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Michael Clark

Michael Clark
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  • Is Austria Set to Join the Honorable Company of PIIGs? [View article]
    Again, an excellent post, Edward. I remember, 6 months ago I opened SA to look for stories on the China bubble. Now I look for your posts first. My focus has shifted to Europe as well. I think Europe will be the flash point. It is interesting to watch the far right again gaining power in Europe. As the European 'recovery' falters, and the society begins to come apart, the far right will gain power and (Muslim especially) immigrants will become the next great social problem for Europeans. It's all becoming tangible, especially as the European banks begin quaking again.
    Dec 16, 2009. 11:11 AM | Likes Like |Link to Comment
  • Time Magazine's Richard Stengel explains his choice: "We've rarely had such a perfect revision of the cliché that those who do not learn from history are doomed to repeat it. Bernanke didn't just learn from history; he wrote it himself and was damned if he was going to repeat it. Bernanke decided to do the opposite of what the Fed did back in the '30s: he would loosen the money supply as far as it would go, he would save as many banks as he could, and he wasn't going to hector the American public about pulling up their socks."  [View news story]

    I'm sure Time probably did the same thing in 1930, if they were around. In fact they might have named you the Man of the Year in 1930.

    Our need for instant gratification is the reason we have no sense of history, and a dwindling sense of cultural genius.

    On Dec 16 08:02 AM herbert hoover wrote:

    > I am amazed that TIME - or anyone - thinks that the financial crisis
    > is anywhere near over. They have essentially named a Cy Young Award
    > winner in June.
    Dec 16, 2009. 08:04 AM | 5 Likes Like |Link to Comment
  • Long Position in Optimism, Without a Stop Loss [View article]
    I'll take a stop-loss please, with salt.
    Dec 16, 2009. 07:51 AM | 1 Like Like |Link to Comment
  • Yes, China Has Fully Arrived as a Superpower [View article]
    I agree with this. The Superpower emblem is not primarily a business moniker. Japan was not a superpower in the 1980's despite a monster economic power.

    Superpower designates military, political, diplomatic and financial strength and influence. China is not there yet. Does China has ambition to have an empire that rules the world? That isn't clear. China wants influence -- but a superpower status is won not given. It requires a dream of conquering (or at least managing) the world. Is China suffering from this dream?

    On Dec 16 06:57 AM User 353732 wrote:

    > China is not a superpower by any reasonable definition of the term.
    > It is semantic inflation to use "superpower" in this way. A superpower
    > must have more than economic heft: global influence and power that
    > results in tangible and strategic change also requires moral and
    > cultural authority and appeal and the ability to project dispositive
    > military force around the planet. The US once had these traits; it
    > no longer does.
    > China has no moral authority(it seeks only what is good for the Politburo:
    > everything is a means to that end); its cultural influence is sub-regional
    > and its ability to project force globally is not even nascent. The
    > world knows that China is a mercenary, mercantilist inland empire.
    > China's influence in world affairs and its leverage over the US regime
    > is a result of
    > 1. very large export surpluses and hence foreign currency holdings:
    > born of its mercantilism and ruthless pursuit of self interest.<br/>2.
    > Its ability to veto international negotiations: but so can other
    > nations, including India and France. A veto is a negative influence
    > that several powers can exercise.
    > China has influence and admirers but no strategic allies. A superpower
    > must have both influence and dependable strategic allies.
    Dec 16, 2009. 07:16 AM | 4 Likes Like |Link to Comment
  • Fed Policy: See No Evil, Hear No Evil [View article]
    It's big-time poker but everyone knows that everyone sitting at the grown-ups table is bluffing. Everyone is holding nothing. Now, that's leadership for you.
    Dec 16, 2009. 07:07 AM | 5 Likes Like |Link to Comment
  • Is Canadian Housing a Bubble? [View article]
    Housing appreciation historically is 2-3% annually. Anything significantly above this is a bubble. 20% in one year is a bubble.
    Dec 16, 2009. 07:03 AM | Likes Like |Link to Comment
  • U.S. Forfeiting Billions in Future Taxes So Citi Can Exit TARP [View article]
    Part of the issue is that the government could have viewed this as (1) an opportunity to assess future corporate taxes to help wind down the deficit we're amassing in an effort to save corporations from financial destruction, or (2) a chance to give the corporation in question more free meals....and the government chose the latter. When will the government begin to choose #1?

