Harold Maass of The Week The Best of Today's Business

NEWS AT A GLANCE

Buffett pulls back from insuring large bank deposits

Warren Buffett's Berkshire Hathaway has instructed one of its subsidiaries, Kansas Bankers Surety Co., to stop insuring bank deposits above the amount guaranteed by the federal government, The Wall Street Journal reported. KBS in turn is telling 1,500 banks in 30 states that it will no longer offer the depository insurance bonds, in a blow to banks trying to attract wealthy depositors. (Reuters) Buffett's withdrawal from the niche service is seen as an indicator of a growing level of concern about the high rate of bank failures. KBS reportedly lost money when Columbian Bank & Trust failed in late August. one of 11 banks to have failed this year. (The Wall Street Journal)

Lehman flounders; Korean bank ends talks

The Korea Development Bank said it has ended talks to invest in struggling Lehman Brothers, ending days of speculation that the state-run KDB would extend Lehman a sizable lifeline. (MarketWatch) Facing flagging investor confidence, Lehman said today that it is spinning off most of its commercial real estate assets and selling a majority stake of its Neuberger Berman investment management division. Lehman also pushed up its earnings results, reporting a larger-than expected $3.9 billion quarterly loss and cutting its dividend to 5 cents a share, from 68 cents. (CNNMoney.com) Lehman shares lost 45 percent yesterday, pushing its market value down to $5.4 billion, from $36 billion a year ago. (AP in Yahoo Finance)

OPEC cuts overall output

OPEC oil ministers agreed to effectively cut overall output by about 520,000 barrels per day, to 28.8 million barrels, in a compromise measure designed to keep prices high without crimping global demand. (AP in Yahoo! Finance) The announcement, which sent oil prices higher early today, was seen as a call for tighter compliance with OPEC's murky output quotas. "The statement is clear as mud," said Olivier Jakob of Petromatrix, "but really what it says is members should keep to quota, which basically means Saudi Arabia should stop the additional barrels." (Reuters) Masters Capital Management, in a report today, blames the run-up in oil prices on speculators, not OPEC, noting that commodity investors have sold $39 billion of oil futures since oil's July peak. (Bloomberg)

The incredible shrinking grocery store

After years of building grocery stores the size of football fields, U.S. retailers are going in a radically different direction. Safeway, Jewel-Osco, Giant Eagle, and even Wal-Mart are experimenting with much smaller grocery stores that specialize in premade meals, fresh produce, and ready-to-grab drinks. The switch is partly to cater to time-challenged professionals, but it's also a defensive move against the British invasion of supermarket chain Tesco, which is putting up Fresh & Easy markets all over the U.S. "The average person goes shopping for 22 minutes," said retail analyst Phil Lempert, who edits Supermarketguru. "You can't see 30,000 or 40,000 products" in that time. (The New York Times)

BEST COLUMNS OF THE DAY

The credit crunch's bright side

Lots of banks are struggling through the credit crunch, says Joan Goldwasser in Kiplinger's, but "their pain is your gain." The hurting banks, "desperate to attract deposits, are ratcheting up CD rates," and many healthy banks feel compelled to match those rates. Today's top rates are topping 5 percent, and "such plump yields put Treasury securities with comparable maturities to shame." One-year T-notes are yielding 2.19 percent, for example. There are plenty of bad things about the credit crunch, but "there's nothing wrong with a little schadenfreude" when you can get it these days.

Where to stash cash nowadays

With supposedly rock-solid investments falling prey to subprime mortgage contagion, says Eric Dash in The New York Times, cash is no longer "the most boring of assets." Investors usually keep "between 5 and 10 percent of their total assets in cash," but many have upped that percentage to wait out the wildly swinging stock and bond markets. If you have cash to park, put no more than necessary in a checking account, and put the rest in money market accounts and CDs. CDs have higher rates, but are less liquid, of course; money market accounts are a good middle ground. Tax-free money funds are a solid choice this year, and money market deposit accounts often pay higher rates and carry FDIC insurance.

GOOD DAY FOR: Generating sparks, after GM pulled leaked photos of its in-development electric car, the Volt, after the images flooded industry blogs Monday night. Yesterday, GM shares rose 3.4 percent, even as the wider market fell broadly and sharply. Marketers sometimes intentionally "leak" photos of hot new cars to draw publicity. GM is hoping the Volt will help revive its fortunes. (MarketWatch)

BAD DAY FOR: Good karma, as smugglers have stolen about 1,000 mature Buddhist Pines, or "good luck" trees, from Hong Kong in recent years to sell to Chinese feng shui adherents. The trees, believed to bring prosperity, sell for about $130,000 in mainland China. (Bloomberg)

NOTED: Chief financial officers are more optimistic about the U.S. economy than they were last quarter, according to a survey by Duke University/CFO Magazine. "There are signs that we are bottoming out," said the survey's director, John Graham. The 1,300 CFOs in the survey said they were worried about weak consumer spending, though, and indicated plans to cut back on capital spending and employment. (Reuters)

This column was written by Peter Weber and edited by Harold Maass of TheWeekDaily.com.