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Michael Clark

Michael Clark
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  • Asia: The Next Big Bubble [View article]
    Who is going to buy their manufactured goods when America and Europe stop buying? Exports are down another 21% in July. Imports in China also down. I think the Chinese would rather buy stocks and land that the cheap (shoddy) products the Chinese are producing.

    If you compare China now and America in the 1950's, you also have to compare the laws protecting business, private property, etc. It's pretty hard to compare America and China in terms of social environment and laws. Also, America in the 1950's was looking at a freshly destroyed world to help rebuild. Consumer debts were relatively low. Today, we've all just had a huge feast and we won't be ready to eat again for some time.

    China can sell their cheap products locally. But that won't make them the engine of the world-recovery.

    On Aug 10 10:44 PM Jeff Nielson wrote:

    > Yet another commentator who doesn't have a clue what an "asset bubble"
    > is. China and other Asian economies are rapidly building wealth through
    > manufacturing - like the U.S. USED TO do in the 20th century.
    > Did you hear anyone calling the U.S. economy a "bubble" in the 1950's?
    > Asian governments have large operating surpluses and Asian citizens
    > have HUGE savings. There growth is fueled by REAL wealth - not trillions
    > upon trillions of leveraged-debt, which is what the U.S.'s bubble-economy
    > is based upon.
    Aug 11 01:25 AM | 3 Likes Like |Link to Comment
  • More Goldman-Paulson Tarnish [View article]
    This is rhetoric I guess. Can you give me a list of the most recent successful companies the American Public, through Salem Witch Trials and claims of conspiracy, destroyed? I can give you a list of formerly successful companies that destroyed American workers through management
    corruption, complicity to corruption or that legendary justificatin for stealing pension funds: 'mismangement'.

    Are conspiracy theorists killing capitalism -- or are corrupt, risk-disregarding corporations killing capitalism? It's a nice thought: Goldman Sachs, Lehman Brothers, AIG didn't kill capitalism; the international conspiracy of bloggers did.

    On Aug 10 10:30 AM JCC wrote:

    > Um - I expect all of this ranting and raving to continue for some
    > time. It doesn't matter the size of the emergency that we faced,
    > or the fact that we seem to be recovering.
    > All that matters to many is that we kill the successful companies,
    > because of conspiracy theories.
    > This is analogous to the Salem Witch Trials. So keep it up folks
    > and you can burn success at the stake and kill our society and capitalism.
    Aug 10 01:40 PM | 2 Likes Like |Link to Comment
  • Who's Blowing This Bubble - And When Will It Pop? [View article]
    I don't think anything is 'natural' in man's manipulated financial systems. If we don't have the Fed manipulating rates, we'll have bankers and hedge fund managers attempting to do so. If there was no such thing as collusion, price-fixing, and corner markets, then we would not need the Fed. The problem with Greenspan/Bernanke was that he (aren't they the same man?) was a religious zealot masquerading as a man of reason.

    In the ideal world, capitalism and competition drive down prices. In the global economy capitalism, prices never fall, prices are fixed at higher and higher levels, so that return on investment always climbs.

    On Aug 09 10:02 AM noob wrote:

    > What would happen if the Fed just let rates float according to their
    > natural value instead of screwing with it?
    > Might help avoid some of these problems.
    > Of course, we could do better if we just removed the Fed completely
    Aug 10 07:19 AM | 1 Like Like |Link to Comment
  • Who's Blowing This Bubble - And When Will It Pop? [View article]
    Excellent post.

    On Aug 08 08:01 PM Fat Squirrel wrote:

    > I've never understood some people's slavish and superficial reliance
    > upon earnings multiples as an indicator of value. Under normal 'equilibrium'
    > conditions, perhaps they offer some useful insight into relative
    > value, but in a situation where company top lines are dependent upon
    > government spending to an unprecedented degree, isn't the real question
    > "how stable is stimulus-derived demand"? Or "what are threal e consequences
    > of stimulus-induced demand shifting?"
    > Several examples of this immediately spring to mind:
    > 1) Bank earnings seem to be largely manufactured now through 'trading
    > profits', newly-created accounting gimmicks, deferring the realization
    > of loan losses many times capital, and back-door infusions of government
    > (taxpayer) capital through above-market derivatives transactions
    > (eg AIG -> GS, etc). To say, on the basis of current “earnings”
    > and historic multiples, that financials are cheap seems to completely
    > miss the point that the “earnings” to which these multiples are being
    > applied are completely unsustainable and of exceptionally low quality.
    > 2) The much-ballyhooed 'low multiples' of emerging markets seem to
    > completely overlook the fact that the Chinese government's stimulus
    > (and the consequential wave of private borrowing and demand front-running
    > in commodities) has caused a similar artificial spike in earnings.
    > To apply normal multiples to these puffed-up earnings seems like
    > a fine way to overpay for stocks.
    > 3) The Cash for Clunkers deal is another classic example of pulling
    > forward future demand into the present. Yes, it makes the current
    > period's numbers look great, but only at the expense of prolonged
    > *depressed* future demand. What do we do after the sugar high has
    > passed and we're stuck with protracted subpar sales in coming quarters?
    > These programs do not create new demand, they just change its timing.
    > The Green Shootists who love to extrapolate the stimulus-induced
    > sales and earnings increases indefinitely into the future and to
    > then cite these as evidence of a "recovery" are, at best, suffering
    > from severe cases of confirmation bias. Crowd psychology and the
    > expression of people's vested interests are also playing a significant
    > role here.
    > As earlier posters have pointed out, stocks are supposed to be priced
    > at a risk-discounted present value (
    > of future cash flows, but under the present circumstances we really
    > need to consider just how stable current "sales", "earnings" and,
    > by extension, cashflows are given the gargantuan distortions introduced
    > by aggressive government interference in the economy.
    > Also, a key determinant of PV is the discount rate applied to future
    > earnings. The lower the discount rate, the higher the PV (and hence
    > the higher the theoretical value of a stock with an assumed future
    > earnings stream). But this is fraught with problems:
    > 1) The usual way to select a discount rate is to take a “risk-free”
    > rate (eg treasuries of a comparable term) and then to add a “suitable”
    > risk premium. But Treasury rates are currently being manipulated
    > down ( and are at multi-decade
    > lows. Is it really wise to use these artificially-lowered base rates
    > when discounting future earnings to arrive at 'fair' stock prices?
    > 2) Interest rates (and by extension discount rates) are also a function
    > of inflation expectations. Given the apparent love affair of central
    > banks around the world with historically unprecedented money printing,
    > shouldn't we expect much higher inflation a few years hence? If
    > so, then the discount rates we apply to longer term earnings streams
    > need to be MUCH higher (would would greatly reduce the PV of future
    > earnings and of theoretical stock prices).
    > Sitting out a huge manic market spike is admittedly painful, and
    > trying to time its end by going short is doubly so, but I'd urge
    > people to really focus on the sustainability of the underlying forces
    > driving the apparent improvements being used to justify the continuation
    > of the current market mania both here and abroad.
    Aug 10 07:06 AM | 1 Like Like |Link to Comment
  • Who's Blowing This Bubble - And When Will It Pop? [View article]
    Bypho: actually these are not religious rants. They are descriptions of our shared economic reality from the perspective of the poetic, or symbolic mind.

    I tells me something about you that you feel so threatened by them however.

    And I am not a crackhead. And who made you the censor of this website? How long have you been hired by Seeking Alpha staff to decide what is appropriate here and what is not?

    On Aug 08 11:50 AM BPYHO wrote:

    > Hey crackhead, save your religious rants for somewhere else, it's
    > not appropriate here.
    Aug 10 07:00 AM | 1 Like Like |Link to Comment
  • China's Growth an Accounting 'Miracle' [View article]
    Nice response, Rob.

    On Aug 09 06:37 PM Robert Martorana wrote:

    > Vitaliy:
    > Thanks for shedding light on an issue the mainstream media are overlooking.
    > I agree that China is faking its numbers, and Michael Pettis has
    > made the same point in articles on July 24 and on August 3.
    > ______________________...
    > July 24:
    > August 3:
    > ______________________...
    > China's economy has alarming parallels to the U.S.: Weak domestic
    > demand, gargantuan levels of monetary and fiscal stimulus, a real
    > estate bubble hidden in plain sight, exaggerated levels of employment,
    > legions of unemployed college graduates, and the prospect of stubbornly
    > higher inflation down the road.
    > As you noted, China is NOT a democracy. Fortunately, the Internet
    > is shedding light in dark places. Michael Pettis recently noted that
    > Chinese Internet users mock government claims of 12.9% income growth.
    > "Hey! I just got a raise!" This echoes sarcastic bloggers in the
    > U.S. "Hey! I'm really not unemployed!"
    > If wishes were horses, beggers would ride.
    > Thanks again,
    > Rob
    Aug 10 06:52 AM | 2 Likes Like |Link to Comment
  • China's Growth an Accounting 'Miracle' [View article]
    Another thought. Most Americans don't think the way I think. You can argue very well with most Americans using your common logic system. Most Americans don't understand me either.

