Mullahs

By Reuel Marc Gerecht

Tuesday, January 27, 2009; Page A17

How good is American intelligence on Iran? With the clerical regime intimately involved in Gaza, Lebanon, Afghanistan and Iraq, with the mullahs quite probably on the verge of enriching sufficient uranium to make a bomb, and President Obama promising to use more diplomacy and sanctions to stop them, it's a fairly pressing question.

Yet this query has rarely been raised seriously in Washington. I am not aware of one instance since 1978, when Ayatollah Ruhollah Khomeini started to preach revolution from France, that an American president requested a thorough assessment of the clandestine service's collection efforts against the mullahs. Congress has been only a little better. Even after the Iraq war made outsiders more attentive to the deficiencies in the Central Intelligence Agency's operations against "hard target" countries, congressional interest in knowing more about the efforts to collect intelligence against Tehran has been thin. Field officers who have seen gross incompetence in Iran operations over the years have wondered more often about Langley's abilities than have its civilian overseers.

CIA Director-designate Leon Panetta should consider a bipartisan review of intelligence collection concerning Tehran. Since the Obama administration is reviewing policy options toward the Islamic republic, it would seem sensible to know what Langley's actions have produced. Policy built on weak intelligence and analysis obviously isn't a good idea.

Iran operations have always consumed a lot of CIA manpower. Is there a correlation between the number of officers deployed and the quantity and quality of intelligence collected? Does the manner of their deployment -- the balance between headquarters-based and field officers, and the nature of the cover that these officers operationally use -- make much sense? How many operatives and analysts who work on the target could competently read, let alone digest, the sermons and books of dissident clerics or probe a laptop with nuclear plans buried in it? In the 1990s, I saw a case officer who barely spoke Farsi debrief a potentially high-value Iranian official who barely spoke English. The meeting produced "disseminable" intelligence. Sadly, this type of exchange was not uncommon. Agency analysts, who often have little real idea of agents and their case officers, can give weight to field intelligence that really should be dismissed.

Iran is perhaps the best and the most important barometer we have for judging how well the CIA can perform against a hostile Middle Eastern state with a terrorist track record that includes, according to the Sept. 11 commission report, abetting al-Qaeda. It is also probably the "easiest" hard target that Langley has. Unlike in Iraq under Saddam Hussein or North Korea today, the CIA can reach inside the Islamic republic if it really tries. Iran is an authoritarian theocratic state that believes in its civilizing mission to the Muslim world. Its borders are hardly porous, but a range of people -- Muslims, non-Muslims, business executives, academics, students, religious pilgrims and tourists -- travel there regularly.

More important, Iranian VIPs travel abroad. Members of the Revolutionary Guard Corps frequently receive scholarships for foreign study, usually in the West. Iranian scientists and engineers also go abroad. Iranian mullahs are not uncommon in foreign lands, where prolonged contact with them is possible. Although Iran's progressive intellectuals -- the people to whom Western journalists and scholars usually talk -- rarely have much influence and insight into the clerical regime, sometimes they matter, and sometimes they can be reached. The key is whether Langley has developed patient but aggressive measures that make it more likely that its operatives cross paths with interesting Iranians.

Accessibility is never a guarantee of operational success. But the clerical regime is now 30 years old. Disaffection and anger are not uncommon among once-proud revolutionaries. We have not yet seen the defections from the ruling religious elite -- the clergy and the lay hard core who see themselves as Allah's chosen soldiers -- that we began to see among Russian communists after three decades of Soviet rule. The faithful's devotion to God appears to be more tenacious than man's commitment to Marx. But this could change. As we have seen with some of al-Qaeda's most devoted supporters, religious inspiration can evolve or fade, turning comrades into enemies.

It is likely that Obama's diplomacy-and-sanctions effort to stop the clerical regime's quest for nuclear weapons will fail. If it does, the administration will inevitably default to some kind of containment strategy. Covert-action programs, which will oblige Langley to become more intimate with Iran's internal dynamics, will probably be a part of the administration's efforts to check the mullahs' designs in the Middle East. If we are serious about what we are doing (and Langley has a history of approaching covert action haphazardly), the White House and Congress ought to know whether the CIA has been able to perform its primary mission. Human-source intelligence and covert action use the same skill set.

Whatever Panetta does, he would be wise to trust, but verify, what the CIA's senior management tells him. Langley's "professionals" have a way of arrogating to themselves the details that allow outsiders to see whether the agency is actually doing its job.

The writer is a senior fellow at the Foundation for Defense of Democracies and was a CIA case officer from 1985 to 1994.

Only if Stupid Is a Crime

By Eugene Robinson

Tuesday, January 27, 2009; Page A17

Is Illinois Gov. Rod Blagojevich about to be impeached on grounds of loopiness, obnoxiousness and a bad haircut? Apparently so. In defense of the Illinois state senators who seem to have already decided the governor's fate, however, the haircut really does border on the criminal.

But it is unclear to me what else Blagojevich has done that a duly constituted jury would find illegal. Even in the matter of his menacing mop, at worst he's a co-conspirator in a dastardly act committed by his barber.

Unfortunately for the governor, the Illinois Senate is not bound by the strict rules of evidence and testimony that constrain a criminal court. And even an observer as biased as I am -- what columnist wants to see such a colorful and unpredictable figure banished from the political scene? -- must acknowledge that residents of the fifth-most-populous state in the union deserve better than to be governed by a late-night punch line.

Yesterday, while lawmakers in Springfield were convening the governor's impeachment trial, Blagojevich was in New York making the talk-show rounds. He was acting more like a movie star whose latest film comes out Friday than a politician who might be out of a job by Friday.

Blagojevich is accused by U.S. Attorney Patrick Fitzgerald of trying to sell President Obama's vacated Senate seat to the highest bidder. The governor, who maintains his innocence, told ABC's "Good Morning America" -- and this is an example of why we'll miss him -- that among those he considered for appointment to the United States Senate was Oprah Winfrey.

