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Michael Clark

Michael Clark
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  • 10-year Treasury yield wants 3% [View news story]
    GDP is a foolish indicator for one to stake one's life on. GDP measures spending. But, at a certain level, debt-spending becomes a negative, even though it adds to GDP. We have politicians who are encouraged to spend money they don't have because rising GDP means they are doing a good job. Time to wake up.
    Aug 17 02:39 PM | 1 Like Like |Link to Comment
  • 10-year Treasury yield wants 3% [View news story]
    Problem is that the economy grows for 18 years (the business cycle growth period) and then deflates for 18 years. People load up on debt in the latter half of the growth cycle, believing it will last for ever. As such, the economy CANNOT outgrow debt IF central banks don't let higher interest regulate debt growth.

    All these cycles are supposd to work together. Lower rates to spur growth in the growth seasons (1911-1929; 1947-1965; 1983-2001..) and then raise rates to deflate debt growth so that debt growth does not swamp the economy.

    The idea that economies can grow for ever with clever monetary policies is ludicrous. Show me anything in nature that exhibits perpetual growth...except cancer cells. We all know where that leads.
    Aug 17 02:39 PM | 3 Likes Like |Link to Comment
  • QE3: The Fed's Faustian Bargain For The U.S. Economy [View article]
    Being the market is rigging the market, in a sense. Or do we want the Fed to be deciding who gets rich and who doesn't? Is that their proper role.

    Time will tll if it is a Faustian bargain. If the Devil shows up and says "Ok, I'm here for your soul. You will have to go down into the chaos of Deflation now. I just allowed you to pretend you would not have to do this for the last five years..."

    We have been through MANY financial crises in our country's history. In fact, these deflations come every 36 years, as regular as clockwork (2001-2019, 1965-1983, 1929-1947, 1983-1911, 1857-75, 1821-1839, 1785-1767), and these deflations are there for a reason: to rebalance the imbalances of Faust. Faust is willing to substitute short-term gain for an uncertain future. This is the nature of democracy as well.

    Every time in history that we have gone down into the ocean of Deflation we have come back up a stronger nation. This time, we showed our lack of faith. We wanted the easy road. Protect the status quo; protect the banks who manufactured this crisis largely, with their insistence on unregulated risk in the derivatives market, and with Fed insistence on lower and lower rates, to protect the debt. Do we want state capitalism, where the state protects the rich corporations from legitimate failure?

    Looking at American culture today, my view is that we are exhausted. Our movies are horrible, soulless, all about guns, machines, robots, CGI, killing zombies (poor people?) and draculas taking over the world (is that a metaphor for Wall Street?) Look at the books we are publishing? Pretty sad. Who are the greatest writers of the day? What about our music? It is popular throughout the world, true. But popularity does not mean deep and meaningful. Popularity is good for the businessman; but popularity is rarely good for the creation of a deep culture.

    The waters of deflation are the waters of terror and political chaos, and depression and war and fear and they are also the waters of baptism and rebirth. We badly need to be reborn, to cleanse ourself as a nation of our mythology of the American Dream being only about money. America is a beacon to the world as a place where the poor of the world can come and become a rich person -- but it needs to be more than that. But often the rich person is soulless, and gets rich by breaking the law. Of course Big Business wants de-regulation. Laws get in the way of their success.

    I appreciate your article, James. I agree with you that it is a Faustian bargain. I remember Ben and Hank Paulson laughing and Ben saying: "We were flying by the seat of our uncharted territory..."

    It is not uncharted territory. 1929-1947; 1965-1983; now 2001-2019. Ben has delayed our descent into Chaos. He has not prevented it. Watch interest rates rise and ask yourself is this because the economy has recovered or because Faust's subterfuge has failed? We are five years into our deflation; and the total debt of the world is actually higher than it was in 2009. Well, that is what ZIRP and QE do. They encourage people to ignore reality in a highest debt environment and just keep doing what feels good, borrowing and spending. It's a kind of drug. As long as we keep the drug cheap, about what do we have to worry really?

    Of course, we have to worry about th Devil appearing and knocking on our door.
    Aug 17 02:10 PM | 1 Like Like |Link to Comment
  • QE3: The Fed's Faustian Bargain For The U.S. Economy [View article]
    QE and ZIRP prop up the markets by providing almost-free money for corporate refinancing and corporate share buy-backs, which pushes up share prices. Also, why not take out more margin for stocks? The Fed is guaranting stocks will go up, and offering money to borrow for margin for amost nothing.

    How is the Fed propping up the Housing markets? Do I really need to answer that? Deflate interest rates and inflate housing prices. It's a simple formula. The Fed became THE market is financing over priced housing in hopes of keeping it overpriced, to save the banks.

    In truth, QE has been a backdoor and continuing bailout of the banks. The Fed chair works for the banks, lest we forget.
    Aug 17 02:10 PM | 2 Likes Like |Link to Comment
  • The Urbanization Fallacy [View article]
    One last note: cities rise up organically with economic growth, and they also evaporate with economic deflation. I think a PHD student interested in this topic would find population growth in major American cities during Growth Periods (1911-1929; 1947-1965; 1983-2001) -- and population evaporation during the Deflation Periods (see above).

    Also, marriage and child-bearing also increase with the Day-Cycles of Growth, and diminish during Night-Cycles of deflation.

    Cities are like plants, they rise up in the plains during growth cycles and they can even disappear during the Night-Cycle Dark Ages. Rome essentially had no population through the European Dark and Middle Ages. From Wikipedia:

    "The population of the city fell drastically in the Late Empire after Rome ceased to be the capital of the Empire, and remained far lower than its ancient peak until Rome became the capital of a reunited Italy in the late 19th century...."

