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Michael Clark

Michael Clark
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  • If Sentiment Were A Currency [View article]
    Remember, the strong US Dollar has caused a lot of global turmoil when it strengthens: 1980-4 -- South American and Mexico defaults; 1998-2001: Asian Crisis; Russian Default Crisis; Nasdaq Stock Collapse; 2008-2009: collapse of the global economy. Why did the FED spend trillions on QE? To save the banks, yes; and to cripple the strong Dollar.

    The weak Dollar is the global inflation juggernaut; the strong Dollar is the bill for the inflation juggernaut. Let's get ready to pay (finally).
    Apr 12, 2015. 01:08 AM | Likes Like |Link to Comment
  • If Sentiment Were A Currency [View article]
    It is interesting how 'reason' and 'rationalization' are connected at the root. I've come to suspect that the reasoning process is often nothing more than rationalization, or a form of bullying prayer. It is a kind of faith. Once you lose the faith, it takes a long and arduous journey to get that faith back again.
    Apr 12, 2015. 12:51 AM | Likes Like |Link to Comment
  • Plausible Deniability [View article]
    David: Nice to quote Springsteen.

    You say there is nothing we can do to stem the tide of outsourcing and sending operations overseas. Yes there is. You punish companies for doing this. You make them pay more taxes if they outsource. Yes, that makes this protectionism. There is a time for protectionism. And there is a time to let protectionism go, and become GLOBAL. We have been through the GLOBAL phase. Now we are going in to the LOCAL, wherein each country puts its own country first. It's coming, that is my prediction. I don't put a value judgment on it because I see it as an inevitable part of a stage, a season.

    Nationalism is coming. In 2019, America will probably not have many friends.
    Apr 9, 2015. 12:42 AM | Likes Like |Link to Comment
  • Bernanke Supercycles [View article]

    The interest rate mechanism is designed to, first, stimulate growth, and then (if used in reverse), to stimulate saving and reduce debt. We refuse to use interest rates in both directions because we have come to fear non-growth or deflation as something evil and to be avoided.

    I have no problem with what you call the artificial stimulus of the economy, as long as the de-stimulus is also used, in accordance with the cycles listed above. It is called managing the economy.
    Apr 8, 2015. 02:12 PM | Likes Like |Link to Comment
  • Bernanke Supercycles [View article]
    So what is the alternative to the artificial stimulus of central banks in countries without robust capital formation?
    Follow the super-cycles:

    1911: lower interest rates, stimulate growth and spending
    1929: raise interest rates, stimulate saving, retard debt growth
    1947: lower interest rates, stimulate growth and spending
    1965: raise interest rates, stimulate saving, retard debt growth
    1983: lower interest rates, stimulate growth and spending
    2001: raise interest rates, stimulate saving, retard debt growth
    2019: lower interest rates, stimulate growth and spending

    To everything a season, turn, turn, turn.....

    Growth is periodical and is always followed by rest. Hindus call it the Day of Brahma (the Creator) always followed by the Night of Brahma (when the creative principle rests). We have to learn to think and see differently. The Perpetual Expansion model is a problem. The Perpetual Debt Expansion model does not allow for the Reduction of Debt season.

    Growing up; followed by Growing down.
    Apr 8, 2015. 12:58 PM | 1 Like Like |Link to Comment
  • Central Banking Refuted In One Blog- Thanks Ben! [View article]
    You are correct, Kertch. Which is sort of the same thing I said. The "arrogant creative principle" is what I call the Egoists. I am not really against the 'arrogant creative principle', which is what Youth is, I guess. The arrogant creative principle is Evolution, Change, Progress. Hard to be against those principles, until they become rigid and totalitarian and refuse to step back and let the Night lead when it is supposed to. Then they become problemmatic.

    Your correction is actually very well done.
    Apr 8, 2015. 12:39 PM | 1 Like Like |Link to Comment
  • On Secular Stagnation: Larry Summers Responds To Ben Bernanke [View article]
    Yes. I want more saving, higher interest rates, the destruction of bad debt.

