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Off the Subject
I can’t think or write about oil or stocks any more. Oil and stocks are simply taking a vacation. They are gone for a while. Some day they will come back. In the meantime, no lower price for stocks or oil is out of the question.
This market is out to decimate as many people as it can. That means providing short periods of encouragement followed by longer periods of breath-taking decline. Panic happens to be the theme of the day for now as everyone contemplates a possible global depression and the liquidation of funds continues to force institutional selling. But that will probably change with some sustained up days at some point in order to bring more cash back into the market to be destroyed later.
The price of oil can be any number in the short term. There is simply more supply than demand and it is yet to be determined that OPEC is able to change that dynamic. With substantially reduced demand, prices could probably go back into the $30’s without stopping enough current production to make much difference. I don’t expect that but I’ve gotten to the point that I don’t let myself expect anything.
As I said, eventually the panic will pass. Some day home prices will bottom, primary consumer demand will begin to grow and some version of the world we were accustomed to for so many years (since 1982) will return. But for now it is best to think about something else.
So here is something you might want to consider: why not change the term of the presidency to one six-year term with a president being unable to run for re-election immediately but able to run again after an intervening period? That way a president would have a long enough term to get some serious work done. The president would not be in campaign mode during his term with all the distortions of national power for political purposes which the present system encourages in a first term. But a president could also be re-called to duty after an intervening administration so we would not eliminate the possibility of bringing back a former president for a second and final term of office after a respectable layoff.
In that system, the only incentive that a president would have during a first term would be to do such a good job that he would be fondly remembered six years later. There would be no incentive to do particular favors for particular power centers just to secure a re-election. There would be no incentive to attempt any short term glory actions (like starting a war that might seem easy to win). There would be time for the electorate to obtain some historical perspective on a president’s term before having to decide whether or not to re-hire him/her.
The only down-side I can think of to such a system is that it would require a Constitutional amendment, a process that is fraught with risk. Otherwise it seems to me like an abundantly superior system of government in every respect.
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26 responses so far ↓
1 MKR // Oct 24, 2008 at 10:25 pm
Jim - I’m with you 100% on both the concept of a 6 year presidential term (with an option on a later 2nd term) and the desire to forget about oil prices and stocks for a while.
No question that there is no floor under the price of oil at the moment. OPEC pledges to take 1.5M barrels out of circulation and the price drops. Emerging markets, the heretofore drivers of ever higher oil consumption - are getting hammered by crashing commodity prices among other things. The global economy is in uncharted waters and nobody really knows how severe this downturn is going to be. Time to head to the sidelines and either wait for Armageddon to arrive or some semblance of economic stability to reappear in the world.
And I really like the concept of the 6 year term with an option for a later return engagement. The fact that a nitwit like Bush can not only get elected, but then get re-elected 4 years later is exhibit A that our political system is malfunctioning. Having a chance to digest the accomplishments of a presidency before signing on for another term seems like a good idea to me. Consider that if John McCain does a good job in his first 6 years, he would only be 84 when he would be eligible to run for a second term . . .
2 Simon // Oct 25, 2008 at 2:20 am
Hi Jim,
I don’t like the idea of a six year term at all. To list a few potential problems; Firstly in a democracy people get to vote for their leaders reasonably regularly. Every six years is not enough. One might forget that one’s opinion mattered occasionally and might forget to form an opinion. That would be bad for democracy.
Six years would allow an administration to become too entrenched. The bureaucratic structures may become lazy and apathetic with no reason to be concerned about a shake up in the medium term.
The judiciary is tied in some respects to the administration in America is it not? Complacency here also would be a bad thing. An unpopular or incompetent or corrupt judiciary could do a lot of damage in six years.
An effective opposition is essential for an active democracy. Six years may be too long to keep quality people interested in being in opposition
I agree that the American electoral system needs to be reviewed. I suggest eliminating pocket book politics. Money plays far to big a part in American politics. A fairer system that is not dependent on private funding needs to be developed.
