Understanding the stock market: Follow the Dolphins

posted at 10:10 am on October 30, 2008 by Ed Morrissey

Wayne Huizenga gives a pretty good demonstration of what will happen to the stock market over the next couple of months if Barack Obama gets elected next Tuesday.  Huizenga released a statement this week insisting that he will sell his half-interest in the Miami Dolphins to avoid the capital-gains tax-rate increases that will undoubtedly pass with an Obama administration in the White House.  And if you think he’s the only investor making that decision, you haven’t paid attention to history:

Don’t think tax rates matter to business decisions? Ask H. Wayne Huizenga, the owner of the Miami Dolphins, who declared earlier this week that he intends to sell up to half his ownership in the NFL franchise before next year. Why? Because as he told a Florida newspaper, Barack Obama “wants to double the capital gains tax, or almost double it. I’d rather give it to charity than to him.” …

We saw a similar tax effect in 1992 when Bill Clinton raised tax rates. The Wall Street crowd accelerated income, bonuses and stock sales to pay the 31% rate, not the expected higher rate. One of those who cashed out in 1992 was Robert Rubin, who would soon join the Clinton Administration.

One economist who observed this tax avoidance was Austan Goolsbee, of the University of Chicago, who is now a top Barack Obama adviser. In a 1999 paper, “What Happens When You Tax the Rich?,” Mr. Goolsbee wrote that “the higher marginal rates of 1993 led to a significant decline in taxable income.” Many of the superrich were able to change the timing of compensation to avoid paying the higher rates. Mr. Goolsbee concluded this was merely “a short term shift,” but it did cost the Treasury revenue it had been anticipating.

Most people don’t care who owns the Miami Dolphins.  In fact, getting Huizenga to sell may even gain Obama a couple of points among Dolphins fans, who still wonder when Dan Marino will come out of retirement.  This isn’t about NFL football, though, but the valuation of assets in the marketplace.

The value of the Miami Dolphins varies on several factors, but a forced sale always lowers the price.  If buyers know that Huizenga has to sell before December 31st, they can wait him out and pressure the price lower.  Huizenga will lose potential value.  Anyone who has had to sell a residence because of a job relocation has gone through the exact same process.

Now take that dynamic and apply it to the entire market.  Anyone who thinks they will have to cash out their holdings over the next couple of years will now want to do it in this tax year, rather than risk the significantly higher rates — perhaps twice as high as they are today, as Obama has suggested returning to the 28% rate under Bill Clinton.  If everyone tries to sell at once, buyers will become so scarce as to be non-existent — and we will see yet more free-fall.

That’s not the only pressure, either.  Democrats want to end tax breaks on 401(k) retirement plans and replace it with Social Security II.  People will want to bail out of the investments quickly, anticipating the huge flight of capital that will result from 401(k) demolition.  When the dust settles, anyone still left in the market will be lucky to see the DJIA at 1500.

Some have suggested that the markets have begun building that into their valuations already, which is the reason why we’ve seen the markets drop dramatically this fall.  Huizenga and others like him haven’t begun to move their money in earnest, though.  When they do, this last month will feel like a speed bump compared to what’s ahead.


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I’m hoping for a rally through tomorrow so I can dump some of what I bought two weeks ago. If Obama wins I’ll pick up the pieces next year at retested basement prices.

BadgerHawk on October 30, 2008 at 10:16 AM

If Obama gets his way this recession is going to be around for a looooong time.

Mr. Joe on October 30, 2008 at 10:16 AM

Democrats believe in trickle down the toilet economics.

fogw on October 30, 2008 at 10:18 AM

There will certainly be massive tax selling in Nov. and December if Obama wins, and not just by the big boys.

Huizenga is really doing a great service by going public with this. He diminished greatly the value of his team by announcing that he wants a deal done quickly (ie. motivated seller), more than any add’l tax consequences would be, in order to get his distate for Obama made public.

Wayne’s a Patriot.

JiangxiDad on October 30, 2008 at 10:18 AM

well Commrades, Adolph Obama will not allow this kind of racial slander in January so enjoy it while it last….NO ONE shall question the Messiah!!!

SDarchitect on October 30, 2008 at 10:18 AM

Well this is by far my biggest beef with Obama…ive come out here day after day defending him on foreign policy and energy and some other things…but this capital gains hike…i stinks. not lowering the corporate rate also stinks. It just doesn’t make any sense…

ernesto on October 30, 2008 at 10:19 AM

fogw: It seems more like trickle down (your leg) economics to me.

Merovign on October 30, 2008 at 10:22 AM

A good timely post, Ed. Every Presidential election where the outcome is in doubt we’ve seen this happen,but always on a much smaller scale. This year it’s a sunami rather than a wave.
My co-workers ask what they should do with their 401ks. I suggest they ride it out, long term investment, markets will come back…but if Obama gets in, what do I tell them?What should I do myself? I’m hanging tough, but let me tell you, it is tough.

