Free Republic

Buffett's Insurance Bust Ruthie Ackerman, 02.29.08, 9:30 PM ET All good things must come to an end -- even billionaire investor Warren Buffett's success in the insurance business. On Friday in Buffett's eagerly awaited annual letter to shareholders, he acknowledged 2007 was a good year, thanks to Berkshire Hathaway's stable insurance operations in a disaster-free 12 months, but he's not expecting a repeat. "That party is over,” he wrote. “It is a certainty that insurance-industry profit margins, including ours, will fall significantly in 2008. Prices are down, and exposures inexorably rise.” He predicted that even with another catastrophe-free year, the...

Japain Feb 21st 2008 From The Economist print edition The world's second-biggest economy is still in a funk—and politics is the problem THE ghost of Japan's “lost decade” haunts the United States. As the consequences of America's burst housing bubble are felt through financial markets, it has become popular to ask whether Japan's awful experience of boom-and-bust has lessons for other rich countries facing, at best, sharp slowdowns. Japan's property-and-stockmarket bubble burst in 1990, creating bad loans equivalent in the end to about one-fifth of GDP. The economy began growing properly again only 12 years later, and only in 2005...

Banking Bust: More To Come Liz Moyer, 01.16.08, 4:30 PM ET Banks have written down more than $100 billion since the summer. Yikes. Now the bad news: There are still billions worth of potentially toxic securities sitting on the books. The additional $1.3 billion write-down disclosed by JPMorgan on Wednesday was just the latest loss big banks have reported in the fourth quarter. Merrill Lynch is expected to report a sizeable write-down when it reveals fourth-quarter numbers on Thursday, by some estimates in the neighborhood of $15 billion. Bank of America, Wachovia and other big lenders report next week and...

The price of ethanol has fallen by 30% over the past few months as a glut of the corn-based fuel looms, while the price of ethanol's primary component, corn, had risen. That is squeezing ethanol companies' profits and pushing some ethanol plants to the brink of bankruptcy. Some ethanol companies are "under deathwatch" now, says Chris Groobey, a partner in the project-finance practice of law firm Baker & McKenzie, which has worked with lenders and private-equity funds involved with ethanol. That could be fine for big efficient players like Archer-Daniels-Midland Co., one of the nation's biggest ethanol producers by output....

t was a slow Friday at Red Herring magazine. The receptionist at the Silicon Valley tech title had stepped away from her desk. So a messenger strolls in from the summer sunshine, finds a 20-something reporter on her first real job and hits her with an eviction notice. Red Herring has three days to pay the rent or get out. Word got around, fast. Then someone looked outside. There, driving up in a rented silver Mazda minivan is a correspondent with gossip blog Valleywag. Aaaaaaand she's got a camera. Silicon Valley is booming again. But if you work in tech...

During the height of the real estate bubble, I wrote a column saying that the crash was coming and suggested selling any piece of real estate that was overpriced, questionable, or non-performing. As expected, I received angry replies. Today, I'm predicting the next crash, what I believe will cause it, and why it'll be a severe blow to the global economy. The signs are already here. Busts Beat Booms First of all, it's no big deal to predict booms and busts. All markets boom and bust. It's just easier to predict a bust because the signs are so obvious --...

The man responsible for protecting Egypt's antiquities has said he will "fight" for the return of an ancient bust of Nefertiti, an ancient Egyptian queen, now housed in a Berlin museum. Zahi Hawass also requested the temporary return of other ancient Egyptian artifacts, including the Rosetta Stone which is housed in London's British museum. "Some people say, 'If we give this bust to Egypt for three months they will not return it'." Hawass said, regarding the bust of Nefertiti, in an interview on Wednesday.Zahi Hawass is seeking "unique artifacts" from at least 10 museums around the world [AP]Germany says the...

“Innovation has brought about a multitude of new products, such as subprime loans and niche credit programs for immigrants… With these advances in technology, lenders have taken advantage of credit scoring models and other techniques for efficiently extending credit to a broader spectrum of consumers… Where once more marginal applicants would simply have been denied credit, lenders are now able to quite efficiently judge the risk posed by individual applicants and to price that risk appropriately. These improvements have led to rapid growth in subprime mortgage lending,… fostering constructive innovation that is both responsive to market demand and beneficial to...

SAN DIEGO – Federal authorities Wednesday arrested dozens of individuals across the country suspected of bringing 18 tons of illegal drugs into the United States, Attorney General Alberto R. Gonzales said in an afternoon news conference here. Members of the Victor Emilio Cazares-Gastellum drug trafficking ring were awakened in the early morning hours by federal, state and local law enforcement agencies who served simultaneous arrest warrants as part of a 20-month-long investigation into the ring's operations, Gonzales and other federal officials said. Gonzales said the Mexico-based organization acquired drugs from Colombia and Venezuela to Central America, then smuggled them into...

SAN FRANCISCO (MarketWatch) -- Crude-oil futures tumbled as much as 3% Tuesday after Saudi Arabia's oil minister said major oil producers need not cut production further, disappointing hopes that the Organization of the Petroleum Exporting Countries would intervene to prop up prices. Crude for February delivery was last down $1.39, or 2.6%, at $51.60 a barrel on the New York Mercantile Exchange. The contract struck a 20-month intraday low of $51.25. Saudi Oil Minister Ali al-Naimi told reporters at an oil conference in India that the market is "significantly healthier" now than it was in October, when OPEC agreed to...