Just my thoughts. Thanks for letting me post
3 Barry // Oct 25, 2008 at 3:07 am
A little perspective.Bear markets of this magnitude arrive about every 30 years or so.They are have different causes so are scarry since we have nothing to fall back on since each one is different.What all great bear markets have in common is they push prices of stocks down to bargain basement levils that never happen in normal markets.In short you get the buys of a lifetime in these super bear markets.QuotingB uffett “be greedy whaen others are fearfull and fearfull when others are greedy”sums it up.Easy to say,hard to do.I am buying stocks with every dollar I can get my hands on.Am I a fool,Throwing good money after bad?Only if you believe this is the end of American prosperity.It isn’t.The gov. led by the fed.reserve and the treasury are doing all the right things to counteract the crises.It will work but it takes a little time.Meatime hedge funds are forced to liqidate,individual investors are selling their mutual funds,thereby pushing share prices futher down thus triggering more selling.An enormous amount os cash is building up on the sidelines earning almost 0 returns.One cannot live on a million dollars woth of capital earning one quarter of one percent.That money will come right back into the market once things calm down.The cassandras of doom will melt away once the new bull market arrives.Buffett is buying and no one is listening because hysteria is the order of the day.Buffett will be right just as he is always right when he scoops up shasre at bargain prices.If you buy a dollar for fifty cents ,you can never lose money.I am pretty sure this message will fall on deaf ears.There will be no shortage of investors who will tell me I just don’t get it.This time things really are different.They are wrong.This crises will pass in time and the clouds will part.The economic sun will shine again.I have been investing for 45 years and i have perspective.If the late John Templeton ,an investor on par with Buffett,were here today,he would calmly tell you to buy.Peak oil is still valid.Once the world economies start to grow,oil will right back up.The world will have fallen further behind the curve as alot of exploration has been curtailed.It takes time to get up and running.The shortage of oil is the next big crises facing the world.It will become apparent sooner then you think.Thats my take.Barry
4 Bruce // Oct 25, 2008 at 3:34 am
Well Jim,
Let’s get back on the subject of oil. First, everyone puts their pants on one leg at a time. Second, you are making out the market to be something that is alive and out to devour.
Now, if we look at it your way those who are in this for the long term will keep their pants up and those who are for the short will loose their jewels with their pants.
Buy low sell high how easy can it be?
Currently, buying high and selling low is easier. All these dumb buyers and sellers will soon find out which is better for them.
Don’t get caught with your pants down.
Play it the smart way and average and add a twist, buy limit at a vastly lower price to hit on a swing. Then take some off the top on the bounce.
How simple can it be?
5 Bruce // Oct 25, 2008 at 4:14 am
Saving Grace!
Is that her name?
Jim, I would love to see the devil loose this one.
If, as you hinted the price of oil falls to the thirty’s we could see Iran doing as North Korea.
That would be a gift from St. Michael.
Otherwise we could be in for World War III.
Me, I rather have oil go to $30 and our daily world to hell then deal with Israel’s nonexistence.
And!!!
the lives of our troops.
6 robert essian // Oct 25, 2008 at 5:03 am
Jim, suppose we would have Bush for two more years…YIKES!!!!!
Forgive me that I didn’t really think too much about your proposal but I’m a little tired with all that’s happening in the market right now to take up the debate.
Jim, I am an optimist by nature. The market can do this or that in the near term but my over riding belief is that this too shall pass.
This is not the end of the world and the cleansing of the system is our time to shine and prepare our new economic system so our kids and grandkids have a descent life. We all would gladly take the hit for them so their lives would be better. Time to buckle down and prove it.
We still have bread, peanut butter, jelly, milk, oreos, and corn flakes in the cupboard so we still feel rich. We have cloths to last a few years if necessary and a roof over our heads so all’s good.
