Seeking Alpha

Michael Clark

Michael Clark
Send Message
View as an RSS Feed
View Michael Clark's Comments BY TICKER:
Latest  |  Highest rated
  • Debt Doesn't Matter... [View article]
    Funny, wage inflation shows up in the CPI. Debt inflation doesn't. The illusion is that debt inflation is not harmful because we have designed our CPI to ignore it. So, we've fixed the inflation gauge so we can lie to ourselves and be destroyed by our ignorance (and greed). If there is no inflation (only debt inflation) we can keep interest rates low forever, and just keep satisfying our gluttony at the banquet of debt expansion.

    Of course, debt infaltion IS inflation -- and it destroys our world just as surely as wage inflation does.
    Feb 13, 2015. 03:19 PM | 1 Like Like |Link to Comment
  • Debt Doesn't Matter... [View article]
    Borrowing from the future. Yes. Stealing from the future I call it, with a tinge of emotion or judgment, considering the amount of money we are stealing or borrowing from the future. If we pay the money back it was borrowing; if we don't it was stealing.

    So it is surprising that the younger generation is taking all this theft from their future so calmly. I think they won't for ever. I think we will head into a major generation gap with the younger generation taking to the streets against the old thieves who have stolen them blind. But I may be surprised. Lethargy is a powerful habit. Keep everyone surprised with Iphones and other electronic games and maybe you keep them from recognizing what is going on around them.
    Feb 13, 2015. 03:13 PM | 2 Likes Like |Link to Comment
  • Debt Doesn't Matter... [View article]
    I would say the economy crashes with or without debt, every 18 years. But you'll see the crash is MUCH different if you don't have massive amounts of debt. We built an economy from 1947-1965 that was not based on debt; we had wage inflation to drive the economic bubble. We have only two choices apparently, as fuel for inflation: 1) wage inflation; 2) debt inflation. We had wage inflation from 1947-1965 and on, and so our crashing economy from 1965-1983 was a combination of inflation and deflation. The FED's manipulation actually did help cause inflation then (along with oil price inflation, caused by weakening of the Dollar, oil producer's policies etc.). So we had to grapple with both wage and price inflation and deflation. We had 12% unemployment also.

    In 1911-1929 and in 1983-2001, we eschewed wage inflation for debt inflation. But debt inflation is much more lethal. We had the Great Depression 1929-1947 and a World War (which, in my mind, is a physical plane reflection of massive debt destruction; which makes me also think we will have world war this time around). This time too, 2001-2019, massive debt, Great Depression (still coming), and perhaps world war also.

    So, to answer your question, it is the economic collapse that causes the problem -- but the economy is programmed to collapse every 36 years. Study history, go back, every 36 years the economy collapses. And if this is a fact, then having mountains of debt artifact (I like that) means that we must go through major debt destruction and perhaps world war to get our debt level back to ground zero (about 130% total debt to gdp). Whichever fuel we use to drive our growth cycle (wage inflation or debt inflation) we will have a deflation of 18 years and all the consequences of diminishing the artifact left behind.

    More debt at this stage is insane. The interest rates are supposed to be used to inaugurate the expansion phase (lower rates -- and either wage inflation or debt inflation: if we have wage inflation we don't need debt inflation; wage inflation is a tax on business; debt inflation is a tax on the populace) -- expansion or growth is the SPENDING CYCLE -- and we inaugurate the SAVING CYCLE (the end of growth, the beginning of deflation) (1929, 1965, 2001...) with higher interest rates.

    We've really painted ourselves into a corner now, by using the derivatives market as a kind of blackmail against the bond market and higher rates. Extortion. If rates go up, and the bond market craters, and the hundred-trillions derivative market falls, then we will be de-leveraged in a major way, and we will come to know the true meaning of DEFLATION. The higher you build the edifice of dreams (the cash-hole in the air) the further you have to fall when that edifice of ice begins to melt. (Please excuse the mixed metaphors.)
    Feb 13, 2015. 03:07 PM | 1 Like Like |Link to Comment
  • Debt Doesn't Matter... [View article]
    Looks to me like our entire economy is based on this art of squandering. Consuming other people's products is squandering. So why is the government so dedicated to encouraging and supporting this kind of national squandering.

    I squander money when I buy an IPhone. We get attacked by Arab terrorists; and our President pleads with us: "Go out and squander your money."

    That's our way of life, isn't it?
    Feb 12, 2015. 11:40 PM | Likes Like |Link to Comment
  • PepsiCo: Very Fully Valued [View article]
    Tom: I don't think rising rates is the whole story. Looking back when rates were rising historically was not the same situation as today, with TBonds acting as collateral for a derivatives that some say is valued at hundreds of trillions of dollars.

    Here's a SA article on this.

    It's a new ballgame today. I'm not sure studies of the past tell us enough about the situation we are in now.
    Feb 12, 2015. 06:49 PM | 3 Likes Like |Link to Comment
  • PepsiCo: Very Fully Valued [View article]
    Once rates rise, the Bond market will crash, stocks will follow. Why are central banks so terrified of higher rates? Because they fear a bond market crash. When there is a race to the bottom in a currency war, it is not time to celebrate, it is time to fear. It often means a real shooting war is coming next.

