Overstock's Byrne deciphers Economic Meltdown Civilization Deleveraging

Wall Street as post-coitus behavorial psychology


Radio Reg Patrick Byrne doesn't call it an economic meltdown. He calls it "the de-leveraging of a civilization."

When the ever-quotable Overstock.com CEO last sat down with Radio Reg, the world still pegged him as a tin hat–wearing crackpot. But now that Wall Street has buckled under its own excess, he's been recast as an financial soothsayer.

For years, Byrne warned that a Wall Street sleight of hand known as naked short selling was threatening the health of the American markets. And in July, as Fannie Mae and Freddie Mac struggled to stay afloat, the SEC laid down an emergency order banning naked shorts in the two mega-mortgage houses and seventeen other major stocks, including ill-fated investment banks Lehman Brothers and Merrill Lynch.

The temporary ban — lifted in August — wasn't enough to save civilization from its ostensible de-leveraging. And as the SEC steers clear of a permanent ban, some still question the role of naked shorts in the eventual collapse of Fannie, Freddie, Lehman, and Merrill. But the world now listens when Patrick Byrne speaks.

You can listen here, as the three-time cancer survivor discusses his bittersweet Wall Street vindication and the future of a worldwide economy he compares to a teetering tower of milk bottles. The sub-prime mortgage crisis doubles as the baseball tossed from across the fairgrounds.

As growth flatlines at his semi-recession-friendly e-tail biz, the Warren Buffet confidant predicts even tougher times ahead for the world's web businesses. Excepting Google. When Mountain View calls itself meltdown proof, Byrne nods in agreement.

Naturally, he goes on to gab about his epic crusade against Wikipedia and the New York financial media over the naked shorting issue. But we begin with a glitch in Overstock's Oracle-based ERP system, which recently forced the company into a five-and-a-half-year earnings restatement. "Our first commandment is 'maintain a bulletproof balance sheet,' but while the spirit is strong, the flesh made a mistake," the CEO told investors.

Patrick Byrne has a way of tumbling into such serio-comic situations. And talking his way out.

You can download an mp3 here or an Ogg Vorbis variation here. But it's much easier to simply hit the play button on the player over on the right hand side of the page or below:

Patrick Byrne

Somewhere along the way, Byrne compares the country's financial brain trust to a pair of post-coitus behavioral psychologists. And that's the boring bit. ®


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