For all of you that have been doing this awhile stocks can be had at better than half their values of a few months ago why on earth would anyone not buy these stocks now. A gift of a lifetime.
Obama looks to be our next President and by a landslide. The Democrats will be the majority in both houses.
Obama will bring a huge upside and will from the start instill to the American people that “Happy Days are here again”.
He will immediately instill confidence, he will represent the middle class and the poor. He will galvanize all classes for the common good.
Why do I feel strongly about this? We have no choice, we all want to be proactive we just need leadership…Peace
7 KV // Oct 25, 2008 at 7:00 am
Our real problem is that we as a country got too rich on borrowed money, and in less than two generations, we replaced hard work by speculation, gambling and power drunk charlatan activities. We collectively became ignorant, and fell for the fear and greed, politically, socially, and morally. Historically, Romans did the same.
There is no political solution when we are rewarded to be ignorant and arrogant. Yes, compared to many in the world, we are still rich, and are ignorant and arrogant. The real problem is that we have a political party that wants to control masses by fear of wars and lesser gods (like the dumb ass priests, preachers and ministers who claim the right to interpret God to you and deny you the right to do the same), and believes that there is no common good for a society except the chosen few. And, the children of masses are expendable for the safety and security of a few. Nazis also believed in the same.
We, as a people, are in a ocean of our own filth, and it began with Nixon, whose protégé – cheney, rumsfeld et. al. – took over and continued the agenda. Nixon dumped gold standard mostly to pay for wars, ongoing and future. Republicans continue to invent enemies in the world where there is really none, especially, in a country where people from world over have come and called home.
I really prefer the checks and balances built in the Constitution. However, we have totally eroded our constitution under Patriot Acts, and we need to become free again and stop being afraid of two stateless thugs in turbans.
8 Isaac // Oct 25, 2008 at 8:16 am
I agree to the six year plan, and it ought to go for the senate and house as well. I’m tired of politicians being partician above country, and being only concerned about their own re-election. How do we incentivize longterm policy making? I’m also ready for a constitutional ammendment to balance the budget, and to begin rationing health care (medicare).
9 robert essian // Oct 25, 2008 at 8:18 am
KV, on Bruce….Thank you
On your opinions of the state of our well being I couldn’t agree more.
Honestly, you get what you deserve.
I’m feeling pretty good today.
Frankly a good old fashion purging is fine with me…Peace
10 KV // Oct 25, 2008 at 9:18 am
Jim,
If the congress is controlled by party other than president, a six year term president starts as lame duck. Virginia has one term governership, and as soon as the election is finished, the newly elected governer is lame duck, and much of the VA govt business is done by the assembly. In that case why not go to a parlamentary system, and appoint a president for show and tell like a queen (bush would have looked good especially in the drags!). And, we would not need a vice president! (cheney can screw around with his heart than the country).
11 Jim Kingsdale // Oct 25, 2008 at 10:35 am
Gentle readers: let’s keep this discussion polite and well reasoned. As I said, neither the world nor reasonable valuation are coming to an end - it’s just that the latter has taken a vacation. Jim
12 robert essian // Oct 25, 2008 at 1:25 pm
I just got up from a 31/2 hour nap. Felt great.
Before I went to bed I thought of your proposal Jim because I was always taught to sleep on it when you want something to be clear when you wake up.
Bush…2 more years…YIKES…
13 Jim Kingsdale // Oct 25, 2008 at 7:32 pm
Actually, Robert, it would be Bush… two fewer years. He would have had 6, not 8. Plus he would not have had Carl Rove sitting in the White House for 6 of his 8 because there would be no short term political campaign - only a legacy - for Bush to think about. Also we’d have 50% fewer presidential elections that attract special interest money looking for political favors.
14 Bruce // Oct 25, 2008 at 8:34 pm
on the subject of oil
It’s time to shift some oils.