    I want high rates to trigger deflation, wipe our the flood of excess money in the world. Yes.

    Is there a global savings glut? It's not clear. As many people say no as yes.

    Read this article about the savings glut, caused by two things, according to this Michael Pettis article:

    A rise in income inequality. We see this in Europe, the US, China, and indeed in much of the world. As wealthy households increase their share of total income, and because they tend to save a larger share of their income than do ordinary households, rising income inequality forces up the savings rate.

    A decline in the household share of GDP. We’ve seen this mainly in China and Germany over the past fifteen years. When countries implement policies that intentionally or unintentionally force down the household share of GDP (usually to increase their international competitiveness) they also automatically force down the consumption share of GDP. Because savings is defined as GDP minus consumption, forcing down the consumption share forces up the savings share. There are many policies and conditions that do this, and I discuss these extensively in my book, The Great Rebalancing, but the main ones are low wage growth relative to productivity, financial repression, and an undervalued currency.

    Notice that in both these cases, and completely contrary to the popular narrative that praises high savings as a consequence of household thrift, and so as morally virtuous, the rise in the savings rate does not occur because ordinary households have become thriftier. In the former case household savings rise simply because the rich increase their share of total income. In the latter case national savings rise without households in the aggregate increasing their savings.

    Saving is not the enemy. Debt is the enemy. Debt is the biblical flood.
    Apr 7, 2015. 08:03 PM | Likes Like |Link to Comment
  • On Secular Stagnation: Larry Summers Responds To Ben Bernanke [View article]
    There are MANY pauses in evolution. There is activity, evolution; and this is followed by rest. MANY Pauses. Days; then nights. Nights are pauses.
    Apr 7, 2015. 07:56 PM | Likes Like |Link to Comment
  • On Secular Stagnation: Larry Summers Responds To Ben Bernanke [View article]
    THE "plant" has to grow down before it can grow up again. The plant has to 'return to seed' -- this involves debt destruction and the austerity of winter non-growth and gestation.

    There are stages of growth -- and we need to go through all the stages -- we can't merely skip the parts that are not as fun as the growing (and growing rich) stage, which is what central banks are attempting.

    Logically, one would expect interest rates to be high if there was a real savings glut. Higher interest rates encourage saving. Low interest rates encourage spending and borrowing. Rates are low because we have too much debt, and central banks want to keep the system from crashing -- they are saving the banks from systemic collapse when rates go up and everyone in debt (consumer, corporations and governments) stops being able to service that debt.

    The Old World Economy is dead and needs to be buried. That is what deflation is, and higher interest rates help this: the burial ritual. Seeds must be buried before they can grow again. The strong seeds survive and return with the light as the next generation of life. The same is true with corporations -- those that can adapt best to the new, more difficult situations (more expensive money) will deserbe to continue living. Those that cannot survive without ZIRP don't deserve to survive.

    A high savings rate is exactly what we need through 2019. Economies cannot grow all the time. Growth is periodical. As long as we cling to the perpetual growth model we will never understand that the darkness of night, when the body slows down and rests, is essential to the new day's frenzied business cycle.

    Let the OLD economy die. Let's prepare for the NEW economy, not eat our seed corn attempting to save the Old economy.
    Apr 7, 2015. 07:55 PM | Likes Like |Link to Comment
  • Major Stock Market Selloff Looms As The Fed's QE3 Ends [View article]
    Chaos will reign through 2019. Your income streams are not guaranteed through Midnight. The FED is trying to guarantee them. But a strong Dollar will destroy your income stream and your capital gain.

    In 2019, the forces of Chaos will be strongest. Then order will slowly begin to return, from 2019 through 2028.