Doug on October 30, 2008 at 10:22 AM

Spread the wealth.

Joy.

Bishop on October 30, 2008 at 10:24 AM

Well this is by far my biggest beef with Obama…ive come out here day after day defending him on foreign policy and energy and some other things…but this capital gains hike…i stinks. not lowering the corporate rate also stinks. It just doesn’t make any sense… – ernesto on October 30, 2008 at 10:19 AM

For Obama it makes perfect sense. Perhaps you should take a second look at the Messiah’s platform and reconsider your support. Unless, of course, you enjoy going down with sinking ship.

ManlyRash on October 30, 2008 at 10:24 AM

Obamunists have managed to excite the worst in humanity: fear and greed. What uniters!

Akzed on October 30, 2008 at 10:26 AM

Gee, why would anyone be wary if an unqualified, unaccomplished, no account neo-Marxist takes the helm?

I’m sure the absolute lunatics he appoints to his cabinet will prevent him from making any bad decisions.

And hey, we’ll have a woman with event planning experience as Speaker of the House and the Gambino’s errand boy leading the Senate.

Not to mention the fecal matter encrusted, incompetent pervert Barney Frank heading the House Finance Committee and the hopelessly corrupt Chris Dodd doing the same in the Senate.

What could possibly go wrong?

NoDonkey on October 30, 2008 at 10:27 AM

Doug on October 30, 2008 at 10:22 AM

Yep. Employers are caught in the riptide. The company I work for employs several thousand. They opted out of Workmans Compensation Insurance. Instead they went out into the market and on the job injury claims are handled by private insurance (paid for by the company). When they are forced to ‘give’ to the WC government program I wonder if the company will still be able to employ all those workers.

Limerick on October 30, 2008 at 10:28 AM

When the dust settles, anyone still left in the market will be lucky to see the DJIA at 1500.

Welcome to my way of thinking. I have predicted DOw 1500 for months. It would wipe out all of the market moves since Reagan. I think if Obama gets elected the DOW will be 7,000 by DEc 31. On NOV 5 if Obama is elected we should have one of the biggest drops in history. I would suggest anyone that is able to in thier 401k’s or IRA to buy puts for protection of if able to by an ETF/mutal fund that goes up in vaule when the market drops. Like SDS or DOG.

unseen on October 30, 2008 at 10:28 AM

This is exactly correct. I’m not in Huizenga’s wealth category, but I have significant assets that I will sell in the next few years. Seeing that my cap gains will likely double, I’m accelerating those sales into this tax year. I would anticipate that many thousands of investors and business owners are making the same rational decisions. I guess we’re just all evil capitalists or perhaps even racists.

liberty on October 30, 2008 at 10:30 AM

unseen on October 30, 2008 at 10:28 AM

On the reverse side if McCain pulls it out we will have a massive rally on Nov 5. fortunes will be made and lost on the outcome of this election.

I would say the last 1,000-1,500 pts have been due to Obama’s lead in the polls. the rest due to the credit crisis.

unseen on October 30, 2008 at 10:30 AM

Well this market crash has made my 401 lose about 3/4 of it’s value already. I was trying to wait until the market seemed to find some sort of bottom. A week without triple digit swings one way or the other and then get back in in earnest. I don’t have the years left to use the slow steady approach anymore. I have weathered other such times by just plodding along, but alas I fear time is no longer my friend.
With the Dems talking about removing the tax breaks on 401(k) plans and trying to come up with some sort of cock a mammie Social Security ponzi scheme I am at a lost as to where to turn. I fear not for me but for my child, who I had hoped to leave something to so she wouldn’t have the hard slog through life that I had.

Just A Grunt on October 30, 2008 at 10:30 AM

The Rich did not get rich by being more stupid than Congress.

Patrick S on October 30, 2008 at 10:31 AM

liberty on October 30, 2008 at 10:30 AM

Don’t forget about the increase in dividend taxes coming either. the great majority of retired people get their income from dividend be it from CD’s, stocks, or bonds. that tax is going to go up when Bush’s tax cuts expire. Of course Obama says not for those on welfare but than who on welfare has stocks?

unseen on October 30, 2008 at 10:32 AM

Spread the poor around.

marklmail on October 30, 2008 at 10:35 AM

Just A Grunt on October 30, 2008 at 10:30 AM

Does your 401k allow loans? Most 401k’s allow loans of up to 50%. you can always tak out a loan and keep the money. If the market recovers you can put it back in. If it doesn’t you can put it back later or keep the money to invest it some other way. If loans are taken if you lose you job you have 30-60 days to pay it or pay the 10% penalty and the taxes on it. Yet the loans do not go against your credit so if you lose your job the tax man is the only collector you have to worry about.

unseen on October 30, 2008 at 10:36 AM

Another thought about selling… those holding items ALREADY in a loss position will probably hold until AFTER the “tax changes” to take better advantage of the loss.