She is "an African American woman who probably by herself has more influence than 100 senators," Blagojevich elaborated in his appearance with the women of "The View." He went on to say that he discarded the idea after wondering whether Winfrey had any interest in the job, whether she would even take his call -- since "she's Oprah, and I'm just the governor of Illinois" -- and whether the move might be seen in some quarters as a "gimmick."

What would give him that idea?

Blagojevich also pleaded his case on NBC's "Today," in an interview taped at his campaign offices -- where prosecutor Fitzgerald's wiretaps picked up the conversations that led to the governor's arrest.

It was an exercise in futility, as far as the impeachment proceedings are concerned. Fitzgerald has asked the Illinois legislature to stay away from witnesses who might be called in an eventual criminal trial. That means the senators sitting in judgment of Blagojevich are unlikely to hear direct testimony of his guilt or innocence. The FBI affidavit detailing wiretapped conversations about the Senate seat and other matters should suffice to get the governor booted from office.

Those expletive-laden conference calls and bull sessions might not be enough, however, to put him in jail. Fitzgerald may have evidence that he has not yet presented. From what we've seen, though, it's not immediately apparent what crime Blagojevich has committed except being something of a buffoon and a jerk.

In one taped conversation, Blagojevich refers to the empty Senate seat as "a [expletive] valuable thing. You just don't give it away for nothing. . . . I've got this thing, and it's [expletive] golden." He evaluates various candidates according to what they might deliver in return -- campaign contributions, for example -- and excoriates Obama staff members for refusing to offer anything except appreciation on behalf of their favorite candidate, longtime supporter Valerie Jarrett.

In some circles, this is known as politics. Cover the children's ears.

Trying to leverage a political appointment into a political advantage is not unprecedented. Doing so while talking like a character from "The Sopranos" is an aesthetic offense, but I'm not sure it's a criminal one.

Had Blagojevich consummated a deal for personal gain in exchange for the appointment, Fitzgerald may have had an open-and-shut case. But the governor didn't consummate anything. He just talked and talked and talked, mostly about how nobody wanted to play ball with him. I question whether the tapes are enough to put him in jail.

His talents would be wasted there, anyway. Watching him on "The View," you could see that the man was born to be a talk-show host. When Joy Behar said she heard he did a spot-on Richard Nixon impression and invited him to say "I am not a crook," he wisely demurred. Then, without missing a beat, he countered: "Let me make this perfectly clear . . ."

The writer will answer questions at 2 p.m. today at www.washingtonpost.com. His e-mail address is eugenerobinson@washpost.com.

“Perhaps it’s time for yet another performance of Border Border in both countries”

THE HINDU notes: In 25 years, the noted Pakistani theatre personality’s group, Ajoka, has engaged with issues ranging from the ‘military-mullah nexus’ and brutalisation of society, to the construction of post-Partition identities. Following Ajoka’s recent performances in India in stormy times, Madeeha Gauhar reiterates the need to recognise the subcontinent’s unique lifeline — a shared cultural heritage which crosses all borders.

With a dark shadow cast over bilateral ties following the Mumbai attack, and heightened by the high-decibel war on nerves unleashed on both sides, the stage had been set without their asking. But not only did acclaimed theatre director and actor Madeeha Gauhar’s Lahore-based group Ajoka, which turns 25 this year, perform thrice in India in the past month. The overwhelming response of audiences from Delhi to Kerala reaffirmed the feisty 52-year-old’s faith in people-to-people contact, sustained by the “legacy of the sub-continent’s shared cultural heritage that lives on in their hearts.”

Known for plays that have questioned Pakistan’s ‘military-mullah nexus’, Ajoka performed Hotel Mohenjodaro on January 16 at the National School of Drama’s festival in Delhi. The play is an adaptation of a prescient 1960s short story that predicted Pakistan’s troubled trajectory 30 years hence. Last month in Delhi and at the International Theatre Festival of Kerala in Thrissur, the group performed its most popular play, Bullah. It is based on the life of 17th century Punjabi Sufi poet Bulle Shah, whose powerful message of humanism, questioning all orthodoxies of his time, has gained a new relevance in the troubled present.

Madeeha Gauhar speaks to Chitra Padmanabhan about performing in times of crisis. Excerpts from the interview:

Hypothetically, say, war broke out while you were in India. Don’t you fear you will be dubbed a traitor?

Then nothing will matter. I was a child during the 1965 conflict and a teenager during the 1971 war. Recently, when Pakistani air force planes flew over Lahore, it brought back horrible memories. People were on their roofs watching. There is this element of tamasha in Punjab: in the 1965 war, people in Lahore watched aerial dogfights over the Ravi.

In earlier conflicts, the media was not everywhere. Today, it has gone crazy on both sides. I told my husband Shahid Nadeem, a senior Pakistan TV official as well as the writer of Bullah, to start airing footage of Hiroshima and Nagasaki so people know what happens during a nuclear strike. India and Pakistan are not like Russia and America. But people on both sides are in complete denial.

You are one among the liberal voices in Pakistan. How has this liberal voice positioned itself within Pakistan and vis-a-vis India?

I will speak as a theatre activist. Ajoka began by questioning the military-mullah nexus during the Zia-ul-Haq years. Few realised what the build-up of this military-mullah nexus entailed, and whose impact we continue to suffer.

That’s an important facet of our work, whether it’s a play on Bullah, on the blasphemy law (Dekh Tamasha Chalta Ban), or on the discriminatory laws introduced by Zia’s Islamic legislation regarding women and minorities (Bari).

This work continues, whether it highlights society’s brutalisation — the Kalashnikov culture — or Pakistan’s Talibanisation. Our work has helped us understand the ideological manifestations imposed on us since Pakistan’s formation — the creation of a new identity as Pakistanis, looking towards the Middle East, and cutting the umbilical cord with South Asia.

This artificial manoeuvre has created a disjuncture with history and tradition, damaging us as a nation and as a people rooted in our geographical context. This manoeuvring culminated during Zia’s time into the Frankenstein monster we behold today. But the army was always there, lurking. The democratic process was derailed from the start. I feel if we understand this process and nexus, we know what to look for. As artists it has translated into our work.

How?

