Wednesday, December 29, 2010

Eleven Predictions For 2011 (Part 2)

After turning in a decent, but not spectacular, C+ performance in 2010, "Marko's Take" shoots for the blog honor roll in 2011.

2011 is shaping us as the year in which we may experience things that we never could have imagined before.  And, in the United States, of all places.  In no particular order, here are just a few of the events the world is going to have to deal with:

1.  A Global Stock Market Beating.   While our bearish posture was very premature, we continue to believe that the stock markets are making MAJOR historic tops.  The Dow Jones Industrial Average ought to drop below 8,000 sometime during the calendar year.  For a more thorough recent stock market analysis, click here:

2. Increased Global Militarism.  What better way to deal with a crummy global economy than to jump-start spending with a good ole fashioned war?  It's that simple.  Oh yeah, and let's not forget the ongoing tensions in the Middle East with Iran and nukes and terrorists.  North Korea, anyone?  For some of the latest thinking on how War is defined and conducted, click here:

3. Rapid Global Economic Downturn.  The tepid worldwide recovery is now running out of gas as the stimulative benefits of all the bailout programs have pretty much been absorbed by the system.  The Federal Reserve is out of power and out of bullets.  Wanna know why?  Here's your answer:

4. Short-term Interest Rates Remain Low While Long-term Rates Move Steadily Higher Throughout The Year.   The reason?  Increasing signs of simmering inflation leading to hyperinflation throughout the year.  More on this topic come.

5. The Precious Metals Markets Will Continue Strong Though The Year.  The question is how strong?  We continue to maintain our long-held belief that Gold will reach or exceed $5,000 per ounce with Silver heigh-ho-ing its way to at least $250.  Any target for year-end would be nothing but a sheer guess.  Some recent thoughts and ideas on how to play this bull market can be accessed here:

6. Martial Law.  Yes, you read that correctly.  My reasoning for this is contained in this piece:  While the dark scenario portrayed in that essay has veered a bit, I still stand behind it and hope to death I'm wrong.

7. Civil Disobedience.  It didn't happen in the United States this year as I had forecast, but it happened all over Europe in response to budget cutbacks.  So, why would someone think it can't happen here?

8. European Sovereign Debt Implodes.  The troubled European issuers of sovereign debt will only have bought time through the ill-conceived bailouts and budget austerity programs.  By this time next year, everyone will wonder how on Earth anyone with a brain could have possibly bought these bonds yielding anything under 10%. 

9. Global Financial Crisis.  Whether it starts with a Sovereign Debt Crisis or a currency crisis or the discovery of an entire new layer of bad, overmarket assets in bank balance sheets, the global financial system can hardly withstand an accident, let alone a Chernobyl.  If some number of trillions of dollars thrown at our financial system didn't really get us out of the last mess, what weapons do we have left?

10. Dollar's Slide To Second-Tier Status Continues.  Just last month, China and Russia decided simultaneously to abandon the USD  In its favor, the Dollar has only a few better alternatives, like this barbaric relic called Gold.  At this time no paper alternative possesses the liquidity and stability to repace the Dollar as a bona-fide reserve currency.  Unfortunately, China and Russia's actions means one thing's for certain.  A probably Gold-back new reserve currency will be created.

11. Big Bonuses At Government Sachs.  So what if you played a key role in wrecking the global economy and financial system?  So what if your clients lost all their money?  The reason these guys can get away with anything, you ask?  Well, here's your answer:  But if you really need some additional background, this video explains the nitty gritty:

2011 kinda feels like a bunjee jump, doesn't it?   Here's to hoping that our elastic straps hold!

Marko's Take

Eleven Predictions For 2011 (Part 1)

While it's fun to speculate on the future course of very unpredictable world events, it's much less fun to review how one's past forecasts have turned out. 

About a year ago, we did a special outlook on 2010 putting forth what we expected to see:

How'd we do?  Well, it depends on how one grades oneself, but let's be brutal, shall we?  After all, we've "Taken On" Goverment Sachs, Al Gore, Barney Frank, Barrack Obama, Warren Buffett and many, many more.  We've also lit fuses under the collective behinds of virtually every major financial and political figure.  Virtually no one came out unscathed.