CC – BHO: “my Muslim faith”

CapedConservative on October 30, 2008 at 10:38 AM

unseen on October 30, 2008 at 10:36 AM

I took out a loan earlier this year, wife had breast cancer, so I can’t go to that well again until next year. Thanks for the advice though.

Just A Grunt on October 30, 2008 at 10:40 AM

ManlyRash on October 30, 2008 at 10:24 AM

Oh trust me ive looked at it. However, between McCain’s insistence on a bellicose international stance, his selection of Sarah Palin (whom i myself could brief on international matters), his willful disregard for the fact that “drilling now” would produce only a drop in the bucket compared to our consumption even if it were produced TODAY, and his grasping at straws approach to the economic crisis…his joke of a health care policy that would wind up costing me $5000 a year while taxing me on that…I see in him the incompetence of the Bush administration…who for all their good intentions fumbled initiative after initiative.

I fully understand all arguments made here against Obama…and I respect the vast majority of them. I agree with those here that increasing capital gains and corporate taxes is simply the wrong answer…but as ive said this whole campaign…McCain has made nothing but the case AGAINST barack obama…never the case FOR john mccain.

ernesto on October 30, 2008 at 10:43 AM

Most people don’t care who owns the Miami Dolphins.

Heh. I’d like to see Rush buy them.

Brat on October 30, 2008 at 10:45 AM

I’m listening to a (white, middle class) fellow worker here in Chicago talk this morning about the critics of Obama. He says “if that’s all they have on this guy, he must be pretty clean” and “I don’t know anything about any of these guys”.

He’s apparently an idiot, and is welcoming his socialist overlords with open arms. Can’t wait to laugh at him next year, with apologies to Manly Rash.

Jaibones on October 30, 2008 at 10:47 AM

I have a wealthy relative who is going to help all of us less well off relations with our investments. Our stock in the US market is all going into Asian markets, and our savings will go either to the Caymans if worthy of earning interest, or to our fireproof safes hidden in basements bolted to concrete floors. Our local safe company has seen something like a 20% rise in sales in recent months. This is no joke, Obama will cause a US depression that will probably have worldwide implications.

JustTruth101 on October 30, 2008 at 10:49 AM

I took out a loan earlier this year, wife had breast cancer, so I can’t go to that well again until next year. Thanks for the advice though.

Just A Grunt on October 30, 2008 at 10:40 AM

anyway you can refi that loan? get a loan from a bank pay back your 401k than take out another 401k loan and pay off the bank. The interest rates are much lower and it should save you soem money.

Most 401k’s offer money market mutal funds. Most of my money is there. I sold all my mutal funds when gas hit $4.00/gal and placed them in money markets. Missed the nosedive of the dow. I started to put some back in to the market. Should be ok no matter what happens. Can’t lose more than 305 if the market goes to zero and will get some of the upside if the market rallies.

unseen on October 30, 2008 at 10:49 AM

if you remember the 1970s…the market barely budged…the dynamic market we see today did not exist then…

if obama wins, we replay the 1970s…but it’ll be far worse this time.

right4life on October 30, 2008 at 10:53 AM

McCain has made nothing but the case AGAINST barack obama…never the case FOR john mccain.

ernesto on October 30, 2008 at 10:43 AM

What has Obama made the case for? His whole argument is that Bush sucks and McCain is just like Bush.

A drop in the bucket is still better than no drop at all when it comes to oil. Plus, there are capped wells off the CA coast that could have oil to market in 7 or 8 months. Also, A McCain/ Palin ticket would also have at least one advocate for drilling ANWR. Obama’s not a fan of nuclear, which currently provides 20% of our electricity. Despite some of his statements, Obama isn’t really a fan of coal, which provides 50% of our electricity. They both support wind and solar, Obama just wants to raise massive energy taxes to support their expansion. Obama also heavily supports ehtanol subsidies, which distory food prices for beef, pork and chicken as well as grains and soy, and waste large quantities of fresh water resources, all to produce a fuel that’s LESS efficient than gasoline and can’t be shipped cross country by pipeline.

Energy policiy is one of the BIGGEST reasons to support McCain over Obama, and I’d say McCain’s made that case fairly well.

BadgerHawk on October 30, 2008 at 10:53 AM

So long, and thanks for all the fish.

That’s not the best song to have stuck in one’s head. Thanks.

Anna on October 30, 2008 at 10:54 AM

I have my 401(k) all in bonds now, so the interest rate drop helped.

I can cash out and emigrate to Ireland or Australia before January 20, 2009 if McCain is not victorious.