    What the government doesn't take as corporate TAX goes to corporate executives as 'performance bonuses'....and, of course, the crux of the reasoning is this:

    "You’re manipulating tax rules so that the market value of the stock is higher than it would be under current law," said the aide, speaking on the condition of anonymity. "It inflates the returns that they’re showing from TARP and that looks good for them."

    The government is desperate to try to make it look like government handouts were 'investments' instead of handouts. The government can claim that there were no bailouts, there were only 'shrewd investments' in the dying banks: everyone won. Sure, everyone won. Everyone except the taxpayer, who continues to lose, so that the banks can look like winners again (hiding their debts behind new accounting gimmicks).

    Lies and deceptions. Lies and deceptions.

    On Dec 16 05:55 AM Angry Banker wrote:

    > It is ridiculous to call this a backdoor bailout and an outrage.
    > The tax rules on mergers are, as you said, intended to prevent mergers
    > and acquisitions purely to take advantage of an acquired company's
    > NOL's. The government never wanted to "acquire" Citigroup (or any
    > of the other companies that are also receiving this so-called tax
    > break), thus the intended purpose of the tax provision is not relevant
    > here. Therefore, it makes perfect sense for the government to waive
    > this tax on these transactions since the government's "control" was
    > only temporary. This is a classic example of sensationalist journalism
    > simply to try to whip up "outrage" again without thinking through
    > the logic of what is being said. Just silly.
    Dec 16, 2009. 07:00 AM | 5 Likes Like |Link to Comment
  • The Relentless Slide Towards a Sino-European Trade War [View article]
    Unacceptable! Welcome to a glimpse of the New World politics! Brought to you by....reality triumphing idealism.

    On Dec 15 06:01 PM lower98th wrote:

    > Wow. Envisioning the future of our infrastructure, built by Chinese
    > workers and companies, not Americans. Paid for by the Stimulus.
    Dec 16, 2009. 02:46 AM | Likes Like |Link to Comment
  • The Relentless Slide Towards a Sino-European Trade War [View article]
    I have to agree with surfgeezer's last paragraph. It's not just Europe. Japan, Korea, Taiwan are all suffering because of China's peg. Protectionism won't just involve white faces against China, but most of the world.
    Dec 16, 2009. 02:45 AM | Likes Like |Link to Comment
  • Why Merrill Lynch Is Bullish on 2010: Foreseeing a Burst of the Pessimism Bubble [View article]

    On Dec 15 09:52 PM Tempo dulu wrote:

    > With all due respect to Merrill Lynch, I ask myself why anyone should
    > pay any credence to what they say? After all, they've been very wrong
    > in the past. Statistically, you're probably get a better prognosis
    > on the economy by asking a local high school teacher.
    Dec 16, 2009. 02:06 AM | Likes Like |Link to Comment
  • Why Merrill Lynch Is Bullish on 2010: Foreseeing a Burst of the Pessimism Bubble [View article]
    There is no Merrill Lynch unless they get Joe Six Pack and his wife Jill to put their money into stocks and bonds. ML is just a pack of salesmen, no different that the used-car dealers down the block, who want your money. They'll say whatever they have to say to get your money. Why do we pretend that they have some extra-systemic authority to tell us what the future will bring? It's just a habit we have of following salesmen in America. "This will make you rich!" "Ok, here's my money...!"
    Dec 16, 2009. 02:06 AM | 3 Likes Like |Link to Comment
  • Why Merrill Lynch Is Bullish on 2010: Foreseeing a Burst of the Pessimism Bubble [View article]
    Thank you, Tunaman. In two sentences you pointed out the basis of the 'optimism bubble' and suggested why the bullishness can't last. Quantatative Easing is welfare for the rich. It is digging us a deep hole of debt, and leading us toward the list of nations that may default on their debt. If the global recovery falters, and foreign trade continues to dry up, who is going to buy American debt to finance our insolvency? Let's keep up the charade as long as we can. Stocks are going up. What else matters? Aren't America and the Dow Jones Average the same thing ultimately? They're not?