So, what happens when "Marko's Take" takes on "Marko's Take"?

Predictions that were basically good include the ones about Republicans seizing control of both House and Senate.  While they did NOT get the Senate, the prediction of the landslide was made on January 16th, 2010, well before the dissatisfaction with everything Obama took the Democrats for a political car-jacking. 

We were skeptical that this country would see Obamacare.  That, too was a good call.  That god-awful piece of socialist legislation was not and NEVER will be enacted, although it did pass Congress.

Interest rates remained at very low levels all year.  Dead on!

The Dollar is beginning a process of being relegated to second-tier status as China and Russia are now transacting in Gold and alternative currencies.  Touchdown!

The stock market did indeed rise and sharply in 2010, but we can't do "chest bumps" about that one.  Many times during the year, citing everything from astronomical phenomena to arcane and rare technical indicators, we became extremely bearish WAY too early.  That crow soup we've been eating is starting to get old.  Mea Culpa! 

"Marko's Take" has maintained an ultimate target of $5000 per ounce for Gold and several hundred dollars per ounce for Silver.  Our bullish stance was overall correct, even though I would have thought that $2000 for Gold would be the existing price level today.  Nonetheless, this one goes to us.

Things that didn't happen:  Civil disobedience from shortages of staples like food and water, a collapse in Commercial Real Estate led by strip malls, no "Windfall Profits Tax" on oil, the economic recovery did NOT sputter by the 2nd quarter and residential real-estate prices did NOT rise.

Overall grade?  How does C+ sound?  Not Summa Cum Laude performance, but certainly enough to be at the top of the Delta Tau Chi fraternity in Animal House.  No need to be put on "Double-Secret Probation", yet!

Part 2 will present our new 2011 forecast, will 11 new surprising, shocking, scintillating predictions.  Same Bat Time, Same Bat Channel.

Marko's Take

Saturday, December 25, 2010

High Economics (Part 2)

If the first economic argument for legalization of marijuana ( didn't pursuade you, there are many more. 

Incarceration for marijuana offenses is fairly small, accounting for less than 1% of the prison population, but it does still keep about 60,000 inmates supported at taxpayer expense.  It is believed that the annual cost is on the order of $1.2 billion.  That does not include scarce court time, legal resources or police time which is allocated to enforcing an unpopular and needless code of law.

Then there is the medical aspect.  Marijuana is now used to treat nausea from chemotherapy, anxiety, pain, glaucoma and insomnia.  But is it safe?  Remarkably so.  Of all the causes of death monitored by the Food and Drug Administration, marijuana comes in DEAD LAST, with NO fatalities (
Even aspirin, which many doctor recommend be taken daily, accounts for thousands of deaths per year.

But, despite overwhelming societal and economic benefits, Proposition 19 did NOT pass in California.  What are the arguments against?  The main objections to legalization are focused on the belief that marijuana use is addictive, a "gateway" to more serious drugs and a factor in greater crime.  There also exists the fear that once legalized, we'd become a nation of Cheech and Chongs.

The U.S. Drug Enforcement Agency (DEA) has issued this position piece outling the arguments against:

The addiction argument is absurd in light of legal alcohol, cigarettes, soft drinks and prescription drugs, all of which are far more injurious to the user and most importantly, can be FATAL to abusers and second-parties.  Caffeine is addictive.  And, to some, so is shopping, sex and gambling.  So is reading "Marko's Take"!

The crime argument is equally absurd.  Marijuana is a sedative.  How many stoners pull off a bank heist or hold up a 7-11?  And, should marijuana become legal, the price would certainly drop.  So, the notion that one has to go rob a gas station for a few joints becomes preposterous. 

According to federal statistics, nearly 100 million Americans, or 1/3 or the population, have, at least at one point in their lives, imbibed.  Cigarette smokers make up about 25% of the adult population, while drinkers make up more than half.  Experience with both prohibition and other countries experimenting with legalization have shown that very few NEW people will  become  users.  And, so what if they do?

Merry Christmas!