Right_of_Attila on October 30, 2008 at 10:56 AM

Oh trust me ive looked at it. However, between McCain’s insistence on a bellicose international stance, his selection of Sarah Palin (whom i myself could brief on international matters), his willful disregard for the fact that “drilling now” would produce only a drop in the bucket compared to our consumption even if it were produced TODAY,

bellicose?? oh you mean not pre-emptively surrendering to Iran and al-qaeda like your messiah wants to do.

newflash moron we have Trillions of barrels of OIL (see shale oil) that we could use…it would last us more than 100 years…we would be self-sufficient…easily.

right4life on October 30, 2008 at 10:56 AM

Democrats believe in trickle down the toilet economics.

fogw on October 30, 2008 at 10:18 AM

Trickle up poverty.

techno_barbarian on October 30, 2008 at 11:00 AM

right4life on October 30, 2008 at 10:56 AM

Yea…none of which is offshore. Why all the drill baby drill nonsense if in reality all the oil is in that rock? Why all the talk of offshore regulation if its that rock we’re actually looking at? Either way investing in oil production gives us a negative return over the long term. Better to set the priority in research and development of battery and transmission technologies than devote all federal resources to a dead investment. We’ve seen the psychological effects of expensive gas…people have already begun changing their consumption habits…why not encourage further changes that in the long term free us from all oil, and make our energy situation SUSTAINABLE. And why the namecalling all the time? lol JK

anyway…my terming McCain bellicose has much more to do with Russia and china than the middle east. McCain’s basically sworn off any hope of at least TRYING to increase cooperation with Russia and has not really made much mention of China at all. Though I do not have high hopes for Russian cooperation…I see nothing to gain from telegraphing that point. Better to express rhetorical willingness and gauge their responses over time than to cut them off from the get go.

And would you stop calling him my messiah? Granted I support him over McCain but ive thought it out well enough and ive tried my hardest to explain why. I have no delusions about obama, i dont see him as perfect, only a better alternative to mccain…and ive explained why.

ernesto on October 30, 2008 at 11:05 AM

fogw on October 30, 2008 at 10:18 AM

It’s been too long since I did this…

That wins the Comment Of The Day™ award, even though it’s closer to “flush” instead of “trickle”.

steveegg on October 30, 2008 at 11:06 AM

McCain has made nothing but the case AGAINST barack obama…never the case FOR john mccain.

And that case is good enough for me, although I disagree that McCain hasn’t made the case for himself by saying he wouldn’t let the Bush tax cuts expire. As for Palin’s foreign policy creds, she hasn’t said she’d negotiate with rogue nations and terrorists with no preconditions. Obama has and this automatically disqualifies him.

Obama, as one of the Gang of Three will totally destroy this country, cancel the Constitution and have us all merrily laboring, side by side, in the rice paddies.

pistolero on October 30, 2008 at 11:06 AM

BadgerHawk on October 30, 2008 at 10:53 AM

I agree that ethanol is crap and subsidies supporting it are garbage. However, you fail to make the case that a drop in the bucket is better than nothing. In my view, substantial investment in R&D to develop specific battery and power transmission technologies has the better long term prospects for return. I find no substantial difference in energy policy between them…its really only a rhetorical difference…as both ANWR and offshore drilling would produce laughably small increases in oil. Either way oil is not the answer, research in battery and transmission technology is.

ernesto on October 30, 2008 at 11:08 AM

ernesto on October 30, 2008 at 10:43 AM

It’s been explained to you time and again why you are wrong in each everyone of the points that you raise.

It’s odd that you can see through the BS when it comes to matters economic, but you wallow in the BS on everything else.

MarkTheGreat on October 30, 2008 at 11:08 AM

Welcome to my way of thinking. I have predicted DOw 1500 for months. It would wipe out all of the market moves since Reagan. I think if Obama gets elected the DOW will be 7,000 by DEc 31. On NOV 5 if Obama is elected we should have one of the biggest drops in history. I would suggest anyone that is able to in thier 401k’s or IRA to buy puts for protection of if able to by an ETF/mutal fund that goes up in vaule when the market drops. Like SDS or DOG.

unseen on October 30, 2008 at 10:28 AM

The market has already baked in an Obama victory in the same way it was betting on 50bp from the Fed yesterday. The market could only go to 1500 if earnings for the Dow 30 dropped by about 70%. Will VZ or T lose that many subscribers? Will KFT, KO, PG see their sales drop that precipitously? Will XON, CVX see the demand for energy fall off the map? Maybe if unemployment jumps up to 30%.

With the Dow down 40% or so from its peak there are fewer capital gains to tax and most investors are taking losses and building up their carry forward.

Obama has come out and said he’d eliminate the capital gains tax for founders of small businesses, so someone who losses their job in this recession might start a small business and sell it in a few years without having to pay taxes–that’s actually pretty appealing.

dedalus on October 30, 2008 at 11:10 AM

research in battery and transmission technology is.

