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Michael Clark

Michael Clark
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  • Volcker: Casino Activities Up, Lending Down [View instapost]
    Good article, Cautious. Why isn't Volcker leading the charge, instead of Bernanke?
    Sep 20 09:18 AM | 2 Likes Like |Link to Comment
  • Slower Going for IT Spending - But the Recovery Continues [View article]
    I love the term 'rapidly stabilizing'. That actually is almost a surrender from the 'hall full' glass crowd. 'Rapidly stabilizing' last month; 'less rapidly stabilizing' this month.
    Sep 20 08:17 AM | 2 Likes Like |Link to Comment
  • Jon Markman sees just enough parallels between now and 18 years ago to get pretty excited, and prompts investors: Get ready to party like it's 1991.  [View news story]
    Let's just ignore the fact that we are insolvent as a society and party on, party hard -- taking on more debt, no problem, we don't have to pay it back anyway, do we?


    On Sep 19 01:05 PM E Nuff Sed wrote:

    > Before you guys trash Jon Markman, look at his record. He was one
    > of the few people who correctly called the bear market and then correctly
    > called the subsequent rally. (Check out his articles on MSN Money).
    >
    >
    > The trap most of the bears have fallen into - is that you are equating
    > local economic conditions with global investing. The travails of
    > Michigan or California is peripheral to the S&P 500 companies,
    > which are global in nature. For example look at the explosive growth
    > which will drive the BRIC's for decades.
    >
    > Businesses have cut costs aggressively and are now coiled for global
    > expansion with low leverage and cheap capital. M&A activity
    > is already reflecting it. S&P should hit 1200 by the end of
    > the year. (pre-lehman level). Earnings will continue to bounce
    > back from the depressed level and positive surprises abound. This
    > will be the fuel which brings the capitulating bears back into the
    > market. S&P 1400 by the end of 2010 is not out of the question.
    > That is a 30% increase from here. You ain't gonna get is T-Bill
    > (except if you are shorting them).
    Sep 20 08:15 AM | 1 Like Like |Link to Comment
  • Jon Markman sees just enough parallels between now and 18 years ago to get pretty excited, and prompts investors: Get ready to party like it's 1991.  [View news story]
    One look at the debt to GDP chart tells you that 2009 is not really like 1991. 1991 was a recession. 2009 is debt-deflation, like 1929 was.

    Interest rates were at 9% in 1991 and were just beginning their 15 year fall. Interest rates today are at 0%, being held at 0% because the Fed Chairman fears the biggest depression in the history of the world if he lets interest rates go where they want to go.

    It doesn't look anything like 1991 in fact.
    Sep 20 08:12 AM | 1 Like Like |Link to Comment
  • Get ready to party like it's 1991 [View instapost]
    One look at the debt to GDP chart tells you that 2009 is not really like 1991. 1991 was a recession. 2009 is debt-deflation, like 1929 was.

    Interest rates were at 9% in 1991 and were just beginning their 15 year fall. Interest rates today are at 0%, being held at 0% because the Fed Chairman fears the biggest depression in the history of the world if he lets interest rates go where they want to go.

    It doesn't look anything like 1991 in fact.
    Sep 20 08:10 AM | Likes Like |Link to Comment
  • Taleb and Roubini Agree (Again) [View instapost]
    One way that America is different than Japan (there are many) is that Americans are nearly as discipline and well-behaved. The Japanese people suffer in silence, paying respect to their elders as much as possible, given the situation.

    Americans won't go quietly to the slaughterhouse. If stagnation lasts for a decade, Americans will be listening to radical voices and radical solutions, for better and for worse.


    On Sep 19 06:14 PM CautiousInvestor wrote:

    > John as always interesting and timely material; I think there is
    > a growing body of influential thinkers that we are getting it wrong.
    >
    >
    > In a recent piece by Andy Xie in Caijing he observes ......"The Japanese
    > government choose to let the corporate sector earn its way back,
    > first by preventing bankruptcies and second by stimulating demand.
    > To achieve the first goal, the government kept interest rates near
    > zero and Japanese banks did not pursue mark-to-market accounting
    > in assessing borrower solvency.
    >
    > With a big chunk of the corporate sector zombie-like, the economy,
    > of course, was always facing downward pressure. The government had
    > to run large fiscal deficits to prop up the economy. After the bubble,
    > Japan's economic equilibrium stagnated and the fiscal deficit swelled.
    >
    >
    > This strategy was flawed in three aspects. First, even as the corporate
    > sector earns profits to pay down debt, the government's debt is rising.
    > At best, it is shifting corporate debt to government debt. In reality,
    > government debt has been rising faster than private sector debt has
    > been falling.
    >
    > Second, economic efficiencies don't increase in such equilibrium.
    > Existing resources in the zombie sector are essentially unproductive.
    > Bankruptcies improve efficiency by shifting resources from failing
    > to succeeding companies. When rules are changed to stop bankruptcies,
    > efficiency is sacrificed. Worse, incremental resources are sucked
    > up to pay fiscal deficits used to prop up zombie industries. Japan
    > is thus trapped in equilibrium of low productivity.
    >
    > Third, a long period of stagnation could worsen irreversible social
    > change. A falling birth rate, for example, is one consequence that
    > is wreaking havoc on the Japanese economy. Japan's post-bubble policy
    > was to let property prices decline gradually. Hence, living costs
    > also declined gradually. On the other hand, the economy stopped growing,
    > which caused income expectations to quickly adjust downward. The
    > combination of high property prices and low income growth rapidly
    > pushed down Japan's birth rate. As a consequence, Japan's population
    > is declining two decades after the bubble. The rising burden of caring
    > for the old will lower Japan's ability to pay for anything else."
    >
    >
    > Andy's insights resonate with those of Roubini and Taleb; he then
    > he goes a bit further in laying out the cracks in Japanese policy
    > in dealing with their post bublle aftermath.
    >
    > In reading this one can immediately see parallels to our circumstances,
    > creating doubt about our current course.
    > As a general observation we appear to be very keen on stimulating
    > and spending and something less than enthusiastic about structural
    > reform.
    Sep 20 08:04 AM | 1 Like Like |Link to Comment
  • Turning Point in Inflation? [View article]
    I really don't see inflation coming in the charts. The CPI blipped up in Jan 09, and then fell harder. IF the global recovery is real, then maybe inflation comes back. But the global recovery is not real, according to most statistics and charts...and UNLESS governments can afford to keep pouring billions into the economy every quarter to sustain a mirage of recovery, there will be no recovery for another decade.

    Deflation just arrived. We have years more of deflation so it can do its job.

    The inflation crowd (Bernanke at the helm) believes that a kind of monetary viagra is just what the doctor ordered. If fact, the doctor is ordering some rest. We've been inflated for two decades. Now it's time to let prices come down to a reasonable level again.
    Sep 20 05:28 AM | Likes Like |Link to Comment
  • The Hidden Depression of the 2000s [View article]
    Mallarde: We're still in the denial stage. We're still thinking we can apply a band-aid to the hemorrhaging and go back to the Golden Age we've just passed through (which was golden for the banks and corporate executives but not for the rest of us). Denial is the first stage of death, followed by anger. We have not entered the real anger stage yet. We're still pretending the dream can be fixed.


    On Sep 19 07:39 PM mallarde wrote:

    > At some point, the U.S. simply must come to terms with what ills
    > its labor market. In particular, the U.S. cannot allow unlimited
    > outsourcing or cheap imports from Asia and elsewhere. Also, the
    > U.S. cannot continue allowing millions of "workers" -- legal or otherwise
    > -- into the country to boost the labor supply and depress wages.
    > Americans must have jobs that can pay them living wages before the
    > economy can be healthy again.
    >
    > What seems to be happening is that Obama is flooding the market with
    > credit and government spending to delay the pain -- like giving morphine
    > injections to a badly wounded soldier. At some point, you have to
    > treat the wound.
    >
    > I see no policymakers or "experts" talking about the above. Until
    > this starts to happen, I do not see how we will avoid continuing
    > down the same path.
    Sep 20 05:15 AM | 2 Likes Like |Link to Comment
  • It's Time to Sell Equities and Look to These 3 Areas [View article]
    In truth, the market and the economy have almost no relation. Stocks bottomed in 1932, after the Great Depression began. The depression ended in 1947. Stocks are their own world and really have no more connection to the economy that Las Vegas has a connection to moral sanity. New York has its casinos; so does Vegas. New York has its winners, the house; so does Las Vegas.


    On Sep 18 10:03 PM The Geoffster wrote:

    > Great stuff Harrison, as always. People keep confusing the market
    > with the economy. Economic indicators are up say the bulls. No shite
    > say I. Trillions in borrowed money and guarantees has to go somewhere
    > and the money market is nowhere to party. The economy still sucks.
    > Gold is up because gold is money and the dolar is junk. Treasuries
    > yields are a joke because the Fed owns most of the long end of the
    > yield curve, mostly through swaps I gather. Stimulus spending is
    > fine if you're in the black, but borrowing your way out of debt only
    > works if you hit the Powerball. I own palladium because it's used
    > in Cold Fusion. Palladium is up but only because the dollar is down.
    > I figure the chance of Keynesian deficit spending getting us out
    > of this mess is about as good as Cold Fusion
    Sep 19 04:27 PM | 5 Likes Like |Link to Comment
  • It's Time to Sell Equities and Look to These 3 Areas [View article]
    Very well-written response. I can't disagree with anything you've written here. The wool has been removed. And now the world looks quite dark and dirty and ruled by unimaginable heathen dressed in Armani suits and driving European cars.