Bullah, our most popular play with over 500 performances in seven years, gives me hope that this is the philosophy the common man adheres to unconsciously — Sufi humanism, which crosses all borders in South Asia and is unique to the region, though Sufism has been reduced somewhat to ritualism.

Seeing Hindu, Muslim, and Sikh families camping at the Ajmer dargah was amazing. On our first Punjab visit (2003) — first ever of a Pakistani group post-Partition — what astonished me were dargahs big and small, everywhere, in areas bereft of ethnic Muslims, except Malerkotla and Qadiyan. In Jalandhar cantonment, behind barbed wires was a dargah with a lamp and green chador!

In Malerkotla, I saw Hindu and Sikh women dance the dhamaal at dargahs for their mannat (wish). This, I imagined, would have been Punjab’s pre-Partition composite culture. The destruction of belief in syncretic culture in Pakistan and India has been a shame — we had something viable. It still is a living tradition but we must go beyond mere ritualism to claim the rich legacy of Sufism and Bhakti movement.

How does one claim this rich legacy?

It has been a dilemma for me. I am secular. I call myself a Muslim culturally. But we cannot talk of secularism per se in Pakistan or India, for people are deeply religious. Why speak about western secularism, why not talk about our rich legacy?

We try to capture the strong performative element in Sufism through poetry or dance. This directly clashes with Wahabi ideas brought to the subcontinent by Deoband and, recently, by the Taliban — the latter, an import from Saudi Arabia, constructed to create mayhem, and we won’t go into America’s promotion of the jihad concept when it suited them. There’s a definite clash between these two philosophies.

Musharraf spoke of enlightened moderation but was also supportive of the Muttahida Majlis-e-Amal (MMA), was liberal in Islamabad but look what was happening in the north-west frontier. Today, we crucially need the clarity of vision of a Pervez Hoodbhoy or Najam Sethi.

Some sections in India maintain that all the liberal voices do in Pakistan is pull a curtain over ISI activities.

Take the north-west frontier. Given a chance, people exercise their will. This time they voted for the Awami National Party and Pakistan People’s Party — secular, liberal parties — saying no to Talibanisation. But the democratic process is fragile because of the army presence and its interests.

India, Pakistan and their civil societies must work together, for the spectre of a Talibanised Pakistan is not some distant reality. Consider the blasts during the recent international theatre festival in Lahore or the public bonfire of CDs as intimidation of mall owners. That is what is happening in the frontier areas. Next they could target Indian films.

I feel frustrated sometimes particularly as a Punjabi. The rest of India and Pakistan feel that when two Punjabis meet, it’s as if no one else matters. But apart from Bengal it was Punjab which really suffered due to Partition. That wound has not healed. To address the issue we host the Paanch Pani Theatre Festival, an Indo-Pakistan event, with most groups from Punjab. We also work with youngsters around issues of identity and shared culture.

Perhaps it’s time for yet another performance of Border Border, written by Shahid post-Kargil, and performed by children from, and in, both countries.

An Indian and a Pakistani family come to see the Wagah border ceremony. Two pairs of siblings, both called Guddu and Guddi and wearing identical clothes, are chaperoned by their mothers; the rigid fathers don’t want to see the ‘enemy.’ In the melee the children cross over to the other side to look for their grandmothers’ friends. Finally, responding to the mothers’ appeals, the BSF guards and Rangers close their eyes for a split second for the children to return to their sides! Except for one Sikh boy you couldn’t tell which actor was from where. The children still continue to email each other.

Has there been any attitudinal change in your troupe members?

Definitely. Most come from conservative backgrounds. Take Sarfraz, who plays Bullah. In Patiala, an old man wanted a reluctant Sarfraz, as Bullah’s avatar, to bless his sickly grandchildren. I asked the 30s something actor to go ahead. He went quiet, realising the healing power of Bullah’s message through his portrayal. A conservative Shia who would never perform during Muharram, Sarfraz played Bullah saying, “Yeh bhi ibadat hai” (This too constitutes worship).

You have a son named Nirvaan.

Yes. After all we are the inheritors of Gandhara, which ironically is in the Taliban’s hands now. People like us in our generation seem to be turning away from Arabic and Persian to Punjabi names, looking afresh at identity. My younger son is named Sarang, common in Punjab and Maharashtra. Nirvaan wanted to name him Rahul after a Shah Rukh Khan character! I named my niece Neha. Last year a Sikh friend from Delhi called us, “I want to name my grandson Nirvaan. Do I have your consent?”

There are many levels of connections.

Absolutely. One of our boys is engaged to a Delhi girl who participated in the Indo-Pakistan theatre festival. Going to Islamabad to process the group’s travel documents is tedious but he readily agrees, declaring, “Mujhe wahan India ki khushboo aati hai” (I can smell the fragrance of India there).

This is what happens when youngsters come together in any society. There has been an opening up in recent years. An Indian diplomat jokingly remarked that the emphasis should shift from people-to-people contact, to intimate people-to-people contact! Jokes aside, this is a natural culmination of contact between India and Pakistan.

© Copyright 2000 - 2008 The Hindu

Zardari threatens: I will deal with Lawyers

President Zardari has categorically said “You will see how I deal with the lawyers,” in a way threatening the lawyers long march due to hit Islamabad on March 9th. This comes from a democratically elected president who dishonored several written agreements regarding the restoration of entire deposed judiciary and even used the lawyers movement to uproot Musharraf is now ready to deal with the lawyers on a different playing field.

On the other hand the Prime Minister has said that the Long March is the right of Lawyers and he will try to facilitate their Long March in Islamabad. It does go to show a high level of miscommunication within the ruling elite, a constitutionally ceremonious President giving orders to a democratically elected Prime Minister, who should have been a shoo over when initially appointed in 2008

The month of March is critical for this government as a show down is definitely on the cards, the upcoming senate elections holds the key combined with the Lawyers upsurge to push for their broken promises, all these and more events can really twist the fate of a certain widowed husband and his cronies, the question is, will he fall into the elaborate trap that is being carefully planned from the drawing rooms of Raiwand all the way to London. PML-N with PML-Q is lobbying to get control of the Upper House, which might set into motion some floor crossing within the Lower House, I must agree there is a lot of speculations, but for now lets assume the first check has been served to Mr. Zardari, more are likely to come

New Day on Climate Change

Published: January 26, 2009

In one dramatic stroke, President Obama has removed any doubts that he intends to break sharply from President George W. Bush’s policies on yet another vital issue — this time repudiating Mr. Bush’s passive approach to climate change. At a news conference on Monday, Mr. Obama directed the Environmental Protection Agency to consider immediately California’s application to set its own rules on greenhouse-gas emissions from cars and trucks. Mr. Bush had rejected that application.