    On Dec 15 01:26 PM tunaman4u2 wrote:

    > Why hell I'd be bullish if I had quantitative easing buying stuff
    > off my books at above fair value.
    > Lets be honest... without quant easing and the government spending
    > $2 for every $1 it takes in there would be no bullishness
    > Can you count on quant easing &amp; 2 to 1 spending vs income to
    > power a bull market forever? If it stops it crashes, we know that.
    Dec 16, 2009. 02:02 AM | 1 Like Like |Link to Comment
  • Thoughts on Fed's Exit Strategy: Stephen Roach vs. Mish [View article]
    Is this the best system we can come up with? Private international bankers who have a vested interest in lining their own pockets put in a position to determine monetary policy that can sink America as a nation? Why not just have a king -- a king would have more loyalty to America than these bankers have.

    Are we not creative enough to come up with a system that works?

    Part of the problem is that bankers are VERY reticent to raise rates, because doing this takes profits away from them. Bankers are very reticent to pop asset bubbles, because, again, this is their shot at maximizing wealth, even as it is a guaranteed trip to the ash heap. Had Greenspan begun raising rate in 2000-2001, we would have had a very different landscape to deal with today that we do have. The Paul Volckers of the world are a very rare breed -- and can't be counted on to rule the Fed. You will get 99 Alan Greenspans for every Paul Volcker. So, what do you do to make sure rates go up when bubbles begin to form? That seems like it's the crux of the issue.

    One thing you can't do is put people in charge of making the decision who will get richer from the formation of bubbles. You have to have a J Edgard Hoover type (without the cross-dressing) who sees asset bubbles as his/her personal nemesis.

    Or, we have to systematize expansion and contraction, so that lowering and raising of interest rates is based upon an 'objective' time-centered criteria of economic cycles. Those of you who have read my posts know that I believe (I see) American cycles of economic expansion and contraction happen about every 18 years. Day-Cycles are periods of expansion of credit/debt (monetary supply); Night-Cycles are periods of rest, contraction of credit/debt (money supply). For example:

    Day-Cycle: 1947-1965 = rates lowered, monetary expansion
    Night-Cycle: 1965-1983 = rates raised, monetary contraction
    Day-Cycle: 1983 - 2001 = rates lowered, monetary expansion
    Night-Cycle: 2001 - 2019 = rates raised, monetary contraction

    The philosophy behind this phenomenon is that everything has a period of activity, expansion, growth, followed by a period of rest, contraction, gestation. The Inflationistas want nothing but growth, growth, growth...which is cancerous. Yes, deflation is painful. And democracy wants to make everyone happy. But deflation allows for the next stage of growth. Continuous expansion and inflation is not possible -- and the idea that it should be shows a childish understanding of nature and life.
    Dec 16, 2009. 01:55 AM | 1 Like Like |Link to Comment
  • Is Foreign Appetite for U.S. Treasuries Sated? [View article]
    We should have begun raising rates slowly in 2000. Now look at us.

    We NEED higher rates. We NEED to clean out our debts. Painful, yes. But we've been trying to cheat our way out of this mess. It won't work. We need to confront reality -- as much as we'd like the party to keep on going.

    Thing to remember for the future: there is no party today without a bill being served tomorrow with money due for your good time.

    What idiot (foreign or domestic) is going to buy treasury bonds or bills that pay nothing in yields. Let the real market determine what bonds are worth, and foreigners will return.
    Dec 16, 2009. 01:23 AM | 8 Likes Like |Link to Comment
  • Strategic Default: The New Stimulus [View article]
    A lot of blame to share. Greed is not a sin at the top of the ladder only, clearly. We've created a society that increasingly thinks its ok to cheat to get ahead. This is the kind of society you get when you teach such values.

    If you honor wealth above all other virtues, you get a society of criminal shysters.
    Dec 16, 2009. 01:16 AM | 2 Likes Like |Link to Comment