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Michael Clark

Michael Clark
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  • The Deflation Threat [View article]
    Well, David, I really don't believe that central banks have EVER tried to minimize the BOOM cycle (the Business Cycle) -- to which the jacking down of interest rates to jack-up the international debt bubble should attest -- and clearly the continued jacking down of interest rates toward zero from 2001-2015 (and counting) is a clear indication that the central banks continue to attempt to lure more borrowers into debt fourteen years after the business cycle has ended which says to me that central bankers DO NOT understand the curative effects of higher rates on a world with too much debt -- central banks in effect seek Growth during the Business Cycle and Bubble Growth during the non-growing stage of the Business Cycle -- that is to say, Perpetual Growth, the first stage being organic, the next stage being artificial, engineered by tricks of accounting, social engineering, and outright theft from the public which we call QE or ZIRP now or simply financialization.
    Jan 28, 2015. 01:05 AM | Likes Like |Link to Comment
  • Global Means Global; 'Dollar' Means Trouble [View article]
    The 1980's rally began after the Dollar Bull was castrated, 1983. The global rally in the 90's ended with a reflex Dollar Bull market 1998-2002, which destroyed Asia and Russia. The strong Dollar has always been the Great Crumpled of global debt bubbles.
    Jan 27, 2015. 09:24 PM | Likes Like |Link to Comment
  • Global Means Global; 'Dollar' Means Trouble [View article]
    This market could get very "choppy" indeed if the Fed decided it wanted to join this "race to debase." P/E expansions like we have had for some time now can turn into a p/e contraction if folks stop believing that you believe in your own currency.
    Of course the FED led this 'Race to Debase', and did it with a vengeance from 2009-2014. The strong Dollar is the medicine the FED has been trying to avoid, actually since 2001, when the Business Cycle ended.
    CAN the FED join the race to the bottom again?
    Is it politically justifiable again, to transfer trillions from America's future taxpayers, to the richest people in the world again?

    What is happening in Greece CAN happen everywhere. The guillotine CAN be brought out of storage, again, although we would all probably rather imagine a different result.
    Jan 27, 2015. 09:21 PM | 1 Like Like |Link to Comment
  • The Deflation Threat [View article]
    Joseph, I could not agree with you more. The true capitalist must accept both sides of the equation, it seems to me, inflation AND deflation, and any attempt to mitigate the deflation side of the equation suggests the presence of an idealism that could be called "Perpetual Growth", which is an ideology that led the central banks down this road we have now taken, which is leading to our ruin.

    Everything breathes. When the economy breathes out, in inflates (expires); and when the economy breathe in, it deflates (inspires). It's a very normal, understandable process, a very rational metaphor. Of course, those in power who make vast amounts of money during the inflation suddenly lose their religion (Capitalism) when the tide begins to reverse. That's when the new religion appears, the "Perpetual Growth" machine kicks in; and the great panic of theft of public money becomes furious, proving the lack of philosophy in most our our leaders, which becomes the relative cause of social revolution and generalized mayhem based on a sense of betrayal of the common law.

    Every expansion has expiration built in to it; and every deflation has inspiration built in to it. Inspiration causes the expansion; expiration causes the deflation.

    Keep writing. Your articles make wonderful sense to me.

    For every inflation there is an equal and opposite deflation. I believe this is a natural law. I believe those who resist this law are doomed to failure and punishment by the rational process of Nature.
    Jan 27, 2015. 09:03 PM | Likes Like |Link to Comment
  • Global Means Global; 'Dollar' Means Trouble [View article]
    Wonderful report. The smartest I've read in a long time on SA. I'm following you.
    Jan 27, 2015. 08:41 PM | 1 Like Like |Link to Comment
  • 3 New Red Flags Waving [View article]
    China is deflating.
    Canada is deflating.
    Australia is deflating.
    Britain will deflate.
    America will also deflate.
    Jan 26, 2015. 12:35 AM | 1 Like Like |Link to Comment
  • 3 New Red Flags Waving [View article]
    I agree with this characterization. Deflation is relatively fast and true. Inflation rewards those who take on debts they cannot service. When did government become the last line of defence for the speculators?
    Jan 26, 2015. 12:33 AM | Likes Like |Link to Comment
    NEVER gonna happen, you need to learn a little bit about European economics. Germany is the great beneficiary of the PIIGs irresponsibility, those countries suffer, while the Euro is devalued, making Volkswagon the #1 most efficient carmaker on earth. So its NEVER gonna happen, you have to understand how Volkswagon got so successful in the past 15 years : from an undervalued Euro, just like Japan Inc. in the 1970's!!
    True, Germany was the great beneficiary of the PIIGS' irresponsibility. And if the PIIGS quietly paid back their debts this would continue to be true. But the PIIGS are now suddenly unable to pay their debts. And the Germans are having to PAY to help drive the Euro lower, and help pay to bailout European bankers, some German, many not. The Germans are now paying a bill that gets heavier and heavier the longer this goes on. Germans don't mind a weaker Euro. But they are deathly afraid of the Weimar ghost, and rampant inflation, which is what a gigantic global deflation eventually begins to smell like.
    Jan 25, 2015. 04:19 PM | Likes Like |Link to Comment
    Jan 25, 2015. 01:16 AM | Likes Like |Link to Comment
    I think you guys may be forgetting something. The powerful deflating effects from a strong US Dollar. India will be like the other emerging economies if the Dollar keeps appreciating and draws monies out of emerging markets for safe haven in the US and sends these over-indebted emerging markets into monetary, currency, and debt crises.