    On Sep 19 04:13 PM ebworthen wrote:

    > The only problem with the old staid advice of long term investing
    > in equities is that it relies on a free market that is not manipulated
    > by banking oligarchs in collusion with corrupt government and a whole
    > lot of sheeple to feed the system.
    >
    > People are waking up to the fact that the markets are rigged in favor
    > of banks and politicians and FED policy rather than ethical markets
    > that serve as an engine for capitalism and companies that create
    > real jobs and careers for hard working citizens.
    >
    > The markets have become milking machines for opportunists, equivocators,
    > and criminals in suits. The middle class, and a number of the hapless
    > wealthy, have been fleeced by the malfeasance from Wall Street and
    > Washington. Yes, this is human nature, but at some point the gig
    > will be up and Great Depression II will ensue.
    >
    > This is the eye of the hurricane, not 1974 or 1982 or 1987 or 2001.
    > The socio-economic climate, the political climate, the division amongst
    > moral and immoral, ethical and unethical, responsible and lazy, and
    > the dreamers and the awake, rhymes with 1930 but is unique in a dangerous
    > way.
    >
    > We are all dependent upon a system that is failing.
    >
    > We have all heard and felt the rumbling of the earthquake of last
    > year.
    >
    > We have yet to weather the tsunami.
    Sep 19 04:23 PM | 4 Likes Like |Link to Comment
  • It's Time to Sell Equities and Look to These 3 Areas [View article]
    Right now treasuries are rising and the dollar is sinking because Mister Bernanke is buying every TBond is sight to try to keep interest rates low. He really thinks a solvency crisis can be cured by a doubling or tripling of liquidity. I'm sure he's a smart man. But I'm not sure what he's seeing that makes him think he can flood us to death and not send us into the Dark Ages again.


    On Sep 18 07:51 AM Edward Harrison wrote:

    > A tanking dollar does not mean treasuries get crushed. Right now
    > the dollar is falling, treasuries are rising as is gold.
    >
    > You'd want to be in treasuries even if the dollar fell if you expect
    > the deflationary forces to outweigh inflationary forces from the
    > currency depreciation. You'd want to be in gold if you think the
    > inflationary forces of the depreciation would feed through.
    >
    > Right now, both trades are being put on i.e. gold is rising and so
    > are treasuries. When it becomes more clear which force is winning
    > the deflation-inflation tension, I would expect a reversal in one
    > or the other.
    >
    > On Sep 18 06:39 AM bkdc wrote:
    Sep 19 04:20 PM | 5 Likes Like |Link to Comment
  • Another $185B Could Soon Hit the Markets as U.S. Approaches Debt Ceiling [View article]
    Excellent articles, Bob. I'm following you. Please keep us updated as to what you're seeing with your very special research.

    I will direct readers of my instablog to follow you also, as I think your message is vital to investors' understanding of what a....'shell game' is a pretty good description of this rally we are all witnessing and many participating in (grudgingly and filled with dread in some cases).
    Sep 19 04:15 PM | 1 Like Like |Link to Comment
  • Funding a Rally Extension [View article]
    We've all known in our guts and in our powers of deduction that this 'fixing' has been going on. It's a way to make sure that the government gets paid back by the banks and insurance companies, those that got all the bailout money. If the market rallies, if worthless companies can look smart again, make a profit, and pay back the government, the government can them go back on the campaign trail without getting hit everywhere they go with rotten eggs or worse (by government I mean both parties -- this mess belongs to both parties).

    Now we seem to have the smoking gun.

    But why would we ever trust the stock market again? If the government can make it go up when it wants, it can also make it go down. Who is going to be the first to know when it's time to sell? Well it won't be you and I, mister and missus small, average investor. The banks and the government are in bed together, exchanging toxic fluids...so they might as well have a good time.

    We should not forget that this fix is immoral and should be illegal -- and the next government that's elected should clean house and send the fixer's to prison for insider trading. How much more inside can it get -- the Fed Chairman is working with the banks to fix a profit flow in what were supposed to be independent, free, neutral markets. They are gone now. The stock market is a ponzi scheme; and Bernanke is another Bernie Madoff.
    Sep 19 03:52 PM | 8 Likes Like |Link to Comment
  • Gold: What Professional Futures Traders Think [View article]
    I agree. Gold does very well in a deflationary environment because gold/silver is the only 'commodity' that is a currency. Global deflation will knock everything down, but gold. That is why gold will have an obscene rally, because it will be the only place to be.


    On Sep 18 03:57 PM twitee wrote:

    > Gold is not going up because of inflation. Gold is a reserved currency
    > that is inversely proportional to the value and stability of $US.
    >
    >
    > Gold will rise due to inflation or recession, so if you are a long
    > term investor you will gain no matter what the manipulated markets
    > are indicating.
    >
    Sep 19 03:41 PM | 2 Likes Like |Link to Comment
  • Gold: The Moriarty Warning [View article]
    Gold will continue to rally. This is an historical period of stock decline/gold advance. See below for a larger picture:

    seekingalpha.com/insta...
    Sep 19 01:01 PM | Likes Like |Link to Comment
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