Marko's Take

Thursday, December 23, 2010

High Economics (Part 1)

Few national political issues are as clear-cut as the growing movement toward legalization of Marijuana.  The reasons for supporting this NOW are numerous and quite financially substantial.  With a few more votes and the stroke of a pen, we can take a major step toward trivial matters such as balancing the budget.

According to recent article in Time Magazine, more than 500 prominent economists agree that the legalization case is a no-brainer (
Odd, that "Marko's Take" was not consulted.

Public sentiment is growing tired of the vestiges of persecution for those involved in minor possession.  Recently, a jury in the conservative state of Montana could not be assembled because of the virtually unanimous sense that it was an utter waste of private and public resources  (

Marijuana is a massive industry even when compared to other substantial agricultural industries.  The largest countries growing, apart from the United States, are clustered in Central and South America  ( 

In the United States, California is dominant, with nearly 50% of national production totalling a paltry $12 billion per year (  Think citrus is big?  According to recent data, the total annual production of Florida's ENTIRE citrus crop is a mere $9 billion  (  California is number 2 in citrus meaning that marijuana is twice as big as this state's citrus industry.

So, let me get this straight.  We have a $12 billion industry which is NOT paying taxes, hiring people who are NOT paying taxes and selling a product which has NO sales taxes.  And, we have a state budget problem which is forcing cutbacks everywhere.  And, one recalls a ballot proposition to legalize that LOST?

So, if I you ever hear someone affected by the state cutbacks complain to you, ask them how they voted on the California referendum to legalize marijuana.  If they answer that they voted no, please send them this blog so they'll shut the hell up!

But legalization doesn't just stop with selling the plants for medical or recreation use.  The fibre of the cannabis plant, known as hemp, has an amazing variety of uses from clothing, to paper, to biomass, to medical to even jewelry (  The estimated size of the domestic market for hemp-based products is on the order of $500 million.

But, the benefits hardly stop there.  In the next part, we'll discuss more fully the medical and criminal aspects, either of which, alone, would be enough to warrant its legalization.

Marko's Take

Tuesday, December 21, 2010

The Educators Are The Ones Needing Education (Part 3)

You didn't think the multi-part series on financing education would end with an endorsement of school vouchers, did you?  There actually exists an even better "Marko's Take" solution.

To get up to speed on the issues of financing public and private education, the prior two blogs can be accessed here:

If we all agree that an educated society is in everyone's best interest, then the only issue is how to finance it.  Just a few of the key economic benefits of a better educated populace include higher employability, income,  productivity with a much lower crime rate and dependence on the public dole.

We can take this logic much further.  If I earn an additional $1 million lifetime dollars as the result of public generosity, than wouldn't it be much FAIRER if I SHARED some of that with the people who financed me as I actually earn it?   Of that extra cool mill I just made, why not pay as I go as long as I earn?  This can be done through a small income tax surcharge which is earmarked specifically for future students.

This plan would also accomplish eliminating all the dead-beats who borrow and NEVER pay the loans back.  According to recent data from the Department of Education, student loan default rates are soaring:

The stated default rate is actually believed to be much, much higher than the 7% official rate.  Many firms have been set up to keep a defaulting student from officially being characterized as such to protect credit scores and bank balance sheets. 

The really sad thing about student defaults is that the majority have the capacity to actually pay the loan back but rationalize non-payment because it's government-guaranteed and little enforcement mechanism exists. 

The IRS, I think we'd all agree, is far better at collecting debts than the Department of Education.  But, another solution would be to use the present value of loans to offset future Social Security liabilities.  The thought here would be to eliminate future public liabilities in exchange for funding some level of education.  A higher income earner would certainly have a greater capacity to actually SAVE for retirement!

Now how simple would this be?

For more on the Social Security system, we have two videos which explain the system itself, as well as a "Marko's Take" solution.  They can be viewed here: and here:

Marko's Take

Sunday, December 19, 2010

The Educators Are The Ones Needing Education (Part 2)

If the effectiveness of the Public Education system were given a grade, it would surely get an F.  The more we spend, the less we get.  The evidence?

The most basic question concerns whether the public coffers should be used to fund education at all?   If you think about it, an educated population, like a strong army, is in society's overall interest.  There is a direct and positive correlation between level of education and societally beneficial behavior such as higher employability, lower crime rate and out-of-wedlock births. 