    From John Mauldin's "A Scary Story for Emerging Markets":

    In the third and final phase, capital flight drives a self-reinforcing cycle of falling asset prices, deteriorating fundamentals, and currency depreciation… which in turn invites more even more capital flight. If this stage of the balance of payments cycle is allowed to play out naturally, the currency can fall well below the level required for the economy to regain competitiveness, sparking runaway inflation and wrecking the economy as asset prices crash.

    In order to avoid that worst-case scenario, central bankers often choose to spend their FX reserves or to substantially raise domestic interest rates to defend their currency. Although it comes at great cost to domestic growth, this kind of intervention often helps to stem the outflows… but it cannot correct the core imbalances. The same destructive cycle of capital flight, falling asset prices, falling growth, and currency depreciation can restart without warning and trigger – even years after a close call – an outright currency collapse if the central bank runs out of policy tools.

    John and I believe that this worst case is the looming risk for many emerging markets today, particularly in the externally leveraged “Fragile Eight” (Argentina, Brazil, Chile, India, Indonesia, Russia, South Africa, and Turkey) and, in the event of a forceful unwind in the USD carry trade, maybe even China. Not only have those countries amassed a disproportionate share of total inflows to emerging markets, but each also has its own insidious combination of structural and political obstacles to long-term growth. Each of these countries is not without options, but the longer they delay in being proactive, the greater the risk.
    Jan 25, 2015. 12:56 AM | Likes Like |Link to Comment
  • The Main Bearish Thesis On Crude [View article]
    The oil crash is NOT just about oil. All your analysis about supply and demand does not get to the real truth about all of this; it is just a small part of the picture. We are at war with Russia; that is another part of the picture. Dollar strength is a big part of this war against Russia, trying to bring Putin to his knees without firing a shot. The war against Iran is also a part of this picture. We are also at war with Iran. A strong dollar is punishment against anyone who has publicly discussed the overthrow of the Dollar as the World Currency. There is a lot going on, in addition to the overproduction of oil and the magnification of World Debt, which has created the Global Economy. We don't know how to get out of the destruction loop, which the strong Dollar commands. Is this all the opening salvo of World War III? The Currency War leading to a real live Shooting War, and the recreation of the world through violence?
    Jan 23, 2015. 07:03 PM | Likes Like |Link to Comment
  • Federal Reserve Exit Strategy: Number 7 [View article]
    The federal government has been issuing false data all my life. It's SOP for a government that feels threatened by bad news, and a need to CONTROL every aspect of life. Lies on top of mistruths; finding euphemisms to color data in their own favor. Very sad, in fact.
    Jan 23, 2015. 06:57 PM | 1 Like Like |Link to Comment
  • 3 New Red Flags Waving [View article]
    As long as we continue to think that changing a Republican for a Democrat is going to fix our problems, we are caught in the illusion. It does not matter which party leads if they cannot see the larger cycle we are caught in.

    18 years of expansion are always followed by 18 years of contraction or deflation (non-growth). It does not matter who our president is -- he or she cannot fix a broken economy unless they are in tune with this cycle. 1947-1965 was an expansion. From 1965-1983, expansion reversed. We had 18 years of non-growth, as always. Interest rates need to be raised during these 18 years, to encourage savings, and to discourage debt. From 1983-2001, we had a new expansion. Ronald Reagan gets credit for the first half; Clinton gets credit for the second half. See, the two parties both shared this glory...but it was the expansion itself that made everything work. It is like a tide coming in, a tide of energy, creative energy filling up the world. From 2001-2019, we have a reverse tide, an energy tide that empties out the world. Bush gets blamed for the first half; Obama gets blamed for the second half. But it is the energy tide that determines everything. Republican Capitalism can't cure an energy tide reversal. Neither can a Democratic progressivism. The energy-tide is the law that rules the world, not the figureheads we elect as the puppets of our government. One side or the other side, it doesn't matter. We will get another expansion from 2019-2037. This should be accompanied by interest rates coming back down; but in 2037, we need to begin raising interest rates again, to discourage debt and to support savings.

    The cycles of energy ebb and flow matter much more than the individuals on the surface who don't know what they are doing and attempt to saddle time-worn ideologies to a wild horse they do not understand. We need new tools of understanding. We need to gain some modesty. We need to step back, to get some perspective. Neither party is going to fix anything unless they begin to recognize the larger reality I am describing.
    Jan 23, 2015. 02:55 AM | Likes Like |Link to Comment
  • The Unintended Consequences Of Perpetual QE [View instapost]
    Because money printing to buy existing assets makes those who own those assets (the rich) even richer. Money printing to build bridges, roads and tunnels helps everyone in the society live better lives. The Central Bankers are 'employees' of the rich, so they steal money for the rich. When it is all over, they will all laugh at what a grand time they had back in 'old America'...'remember America?' They will laugh and drink cognac and plot their next triumph.
    Jan 22, 2015. 10:29 PM | 2 Likes Like |Link to Comment
  • 3 New Red Flags Waving [View article]
    I have a sneaking suspicion that the real reason we went to war with Saddam is because he (Saddam) attempted to assassinate George Bush Senior in 1993. I think George thought it was payback time for Saddam. All the other stuff was just faked intelligence to justify the war.
    Jan 22, 2015. 01:52 PM | 3 Likes Like |Link to Comment