    Once rates rise, sell Pepsi, buy Lockheed and Raytheon.
    Feb 12, 2015. 03:52 PM | 1 Like Like |Link to Comment
  • Debt Doesn't Matter... [View article]
    Because access to debt is based on wealth, on collateral, debt binges worsen the wealth-gap in the society. Poor people can only get so much debt, based on their collateral. They hit their limit very fast. Rich people and corporations and institutions never hit their limit -- because their collateral grows with their debt purchases.

    With unequal wealth comes unequal political access. With unequal political access comes government by and for the wealthy. Which leads, eventually, to civil war.

    You borrow money. You invest it to expand your business. The global economy crashes. You borrow more money to survive. The economy keeps shrinking. You borrow even more to survive. The economy keeps shrinking. Suddenly, the only way out is default. THAT IS HOW DEBT MATTERS.
    Feb 12, 2015. 03:46 PM | 3 Likes Like |Link to Comment
  • Debt Doesn't Matter... [View article]
    If people had access to debt equally, then it may not matter. The truth is those with unequal collateral (the poorer 99%) do not have access to credit equal to the 1%. The top 1% can borrow for ever. Banks won't turn them down because of their collateral. The 99% hit their limit of debt much more quickly, because of their limited collateral. So debt-power is very unequal. And that is why we are seeing the wealth gap become more and more skewed in favor of the 1%. It is a gold rush for the rich.
    Feb 12, 2015. 03:27 PM | 2 Likes Like |Link to Comment
  • PepsiCo: Very Fully Valued [View article]
    Fully priced? Yes. Overvalued? Maybe. Sounds like the entire market. I own PEP calls and they keep appreciating. I won't sell when they are overvalued. I'll sell when they start to break down. No sign of it yet.
    Feb 12, 2015. 03:23 PM | 1 Like Like |Link to Comment
    Aakash: Thank you for the correction. I appreciate it. Best to you.
    Feb 12, 2015. 01:31 PM | Likes Like |Link to Comment
    I have not found a true ultimate correlaltion between gold and anything else. You've think it would be a truism that gold and the US Dollar have an inverse correlation. But it is not absolute. I think it is the best correlation.

    My view on gold was that one should buy gold in 2001 and short sell god in 2019; buy gold and sell stocks when the Day-Cycle end and the Night-Cycle begins. Reverse this when the Night-Cycle ends in 2019. But then the FED got involved, attempting to destroy gold as an alternative to fiat currencies. I think gold will have a big finish through 2019. But here I am essentially shorting gold stocks. Short-Term. I think gold is tring to make a long-term bottom, in fact.

    The most powerful rich people in the world have been attempting to subvert gold for many years now. I will demonstrate what I think is a long-term bottom in gold -- but it is not there yet.

    Thank you for your "good luck".

    Feb 11, 2015. 08:33 PM | Likes Like |Link to Comment
  • Gold Is In A Bull Market And Stocks Are In A Bear Market [View article]
    Zero interest rates are SUPPOSED to make the markets correction proof. And ZIRP with QE really do. I guess it is supposed to be Europe's 'heavy lifting time' now. Japan has done heavy-lifting; the US has done heavy-lifting; the Swiss were supposed to do heavy-lifting. Oh, well.

    The problem is ZIRP suffocates the economy; ZIRP and massive debt. No oxygen. Ever see a campfire that has no oxygen? A lot of smoke. No fire. That's what we have. ZIRP is supposed to provide the oxygen. But low interest rates (held low for too long) combined with massive debts creates a kind of financial vacuum.

    You have been able to short gold, and now oil. The strong Dollar is an alchemical tool that breaks up the dead body. The global economy is a dead body. We need to break it down again, to separate the elements that compose this dead body, so they will be free again, in time, to re-compose the material world. The strong Dollar aids this decomposition (deflation). The weak Dollar aids later re-composition (inflation).

    On the gold and gold stock tangent, I think gold stocks are going down again:
    Feb 11, 2015. 04:23 PM | Likes Like |Link to Comment
  • The Catch-22 Now Being Faced By World Financial Leaders [View article]
    And where are human being in this wonderful picture of machine-age growth? Do we all write books and live on welfare? Or do we all flip burgers at Macdonalds?

    The more we worship machines the more we become machines. Is that the 'goal of evolution', for humanity to become more machine-like? I think not. I think, in our pursuit of more and more, bigger and bigger, we have lost connection with our source of life. When the Romans did the same thing, it was checkmate.
    Feb 11, 2015. 04:04 PM | 2 Likes Like |Link to Comment
    Yes, Alan, I don't think they care either. We admire wealth; we really don't care than much how one gets it. The Robber Barons. We allow foreigners' with money to come in and buy up our houses. Do we ask how they make their money? I don't think so. So we have old money from across the world and new money (think drug dealers, human traffickers...) buy up housing in LA and New York City. We don't care.

    It's the money that counts. Why was Tony Soprano so well loved? It's the money, baby.

    I agree. Maybe future generations will view it differently, I don't know. Why do people come to America? Land of Opportunity? Opportunity to make money? Opportunity for organized crime to operate? Wall Street is first generation (white Protestant) organized crime. It's a trickle-down theory...
    Feb 11, 2015. 02:12 PM | Likes Like |Link to Comment
  • IBM: Calling The Bottom [View article]
    Rate hikes will strengthen the Dollar; a stronger Dollar will suffocate IBM.

    AND a rate hike means no more share buy-backs, to transform loss of revenues into EPS gains (by lowering outstanding shares) -- a scam fixed by lower interest rates.
    Feb 11, 2015. 02:10 AM | Likes Like |Link to Comment