El Filosofo Liberal

Commentary by Caroline Baum Oct. 28 (Bloomberg) Three months ago, the world was running out of oil. Seriously. I kid you not. Everywhere you turned, you heard whispers that the day of petroleum reckoning was at hand. Now there's too much oil, prodding OPEC to cut production targets for the first time in two years. Last week, the Organization of Petroleum Exporting Countries, confronted with the halving of oil prices since July, announced a 1.5 million barrel-a-day cut in output. World markets greeted the news of reduced oil supply by pushing prices down further. Crude oil fell $3.69 a barrel Friday to $64.15. Yesterday, oil dropped another 93 cents to $63.22, a 17-month low. How quickly things change. Or do they? All speculative bubbles have a kernel of truth behind them to justify their existence. This time around it was China and India. These emerging Asian giants were gobbling up all the commodities the world could produce to fuel their rapid industrialization. It wasn't tha...

By WARREN E. BUFFETT Op-Ed Contributor Published: Omaha, October 16, 2008 THE financial world is a mess, both in the United States and abroad. Its problems, moreover, have been leaking into the general economy, and the leaks are now turning into a gusher. In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary. So ... I’ve been buying American stocks. This is my personal account I’m talking about, in which I previously owned nothing but United States government bonds. (This description leaves aside my Berkshire Hathaway holdings, which are all committed to philanthropy.) If prices keep looking attractive, my non-Berkshire net worth will soon be 100 percent in United States equities. Why? A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors. To be sure, investors are right to be wary of highly leverage...

By Andy Serwer and Allan Sloan Time, Thursday, Sep. 18, 2008 If you're having a little trouble coping with what seems to be the complete unraveling of the world's financial system, you needn't feel bad about yourself. It's horribly confusing, not to say terrifying; even people like us, with a combined 65 years of writing about business, have never seen anything like what's going on. Some of the smartest, savviest people we know — like the folks running the U.S. Treasury and the Federal Reserve Board — find themselves reacting to problems rather than getting ahead of them. It's terra incognita, a place no one expected to visit. Every day brings another financial horror show, as if Stephen King were channeling Alan Greenspan to produce scary stories full of negative numbers. One weekend, the Federal Government swallows two gigantic mortgage companies and dumps more than $5 trillion — yes, with a t — of the firms' debt onto taxpayers, nearly doubling the amount...

Putting a Foundation Under the Financial System By David Ignatius The Washington Post Thursday, October 9, 2008; Page A21 In William Saroyan's Depression-era drama "The Time of Your Life," there is a laconic character called "The Arab" who keeps muttering the play's signature line: "No foundation. All the way down the line." The global economy feels that way this week. No foundation, no liquidity, no safe haven, no exit . . . all the way down the line. That's really the heart of the problem -- global financiers sense that they're standing on quicksand. They don't trust other institutions, so they're hoarding their cash as if it were a lifeline, in the hope they can survive the panic. The problem is that the sum of all these rational individual decisions, in which each player in the global economy tries to protect his own self-interest, is the collective catastrophe we are witnessing. That's why the answer -- the foundation, if y...

This Time, Uncle Sam Has Got Our Back By Laurence J. Kotlikoff and Perry Mehrling The Washington Post Thursday, October 9, 2008; Page A21 Global markets have not been reassured by the coordinated interest rate cuts of several central banks or by recent congressional action, but they should be. Our bet is that financial markets will return to normal in short order and that the U.S. economy will squeak by with a moderate recession. Recapitalizing the banks and working out mortgages will take time, but the financial system will not collapse -- the government won't let it. The markets, of course, seem to be factoring in some probability of collapse. Why is this wrong? For starters, the biggest subprime mortgage gamblers have already failed, been nationalized or been married off, shotgun-style, to banks run by grown-ups. Yes, lots of small shoes may still drop, but the Paulson "buy-up" bill, and, ultimately, the Fed's ability to print money, provides the Treasury and Feder...