California receives permission to move ahead — as it surely will — 13 states, and possibly more, are expected to impose similar rules. The result will be to force automakers here and overseas to begin producing cars and trucks that are considerably more fuel efficient than today’s models and on a faster timetable.

The California decision is of great significance not only for that reason but for what it says about Mr. Obama’s commitment to the cause of reversing the rise in greenhouse gases. Mr. Bush began his tenure by breaking a campaign promise to regulate carbon dioxide and by withdrawing the United States from the Kyoto agreement on climate change. Mr. Obama begins his with a clear signal that he will not hesitate to use the regulatory levers provided by the Clean Air Act and other federal statutes to fight global warming.

California has long had the right to set stronger air pollution standards than the rest of the nation, provided it has federal permission. Its earlier requests to set stronger air pollution standards were routinely approved, but in this case the Bush administration said no, dredging up all manner of arguments to support its case. One was that California had not demonstrated “extraordinary and compelling” reasons to limit greenhouse gases; another was that a national regulatory system was preferable to state-by-state laws — even though the administration itself had shown no interest whatsoever in a national system.

In a companion move, Mr. Obama directed the Transportation Department to finalize the interim nationwide fuel-efficiency standards called for in the 2007 energy bill. These standards would eventually require fuel-efficiency increases in the American car and light-truck fleet to roughly 35 miles per gallon by 2020 from the current average of 27 m.p.g. The California standards would require automakers to reach the same 35 m.p.g. target four years ahead of the federal timetable.

The California rules cannot by themselves stop the rise in greenhouse gases. In addition to regulatory controls, Mr. Obama must eventually embrace a broader strategy involving major federal investments in clean-energy technologies and, down the road, some effort to put a price on greenhouse-gas emissions in order to unlock private investment. But after eight years of inaction, this is a wonderful start.

More Articles in Opinion » A version of this article appeared in print on January 27, 2009, on page A30 of the New York edition।

Geography Is Dividing Democrats Over Energy

Peter Newcomb/Bloomberg News

Coal is a major source of electricity in brown states like Missouri, where coal-filled train cars lined railroad tracks in St. Louis.

By JOHN M. BRODER

Published: January 26, 2009

WASHINGTON — President Obama is moving quickly to act on the environmental promises that were a centerpiece of his campaign. But tackling global warming will be far more difficult — and more costly — than the new emissions standards for automobiles he ordered with the stroke of a pen on Monday.

Already, the Congressional Democrats Mr. Obama will need to carry out his mandate are feuding with one another.

By coincidence or design, most of the policy makers on Capitol Hill and in the administration charged with shaping legislation to address global warming come from California or the East Coast, regions that lead the country in environmental regulation and the push for renewable energy sources.

That is a problem, says a group of Democratic lawmakers from the Midwest and Plains States, which are heavily dependent on coal and manufacturing. The lawmakers have banded together to fight legislation they think might further damage their economies.

“There’s a bias in our Congress and government against manufacturing, or at least indifference to us, especially on the coasts,” said Senator Sherrod Brown, Democrat of Ohio. “It’s up to those of us in the Midwest to show how important manufacturing is. If we pass a climate bill the wrong way, it will hurt American jobs and the American economy, as more and more production jobs go to places like China, where it’s cheaper.”

This brown state-green state clash is likely to encumber any effort to set a mandatory ceiling on the carbon dioxide emissions blamed as the biggest contributor to global warming, something Mr. Obama has declared to be one of his highest priorities. Mr. Obama has said he intends to press ahead on such an initiative, despite opposition within his own party in Congress and divisions among some of his advisers over the timing, scope and cost of legislation to curb carbon emissions.

The centrist Democrats who urge a slower-paced approach represent states that are crucial electoral battlegrounds and that stand to lose the most from such regulation. They say they believe that global warming is a serious threat and they will support legislation to address the problem — but not at the expense of their already-strained workers and industries.

These Democrats are concerned, they say, that climate bills will be written by committees in the House and Senate led by two liberal California Democrats, Senator Barbara Boxer and Representative Henry A. Waxman, and shaped by Mr. Obama’s team of environmental and energy advisers, virtually all of whom are from California or the East Coast.

For decades, California has led the nation in environmental regulation, including the most sweeping effort to address global warming by imposing mandatory caps on greenhouse gas emissions starting in 2012.

Following California’s lead, a group of Northeastern States have created a partnership known as the Regional Greenhouse Gas Initiative to control carbon emissions.

But California and many East Coast States also differ sharply in the extent to which they depend on coal — a fossil fuel that is a major culprit in producing carbon emissions. California, for example, derived only 20.7 percent of its electricity from coal and 40 percent from hydroelectric power and renewable sources in 2005, while Ohio drew 86 percent of its electricity from coal that year, according to the Department of Energy. Other states of the Great Lakes and Plains are much more like Ohio than California in energy usage.

In the space of a single afternoon this month, Ms. Boxer, Mr. Waxman and the House speaker Nancy Pelosi, another California Democrat, issued statements declaring their intent to work with Mr. Obama to act quickly on comprehensive climate and energy legislation, with a goal of passage this year. Mr. Waxman said he expected to move a climate bill out of his Energy and Commerce Committee by Memorial Day. Ms. Boxer said “the writing is on the wall that legislation to combat global warming is coming soon.”

Rahm Emanuel, the new White House chief of staff, endorsed the lawmakers’ timetable and said he believed the goal of passage of a broad climate change bill this year was “realistic,” given the substantial Democratic majorities in the House and Senate.