    How to safeguard your money through 2019? That's an issue. If rates go negative, then buy stocks, gold, houses, property, bonds -- but get your money out of the banks. If rates go negative, then fiat currencies will die, and gold will soar. And then, eventually, the new currencies will all be backed by gold again, because we will have learned what a lack of discipline and self-control can do to our society, turn it upside down.
    Apr 6, 2015. 03:15 AM | Likes Like |Link to Comment
  • Major Stock Market Selloff Looms As The Fed's QE3 Ends [View article]
    There have been no FED-MANAGED bull markets in history. This is a first.

    I think it is a faux-bull market. As such I think it is really a Bear Market in colorful Bull Market attire. It is like the masque ball where everything goes bad at Midnight, everything reverts to horror. Remember Cinderella. Bernanke is Cinderfella. Or Senator Fowler. Midnight is 2019. The magical dream will suddenly pop and we will be standing naked before Grim Reality, wondering how we can get into a gentler movie.
    Apr 5, 2015. 09:37 PM | Likes Like |Link to Comment
  • Central Banking Refuted In One Blog- Thanks Ben! [View article]
    Don't know what NIMBYism is. Arrogance goes with power, no matter who has it. It will be European arrogance, or Chinese arrogance, or Russian arrogance, or British arrogance...depending who has the most money and the largest military. There is nothing inherently American about arrogance.
    Apr 5, 2015. 09:27 PM | 1 Like Like |Link to Comment
  • Central Banking Refuted In One Blog- Thanks Ben! [View article]
    When do the meek inherit the Earth? After the apocalypse. There was the Roman Empire (call it Bablyon if you want), then the Roman Empire went up in smoke. The meek inherit the Earth during the Dark Ages. When the American Empire is gone, the meek will inherit the Earth in America also. Not for ever. The arrogant creative principle will return; and a new structure of cities will be built, resulting in Babylon again, Megalopolis; but then again the Empire will be voided; and again the meek will inherit the earth.

    The meek inherit the Earth only when the Ego is devolved. The meek are true humans; the Egos are humans who believe they are either gods or on God's side. The Tower of Babel is the apex of Babylon (mixing metaphors).
    Apr 5, 2015. 09:26 PM | 2 Likes Like |Link to Comment
  • Central Banking Refuted In One Blog- Thanks Ben! [View article]
    I remember many years ago when I was learning how to drive, how turning into a curve was tense and fraught with concern, as I fought every inch of the turn. My dad said: "Don't look at the curve so much. Open your vision and look up the road and just glide into the curve as a part of the whole picture of the road." I stopped fighting the curve, and opened my vision to the larger road; and all the tension vanished.

    The FED does not need to micro-manage. The FED needs to macro-manage. They need to keep their eye on the road, instead of the curve.

    If they need to encourage growth from 1983-2001, that is the road. What happens in 1985 or even 1987 (the crash), does not matter, and should not affect their long-term policy.

    If the FED needs to constrict growth during the non-growth season (2001-2019), then they need to raise rates on time and keep slowly, steadily raising them. In 2019, all our bad debt is supposed to be gone. Not all our debt, but all our unserviceable debt -- that means we allow bankruptcies and default, because that is the bad debt.

    Micromanaging is not the FED's job. If stocks crash, that is not the FED's job. The FED's job is to drive the car on the big road; leave the micro-managing to the politicians.
    Apr 5, 2015. 09:19 PM | 4 Likes Like |Link to Comment
  • AUD/USD - Enjoying Support At 0.76 Presently [View article]
    I agree with you.

    Not only have most of the people living never encountered a real recession, the same number have never encountered a real Bear Market -- one unmitigated by central bank interference. We like central banks shielding us from the truth about life. Of course. What happens when they can no longer do that.

    Of course central banks are also shielding themselves (and the governments they serve) from overthrow and rebellion reformation. Central banks are preserving a world in which they are on top, and get to decide how the rest of us live.
    Apr 4, 2015. 03:48 PM | Likes Like |Link to Comment