    On Aug 10 03:32 AM Dave Wrixon wrote:

    > This demonstrates why arguing with Americans is pointless. They usually
    > operate in a universe with a totally different logic system to the
    > rest of us.
    Aug 10 06:49 AM | 2 Likes Like |Link to Comment
  • China's Growth an Accounting 'Miracle' [View article]
    Are we 'arguing', Dave? Actually the logic system I am reintroducing IS quite archaic -- archaic not necessarily meaning outmoded but, instead, 'time-tested'.

    Dualism, as a philosophical foundation, is based on the same systems used by Pythagoras, Plato, Goethe, Jung actually many of the great thinkers of the world, but one that has been forgotten or dismissed, as the logic system of causality has taken over the world with the dominance of science.

    It is true that the poetic mind thinks differently than the scientific mind. The crux of the view, in terms of the economy, is that there are 'days' of economic expansion and 'nights' of economic contraction...and all the other causes and effects flow between these primordial 'poles'.

    On Aug 10 03:32 AM Dave Wrixon wrote:

    > This demonstrates why arguing with Americans is pointless. They usually
    > operate in a universe with a totally different logic system to the
    > rest of us.
    Aug 10 06:47 AM | 1 Like Like |Link to Comment
  • The Critical Piece to the China Plan: A Managed Currency [View instapost]
    In Vietnam, Vietnamese laugh at the idea of Vietnamese 'quality'. But they are quick to point out that this laughable Vietnamese 'quality' is much better than Chinese quality.

    My wife and I bought 60 pirate DVDs made in China during our 2003 visit to Vietnam. 15 of the 60 actually worked. The Vietnamese laughed and said "You guys did pretty good."

    Everything is pirated over here (and in China, I'm sure). If you publish a book in Vietnam, two weeks later the book has been copied and is selling on the street at a discount. Someone else is getting the profit. Music, movies, software -- it's all pirated, cheap, and VERY low quality. But low quality and cheap is better for the Vietnamese -- otherwise they could not afford it.

    Some Chinese companies agree to produce Western products in China so they can reproduce the product at diminished price and quality for the Chinese market. Say, they have a contract to produce Crest toothpaste. They might set up a show factory for the production of Western Crest and set up 15 dirty Chinese factories for the production of Chinese Crest. It's a way they can steal the formula and brandname for use in China.

    It's the Wild West over here.
    Aug 10 06:23 AM | 1 Like Like |Link to Comment
  • The Wealth Gap and the Collapse of the U.S. [View instapost]
    Excellent article! Wonderful Charts! Why are the editors holding this back?

    It's time to 'prune' the large corporations again -- as Teddy Roosevelt did. They've crossed the line. Now there is no going back.
    Aug 10 06:14 AM | 1 Like Like |Link to Comment
  • The Appropriate Sports Metaphor for the State of the U.S. Economy [View article]
    Right now it looks like a basketball game and we know we can't compete with our adversary (DEFLATION), so we are simply holding the ball. There is no shot-clock. We'd rather lose 2-0 than lose 300-23.

    The end? We lose and win. We lose some power and prestige and but win some self-respect by suffering through deflation and generating a more moral view of the world, one that does not emphasize our desires and 'needs' for material things, our desperation for pleasure and power.

    Out of deflation comes protectionism and the end of globalism. Then things get hard. Austerity and saying 'no' to oneself replaces the self-indulgence of inflation. Perhaps we even become a more human culture again, through this difficulty.

    World War? It is very possible. Deflation, protectionism, reallignment of political alliances, a new world order.

    We must not forget that America is isolationist at the core, and has been isolationist at heart during each of the many deflations of its 'hero' identity. As isolationists, America may turn its attention away from the world and more inward to try to revitalize American business and economy from the inside out. Do we need to have a vital steel industry, a vital automobile industry, a vital manufacturing sector? We do if the world is at war -- and all of our current suppliers of manufactured products are cut off physically or politically.

    Self-reliance flows out of self-indulgence as spring flows out of winter.
    Aug 10 05:57 AM | Likes Like |Link to Comment
  • More Goldman-Paulson Tarnish [View article]
    Collusion, you say? Collusion to rob taxpayers while paying Goldman Sachs? Why is this man not in jail?