Dude, it’s just like your farcical claim that there’s hardly any oil out there. Do you think the oil companies would want something so badly if it didn’t exist?

And as for your panacea of battery and transmission research, universities and private industry have been researching these things for decades. Jimmy Carter started providing grants to research and develop wind and solar in the 70s, but just because you dump money into research doesn’t mean you always end up with something viable. I don’t see Nancy Pelosi or Barack in a solar powered airplane. Those are greenie pipe dreams with no known deliverable, as opposed to say, drilling for oil.

pistolero on October 30, 2008 at 11:13 AM

ernesto on October 30, 2008 at 11:05 AM

There’s lots of oil offshore as well. While each additional well is only “a drop in the bucket” all of the potential wells, added together combines to a significant amount. When added to all of the other sources of oil that are currently off limits, it adds to a very signifigant amount of oil.

Just what bribe would you give Russia to get them to agree to “cooperate”. Our problems with Russia have absolutely nothing to do with US policy, and 100% to do with Russian policy and goals.

I find it fascinating that it is Russia that is invading it’s neighbors, yet you declare that it is the US that is being “bellicose”.

but ive thought it out well enough

I can’t find any evidence in your statements that you have thought at all.

MarkTheGreat on October 30, 2008 at 11:15 AM

McCain has made nothing but the case AGAINST barack obama…never the case FOR john mccain.

ernesto on October 30, 2008 at 10:43 AM

And that case, all by it’s lonesome, is enough to vote for Alfred E. Newman over Obama.

CC – BHO: “my Muslim faith”

CapedConservative on October 30, 2008 at 11:16 AM

MarkTheGreat on October 30, 2008 at 11:08 AM

No it hasnt. McCain IS bellicose…his health care plan gives a tax credit that amounts to 1/4 of the plan i receive today…Sarah Palin, by the admission of mccain aides, knows little to nothing about pressing international and national issues…offshore drilling and ANWR wont provide anywhere near the amount of oil we consume, and could easily be offset by an OPEC production cut…should i continue?

ernesto on October 30, 2008 at 11:17 AM

Yea…none of which is offshore. Why all the drill baby drill nonsense if in reality all the oil is in that rock?

because there is a great deal of oil offshore

The federal government estimates the nation’s outer continental shelf might hold 85.9 billion barrels of crude, including 10.13 billion barrels off California. For comparison, the United States consumes about 7.56 billion barrels of oil per year.

link

but nobody knows for sure, because we’re not drilling off most the US coast…we could have another huge find like Brazil did.

Either way investing in oil production gives us a negative return over the long term

huh? thats nonsense. it gives a good number of really good jobs…and with all the liberal whining about jobs…

Better to set the priority in research and development of battery and transmission technologies than devote all federal resources to a dead investment.

please, I’ve heard about these ‘investments’ for 30 years…and we got nothing.

why not encourage further changes that in the long term free us from all oil, and make our energy situation SUSTAINABLE

there is no freeing us from oil. you libs make out like oil is some kind of evil substance from outer space. its a natural resource, like trees. we know how to use it. our economy depends upon it…what you are saying will cost TRILLIONS of dollars…and take technology we don’t have. please.

McCain’s basically sworn off any hope of at least TRYING to increase cooperation with Russia and has not really made much mention of China at all.

how does anyone cooperate with Russia? other than helping them take over the ukraine? seriously.

And would you stop calling him my messiah? Granted I support him over McCain but ive thought it out well enough and ive tried my hardest to explain why. I have no delusions about obama, i dont see him as perfect, only a better alternative to mccain…and ive explained why.

remember Jesus was a community organizer, right? the unthinking adoration of the obamamites is frightening. what position is better? that he wants to kill unborn babies at every opportunity? or is that he wants to transform us from a captalist system to a socialist state? or perhaps his plans to jettison israel, and cut our defenses, basically leaving us open to attack?

right4life on October 30, 2008 at 11:17 AM

Better to set the priority in research and development of battery and transmission technologies than devote all federal resources to a dead investment.
ernesto on October 30, 2008 at 11:05 AM

Come on. The federal government doesn’t have to devote any resources to drilling, they just have to get out of the way of the private companies. Drilling here will also create jobs here, and keep Americans dollars here. And McCain has pushed strongly for a new wave of batteries to push electric cars far beyond their current capabilities. I’m sure you’re aware of McCain’s offer of 300 million for whomever comes up with such a battery.

You’re being intellectually dishonest to think that Obama’s energy plan is in any way superior to McCain’s.

BadgerHawk on October 30, 2008 at 11:20 AM

McCain IS bellicose…
ernesto on October 30, 2008 at 11:17 AM

You find him aggressively hostile? You must have been watching a different campaign than I…. (no Rev. Wright, “he’s make a fine President”…. bellicose my a$$.