LONDON (Reuters) -- Oil prices plunged more than 3 percent back near $51 a barrel Tuesday after Saudi Arabia said OPEC production cuts were working well and that there was no need for an emergency meeting of the producer group. U.S. light crude for February delivery tumbled $1.78 to $51.21 a barrel after touching $50.93, the lowest since May 2005, in earlier New York Mercantile Exchange trading. In London, Brent futures shed 82 cents to $52.30. The price of crude has plunged more than 16 percent this year in part due to warm weather in the Northeast, the world's top...

Can't post but good news as Saudi Arabia's oil minister rejected calls for more production cuts... http://www.bloomberg.com/apps/news?pid=20602099&sid=ap9i3C_FTkR4&refer=energy

The Mortgage Bust Goes On Matthew Swibel, 12.19.06 WASHINGTON, D.C. - A record-high 19% of high-cost mortgages originated during the past two years will end in foreclosure, a consequence of the growth in risky mortgage products, according to new data compiled by an industry group. The nonpartisan Center for Responsible Lending predicts 2.2 million households in this mortgage segment, known as subprime borrowers, either have lost their homes or hold mortgages doomed for foreclosure in the next few years. This estimate comes a week after a grim survey from Fitch Ratings, which studies residential mortgage securities, showing a 16-fold increase...

GREELEY, Colo. - Federal agents on Tuesday raided six meatpacking plants across the country, targeting illegal immigrants who obtained jobs by stealing the identities of U.S. citizens. Immigration and Customs Enforcement agents had surrounded the Swift plant in Greeley as well as five other Swift plants. It was not immediately known how many people were rounded up in the raids. Authorities say the investigation began in February and that they have identified hundreds of potential victims.

What Housing Bust? The bear forecast vs. the bull facts. By John Tamny Jan Hatzius, chief U.S. economist for Goldman Sachs, puts the odds of a consumer-led recession at one in three. His reasoning for this bearish assessment goes as follows: The current housing slump could negatively impact consumer spending which would bring down the economy. But there’s one glaring problem with this sequence of events: There simply is not a lot of evidence that real estate has hit a rough patch. Last month the Office of Federal Housing Enterprise Oversight (OFHEO) released its House Price Index. The index shows...

As I noted last week, Airbus is considering moving some manufacturing operations out of Europe, to countries where the dollar (not the euro) is is the currency, or linked to the currency. The Wall Street Journal reports that today’s meeting of the board of directors of parent company EADS will consider just such a move. Not exactly a triumph for Europe, the euro, or European workers. But potentially even worse news for the A 380 whale jet comes from a technical committee which includes both European and American regukators. They have handed down a decision which threatens the principal advantage...

Housing not facing bust, Just normalcy : experts By Patrick Rucker WASHINGTON (Reuters) - While the U.S. housing market is drifting down from stratospheric levels, the sector is just returning to normal and is not poised to crash, several economists and industry leaders told lawmakers on Wednesday. "True housing busts are a relatively rare event," Federal Deposit Insurance Corp chief economist Richard Brown said at a congressional hearing on the housing market. In a recent study of past housing trends, the bank regulator concluded sharp drops in housing markets are most often linked to "episodes of severe local economic distress."...

MEXICO CITY -- Mexico's attorney general said the arrest a group of corrupt cops along the border with California is imminent. Daniel Cabeza de Vaca told a Mexico City news conference today the cops protected a Tijuana cartel, the Arellano Felix gang, which smuggled tons of pot, cocaine and meth into the United States. Two were already arrested Saturday and charged with taking bribes to protect the gang. The attorney general said they worked at the Rosarito police department just over the border from San Diego border. The two are accused of decapitating three of their fellow officers. The news...

Cocaine seized, 4 arrested in bustBy Sonja Elmquist Staff Writer Sheriff Sam Page (left) displays weapons and cocaine that were seized. WENTWORTH -- Four illegal immigrants were arrested Tuesday in western Rockingham County and charged with trafficking nearly 18 pounds of powder cocaine valued at $800,000. Deputies seized the drugs, automatic weapons and two vehicles. Sheriff Sam Page said Thursday that he didn't know if the drugs were destined for Rockingham County or if the alleged traffickers were just passing through. Either way, Page said, it was a danger. "When you have 171/2 or 18 pounds of cocaine going through...

War On Drugs: While not the end of the tale, the crushing of the Javier Arellano Felix drug cartel is a victory that should be played up. By itself, the arrest is satisfying. Better still, it shows the U.S. can work with Mexico. That wasn't the case when Enrique "Kiki" Camarena, an agent with the U.S. Drug Enforcement Administration, was murdered by drug traffickers in Guadalajara in 1985. Back then, Mexican authorities threw roadblocks at apprehending drug lord Miguel Angel Felix Gallardo, who was a leading member of the group that kidnapped, tortured and killed the agent. Mexican police told...