    City-building is cyclical, periodical, not perpetual.
    Aug 17 05:18 AM | 4 Likes Like |Link to Comment
  • Taper, Taper, Toil And Trouble [View article]
    Why did BB and his world-party friends spend trillions to keep bond yields down for 5 years. Because higher-rates spoil the party, trigger massive defaults and bankruptcies. Why is the US TBond rising today? Because of global economic recovery? Surely not. Because removing the rich kid from the market (spending other people's money) will rebalance the playing field away from 'happy days are here again'.

    Bond yields are rising because market players understand that BB has lost his will to fix th markets for ever. This will take a HUGE BUYER out of the markets -- TBonds and housing bonds. These markets will no longer be FIXED by the Fed. (I keep waiting for those first few lawsuits to appear against the Fed for fixing the markets for the benefit of his friends.)
    Aug 17 05:17 AM | 2 Likes Like |Link to Comment
  • Is Household Debt Still 'Too High'? [View article]
    Odd idea: American de-leveraging is finished. Really. I know your article focuses on household debt. I focus on TOTAL DEBT. The only deleveraging of total debt since 2009 has been housing default and ZIRP-driven refinancing.

    Here is what total debt figures look like historically:

    155% 1983
    353.2% 2010
    344.7% 2013

    Corporations have used Bernanke's policies to re-leverage and to buy back their own shares for nothing (with borrowed money) to keep stocks climbing.

    Of course, government debt is going through the roof. .

    This page shows that household debt has ticked down, as has US corporate financial borrowing. But all other forms of debt have increased. All the charts are instructive.

    This page shows how government debt has jumped:

    One has no real incentive to de-leverage when interest rates are artificially kept at zero. This has been the softest deleveraging cycle in financial history. De-leveraging? Bernanke's policies have postponed real deleveraging. But rising intrest rates will make deleveraging inevitable
    Aug 17 03:49 AM | 6 Likes Like |Link to Comment
  • The 'Bear' Has Its Claws In The Housing Stocks [View article]
    Just think of how much housing all those new part-time jobs without benefits are going to generate. 77% of all the jobs created this year are part-time jobs. Wall Street does not want full time jobs in America -- it's against their business plan. They want full time jobs in China and Mexico and Vietnam. So, who is going to create new prosperous jobs in America? If no one does, watch those overpriced houses inflated by ZIRP fall to dust when the next generation can afford to buy only dust-filled housing.
    Aug 17 03:45 AM | 2 Likes Like |Link to Comment
  • Japan Q2 GDP misses estimates [View news story]
    QE DOES NOT grow the economy. Japan has tried QE 5 times sinc 1989; and it has NEVER worked. There will be no growth unless rates are raised and bad debts are destroyed. This is true everywhere, not just Japan.
    Aug 12 05:03 AM | 1 Like Like |Link to Comment
  • A Bubble Continues To Form In The Stock Market [View article]
    Th stock market bubble popped in 2001. But the Fed found ways to reflate by cranking down interest rates. In truth, cranking down interest rates IS INFLATION. So, we should hav slowly begun to raise interest rates in 2001; instead we did the reverse. In fact, from 1983 to 2001 we did what we were supposed to do, lower rates to encourage growth DURING THE BUSINESS CYCLE growth phase. When growth ended (2001) we refused to followed the pattern of the seasons and raise rates -- and look what we've gotten since: A LARGER AND LARGER DEBT BUBBLE.

    Economics is a breathing process. One must inhale also (raise rates). This does cause recession(s) but it also rebalances the capital forces -- and stops protecting those who failed and have unsustainable debt. Those who borrow and spend like drunken sailors should not be protected by the Fed and by the government.
    Aug 4 09:48 PM | 2 Likes Like |Link to Comment
  • A Bubble Continues To Form In The Stock Market [View article]
    Those who borrow and spend like drunken sailors should not be protected by the Fed and the government -- and this includes Wall Street, and the government itself.

    Raise interest rates. That' the only way we get to pass GO again and collect $200.
    Aug 4 09:48 PM | 2 Likes Like |Link to Comment
  • Is The Financial Crisis Over For Financial Stocks? [View article]
    The financial crisis is over for banks as long as the FED spoonfeeds them $95 billion a month. Wait until the FED stops the spoonfeeding, starts unwinding its balance sheet -- which is being and will be devastated by rising interest rates -- and rates on the 10-year keep rising, threatening the derivatives market (trillions in mostly interest rate insurance policies hidden by the big banks). Why are big banks NOT lending. Because they need all the money they can find for losses set to come when interest rates rise....and businesses and home-owners default and the 30-1 or 100-1 derivatives market starts an earthquake.

    Look out below.
    Aug 4 09:47 PM | Likes Like |Link to Comment
  • Google (GOOG): Q2 EPS of $9.56 misses by $1.22. Revenue (ex.-TAC) of $11.1B misses by $230M. Shares -4.5% AH. CC at 4:30PM ET (webcast). (PR[View news story]
    Jul 19 06:04 AM | Likes Like |Link to Comment
  • Bernanke Is Underwriting The Wealthy: Part 2 [View article]
    We're not out of the woods yet. In fact, we haven't even entered the woods yet. This was Bernanke's plan: to try to go around the woods. But it isn't working. It's just stalling.
    Jul 18 08:55 AM | 1 Like Like |Link to Comment
  • Bernanke Is Underwriting The Wealthy: Part 2 [View article]
    Amouna: I agree entirely. But we're not ready for the pain, are we?
    Jul 18 08:55 AM | 1 Like Like |Link to Comment