McCain will defeat Obama by 6 % points. McCain will be propelled by significant reduction in troop deployments and successes in Iraq. Obama will suffer further setbacks after debates with McCain.

Oil will be below $100 per barrel in 6 months. High prices will deflate when market absorbs news of new supplies, and financially sound alternatives; particularly improvements in battery technology.

The mortgage banking debacle will bottom on the news of several consolidations and purchases of regional banks by larger players, one of them being Warren Buffet’s Berkshire Hathaway and its companies.

Food prices will spike on the Midwestern floods, but will recover quicker than the market expects and drops below current costs.

Interest rates will slowly but steadily climb as the dollar recovers strength, oil prices reverse their climb, and speculative premiums disappear in commodities.

The price of hybrids will fall as production increases to satisfy higher demand and the costs of better battery technologies are spread over the larger consumer base. New delivery systems and business models will also reduce the price of battery driven automobiles.

Democrats will cave on the energy front and support more domestic drilling, more refining capacity and more nuclear power plants. This will happen largely as a result of these energy issues becoming the forefront of the election, and will be seen as a major reason for Obama’s defeat.

Global warming will become a dead issue under new evidence and climate trends. It will quietly go away as every other environmental doomsday scenario has.

A new model for higher education will start to make current college institutional structures obsolete, as higher tuition costs do not translate into better educations and the college value paradigms collapse.

Foreign language education becomes a booming business.

Iran unseats Ahmadinejad and adopts a more pro western stance, but still out of pride does not want to reverse its progress on atomic energy. The political change will be viewed as the most successful application of an economic boycott in history.

Obama wanted to levy an excess profits tax on oil companies. Our last experience with this was with Jimmy Carter and it was a disaster.

He then proposed to crack down on speculators who are driving up the market. For a man whose financial disclosures showed few investment securities, how does he know that speculators are driving this market? What evidence exists? Can’t speculators drive down a market as well? They may amplify a market direction, but they are usually prone to the boring forces of supply and demand.

I would propose that special tax breaks for the oil companies be allowed to expire or be eliminated, just as I would like to see the special breaks for the farmers expire. I see no problem with profits, but they do not require tax subsidies as well.

I would also like to see a requirement that all oil liscenced from federal properties be restricted for domestic consumption.

HKO

Just a note that I added links to Zogby, Rasmussen and Gallup Polling sites to the Recommended list on the bottom left. They post regularly updated polls and news stories that are polling related. I also recommend that you view Intrade, which is a betting service that shows betting odds on many political races.

Let us imagine a time when I bought steel for $400 per ton and sold it for $500 a ton, making a $100 a ton profit or 20% ($100/ $500). The markup would be 25% ($100/ $400).

From that $100 I have to cover all of my payroll and expenses which, let’s imagine cost $90 per ton leaving me with a $10 per ton net profit. If I sell 20,000 tons I make $200,000 after all expenses.

Now suppose that the replacement cost just shot up to $600 per ton. If I continue to sell my old existing inventory at $500 a ton, I will be $100 per ton short when I have to replace that inventory. So in order to be sure I have the cash to replace my inventory I price based on the replacement cost. I add $100 per ton to the replacement cost of $600 per ton and now sell for $700 per ton.

But wait; that old inventory that I bought for $400 now gets a $300 margin, triple what I got before. My income goes up dramatically. This is called an ‘inventory profit’; I benefited not by better selling or management, but by uncontrollable (by me) price increases. The additional $200 is needed pay the higher replacement cost but for a short time it is added to my bottom line.

Actually I need more than that $200 to cover the higher tax costs and interest costs.

Now some would accuse me of gouging or “excess profits” because they do not understand the economics of commodity products and pricing.

The reverse happens when prices fall. My cash flow improves but I will be selling product for below my costs and my profits will quickly become losses.

Explain that to your banker when it happens. You had better hope they understand basic economics much better than our elected officials, and certainly much better than the morons who report on the economy in much of our media.

Pricing mechanisms serve a clear function: keeping product available and suppliers viable. When the government with its populist stupidity tries to interfere with that function, the financial viability of the supplier and the consistency of the supply stands to suffer.

HKO