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Michael Clark

Michael Clark
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  • Research in Motion: Reports of Sales Death Are Greatly Exaggerated [View article]
    Is this market turning? Bad news; and investors actually make a stock pay for the news. Is the 'rose colored glasses' period over now?
    Sep 26, 2009. 10:24 AM | 1 Like Like |Link to Comment
  • Lumber futures correlate highly with new housing starts, and they're not signaling a quick recovery.  [View news story]
    I'm now follow CUT. The chart is pretty dismal. Looks quite a bit like the homebuilders charts.
    Sep 26, 2009. 09:40 AM | Likes Like |Link to Comment
  • The Worst Economy Since the ... 1980s? [View article]
    I have to agree. Cheerleading the recovery will not make the recovery real.


    On Sep 26 03:34 AM Mr. Ed, Jr. wrote:

    > What a naive, inane comparison.
    >
    > The author wants to compare "benchmarks" like inflation, interest
    > rates and, incredibly-- the "car loan rate".
    >
    > The car loan rate ? Seriously? Our government has just handed out
    > hundreds of billions of dollars to "buy" the broke car manufacturers,
    > then added billions more to help buy cars for citizens, while artificially
    > keeping interest rates low so that all of the other government schemes
    > would not blow up what is left of this economy.
    >
    > How was the foreclosure rate back in your good old days ? Were homeowners
    > sending in the house keys instead of the house payment ? Were banks
    > stalling on forecloses in order to keep from writing off the bad
    > loan ? Were the banks insolvent, propped up by a flood of taxpayer
    > cash ?
    >
    > Credit card loans are approaching double-digit default rates, unemployment--
    > the real number, not the government's "pretend" number-- is 17%,
    > there have been all-time high records of NOD's in 3 months so far
    > this year, and the government has been desperately handing out 8k
    > downpayments to buyers to entice them with those new 3.5% down FHA
    > loans. That makes them no-down home loans. Again. But the author
    > probably thinks that is a good thing, like "Cash for Clunkers." (By
    > the way....how are car sales since that clunkers program ended ?)
    >
    >
    > Trillions have been spent trying to stimulate this economy and fend
    > off bank failures. The FDIC is broke. And then there is this:
    >
    > "Distressed investing specialist Wilburt Ross, CEO of WL Ross &
    > Co., told CNBC Monday morning that he expects the carnage in the
    > banking sector to continue with as many as 1,000 banks closing before
    > it's all over." thedeal.com Sept 15, 2009
    >
    > Americans are filing for bankruptcy at a rate of over 5,500 per day.
    > Per day. Over 1.4 million will file this year, estimates the American
    > Bankruptcy Institute. Sure, that's going to be short of the record
    > of just over 2 million in a year, but still....
    >
    > This does not even begin to cover the bankruptcy and deficits of
    > many states, massive pension shortfalls and commercial real estate
    > on the brink-- hotels are now sending in the keys to the property
    > instead of making their payment to the banks. That's right-- hotel
    > owners are walking away, a la home owners. Many were financed in
    > the recent boom and are unable to generate anywhere near the revenue
    > needed to make the loan payments.
    >
    > The deleveraging will continue because it has to-- there is no alternative.
    > The massive debt overhang must be paid down or written off. Either
    > way, it will be extremely painful for many years. And there will
    > be no "barnburning economic recovery " any time soon, unless this
    > new paradigm can get it done without the consumer.
    >
    > The article is ridiculous.
    Sep 26, 2009. 09:37 AM | Likes Like |Link to Comment
  • The Worst Economy Since the ... 1980s? [View article]
    In truth, interest rates should have been raised in the mid 60's and throughout the 60's and 70's. Instead, we tried to keep rates low -- sort of like what we're trying today, without, of course, the HUGE DEBT LEVEL. This generated the stagnation of a contracting economy with the inflation of a stupid Fed policy of being afraid of deflation. Deflation is as much a part of the picture as expansion and inflation is. So Volcker had to save the day by disciplining the coountry in the 80's. Hence, the high interest rates.

