The Oracle of Omaha is shining a light on the presidential campaign of Barack Obama.

According to media reports, Warren Buffett is participating with Obama in a meeting about the economy along with Google Inc. (NASDAQ: GOOG) Chairman Eric Schmidt, former Treasury Secretaries Robert Rubin and Larry Summers and former Labor Secretary Bob Reich, according to CNBC. New Jersey Gov. Jon Corzine, a former Goldman Sachs Group Inc. (NYSE: GS) co-chairman, and former Federal Reserve Chairman Paul Volcker also will be at the meeting of the wisemen tomorrow. Buffett will be participating via telephone hook-up.

There is plenty to talk about given the current state of the economy and the housing market which the International Monetary Fund says shows no signs of recovery. Obama, the junior senator from Illinois, is clearly signaling not to expect much from the meeting.

``I expect some further fine-tuning of short-term policies based on what's happened over the last several months,'' Obama said in an interview with Bloomberg News.

What that means is not clear. It should surprise no one that Buffett is backing Obama. The investor has been critical of President Bush's economic policies including the repeal of the estate tax which he said would be a "terrible mistake." But that doesn't mean he agrees with all of Obama's policies either.

As CNBC notes, Buffett supported Hillary Clinton while she was running for president and disagrees with Obama's call to tax the windfall profits of oil companies and his decision to forgo public financing of his campaign. I guess the Omaha investor considers Obama to be a significant improvement over Republican John McCain.

Interesting how the greatest investor in history who Republicans tout as a champion of capitalism is as big of a Democrat as Barbra Streisand.

Former Fed Chairman Paul Volcker gave testimony today before a Joint Economic Committee of Congress. He addressed the current financial and economic environment and the role of the Federal Reserve.

He discussed how the financial market environment has changed considerably since his tenure as Fed Chairman in the early and mid 1980's. He pointed out that financial institutions like investment banks and hedge funds, whose failure can have tremendous effects on the financial system, are lightly regulated. "Systemically important investment-banking institutions should be regulated and supervised" in a similar manner to commercial banks.

Chairman Volcker stressed the need to update the entire regulatory framework, saying "It's not simply a matter of inexperience or technical failures." He also discussed the need to update regulations on a global basis because of the increasing coordination between world central banks.

The looming recession may be worse than the other two serious economic downturns that have hit the U.S. in the past 25 years, according to the Wall Street Journal.

The reason is simple: the housing market is horrible, energy prices are high and the job market is weakening. Moreover, it is still not clear whether big Wall Street firms such as Merrill Lynch & Co. (NYSE: MER), Citigroup Inc. (NYSE: C) and Morgan Stanley (NYSE: MS) have a handle on the meltdown in the subprime mortgage market or whether any of the economic stimulus packages being proposed will do any good. Remember the recession in Japan lasted a decade or so.

"Part of the problem is just not knowing," University of Maryland economist Carmen Reinhart told the paper. "The longer the process of not knowing what the losses are takes, the longer the resolution takes."

Investors, of course, are looking to the Federal Reserve to wave a magic wand and make things better. So far, the Fed's chief has been a disappointment.

"I think Bernanke is in a very difficult situation," former Fed Chief Paul Volcker told the New York Times magazine, which published a profile of Bernanke Sunday. "Too many bubbles have been going on for too long. The Fed is not really in control of the situation."

It seems like the light at the end of the tunnel may be an oncoming train.