Mr. Obama and leaders in Congress have endorsed a so-called cap-and-trade system in which power plant owners and other polluters could meet limits on heat-trapping gases like carbon dioxide by either reducing emissions on their own or buying credits from more efficient producers.

Mr. Obama’s energy and environmental advisers include Lisa P. Jackson, the former head of the New Jersey environmental agency who will head the Environmental Protection Agency; Steven Chu, former director of the Lawrence Berkeley National Laboratory in California, who is the new secretary of energy; and Nancy Sutley, former deputy mayor of Los Angeles for environmental affairs, the new chairwoman of the White House Council on Environmental Quality.

Carol M. Browner, who will occupy the new post of White House coordinator for climate and energy policy, is a former head of the E.P.A., a former director of Florida’s environmental agency and was a senior adviser to former Vice President Al Gore.

The appointees come to office with a mandate from the president to transform the nation’s energy economy and to lead the world in addressing climate change।

But their ambitions confront a brutal reality of a weak economy, fading public concern about climate change and serious qualms within their own party about the costs of taking on global warming and who will pay them.

They will also have to deal with bruised feelings among many Democrats over the coup Mr. Waxman mounted last November to wrest the gavel of the Energy and Commerce Committee from its longtime leader, Representative John D. Dingell, Democrat of Michigan and a longtime champion of the auto industry and other Midwest manufacturers.

“For us, it’s still a big disappointment,” said Senator Debbie Stabenow, Democrat of Michigan, referring to the unseating of Mr. Dingell, who was pursuing a more moderate climate proposal than those advocated by Ms. Boxer and Mr. Waxman.

“My message over all is that for us to support what needs to be done in addressing global warming we need to demonstrate that, in fact, jobs are created,” Ms. Stabenow said. “It’s not a theoretical argument. We have to come up with a policy that makes sense, that is manageable on the cost end, that creates new technology — and that treats states equitably and addresses regional differences.”

Ms. Stabenow is a leader of the so-called Gang of 10, representing the coal-dependent states in the middle of the country; the group was formed after the failure of a Senate global warming bill pushed by Ms. Boxer last June. The members’ goal is to assure that their concerns are met in any future legislation.

The other original members are Senators Brown of Ohio, John D. Rockefeller IV of West Virginia, Carl Levin of Michigan, Blanche Lincoln of Arkansas, Mark Pryor of Arkansas, Jim Webb of Virginia, Evan Bayh of Indiana, Claire McCaskill of Missouri, and Ben Nelson of Nebraska.

In the fall, six more Democratic senators joined the group: Jeff Bingaman of New Mexico, Kent Conrad and Byron L. Dorgan of North Dakota, Robert C. Byrd of West Virginia, Tim Johnson of South Dakota and Ken Salazar of Colorado.

Mr. Salazar has since left the Senate to become secretary of the interior.

“We will play an important role in the final bill,” Ms. Stabenow said.

Representative Edward J. Markey, the Massachusetts Democrat who has been a leader in Congress on environmental matters for three decades, has been assigned by Mr. Waxman to write the House’s version of global warming legislation. Mr. Markey said he was very aware of the concerns of coal-state Democrats.

He noted that Mr. Obama, who comes from Illinois, a coal-dependent state, had traveled to Ohio last week to speak at a factory that produces parts for wind turbines.

“Every single wind turbine takes 26 tons of steel to construct,” Mr. Markey said. “A lot of new jobs will be created if we craft a piece of global warming legislation correctly, and that is our intention.”

A version of this article appeared in print on January 27, 2009, on page A1 of the New York edition.

Islamists Overrun Somalia City as Ethiopians Leave

By MOHAMMED IBRAHIM and ALAN COWELL

Published: January 26, 2009

MOGADISHU, Somalia — Islamist insurgents took over the city that houses Somalia’s Parliament on Monday, just hours after Ethiopian troops withdrew and formally ended a failed two-year effort to defeat Islamist militants in the country.

Witnesses reached by telephone in the city of Baidoa, which had been the seat of Parliament since 2006, said that Islamist militias were patrolling the streets and that government offices in the city had been ransacked. There were no immediate reports of clashes with residents.

“The Islamists have taken control of the town this afternoon,” said Xaaji Isaaq, a traditional elder.

Ethiopia began withdrawing its troops earlier this month, leaving a power vacuum that the Islamists rushed to fill — with little to no opposition from the government.

The country now faces a new period of uncertainty. Baidoa was one of the last cities in Somalia where the government had any significant presence. In the capital, Mogadishu, the government controls only a few city blocks, while Islamist factions control most of the southern regions of the country.

In an effort to stabilize the nation, the government reached a power-sharing deal with moderate Islamists last October, hoping to pave the way for a national unity government. Since the Ethiopians began withdrawing, some parts of the country have come under the control of moderate Islamist militias loyal to the government.

Most lawmakers had, in fact, left Baidoa for Djibouti, to the north of Somalia, over the weekend to begin incorporating members of the moderate Islamist opposition into Parliament, leaving the city largely empty of its leadership when the insurgents stormed in.

The change in Baidoa came as the last of the Ethiopians completed their withdrawal from the country, leaving fractious Islamist factions to compete for control.

On Saturday, a suicide car bomber detonated his explosives near an African Union peacekeepers’ base in Mogadishu, killing at least 15 people and wounding dozens.

There had been some speculation over whether the Ethiopian troops had merely moved to border areas. But Reuters quoted a government spokesman, Abdi Haji Gobdon, as saying Monday: “The Ethiopians have fulfilled their promise. Their last troops crossed the border this morning.”

International mediators have urged Somali leaders to overcome their divisions in talks in Djibouti this week.

Parliament is supposed to select a new president to replace Abdullahi Yusuf Ahmed, who resigned in late December. Many Somalis, Western diplomats and aid officials have crossed their fingers in the hope that moderate Islamists and transitional government figures would work together to pick a new, unifying leader.

Mr. Yusuf, a former warlord, had been widely criticized for trying to thwart peace negotiations. One of the leading contenders to replace him is a moderate Islamic cleric.

Mohammed Ibrahim reported from Mogadishu, and Alan Cowell from Paris.