Economist Milton Friedman first proposed a system of school "vouchers" to make collective spending produce better results.   Under the public school system, students receive a certain value through either cost-less tuition in K-12, or through subsidized tuition in the State University or junior college system. 

Friedman argued that a key factor in the poor performance of the education system was lack of competition as reinforced by the tenure system and teacher's unions.   The solution?  Let students opting out of public schools use the money allocated to them by the state at ANY school.  The result?  A flourishing private school industry competing with other private schools for student dollars.  Ergo, better performance by the education system.

While the voucher system contains a certain logic, there are numerous detractors.  One argument against vouchers maintains that a large number of private, religious schools would receive public funding and cross the "church vs. state" issue in the Constitution.  However, since it is the parents making the choice, it is hard to understand how the State could be imposing religion.  In addition, there is also the objection that vouchers take money away from public education.  Well, if you read Part 1 as linked above, one might conclude that taking money away public education might not be such a bad idea. 

Other reasons in favor of school vouchers include the elimination of the inherent unfairness in having parents  who pay for private schools pay twice:  once in taxes for public education they don't use and the other in private school tuition.  In addition, it would allow students of less wealthy parents access to private education, in particular specialty education in fields like music, sports or science.

Voucher systems are far from widespread, but are being employed in parts of 10 states and the District of Columbia.  However, the total number of students receiving them remains quite low.  Chile has the most advanced voucher system in the world actually employed covering 90% of its students. 

Lastly, and perhaps most importantly, public education has been a breeding ground for political correctness and liberal politics.  If you want to experience real censorship, just be either a Republican, Libertarian or Conservative in a University level Political Science class. 

Marko's Take

Thursday, December 16, 2010

Hindenburg Sightings Overtake Elvis Sightings

Just when we thought we had heard the last of the dreaded, but also much maligned, Hindenburg Omen, comes yet another sighting in Wednesday's trading according to expert Robert McHugh (  In a short email sent out to his mailing list:

"Stocks generated a new confirmed Hindenburg Omen Wednesday, December 15th, an official signal with the second H.O. observation in the past two days. This Omen has appeared before all of the stock market crashes, or panic events, of the past 25 years. All of them. No panic sell-off (greater than 15 percent) occurred over the past 25 years without the presence of a Hindenburg Omen. Another way of looking at it is, without a confirmed Hindenburg Omen, we are pretty safe. But we have an official Hindenburg Omen as of December 15th, 2010, so we are not safe."

A reasonably thorough discussion of the complexities and calculations of the omen were discussed  here:

The Nasdaq is now at a 3 year high while the Dow Jones Industrial Average, Standard & Poor's 500 and Russell 2000 are at clear 2 year highs.  Yet, over the past 3 trading days, NYSE new 52 week lows have been astounding high.  The exact number depends on whether you look at the Wall St. Journal or the Yahoo numbers, but new lows ran 2% to 3% of total issues traded each day.  It would be normal to have 1/10th of those levels!

While we're looking at our second favorite zepplin, why not check the solar calendar?  According to NASA, a partial solar eclipse occurs on January 4, 2011.  The last eclipse, occuring early in the summer was total.

Whether a partial eclipse counts in the scheme of astro-harmonics remains an open question.  The connection between solar eclipses, lunar cycles and stock market crashes was discussed more fully here:

So, add to that the horrible sentiment picture as described in these recent "Takes":,   and one could pretty reasonably conclude that a helluva bear market is dead ahead.

As to Gold and the Gold Bugs Index (HUI), it really appears that a retracement to the 200 Day Moving Average (DMA) is upon us.  That would be another 10% downside for the metal and about 15% for the precious metal stocks.  Silver, if it should correct to its 200 DMA, would have about 30% exposure.

The prospect of a more significant drop in the precious metals sector is extremely remote in light of rapidly building global inflation pressures.  This pullback, which ought to be quite violent but short to scare everyone, should be viewed as a terrific buying opportunity. 

For now, investors ought to stay as liquid as possible, even though safe places to park money offer no return.  Better no return than a sharply negative return.