    In fact, during a Night Cycle (1965-1983), the goal is the deflate prices and raise interest rates, strength the currency. The goal of the Day-Cycle (1983-2001) is to expand the money supply, lower rates, increase prices. It's a breathing process.

    We should have been raising rates now from 2001. We have to be disciplined if we want to exist for a long time as a national entity. Expand and then contract. Inflate and then deflate. You need both sides of the equation.
    Sep 26, 2009. 09:35 AM | Likes Like |Link to Comment
  • Fed Policy at the Breaking Point [View article]


    Inflation: hungry consumers chasing consumer goods and services inflating in price.
    deflation: hungry consumers saving money for fear of a future of declining prospects.

    We had 18 years of inflation, from which we are now trying to recover.

    On Sep 26 08:12 AM Karl Denninger wrote:

    no, I do not believe in hyperinflation. The mechanism
    > to make it "work" (that is, to couple back to wages) no longer exists
    > in the US and hasn't since unionized labor was effectively destroyed
    > in the 1970s and 80s.
    Sep 26, 2009. 08:55 AM | Likes Like |Link to Comment
  • Why Stocks Scare Me Now [View article]
    When did we decide that the world had to serve the banks rather than the banks serving the world? This situation needs to end. The banks are the tail wagging the dog.
    Sep 26, 2009. 08:39 AM | Likes Like |Link to Comment
  • The Protectionist Bogeyman [View article]
    This is a wonderful response, N65321. My metaphor of protectionism being the flour in the cake of depression was an apparently flawed way of saying something similar to this. Water, eggs, sugar, butter, flour, heat...all go toward making a cake. The flour doesn't cause the cake. The flour is an ingredient in the cake.

    Your response makes it even more clear that protectionism is a pretty constant player in the drama of government and economics. The free-traders have an ideology -- the free-traders get rich from their ideology. And if the working class gets poor from free-trade, then who cares -- that's someone else's problem.


    On Sep 25 01:12 PM n6532l wrote:

    > In the world according to Aristotle, a heavy object falls faster
    > than a light one. Aristotle's view was accepted truth for more than
    > a millennium until that heretic Galileo dropped a cannonball and
    > a musketball simultaneously from the Leaning Tower of Pisa and observed
    > that they hit the ground at nearly the same time.
    >
    > In the world according to free traders the US was a free trading
    > country until Mr. Smoot and Mr. Hawley got together and invented
    > trade protection in 1930. The history of trade protection has been
    > written by free traders and that is their story and they are sticking
    > to it.
    >
    > But it is wrong! The real world experience of US trade protection
    > is much more positive that the free traders want to admit. It seems
    > that way back in 1828 one of the few things Andrew Jackson and Henry
    > clay agreed on was that America needed protective tariffs. So they
    > passed this thing called the “Tariff of Abomination” that was the
    > highest tariffs we have ever had. Higher than the Smoot-Hawley tariffs
    > of a hundred years latter. These high tariffs upset the then Vice-President
    > John C. Calhoun who set off a Constitutional crisis by urging nullification
    > of the tariff within South Carolina. They compromised and cut the
    > tariff from about 62 percent to about 40 percent.
    >
    > Tariffs went up and down but generally drifted lower in the following
    > years ending at about 20 percent just before the Civil War. According
    > to free traders a trade protected economy without foreign competition
    > should have high prices, shoddy products, and producers should have
    > no incentive to innovate. Society should slide into mediocrity and
    > poverty. That was never the US experience with trade protection.
    > Contrary to free traders, the economy was growing with higher wages,
    > lower prices, and much innovation.
    >
    > After the first few months of the Civil War Congress decided to protect
    > industry from foreign competition in war time and passed the Morrill
    > and War tariffs which jacked tariffs up to just under 50 percent.
    > After the war tariffs oscillated but stayed high until the first
    > decade of the twentieth century. Again, contrary to free traders,
    > the economy was growing with higher wages, lower prices, and much
    > innovation. During this time we overtook free trade Great Britain.
    >
    >
    > In the first part of the twentieth century it was thought that the
    > way to respond to industrial monopolies was to expose them to foreign
    > competition. Tariffs were lowered to below 20 percent. That cost
    > jobs and was abandoned in favor of anti trust legislation. By the
    > 1920s tariffs were back in the range of 40 percent where they were
    > when Mr. Smoot and Mr. Hawley introduced their new tariffs that raised
    > tariffs to just below 60 percent.
    >
    > Smoot-Hawley tariffs went into effect in June 1931 but did not last
    > long. In 1934 Roosevelt started lowering them. When the Great Depression
    > got worse in 1937 tariffs were long back to pre Smoot-Hawley levels.
    > Tariffs continued to decline to current low levels.
    >
    > The notion that Smoot-Hawley was a major cause of the Great Depression
    > is a misreading of history. The Great Depression protectionism was
    > much less dramatic than claimed. The conventional story says that
    > the economy collapsed because the US introduced the Smoot-Hawley
    > tariffs in 1930. But this was more of the same protection we had
    > always had and not a radical shift in policy. At the time America
    > had been the most protectionist country in the world for more than
    > a hundred very prosperous years. After Smoot-Hawley, trade declined
    > from 6 percent of GDP to 2 percent. Too small a decline to justify
    > the boogieman status free traders have given it. Smoot-Hawley did
    > what it was intended to do. It kept us a net exporter throughout
    > the Great Depression and protected jobs from the dumping of foreign
    > goods.
    >
    > The history of US trade protection has been written by advocates
    > of free trade and surprise, surprise protection comes out as a bad
    > thing. That is wrong. Republicans were for trade protection before
    > they were against it. Every Republican presidential candidate from
    > Abraham Lincoln to Herbert Hoover was a protectionist. During that
    > long period of trade protection, contrary to the theory of free traders,
    > the US had higher real wages, lower prices, and more innovation than
    > the rest of the world.
    >
    > During that long period of protection the US ascended to the economic
    > high from which it has descended during a short period of free trade.
    Sep 26, 2009. 08:26 AM | 1 Like Like |Link to Comment
  • The Protectionist Bogeyman [View article]
    Thank you, Value Added. I didn't know that. And it's a pretty powerful picture of an un-level playing field.


    On Sep 25 08:17 AM Value Added wrote:

    > Edward, you are half right. Protectionism can throttle trade and
    > hurt economies on both sides. However, protectionism has been ongoing,
    > on a one-sided basis, for a long time. Average tariff on US goods
    > imported into other countries is ~40%. Average tariff on goods from
    > all countries imported into the US is ~1.5%. So only the US has suffered
    > from world protectionism, while importers in the US have continuously
    > raised the Smoot-Hawley boogeyman to protect themselves while the
    > US market is raped by the rest of the world. Ten generations of weath
    > built up in this country have been lost in a single generation. There
    > needs to be a level playing field. US producers should not have to
    > contend with extremely disparate wage structures worldwide and currency
    > protection schemes. Otherwise the US continues to be damaged and
    > ultimately everyone else as well. I propose a flat percentage tariff
    > on all goods, per country, until trade is approximately balanced
    > with each country individually. Grossly out of balance trade serves
    > only the interest of a few, and ultimately brings pain to many.
    Sep 26, 2009. 08:18 AM | 1 Like Like |Link to Comment
  • The Protectionist Bogeyman [View article]
    I'm talking less about what I like than what I see coming -- and how to try to make the best of what changes History forces on you. I'd like us to remain in the Golden Age where we're outward focused and rich and our bank accounts are all growing and universities get better and our children all believe in the law and there is no rain in the forecast....I'd like that also. I like the expanding reality. I don't like the reality with limits, such as we entered in 2007-8 with such a fury.

