Okay, so how high will the price of oil go? The answer is pretty simple, the price will rise until Americans start driving less. Much less. Then the price will back off some. Market prices are generally capped by the marginal buyer… the buyer who will cut back consumption the most when prices rise. In the case of oil, the marginal consumer is the American motorist.
We keep hearing about the “housing bubble,” and how rampant speculation has caused turmoil on Wall Street. But was the housing bubble a result of excess speculation, or an excess aversion to speculation?
With a little too much time on my hands, I prepared this chart of the Dow Jones Industrial Average since 1900, highlighting the presidents in office at each stage. It’s easy to see why Hoover gets a bad rep.
It’s dangerous to try and read too much from it; in fact, my own opinion is that our choice of Presidents is mostly a reflection of the public’s feeling about the economy, and they don’t affect its direction nearly as much as they would have us believe. Even so, it’s interesting to see the good times and the bad times highlighted this way.