A company in Canada playing oil sands or new processing methods may not be a good short long term investment. By good short I mean 3-5 yrs. There’s to many problems in Canada such as water and mining and not totally proven processes. It seems to be the case that getting out now and shifting to another source of oil will be the wiser thing to do.
15 Bruce // Oct 25, 2008 at 10:01 pm
I keep looking but I don’t see where anyone outside of the US has a bread basket. Can someone please tell me where a country such as China can grow from within other than population?
16 rbblum // Oct 26, 2008 at 4:23 am
Jim, since your taking a mental sabatical, I will pose a couple of questions for consideration in being addressed . . . in due time -
When global activity picks up, would there not be a tendency for the oil producers to consider satisfying the demand of emerging markets before supplying oil to the more mature markets? Also, would there not be negative bias in supplying oil to the US due to its rising deficit, future obligatory entitlements of record and the US having a lessor impact on the global economy going forward (compared to the rest of world participants)?
Thanks in advance.
17 robert essian // Oct 26, 2008 at 5:22 am
Jim, honestly I have given no thought to your question.
What has my interest a little is a huge move upward this week in the stock market so McCain can claim the fundamentals are sound and that the bailout plan has saved the day.
That should help just before the election.
I’m not paranoid but…Lets see
18 robert essian // Oct 26, 2008 at 6:04 am
Regarding your post Jim I guess it would be necessary to see how history would have changed had we had six year terms.
Would Clinton, Nixon, Kennedy, Reagan, Lincoln, Roosevelt, Monroe, Hoover, etc…had a different mind set knowing they had six years instead of eight.
A brief example of my thoughts. Would Gore be President instead of GW. The Lowinsky thing happened towards the end of a pretty good run by Clinton. That influenced the election in GW”S favor. Maybe he wouldn’t have been President.
Another example: Maybe Bobby Kennedy never gets shot because he wouldn’t have had to be where he was on that fateful day.
So many maybe’s…
Going forward, I would be in favor of your plan if we could control the special interests and your proposal would work as intended. It wouldn’t.
The special interests and all their high priced lawyers write up all the proposal and bills now. They have all the money therefore he who has the money wins.
The special interests rules and that unfortunately will not change.
Make no mistake Obama and McCain are bought and paid for.
No matter how long the terms of our President are that will never change…Follow the money
19 KV // Oct 26, 2008 at 6:27 am
Bruce - Good, you are back. I wish you would simply say sorry for uncalled for post. You may not like a person of any color, but hating the whole race is really an expression of deep flaw within you. We typecast all races, religions, and countries of origins. We learned of our ignorance, and change.
Now to your breadbasket question: except Africa, most nations are self-sufficient. Corn, wheat and soyabeans are staple commodities and have many more uses besides feeding people. We are in such a quandry that we may simply have nothing else to export.
China and India have been producing much more agri products and are net exporters of specialty products.
Where we are precariously thin is in our ability to withstand major draughts in any of the major producing countries.
20 Ron // Oct 26, 2008 at 12:42 pm
Jim, Interesting idea. I’d like to comment that by politicizing your open question with nasty comments about the current adinistration, the posters are being as pety, political and narrow minded as any of the current crop of politcians on both sides. Maybe it is just what it means to be an American alive today. Hopefully, we are not all that bad. I for one would like to say I am loath to change anything that has worked out for 200 years.
21 KV // Oct 26, 2008 at 4:08 pm
Ron – Jim, Interesting idea. I’d like to comment that by politicizing your open question with nasty comments about the current adinistration, the posters are being as pety, political and narrow minded as any of the current crop of politcians on both sides. Maybe it is just what it means to be an American alive today. Hopefully, we are not all that bad. I for one would like to say I am loath to change anything that has worked out for 200 years.
Ron – you wrote: hopelully, we are not that bad.
Frankly, the current administration, which I presume, you include in “we” is really bad. And I don’t want to be part of those, ever.