A version of this article appeared in print on January 27, 2009, on page A6 of the New York edition.

Will Obama Save Liberalism?

Op-Ed Columnist

By WILLIAM KRISTOL

Published: January 25, 2009

All good things must come to an end. Jan. 20, 2009, marked the end of a conservative era.

William Kristol

Since Ronald Reagan’s election in 1980, conservatives of various sorts, and conservatisms of various stripes, have generally been in the ascendancy. And a good thing, too! Conservatives have been right more often than not — and more often than liberals — about most of the important issues of the day: about Communism and jihadism, crime and welfare, education and the family. Conservative policies have on the whole worked — insofar as any set of policies can be said to “work” in the real world. Conservatives of the Reagan-Bush-Gingrich-Bush years have a fair amount to be proud of.

They also have some regrets. They’ll have time to ponder those as liberals now take their chance to govern.

Lest conservatives be too proud, it’s worth recalling that conservatism’s rise was decisively enabled by liberalism’s weakness. That weakness was manifested by liberalism’s limp reaction to the challenge from the New Left in the 1960s, became more broadly evident during the 1970s, and culminated in the fecklessness of the Carter administration at the end of that decade.

In 1978, the Harvard political philosopher Harvey Mansfield diagnosed the malady: “From having been the aggressive doctrine of vigorous, spirited men, liberalism has become hardly more than a trembling in the presence of illiberalism. ... Who today is called a liberal for strength and confidence in defense of liberty?”

Over the next three decades, it was modern conservatism, led at the crucial moment by Ronald Reagan, that assumed the task of defending liberty with strength and confidence. Can a revived liberalism, faced with a new set of challenges, now pick up that mantle?

The answer lies in the hands of one man: the 44th president. If Reagan’s policies had failed, or if he hadn’t been politically successful, the conservative ascendancy would have been nipped in the bud. So with President Obama today. Liberalism’s fate rests to an astonishing degree on his shoulders. If he governs successfully, we’re in a new political era. If not, the country will be open to new conservative alternatives.

We don’t really know how Barack Obama will govern. What we have so far, mainly, is an Inaugural Address, and it suggests that he may have learned more from Reagan than he has sometimes let on. Obama’s speech was unabashedly pro-American and implicitly conservative.

Obama appealed to the authority of “our forebears,” “our founding documents,” even — political correctness alert! — “our founding fathers.” He emphasized that “we will not apologize for our way of life nor will we waver in its defense.” He spoke almost not at all about rights (he had one mention of “the rights of man,” paired with “the rule of law” in the context of a discussion of the Constitution). He called for “a new era of responsibility.”

And he appealed to “the father of our nation,” who, before leading his army across the Delaware on Christmas night, 1776, allegedly “ordered these words be read to the people: ‘Let it be told to the future world that in the depth of winter, when nothing but hope and virtue could survive, that the city and the country, alarmed at one common danger, came forth to meet it.’”

For some reason, Obama didn’t identify the author of “these timeless words” — the only words quoted in the entire speech. He’s Thomas Paine, and the passage comes from the first in his series of Revolutionary War tracts, “The Crisis.” Obama chose to cloak his quotation from the sometimes intemperate Paine in the authority of the respectable George Washington.

Sixty-seven years ago, a couple of months after Pearl Harbor, at the close of a long radio address on the difficult course of the struggle we had just entered upon, another liberal president, Franklin Delano Roosevelt, also told the story of Washington ordering that “The Crisis” be read aloud, and also quoted Paine. But he turned to the more famous — and more stirring — passage with which Paine begins his essay:

“These are the times that try men’s souls. The summer soldier and the sunshine patriot will, in this crisis, shrink from the service of their country; but he that stands by it now, deserves the love and thanks of man and woman. Tyranny, like hell, is not easily conquered; yet we have this consolation with us, that the harder the conflict, the more glorious the triumph.”

That exhortation was appropriate for World War II. Today, the dangers are less stark, and the conflicts less hard. Still, there will be trying times during Obama’s presidency, and liberty will need staunch defenders. Can Obama reshape liberalism to be, as it was under F.D.R., a fighting faith, unapologetically patriotic and strong in the defense of liberty? That would be a service to our country.

This is William Kristol’s last column.

$200 Laptops Break a Business Model

Mr. Title, a 35-year-old new-media manager at a film production company in New York, has dropped his cable subscription and moved to watching most of his television online — free. While shopping for a new laptop for his girlfriend recently, he sidestepped more expensive full-featured computers and picked a bare-bones, $200 Asus EeePC laptop, also known as a netbook.

“We’ve reached one of those moments in tech history when there are low-priced and free alternatives that are both user-friendly and reliable enough to make the switch,” Mr. Title said. “Then there’s the extra bonus of saving some cash.”

Silicon Valley has been gripped by a growing sense that the economic retreat might do more than depress earnings. There is too much ingrained optimism here to think that the tech sector will not bounce back, stronger than before.

But the fear now is that consumers like Mr. Title, and businesses operating with the same cost-cutting mind-set, will erode the high-margin businesses of the information technology industry — slowing some technologies and companies but giving new momentum to others.

A normally confident Steven A. Ballmer, chief executive of Microsoft, expressed this very fear last week after announcing the company’s first big reduction of its work force. “Our model is not for a quick rebound,” he said. “Our model is things go down, and then they reset. The economy shrinks.”

This has happened before. The dot-com bust earlier in the decade dragged down high-fliers like Sun Microsystems and America Online but set the stage for a new generation of Web powerhouses like Google and other innovative Internet software companies like Salesforce.com, founded on disrupting the status quo.

The recession of the early 1990s sent I.B.M., then the dominant force in technology, into a five-year tailspin. But it also propelled Microsoft and Compaq, later acquired by Hewlett-Packard, and Dell to the forefront of computing.

Indeed, Silicon Valley may be one of the few places where businesses are still aware of the ideas of Joseph Schumpeter, an Austrian economist who wrote about business cycles during the first half of the last century. He said the lifeblood of capitalism was “creative destruction.” Companies rising and falling would unleash innovation and in the end make the economy stronger.