CC – BHO: “my Muslim faith”

CapedConservative on October 30, 2008 at 11:23 AM

Obama has come out and said he’d eliminate the capital gains tax for founders of small businesses, so someone who losses their job in this recession might start a small business and sell it in a few years without having to pay taxes–that’s actually pretty appealing.

dedalus on October 30, 2008 at 11:10 AM

Very few small business owners pay capital gains taxes. They take their income as ordinary income.

So Obama is lying in this claim.

MarkTheGreat on October 30, 2008 at 11:23 AM

McCain has made nothing but the case AGAINST barack obama…never the case FOR john mccain.

ernesto on October 30, 2008 at 10:43 AM

McCain has spent plenty of time talking about what he wants to do.

Just because it isn’t in the MSM doesn’t mean it doesn’t exist.

MarkTheGreat on October 30, 2008 at 11:25 AM

I agree that ethanol is crap and subsidies supporting it are garbage. However, you fail to make the case that a drop in the bucket is better than nothing. In my view, substantial investment in R&D to develop specific battery and power transmission technologies has the better long term prospects for return. I find no substantial difference in energy policy between them…its really only a rhetorical difference…as both ANWR and offshore drilling would produce laughably small increases in oil. Either way oil is not the answer, research in battery and transmission technology is.

ernesto on October 30, 2008 at 11:08 AM

I think you’re way off the mark in claiming that domestic offshore oil drilling will produce laughably small increases. There’s no way for you to know that. Huge discoveries are being made offshore all over the world.

Also, one of the major reasons oil prices plummeted (even before the credit crisis showed up) was that the US merely entertained the possibility of using our own resources. Just that public threat has oil prices to less than half what they were at their peak.

If we wind up with the unholy triumvirate of obambi, pelousi, and reid at the helm, all that will evaporate because they’ll see to it that we strangle ourselves. Oil will once again skyrocket.

You make good points about battery technology and transmission. You’re actually making more sense in this thread than I’ve ever seen you make in the past. I’d also like to see the mass proliferation of safe nuclear pebble reactors.

I would also add solar into that mix, as the exponential Moore’s Law aspects of solar and nanotechnology R&D are poised to open up a potentially unlimited supply of cheap energy. And that would be a game changer with world-wide consequences.

My point is that we need to be doing all of the above. Oil production serves as a bridge to make possible the other energy alternatives coming down the pike. There is no way that we can get away from the need for oil for decades yet, probably ever.

techno_barbarian on October 30, 2008 at 11:28 AM

No it hasnt. McCain IS bellicose…his health care plan gives a tax credit that amounts to 1/4 of the plan i receive today…Sarah Palin, by the admission of mccain aides, knows little to nothing about pressing international and national issues…offshore drilling and ANWR wont provide anywhere near the amount of oil we consume, and could easily be offset by an OPEC production cut…should i continue?

ernesto on October 30, 2008 at 11:17 AM

Apparently your definition of bellicose is not kissing communist butt with sufficient fervor.

The McCain cuts would cover an average person’s medical plan.

Pallin has demonstrated that while she may not know every leader of every tiny country, she does know enough.

WHile it’s true that ANWR output will be less than OPEC’s, so what. Are you arguing that only the biggest producer should produce? If OPEC wants to pretty much stop producing oil in order to maintain prices, that won’t bother me.

Yes I do wish you would continue. Every post just goes to show how you prefer to spout predigested talking points, rather than think for yourself.

MarkTheGreat on October 30, 2008 at 11:29 AM

Better to set the priority in research and development of battery and transmission technologies than devote all federal resources to a dead investment.

oh yeah, even if we had the battery technology, where do we get the power to charge these batteries? coal? oil? nuclear? solar and hydroelectric are very limited in the amount of power they produce, same for wind.

the only viable alternative to carbon-based fuel is nuclear, which mccain is all for, me too, how about you?

right4life on October 30, 2008 at 11:30 AM

offshore drilling and ANWR wont provide anywhere near the amount of oil we consume, and could easily be offset by an OPEC production cut…should i continue?

ernesto on October 30, 2008 at 11:17 AM

opec is lowering their production rates right now and oil is still going down.

And once again, you’re buying in to the ridiculous 3% of the world’s oil estimate. I don’t think that’s actually the case.

techno_barbarian on October 30, 2008 at 11:32 AM

as the exponential Moore’s Law aspects of solar

Moore’s Law does not apply to solar, since it doesn’t involve etching transistors.

MarkTheGreat on October 30, 2008 at 11:33 AM

Very few small business owners pay capital gains taxes. They take their income as ordinary income.

So Obama is lying in this claim.

MarkTheGreat on October 30, 2008 at 11:23 AM

The tax proposal doesn’t address income that is paid out of the business. It addresses the ultimate sale of the business for entrepreneurs who look to grow and sell a business.

dedalus on October 30, 2008 at 11:33 AM

So long, and thanks for all the fish.
That’s not the best song to have stuck in one’s head. Thanks.