    Goldman pays Paulson more than $200 million, for which he pays not 1 red cent in taxes (what is this about an 'ethics agreement' or an 'ethics waiver' -- does that mean you don't have to be ethical?) and we think Hank is not paying back his friends at Goldman? We know, also, that his friends at Goldman know where most of the Paulson bodies are buried -- friendship in high places cuts both directions -- was Paulson trying to shut someone up, like Mr. Blankfein, for instance.

    Then Blankfein, having dodged the bullet of extinction at the final second, and having had his worst enemy (Lehman Brothers) magically wiped off the face of the earth, uses taxpayer money to pay his mafiosos at Goldman millions of dollars of bonus money (hush money?). If the FBI wanted to find out what Goldman has really been doing all these years, they'd get about 5 GS brass in different rooms and wait for one to crack.

    Paulson is the spitting image of Mephistopheles, especially with that magically bent small finger on his left hand. The Devil controls the world -- apparently from his perch in New York City.
    Aug 10 05:45 AM | 5 Likes Like |Link to Comment
  • Bearish Take on the Unemployment Numbers [View article]
    Great article. We all know that the cheerleaders simply resort to cheering when nothing else works. Eventually the cheerleaders will become vicious and start blaming the bears for the problem ('just shut up and pretend everything is ok.'). The cheerleaders don't understand concepts of ebb and flow, day and night, expansion AND contraction, because they see the world as a struggle of wills -- the weak will (negative thought) always losing. But the strong will loses when it stops perceiving reality and perceives, instead, only its own will. When the Will cannot influence the world with positive thought and cheerleading, it then becomes frustrated, scared, and dangerous. This is going to get interesting. Intolerance of the bearish view will gain momentum -- the alternative is to recognize their own complicity in the problem. To recognize this, they would have to give up the Hero role, the savior of the world through willful construction of the world. Modesty is not the strong suit of the 'Masters of the Universe'.
    Aug 10 03:09 AM | 1 Like Like |Link to Comment
  • China's Growth an Accounting 'Miracle' [View article]
    In place of 'Positive Energy" one might use the idea of 'Construction (Erection)". And, in place of 'Negative Energy' one might use the idea of 'De-Construction (Sterility)'...the phallic references being intentional. Day-Cycles show higher birth rates; Night-Cycles show lower birth rates and much more gender confusion generally.
    Aug 10 02:56 AM | 3 Likes Like |Link to Comment
  • China's Growth an Accounting 'Miracle' [View article]
    The cause is actually Time (Day and Night). All the other 'causes' are merely effects of this larger metaphysic.

    1785 - Noon - high point of economic expansion
    1794 - Dusk - Negative Energy wins
    1803 - Midnight - high point of economic contraction
    1812 - Dawn - Positive Energy wins
    1821 - Noon - high point of economic expansion
    1830 - Dusk- Negative Energy wins
    1839 - Midnight - high point of economic contraction
    1848 - Dawn - Positive Energy wins
    1857 - Noon- high point of economic expansion
    1866 - Dusk - Negative Energy wins
    1875 - Midnight - high point of economic contraction
    1884 - Dawn - Positive Energy wins
    1893 - Noon - high point of economic expansion
    1902 - Dusk - Negative Energy wins
    1911 - Midnight - high point of economic contraction
    1920 - Dawn - Positive Energy wins
    1929 - Noon - high point of economic expansion
    1938 - Dusk - Negative Energy wins
    1947 - Midnight - high point of economic contraction
    1946 - Dawn - Positive Energy wins
    1965 - Noon - high point of economic expansion
    1974 - Dusk - Negative Energy wins
    1983 - Midnight - high point of economic contraction
    1992 - Dawn - Positive Energy wins
    2001 - Noon - high point of economic expansion
    2010 - Dusk - Negative Energy wins
    2019 - Midnight - high point of economic contraction
    2028 - Dawn - Positive Energy wins

    On Aug 09 10:51 PM storm999 wrote:

    > I think legal unions, wage laws and have a lot more to do with it
    > than business cycles. We had lots of collapses in the 1800s. What
    > created the middle class was good wage jobs in 50s. Since 1980 when
    > Reagan got in real wages have flattened, especially for men and manufacturing
    > jobs have shipped overseas.
    > China literally has slave labor and the legal labor is drastically
    > exploited. They can have a lot of consumption from their managerial
    > class but the common people are still subsistence level. They are
    > literally tank fodder. The Chinese won't even let people practice
    > Falung Gong.
    Aug 10 02:49 AM | 2 Likes Like |Link to Comment