Recessions “can cause people to think more about the effective use of their assets,” said Craig R. Barrett, the retiring chairman of Intel, who has seen 10 such downturns in his long career. “In the good times, you can get a bit careless or not focused as much on efficiency. In bad times, you’re forced to see if there is a technology” that will help.

So who’s up, who’s down and who’s out this time around? Microsoft’s valuable Windows franchise appears vulnerable after two decades of dominance. Revenue for the company’s Windows operating system fell for the first time in history in the last quarter of 2008. The popularity of Linux, a free operating system installed on many netbooks instead of Windows, forced Microsoft to lower the prices on its operating system to compete.

Intel’s high-power processors are also under assault: revenue tumbled by 23 percent last quarter, marking the steepest decline since 1985.

Meanwhile, more experimental but lower-cost technologies like netbooks, Internet-based software services (called cloud computing) and virtualization, which lets companies run more software on each physical server, are on the rise.

Penny-pinching shoppers like Mr. Title could have the most immediate effect on the tech industry, particularly if more people consider canceling their cable subscriptions to watch video online, or drop their landline telephones to depend on their cellphones or on Internet calling services like Skype.

Many consumers appear ready to abandon the costly desktop computer altogether. Analysts expect PC sales to fall in 2009 for just the second time in the last two decades, with desktops falling even faster than they did in 2007 or 2008.

The only bright spot in the PC industry is netbooks. Analysts at the Gartner research company said shipments rose to 4.4 million devices in the third quarter of 2008, from 500,000 units in the first quarter of last year. Analysts say sales could double this year despite a deep worldwide recession.

Two lumbering giants, Hewlett-Packard and Dell, missed the first wave of these tiny, stripped-down machines, allowing Acer of Taiwan to grab market share. Acer pushed Apple out of the No. 3 spot behind H.P. and Dell as sales soared 55 percent. Dell and H.P. are making the devices now.

Even the mighty Apple, whose iPod and iPhone revenue had helped insulate it from the first phase of this recession, reported last week that revenue from its desktop line fell 31 percent from the same period a year ago.

“The day of the Rolls-Royce laptop and the high-end computer may not be totally over,” said Charles King, an independent technology industry analyst in Hayward. Calif. “But certainly the audience for that type of product is getting smaller and smaller.”

Companies have also started to examine what they can do without and what they can do differently, and their choices may alter the competitive and lucrative landscape of business computing.

Hoping to save money, Arista Networks, a start-up based in Menlo Park, Calif., has much of its internal technology processes online, or “in the cloud.” Instead of buying its own hardware and software systems from the likes of Microsoft and Oracle, it opted for e-mail and online document services from Google and online sales and manufacturing software from Netsuite, based in San Mateo, Calif.

It is spending a fifth of what it would be for traditional technology, said Jayshree Ullal, Arista’s chief executive.

She smells a trend. “I think 80 percent of the new high-tech and small to mid-size companies are doing what we’re doing,” she said.

A spate of start-ups have seized on cloud computing. Companies like Intacct offer online accounting software as an inexpensive alternative to Microsoft’s products, and giants like Amazon.com sell access to data centers for business operations. Amazon has outpaced the traditional hardware makers with such services.

The number of virtualized new servers has doubled over the last three years, which has driven the revenue of VMware, one of the leaders in this cost-saving technology, to an estimated $1.88 billion last year from $387 million in 2005.

The makers of open-source software also continue to benefit from the growing appeal of their often cheap, if not free, products. Sun Microsystems distributes 65,000 downloads a day of its MySQL database, which has turned into the favored business software of new companies. The job search engine Indeed.com shows a thriving job market for MySQL and Linux developers.

Linux has proved popular as well on a new crop of smarter devices — be they phones, TVs or set-top boxes — that have captured software developers’ imaginations. The new products they build will undoubtedly challenge the status quo.

“Companies like Intel, Qualcomm and Texas Instruments that make chips for these devices are hiring Linux talent as quick as they can,” said Jim Zemlin, executive director of the nonprofit Linux Foundation. “They know the future is netbooks and mobile Internet devices.”

Pfizer Agrees to Pay $68 Billion for Rival Drug Maker Wyeth

Hiroko Masuike for The New York Times

Jeffrey Kindler, left, chairman and chief of Pfizer, and his counterpart at Wyeth, Bernard Poussot, announced the companies' merger on Monday.

By ANDREW ROSS SORKIN and DUFF WILSON

Published: January 25, 2009

The board of Pfizer, the world’s largest drug maker, agreed to acquire a rival, Wyeth, for $68 billion, the companies announced Monday.

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The deal, if completed, would not only create a pharmaceutical behemoth but would be a rarity in the current financial tumult: a big acquisition that is not a desperate merger of two banks orchestrated by the government.

It will also be the first big merger backed by Wall Street in months. While credit has been notoriously tight of late, five banks have agreed to lend Pfizer $22.5 billion to pay for the deal. Pfizer, which has roughly $26 billion in cash, would finance the remainder through a combination of cash and stock.

If completed as planned, the transaction would be the biggest merger since AT&T and BellSouth combined in a $70 billion deal in March 2006, according to the research firm Capital IQ.

Pfizer also said Monday that its net income for the fourth quarter dropped 90 percent from the period a year ago, citing a charge to resolve inquires into its off-label promotional practices. In its statement, it also said that it planned to its work force by about 10 percent and reduce the number of manufacturing sites. The company also said that it would cut its dividend.

Pfizer earned $268 million, or 4 cents a share, in the fourth quarter, down from $2.72 billion, or 40 cents a share, in the period a year ago. Revenue dropped 4 percent, to $12.35 billion. Excluding the $2.3 billion to settle the marketing inquiry, Pfizer had a profit of 65 cents a share. Analysts surveyed by Thomson Reuters had forecast 59 cents.

“The combination of Pfizer and Wyeth will meaningfully deliver Pfizer’s strategic priorities in a single transaction,” the Pfizer’s chief executive, Jeffrey B. Kindler, said in a statement Monday. “Our combined company will be one of the most diversified in the industry and will benefit from complementary patient-centric units that match speed with the benefits of a global company’s scale and resources.”