    The vision I see does not allow us to stop the river and go back. I don't really want protectionism. I don't really want nationalism. But they seem to be part of the cycle we're heading in to. It would be nicest if our lords were really protective of all of us and did not exploit us for their own gain....but that illusion is now gone. As we cycle into a darker and darker reality, we'll still need to try to work with the good side of the equation, see the good side as much as possible. Closing down international trade will make us economically poorer for a time. What good will come of it? If we measure everything in terms of money, then nothing good will be coming in the next decade -- but something good that might come is more social cohesion, more a sense of shared danger, more a sense of unity is times of difficulty. My mom lived through World War II and said it was the best time of her life, because everyone was on the same side in America. My wife lived through the Vietnam War (the losing side) and said she felt sad when the war ended because people became even more selfish after the war ended. We have lived through the richest cycle in the history of the globe -- but were we happy? We had money in our bank account but we had a lot of social problems, crime, drug addiction, prisons filled, our children shooting up schools....the world was pretty golden from 1992-2001 (in terms of our growing bank accounts) but there was a big shadow we were trailing along behind us.

    Nature changes. Reality changes. It is possible to not like where you are going as a nation but simply not liking it will not make it stop happening.

    My vision is not so much about what I want as it is about what I see.


    On Sep 25 09:43 AM chap08 wrote:

    > Micahel, I don't quite get your cake and flour analogy, but I understand
    > that you like the idea of America closing its borders. This is such
    > a dangerously bad idea that I have to register a protest! I don't
    > feel that I need to provide a lecture on the basics of economics
    > so I won't. We all know how bad this would be economically. The point
    > I want to emphasize is more political.
    >
    > We know from history that where countries are integrated through
    > trade, the chances of conflict (war) are greatly reduced. Of the
    > many examples, let's pick the European Union. The Europeans have
    > been fighting, basically for ever. The European Union was driven
    > forward (through trade) specifically for this reason. It worked.
    > On the other hand, where countries cut themselves off, the chances
    > of conflict are greatly increased. Two current examples would be
    > North Korea and Afghanistan.
    >
    > We can't afford the military expenditure any more just to frighten
    > people. We need to work with them instead. Closing our borders would
    > be bad in more than just an economic sense.
    >
    > Good article Edward and I agree that the risk of protectionism remains
    > high.
    >
    > On Sep 25 04:37 AM Michael Clark wrote:
    Sep 26, 2009. 08:16 AM | Likes Like |Link to Comment
  • China: More Trade Tensions [View article]
    I agree. A few months ago, a Chinese factory was going to be sold to a private concern and the manager called all the workers together to make the announcement and the workers beat the manager to death.

    There have been several generations in a row now who have been taught that the proper position of the government (and business) is to protect the masses. Well, now the masses have come to expect that.


    On Sep 26 02:20 AM Moon Kil Woong wrote:

    > I believe the China stimulus is more to prevent public protests and
    > outrage than to boost consumer spending. Social unrest is the #1
    > concern of the government and has been for decades in China. Until
    > China can create a political system which is more closely aligned
    > to capitalism then they will remain in a precariously unstable political
    > environment. A real GDP recession in China would mean instability
    > and chaos. Thus efficiency or rationality plays only a minor role.
    >
    >
    > They will do what they have to to stay in power, which is frankly
    > scary long term. Perhaps that's why they have such a hard time floating
    > RMB denominated bonds and is a good reason for why they still need
    > plenty of US currency to trade with internationally.
    Sep 26, 2009. 08:02 AM | 1 Like Like |Link to Comment
  • For the Fed's Credibility, It's Time for a Fire Drill [View article]
    Pushing on a string? Ok, 1-2-3: "I think I'm turning Japanese, I think I'm turning Japanese, I really think so..."
    Sep 26, 2009. 07:32 AM | 1 Like Like |Link to Comment
  • Leading Economic Indicator Isn't Indicating the Real Recovery [View article]
    The real LEI, in fact, is Fed actions. Keeping the rates low means they don't believe in the recovery either.