Marko's Take

Sunday, December 12, 2010

The Psychology Of Investing (Part 2)

As described in Part 1, successful investing is far more than understanding finance and business.  If it were that easy, every MBA would be rich.  In fact, even experienced professional investors endure breath-taking losses.  Many, many hedge fund managers have lost every single penny under management in days because they made very basic mistakes.

Making money requires some degree of timing.  While investment legends such as Warren Buffett and Benjamin Graham completely avoid market timing, they would not disagree that there are far better times to enter a position and exit a position than others.

Entering a new position when there is panic is a far better bet than when shoe-shine boys and taxicab drivers are giving stock tips.  So, we turn again to different ways to measure investment sentiment.

Statistics from a mutual fund group called Rydex provides an interesting way to gauge how investors are thinking.  Rydex has been a pioneer in the creation of inverse funds, that is, funds which produce returns when markets go down.  Technicians have created "Rydex Ratios" which measure the employment of assets in long-biased funds versus those in the inverse or "short" funds.  In general, the more assets are playing the short side, the more bearish investors are, and the more likely that a bottom is at hand.

A practioner of the Rydex Ratio is Shaeffer's Investment Research  A recent graph of the Rydex Ratio using asset investment in long versus short Standard & Poor's 500 index funds can be accessed by clicking here:

Another set of indicators employs options buying and selling statistics.  Put options buyers bet on falling prices while call option buyers bet on rising prices.  Therefore the "put/call ratio" tracks bearish versus bullish bets and acts as a contrary indicator.  These ratios can also be found in Shaeffer's Investment Research by clicking here:

Probably the most comprehensive sentiment analyst is a guy named Jason Goepfert who has a newsletter known as Sentiment Trader  I have been a subscriber to this newsletter and it has been quite valuable as a resource.  A little more information on Jason can be accessed here:

Jason creates a very comprehensive measure of sentiment using a variety of indicators, of which some are the result of his proprietary research.  His short-term position, as of December 10th, 2010:  "We've been looking for a 2-3 day decline, but stocks aren't accommodating. We'll move back to Neutral if SPY trades above 124.16. If that happens in the first 1/2 hour of regular trading on Friday, then SPY drops back under 123.60, we'll move back to 25% Bearish."  Goepfert's intermediate-term position is neutral.

Jason constucts several models of investor emotion.  His composite index is constructed using the following indicators:  Sentiment surveys, proprietary versions of the positioning of Futures traders, puts/calls, volatility indices, breadth ratios, the "Trading Index" or TRIN, and several un-published indicators. 

He also measure the positioning of "smart" to "dumb" money, or those folks who have a tendency to be consistently right versus those consistently wrong.  One example of "smart money" would be corporate insiders who are in the best position of knowing how their companies are doing.  When corporate insiders buy their own stock, that is about a good of an endorsement of a company's prospects as you can get.  Dumb money is your typical retail investor and option speculator, who tend to be wrong far more often than right.  Currently, according to his research, smart money is 33% confident in a rally, while dumb money is 79% confident.  Fortunately, Marko's Take would agree wholeheartedly with the smart folks.

Taking everything together, virtually any reasonably calculated sentiment measure is suggesting that market confidence is at unsustainable levels.  Most measures are within striking distance or exceeding the type of euphoria which characterized the major tops in 2000 and 2007. 

As for the Gold market, analyst Mark Hulbert measures sentiment in the precious metals arena.  As of November 24, Hulbert's conclusion is that sentiment remains FAR from overheated.  His most recent publicly available views are described here:

We remain a bit cautious on Gold near-term, but expect any correction to be sharp and short-lived.  It would be preferable for the precious metals complex to get a bit of a shake-out, but these types of parabolic moves often leave investors waiting for corrections which never come.

Marko's Take

Wednesday, December 8, 2010

The Psychology Of Investing (Part 1)

Successful investing is about far more than understanding value, balance sheets and quality of management.  One also needs to be a pretty good amateur psychologist.  Virtually all market tops and bottoms occur at emotional extremes:  Bottoms coincide with widespread panic while Tops tend to be associated with some unjustified level of overconfidence or greed.