The merger almost came unhinged at the 11th hour. While the boards of both companies agreed to the broad outlines of the deal and its price before the weekend, these people said, one issue was still a sticking point: whether Pfizer would be allowed to back out of the deal if the economy worsened or Wyeth’s prospects faded.

In better times, deals often falter on matters of strategy or price. But in this case, because of the ailing economy, Pfizer has agreed to pay a staggering breakup fee, $4.5 billion, if it does not complete the deal under certain circumstances — if, for example, its credit rating drops and it can no longer finance the deal. That is almost twice the typical breakup fee for a deal of this size.

If the acquisition is completed, it may demonstrate that Wall Street is willing to lend again, at least to the nation’s top companies with the best credit ratings.

“If banks need to send a message that they’re loaning, they want to be loaning to this quality of company,” said Catherine Arnold, an analyst at Credit Suisse.

Pfizer’s bid is being financed by four banks that received federal bailout money: Goldman Sachs, JPMorgan Chase, Citigroup and Bank of America, the people involved in the deal said. Such banks have been criticized for not doing more lending since they received the government aid.

Barclays, which acquired Lehman Brothers out of bankruptcy in the fall, is also providing financing, these people said.

Pfizer appears to be taking advantage of the bad market for credit to buy Wyeth at a lower price than it might fetch if competing bids were to emerge, which analysts do not expect.

“They have a unique opportunity now because not everybody can get that capital,” said Barbara Ryan, an analyst at Deutsche Bank.

Because the combined company is expected to generate more than $20 billion in cash a year, Ms. Ryan said, “even when they borrow money, they will still have plenty of revenue.”

Under the terms of the deal, Pfizer would pay $50.19 a share for the company — $33 a share in cash and 0.985 Pfizer shares worth $17.19 a share based on Pfizer’s closing price on Friday. That is roughly a 29 percent premium over the share price before word of the deal leaked on Friday.

Both companies’ boards of directors approved the deal.

Wyeth’s management team would depart, the people involved in the negotiations said. Pfizer is also planning to cut its quarterly dividend in half to 16 cents, these people said, in an effort to maintain its credit rating.

After news reports disclosed the talks on Friday, investors applauded the possibility of a deal. Shares of Wyeth rose $4.91, or 12.6 percent, to close at $43.74. Pfizer climbed 24 cents, or 1.4 percent, to close at $17.45.

Pfizer expects to save $4 billion annually by combining with Wyeth; those savings will be phased in over three years।

Mr. Kindler of Pfizer, first approached Wyeth last spring with a phone call, people involved in the talks said. The negotiations heated up in the summer but appeared to collapse when the banking system went into a tailspin in September and October.

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Since then, there were several brief moments when it appeared the deal would move ahead, but then the talks would fall apart once again, usually over financing, these people said. It was apparently only within the last week or so that the financing commitment came together.

For Mr. Kindler, a lawyer who came to Pfizer from McDonald’s, the deal may be a job-saver. His and the company’s most pressing challenge has been the impending expiration of patent rights to the cholesterol-lowering drug Lipitor — which accounted for a quarter of the company’s 2007 revenue of $48 billion and remains the best-selling drug in the world. The patent ends in 2011.

Still, even with the Wyeth deal, much would remain undone for Pfizer as it faces product, patent and pipeline problems for other drugs as well.

“It’s not just Lipitor,” Ms. Arnold wrote last year in a report to investors. Pfizer faces a run of 14 patent expirations through 2014, which would add up to lost revenue of about $35 billion as those drugs give way to cheap generics, according to Ms. Arnold. Pfizer’s patent problem is not unique among the big drug makers. Merck, Bristol Myers Squibb and Eli Lilly are all facing their own patent losses in the next five years. “Everybody’s staring at the same challenges down the road,” Ms. Ryan said.

She said that Mr. Kindler, who became chief executive in July 2006, had probably not been in a position to make a play for a company like Wyeth until after he had cut costs, revamped Pfizer’s core business and accepted the reality that the research pipeline was not producing blockbusters. “Hope springs eternal from the research pipeline,” Ms. Ryan said.

As part of the deal with Wyeth, both companies will have to repatriate tens of billions of dollars back into the United States, which could have a high tax cost. Pfizer reported $25.3 billion in revenue, 52.2 percent of its total, from overseas operations in 2007, according to securities filings.

If foreign profits were repatriated to the United States, Pfizer would have to pay the difference between the tax paid in the foreign country, as low as 5 percent in Ireland, for example, and the 35 percent tax rate in the United States.

Ms. Arnold said some tax penalties might be expected, but could be reduced by doing some of the buying and selling overseas.

“The experts that we’ve spoken to have very definitely said you can use offshore cash to buy offshore assets, and Pfizer and Wyeth both have very significant offshore subsidiaries that they place cash in,” Ms. Arnold said. For example, she said, “Pfizer Ireland can use its cash to buy Wyeth Ireland or Wyeth Singapore.”

Wyeth, with sales of about $23 billion for the 12 months that ended Sept. 30, has about $2.7 billion in cash and liquid assets, according to David S. Moskowitz, an analyst at Caris & Company, an investment bank.

Pfizer was advised by Goldman, JPMorgan and Barclays; Wyeth was advised by Morgan Stanley and Evercore Partners.

Erik Gordon, a professor at the Ross School of Business at the University of Michigan who follows biomedical industries, said Pfizer and Wyeth were a great fit that made the deal creditworthy.

First, because Pfizer has so much cash, the deal does not have to be highly leveraged with debt, Mr. Gordon said. Second, the two companies have enough overlap that they can achieve considerable saving through consolidating duplicate operations and cutting costs. And finally, parts of a combined operation could be spun off to raise money.

Mr. Gordon pointed to the animal health businesses of both companies — which, considered together, accounted for $2.8 billion in revenue and about $600 million in profit in the first nine months of 2008.

“They could sell that business for billions of dollars to either pay down the debt or service the debt,” he said. In addition, he said Pfizer could resell Wyeth’s consumer products business. He added: “This deal is the rare thing. This’ll be the only money investment bankers make in a while.”