    Great article, Steven, as always.
    Sep 26, 2009. 07:19 AM | Likes Like |Link to Comment
  • Inflation, Deflation and Commodity Prices: How Emerging Markets Matter [View article]
    Have you looked at commodity stocks lately -- in the last five days. They don't look so good. Lumber: negative. Oil (all the energy components, Heating Oil, Natural Gas, Unleaded Gas): ugly. Copper: breaking down. Industrial metals: ugly.

    This instablog has charts of some of these:

    seekingalpha.com/insta...
    Sep 26, 2009. 07:13 AM | 1 Like Like |Link to Comment
  • The Deflation of the American Dream [View article]
    I agree, Punk. The problem with universal health-care is NOT the concept, it is the execution. Also, its the inflationary bubble that the medical cartel has erected, which still has not burst. Burst the bubble (deflate it), and halth-care again becomes affordable.

    If the Founding Fathers would have foreseen the mess we have today in health-care they would have included health-care as a right of all citizens. In the 1770's health-care was probably free, or very inexpensive. It used to be doctors' were revered because they devoted their life to serving humanity. Now they are honored because they are rich and famous, serving the rich and famous. The idea that no one will study to be a doctor if they can't get rich doing it is lame. But we need to burst the higher ed bubble also. People studying to become doctors should NOT be forced to go into heavy debt in school.

    We have a lot of things to fix. Greed is NOT the best motivator if you want a society that is not greedy.


    On Sep 03 11:11 PM punk_ash wrote:

    > There will never be job creation in US unless health care is fixed
    > for good. What is wring with health care is that there are too many
    > leaches sucking on it. Seniors expect to be taken care of with a
    > very expensive medicare, which is fair, but there are hundreds on
    > thousands of lawyers living off of health care, doctors and nurses
    > and dentists and pharmacists making insane amounts of money. Where
    > will all this money come from? Things will only get worse when no
    > one is willing to fund out deficits and much worse when the dollar
    > falls (if it does) and even more worse when these baby boomers start
    > retiring.
    Sep 26, 2009. 06:54 AM | 1 Like Like |Link to Comment
  • The Deflation of the American Dream [View article]
    Part of the problem the 'socialist' states are suffering is the same problem we are suffering. We've been inflating the prices of everything BUT wages since 1983. We need times of both INFLATION and DEFLATION. Expansion of debt/credit/prices followed by deflation of the same. But the rich are terrified of deflation because it will lower the value of ALL the assets they own -- and this is what gives them power. They would rather see the entire nation enslaved and crushed by inflation than to lose one ounce of their power.

    Inflation is how the rich oppress the poor.


    On Sep 06 12:17 AM Student of History wrote:

    > Keep in mind that outsourced jobs aren't going to England, Germany,
    > France or Canada where they have socialized medicine. These countries
    > have higher taxes than the US and they can't compete against cheap
    > labor from India or China either...
    >
    > I read a lot about enviornmental sustainablilty, which I suppose
    > is nice. Why is it that nobody is willing to face the issues associated
    > with economic sustainability as it relates government spending?
    > Socialism as we know it is still relatively new. I'm guessing 1945
    > to present in Europe and Canada? Their current government spending
    > and deficits (along with the US) are not sustainable. How long will
    > it take until they collapse under the weight of their entitlement
    > programs and deficit spending? Think socialized medicine will save
    > money? National healthcare programs in England and France are in
    > the red by billions. Think their healthcare is better? Survival
    > rates for almost all cancers are siginificantly higher in the US.
    > Without a doubt, we definitely need reform. Personaly, I'd go after
    > the insurance companies, especially the ones that have non profit
    > status and sit on billions of dollars (yes billions) in reserves.
    > I'd also go after the drug companies that refuse to make any honest
    > to god concessions while offshoring all of their research and development
    > and manufacturing. They think they do their R & D for nothing
    > in China and India? There going to be in for a big surprise when
    > their current technology is stolen and they do not produce any innovation...
    >
    Sep 26, 2009. 06:45 AM | 2 Likes Like |Link to Comment
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