We continue our very bearish stance on virtually all of the capital markets.  We've given dozens of reasons that this so-called "recovery" is unsustainable and, with it, a major, major peak is being formed in the capital markets. 

In addition to all the reasons for concern previously discussed, another subset of technical analysis referred to as "sentiment" analysis is clear in its verdict:  SELL!

The theory behind sentiment analysis is quite simple, and so logical that Mr. Spock himself would not even raise an eyebrow.  Market peaks occur when buying power has become exhausted.  This happens because those buyers have become either complacent, overconfident or just plain greedy.  Once they've all bought in, who's left to buy?

This level of emotional extreme can be measured quantitatively, so one need not be an empath to get a good fix on things.  The most basic form of sentiment reading is the market poll.  There are several which have long track records, are consistently applied and easily accessible for historical analysis.  The two of note are Investor's Intelligence which polls newsletter writers and the American Association of Individual Investors (AAII) which polls retail investors.  Barron's reprints a number of these polls every week

The AAII poll currently shows 49.7% bulls versus 26.2% bears.  These numbers are at major, major top historical readings and suggest any further upside from here can not be ruled out, but must be viewed as quite limited.  Investor's Intelligence confirms similar results.  The most recent readings are consistent with levels virtually identical to the tops reached in 2007 and 2000, with 55.4% Bulls and 21.8% Bears.

Other sentiment indicators are less precise but, nonetheless meaningful.  Just two days ago, Goldman Sachs issued its 12 month projection of 1,450 on the Standard & Poors 500 (SPX) or a gain of 25% from here.  This forecast was not directly attributed to "Dear" Abby Joseph Cohen, but suffice it to say that Ms. Cohen is a notorious perma-bull who never met a reason not to recommend stocks even at extremes of overvaluation.  She was quite bullish at the upper end of the Nasdaq bubble, issuing bullish forecast after bullish forecast.  Somehow, she kept her job.

There is the "Magazine Cover" indicator.  Mainstream publications like Business Week, Time and Newsweek are famous for having cover stories about the "Death Of Equities" or the "New Age of Investing" almost exactly at market peaks and bottoms.  These publications act as investor polls in and of themselves, merely reflecting what their readers believe.

Another excellent sentiment reading, and probably the best one of all, is the level of market volatility.  This one may be best because it's determined through actual trading.  Volatility is a statistical measure of the expected degree of variability in stock prices over various subsets of time.  It is a key component in options pricing, but very, very useful in understanding exactly where investors sentiments lie.

There are several measure of volatility, but the best one is called the VIX, which is its symbol.  At market bottoms, the VIX will have readings of above 50.  Literally translated, this means that investors have priced in a range of up or down 50% over the coming year.  At the other end, VIX can print under 10%, indicating complete complacency or lack of fear.  A 3 year chart of VIX can be accessed by clicking here:

You will note that VIX is currently incredibly low and confirms the very ominous readings mentioned above in the investor sentiment polls.

Think this is all there is to sentiment?  Not even close!  In Part 2 we'll discuss other very interesting indicators of how investors deploy capital and how it gives us pundits a means of understanding what's in their heads.

All in all, this is still a time to remain very, very cautious and keep levels of cash high. 

Marko's Take

Monday, November 22, 2010

The Missile Crisis That Never Ended

The Presidency of John F. Kennedy, which lasted less than 3 years, was perhaps the most dramatic in history.  His election, which at the time, was the closest ever, was marred by allegations of ballot-stuffing from the Chicago political machine.  A key election issue was the so-called "Missile Gap" amid the paranoia that existed at the height of the Cold War with the Soviet Union.

A key figure in the entire episode with Cuba and the USSR, was none other than a 13 year old boy, Julio Antonio del Marmol.  Last week, we introduced Dr. Marmol and some of his intelligence operations in this piece:

Yes, it does sound far-fetched for a boy not old enough to shave to be an intelligence operative.  Send a boy in to do a man's job?  If you think about it, who better?  Who'd suspect a 13-year old?  Not Castro!  He gave young Julio, whom he considered a "pet", unfettered access to Cuba's military bases.

