Byrne foresees more economic woes

Jack Byrne's magic business touch has been all about the basics paired with high drama.

Once hailed as the Babe Ruth of insurance, he was the man who long ago saved Geico, the automobile insurer that later became a household name with the help of clever advertising series. Now Byrne, a longtime partner and pal of Warren Buffett, is fully retired, with time to ponder the trouble with the economy in general and one company in particular.

At 76, Byrne sees nothing but trouble from the U.S. credit crisis. He also worries about the trade deficit and the dollar's falling value, together with rising inflation — all signs, he believes, of America's diminishing power in the world economy.

"I'm an old man. Old men get grouchy and depressed, but I think the U.S. credit markets are going to get bludgeoned," Byrne said of the worst of the troubles. "We've only seen half of it."

He also offered a brutally honest assessment of the nine years of no profits at Internet retailer Overstock.com, a company run by his youngest and, he says, "Don Quixote-like" son.

"It really went into a ditch," Byrne said in an interview from Etna, N.H., where he lives part of the year. He also keeps a home in a Salt Lake City suburb. The Roman Catholic family was drawn to Mormon Utah during the 1990s because of the skiing and his sons' business dealings here.

Byrne was chairman of Salt Lake City-based Overstock for three different periods. At times he appeared to part with his son Patrick, who "wanted to grow fast. I said, 'Let's get the homework done right."' The company proceeded to blunder an information-technology overhaul.

At first, Jack Byrne refused to put up any money for Overstock. He advised his son they'd come out better by just piling the cash needed to start the business into a large bonfire. "We'll dance," he suggested.

In the end Jack Byrne invested tens of millions. "In fact, it wasn't a terrible idea," he said.

Jack Byrne said that after much initial skepticism he believed his son was "right all along" about another thing: a highly public battle and lawsuits with short-sellers and analysts. The CEO accused traders and analysts of conspiring to damage the company's stock

The Securities and Exchange Commission is starting to tighten down on naked short selling, a transaction that can allow traders to avoid risks in making bets that a company's stock will fall.

The attack on Wall Street initially embarrassed his father. "These were his friends that I was taking on," Patrick Byrne said.