Anna on October 30, 2008 at 10:54 AM

That’s a song? I thouht it was a line from the book (and movie) “The Restaurant at the End of the Universe.”

Or was that the second book, I can’t remember somone help me out here…

If Obama gets his way this recession depression is going to be around for a looooong time.

Mr. Joe on October 30, 2008 at 10:16 AM

I hope you don’t mind but I FIFY as I believe if Obambi is elected it will be much worse than a recession…

Liberty or Death on October 30, 2008 at 11:33 AM

Ernesto-
the great power media still holds is not in what it lets through to the general public, but what it decides to let lie stone dead on the cutting room floor.

jjshaka on October 30, 2008 at 11:34 AM

Without a huge storage capacity, equal to at least to total daily production capacity, solar will never take off.

It’s doubtfull whether we will ever make a solar cell that will produce enough energy during it’s life, to equal the energy that went into making it.

MarkTheGreat on October 30, 2008 at 11:34 AM

Moore’s Law does not apply to solar, since it doesn’t involve etching transistors.

MarkTheGreat on October 30, 2008 at 11:33 AM

Actually it does, MTG, due to the processing and manufacturing technologies that will make much more efficient carbon nanotube solar collectors possible.

Here’s a link you might find interesting: Ray Kurzweil at the 2005 TED conference talking about exponential changes.

techno_barbarian on October 30, 2008 at 11:45 AM

Oh and aren’t China and Cuba now drilling in the Gulf of Mexico right off our coast? And didn’t they announce a huge find?

As for Palin, it’s about core principles and your world view when it comes to foreign policy, not how many world leaders you sipped tea with and whispered sinister plots with. Obama does NOT have this country’s interests in his mind. He’s a globalist, United Nations kind of guy who has talked of unilateral disarmament, withdrawing from the world scene and letting Israel take the beating the Obama wishes upon her. His buddies are talking about slashing the military by 25%. Yeah, that’s real good foreign policy there, genius.

pistolero on October 30, 2008 at 11:48 AM

It’s doubtfull whether we will ever make a solar cell that will produce enough energy during it’s life, to equal the energy that went into making it.

MarkTheGreat on October 30, 2008 at 11:34 AM

You may be correct, but ever advancing technology, economies of scale, and mass production at the nano scale are poised to make some truely fantastic thing possible.

I wouldn’t write off solar. I’m not willing to write off any energy techology other than corn-based ethanol.

techno_barbarian on October 30, 2008 at 11:49 AM

They don’t get it, these business men are smarter then the politicians…the government will get outsmarted every time. You never tax the businesses, they will find a way to either pass it on, or find a way to avoid (loopholes from their Political friends).
Senators and congressman know that an increase in taxes, actually create an increase in their contributions from lobbyists.
Everyone states the figures of higher taxes causing an economic slowdown (thus lower amount of collectable taxes), but no one quotes the figures of the increase in business activity in supporting politicians. The politicians make more money when they start writing tax code…what do you think lobbyists are for?
You control people with taxes, you stay in control by taxing.

right2bright on October 30, 2008 at 11:50 AM

techno_barbarian on October 30, 2008 at 11:49 AM

Thanks for the link. I remember when the Kurzweil K250 came out in the 1980′s. It really changed way musicians thought about electronic instruments. He’s a brilliant and creative guy.

dedalus on October 30, 2008 at 11:59 AM

Remember when the Dems pushed the “Luxury Tax” on “The Rich” because they needed to “Pay Their Fair Share”???

It had to be repealed because people quit buying “Luxury Items” and the manufacturers of such items were going out of business.

These clowns never learn.

pherrman on October 30, 2008 at 12:09 PM

A good timely post, Ed. Every Presidential election where the outcome is in doubt we’ve seen this happen,but always on a much smaller scale. This year it’s a sunami rather than a wave.
My co-workers ask what they should do with their 401ks. I suggest they ride it out, long term investment, markets will come back…but if Obama gets in, what do I tell them?What should I do myself? I’m hanging tough, but let me tell you, it is tough.

Doug on October 30, 2008 at 10:22 AM

I hear ya! Riding it out only works if my 401k doesn’t disappear into the government purse. What to do if this 401k change actually happens because I can’t cash out 1/2 of 401k (the company match 1/2) while still empolyed there. So I end up losing it so some deadbeat stiff gets a check off my sacrifices from the last 10 years by contributing 15% of my pay.

VikingGoneWild on October 30, 2008 at 12:14 PM

The liberal Democrats and the Obamassiah are hell bent on destroying this country, and they know how to do it expertly. Or haven’t you noticed? …it has already begun and they simply await the right moment for the coup de grace. I suspect the ‘right moment’ for them will be January 2009.