Del Marmol's uncle, who had direct contact to U.S. intelligence, recruited him to use his incredible access to gather highly sensitive information.  At first, young Julio was tested by being provided with a camera spy pen to take pictures at the military base.  This vintage spy equipment still exists, and can be reviewed here:  In case you're wondering, Del Marmol was NOT given a shoe phone.  That privilege was saved for Maxwell Smart.

The camera pens used by Del Marmol contained several pictures each and were passed on to his uncle who then, in turn, passed them on to U.S. intelligence.  Del Marmol's early work produced what he believes are the first photographs of nuclear weapons brought in from Soviet merchant ships for assembly in Cuba.

As these were reviewed by analysts at the Central Intelligence Agency for authenticity and found to be legitimate, Del Marmol was then shipped boxes of pens to then photograph the surrounding areas, landmarks, road signs, Soviet trucks and everything else needed to fully comprehend the unfolding military threat to the south.

As early as August 1962, the United States officially suspected the Soviets of building missile facilities in Cuba.  During that month, its intelligence services gathered information about sightings by ground observers of Russian-built MIG 21 fighters and light bombers.  U-2 spyplanes found surface-to-air missile sites at 8 different locations.

On Monday October 15, 1962, the CIA's National Photographic Intelligence Center reviewed the U-2 photographs and identified objects that they interpreted as medium range ballistic missiles. By Friday, October 19, frequent U-2 spy flights showed 4 operational sites.

History reports that an agreement was reached by which the USSR would remove and dismantle Cuban missiles in exchange for a pledge by the United States NOT to invade Cuba plus the removal of American nuclear weapons from Turkey.  At this point, Dr. Marmol's information varies dramatically from the history books.

According to Del Marmol, nukes were NEVER actually removed from Cuba.  In fact, over the last 5 decades, he contends that Cuba now has built an arsenal of several hundred intermediate-range ballistic missiles (IRBMs) and an atomic submarine fleet. 

He further contends that the United States has been well aware of Cuba's and the USSR's deception, but remains mum so as not to admit to the failings of its own intelligence and to prevent the unnecessary alarming of the population.

For public comsumption, Cuba in 2002 signed on to the United Nation's policy of non-nuclear proliferation and issued this press release, calling the United States, the sole nuclear power of the Americas.

So, while the United States and United Nations continue to wring their hands about the nuclear programs of North Korea and Iran, neither of which has the ability to reach the our shores, a silent and fully-armed enemy lies less than 100 miles away with the ability to wipe out our largest cities.

An ongoing standoff has remained in place for nearly 5 decades.  Cuba is safe from invasion and while Castro may be certifiably insane, he is NOT suicidal.  Instead, the export of Castro's revolution is done through client states in Central and South America.

The threat from Cuba is far greater than just the ability to inflict military damage.  Castro's forces are active in regime de-stabilizing activities in key "friendly" countries such as Mexico, Brazil and Argentina.  Venezuelan strong-man Hugo Chavez is already a Castro disciple.

How do we know that Del Marmol's information about ongoing Cuban military strength is true?  Admittedly, his information is circumstantial, but he points out that the United States has been the sole super military power for years and has left Cuba untouched while acting as policeman all over the world in places such as Bosnia, Sudan, Ethiopia and others despite Cuba's proximity to our shores.

According to Del Marmol, Cuba's plan is to export its revolution to the United States without firing a single bullet.  How are they doing this?  For one, they are sponsors of militant groups such as "The New Black Panthers".  They also have masked operatives who attend illegal immigration rallies in key border states Texas, Arizona, New Mexico and California who intentionally incite violent riots.

It is believed that Cuba is the ringleader of "The Three Continental Union" comprised of entities in Africa, the Americas and Asia.

It's no secret that our way of life is in jeopardy from American-hating countries in the Middle East, the Taliban and North Korea, a patient and quite potent enemy lies barely a stone's throw away. 