Look at the history:
1. I can understand one plane go through, but three to the targets? Why I say that? Because I was doing my morning cardio when the second plane went through; there was nothing in the air, it was allowed to go through. Same for Pentagon. Sorry, they will never be forgiven.
2. WMD, no where to be found – no apologies from any where, but a passive construct: “mistakes were made”, like I go on a date with Ms. Mistake.
3. Light-pens in the places of Iraqis where Sun don’t shine.
4. Our dead soldiers flag draped coffins off limit to all.
5. Homeland security with colors for levels as the solution. Spent billions on keeping people in the line at the airports.
6. Spent billions in shock and awe while the turbans are hiding in where they always were.
7. Over 3000 of our soldiers dead, over 50,000 wounded and mentally diabled. Over 100,000 Iraqis dead, over four millions Iraqi refugees with nowhere to go. Nobody knows how many Afghans have died.
8. Karzai and Maliki both worked for Unical, now owned by Chevron.
9. Paid over $200,000 for a security guard, who was soldier a few months ago, and was paid no more that $40,000 a year.
10. Those soldiers who got injured on second tour of duty, had been asked to refund the signing bonus pro-rata for the time unfilled. No officer has lost any bonus or promotion.
11. Deficit spent to the point that nothing can be done for 10 or 20 years.
12. Created artificial energy shortage and took most good people in believing fabricated shortage, raping all by taking oil to ~$150 a barrel that is now knocking the doors below $60. Even than it is nearly $35 more that what it was.
13. When warned of impending financial crisis, nothing was done.
14. Then, the biggest socialist-communist program to save the capitalist gamblers and thieves and creating such a large national debt that is basically unserviceable without massive inflation. Get ready for an $5 for an apple.
15. Total destruction of our ideals and what we stood for. Now, under Patriot act, anybody can be taken into custody and nobody has to know for six months. You could have your places explored where Sun don’t shine.
15. And, these are the guys who were listening and serving the higher father in the sky. It turns out they were listening to some folks having self-gratification on the phone.
If any other country’s regime did such stuff, they would be criminally charged.
I wish you had read Jim’s well-reasoned column where he explained why he decided to vote for Obama.
By the way, there are websites which make the case much better than what I just wrote above.
22 robert essian // Oct 26, 2008 at 6:29 pm
Ron, certainly you are observing what is going on…
23 Bruce // Oct 27, 2008 at 7:31 am
OIL
I think a vote for Obama is the wrong vote for the long term investment of the US and world in general. He seems to be bend on it useage more so then on really dealing long term salvation with controlled useage.
I looked at Alan G, and Bill C. and see so much trouble when people regressed to what they combined to do for us for us in the future by voting for a quick fix. Their future is now our present.
My question is when are we really going to pay the price?
In the oil bubble that is yet to come, perhaps?
24 Steve // Oct 27, 2008 at 8:40 am
I could spend all day reacting to Jim’s idea of a single six-year term, with a possible second, and final, six-year term after a hiatus of six years. I can see lots of plus and minus aspects of this — one that may not have occurred to all your readers being a rise in Husband/Wife candidacies: H spends much of his six years setting up W and she does the same. If we imagine rolling time back a decade or so, we could have had a quarter century of Clinton presidents under taht system and could still get a quarter century of Obamas.
The white male landed gentry who came up with our Constitution had all kinds of biasses many of us wouldn’t agree with today, but they got so many things right I would hesitate to tinker with something that, with the two-term limit amendment, has worked well for 220 years.
25 KV // Oct 27, 2008 at 11:29 am
Bruce - Are you a paid basher?
You think! That is a surprise! You dummy! Alan Greenspan was under bush admin too, and it was bush-cheney who asked for nearly free credit, and like agood brain-dead republican Alan complied, just like you. We already know how you think of nearly 2/3 of the people in this world.
26 robert essian // Oct 27, 2008 at 2:06 pm
Yep…
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