FlatFoot on October 30, 2008 at 12:48 PM

Ed, some of Obama underground work

One day said we should “hammer” NAFTA deal. Lately he lied about official in his camp calling the Canadian embassy to initiate talks on NAFTA.

Shown on CTV

http://www.youtube.com/watch?v=cRgiHRqOywA

Monas on October 30, 2008 at 1:07 PM

…In my view, substantial investment in R&D to develop specific battery and power transmission technologies has the better long term prospects for return.

ernesto on October 30, 2008 at 11:08 AM

Better batteries are great, but you have to produce energy to store in your batteries in the first place. Where should that come from?

DarkCurrent on October 30, 2008 at 1:15 PM

This NAFTA talk happened before Obama became the Democratic candidate and is still a great concern of Canadian interest.

Monas on October 30, 2008 at 1:15 PM

techno_barbarian on October 30, 2008 at 11:45 AM

I like Kurzweil, but if his extrapolations where entirely accurate by now my PC should have it’s own HA account and be posting here all by itself.

DarkCurrent on October 30, 2008 at 1:27 PM

This is exactly the kind of thing I’ve been hearing from small business owners that I interact with on a daily basis:

http://woody.typepad.com/my_weblog/2008/10/democrat-policies-dont-affect-just-the-rich.html

“The rich always have options, it’s the middle class that will be stuck between Barack and a hard place.”

Woody on October 30, 2008 at 1:40 PM

I like Kurzweil, but if his extrapolations where entirely accurate by now my PC should have it’s own HA account and be posting here all by itself.

DarkCurrent on October 30, 2008 at 1:27 PM

Actually, your PC is right on schedule, as it is a direct result of Moore’s Law. An example of the progress that processing capacity has reached would be a 747 able to fly around the world on a thimble-full of fuel.

And besides, what you’re talking about is AI, and that does NOT follow Moore’s Law as it is more software development vs hardware intelligence.

No doubt about it, we are on the precipice of some really astonishing advances.

techno_barbarian on October 30, 2008 at 2:00 PM

techno_barbarian on October 30, 2008 at 2:00 PM

I don’t disagree with the basic premise, but it’s not a simple exponetial curve.

As a software developer interested in AI, I can assure you that the reason my computer doesn’t write it’s own posts isn’t because it isn’t 16x faster than 4 years ago (it is). It’s because no one yet knows how to develop the software that writes it’s own original posts, and it’s much closer than it was 4 years ago. It’s not simply a matter of transistor density.

Simple extrapolation from recent trends doesn’t always match long-term curves.

DarkCurrent on October 30, 2008 at 2:13 PM

and it’s much closer than it was 4 years ago.

isn’t

DarkCurrent on October 30, 2008 at 2:17 PM

I don’t disagree with the basic premise, but it’s not a simple exponetial curve.

As a software developer interested in AI, I can assure you that the reason my computer doesn’t write it’s own posts isn’t because it isn’t 16x faster than 4 years ago (it is). It’s because no one yet knows how to develop the software that writes it’s own original posts, and it’s much closer than it was 4 years ago. It’s not simply a matter of transistor density.

Simple extrapolation from recent trends doesn’t always match long-term curves.

DarkCurrent on October 30, 2008 at 2:13 PM

I too am a software developer, among many other things. I wasn’t implying that just because processors have gotten exponentially faster and more capable that that alone would be responsible for the advancement of AI. Sorry if you misunderstood.

I agree with you that AI is more about programming than processor speed, although the speed increases make branching logic much quicker.

techno_barbarian on October 30, 2008 at 7:45 PM

I have spent my life in the computer and electronics field, first as an Engineering Tech. and then as an Electrical Engineer.

For a while, I even had an old IBM 6430 transistor and relay logic computer in my garage that I wrote machine language code for (for fun). I still have my first computer, a Sinclair Basic computer. That was fun too! My first PC was a Compaq luggable, long deceased. We currently have 4 working computers in the house.

Professionally, I helped design one of the first Microprocessor based control boards for industrial control use. Later, I designed a Micro RTU to replace old transistor logic units in the field.

It has been an amazing trip, these past 40 years. And so much is yet to come.

On the coming economy: I got into cash a a while back when the market was peaking. I left some profits on the table, but I have lost 0$ lately. A couple of years ago when the gold ETF GLD was started I bought some, and soon wound up with 1000 shares across our three accounts. Gold was $300 then and I sold this last year when it hit near $1000. Gold has dropped now, and it needs to be part of your portfolio considering the market as it is and will be. There are now Options on GLD. I have bought calls as a less risky way to cover the expected coming rise in prices. If it doesn’t happen, I’m not out much.

On 401Ks: See if your company will let you transfer some or all of your account into a RIRA. You can do that with no penalty.

Good luck!

marcboyd on October 30, 2008 at 9:33 PM