Marko's Take

Wednesday, November 17, 2010

The Titanic Syndrome

It sounds like something a trained psychiatrist would diagnose, but it is yet another arcane and statistical market quirk.  This indicator was created by a gentleman named Peter Eliades, who publishes a newsletter called Stockmarket Cycles (

Eliades has been in the business of technical analysis since 1972, when he began to appear on Los Angeles-based UHF channel 22 as a commentator.  Back then, a 14 year old real life Alex P. Keaton would watch him during school breaks from within the Beverly Hills High library.  Kind of explains why my social life wasn't exactly brimming in those days.

Eliades predicted that the horrible early 1970's bear market would bottom during the week of December 9-13, 1974 many, many months in advance.  It bottomed on December 9th.  Publication of Stockmarket Cycles began in July of 1975.

In 1985, the first year he was rated by the independent rating services, Mr. Eliades earned the Timer Digest’s "Timer of the Year" award and placed second in 1986 in a close race which wasn’t decided until the final trading day of the year.  In 1989, Mark Hulbert (Hulbert Financial Digest) named Mr. Eliades as the "Most Consistent Mutual fund Switcher" based on Eliades timing signals for the years 1985, 1986, 1987, and 1988.  From January 1985 when Hulbert first started rating Stockmarket Cycles, through August 1990, Stockmarket Cycles had the #1 market timing record in the country with a timing gain of 174.3% versus a comparable gain in the Wilshire 5000 Total Return Index of 119%.

In other words, the man is no Abbey Joseph Cohen.  Now, before we go on to Eliades' current outlook, it is important to note that he and "Marko's Take" do not exactly mesh at the current time.  MT says market meltdown imminent with a sub 8000 low for the Dow Jones Industrial Average by early 2011.

From the latest Stockmarket Cycles update for Tuesday, November 16th:

According to Eliades, "we would say that there is a real chance for a short to intermediate-term decline over the next several weeks but because of significantly higher nominal four-year projections, those projections force us to continue to look for higher prices going into 2011."

While our penchant for tongue-in-cheek hubris suggests that we vote for us, last I checked "Marko's Take" has yet to win a single Timer's Award.  Clearly, a conspiracy.

Eliades goes on to describe the Titanic Syndrome:

"Our good friend, Shon Saleh, a great institutional broker at Smith Barney in Century City California, jogged our memory today by asking a question about 52-week highs and lows after a new high is registered in the market. The answer to the question is the Titanic Syndrome, a market indicator devised by Bill Ohama.  Bill recognized back in the 1970s and 80s that if the Dow Jones Industrial Average made a new high for the year or had rallied 400 points or more (remember this was back in the 70s and 80s when 400 points was a lot bigger percentage move than it would be today) and that new high was followed within seven trading days by a day which saw more 52-week lows than 52-week highs on the New York Stock Exchange, a Titanic Syndrome signal would be given suggesting a market top of some significance.  Well guess what? Today was the seventh trading day after the November 5 new high registered in the Dow and the official number of new highs versus new lows on the New York exchange was 20 new highs and 139 new lows. New lows swamped new highs. On the face of it, a Titanic Syndrome signal was generated." 

When employing these indicators which use historical data as a benchmark of their efficacy, it is important to take into account how the nature of markets has changed.  Of particular importance has been the enormous growth of bond funds, ETFs and other exotic securities which may affect how the ratios of new highs and new lows relative to issues traded is computed. 

Eliades does, in noting the presence of the Titanic Syndrome, expect a potential sharp correction possibly dead ahead.  However, he views it as a correction, while we're thinking MAJOR MARKET TOP.

Marko's Take

Tuesday, November 16, 2010

Hindenburg Re-appears

A major mystery for me this summer has been the strange levitation of the stock market, despite an endless list of reasons for it to get crushed.  Not only does the market have to contend with a shrinking money supply, a failing financial system, crumbling European bailouts and an inept Federal Reserve, but it also seems that the entire galaxy is aligned against it.  For more on the Hindenburg Omen, click here:

By now, the market should have begun its catatrophic descent.  Why hasn't it?  My guess is that all the hot air coming out of politician's yaps, coupled with the aggressive market support employed by the Federal Reserve and Helicopter Ben, has temporarily put a delay on what I still contend is inevitable.  The best efforts of the Fed will not work.  Here's why:

Today's trading witnessed a very Hindenburg-like day.  According to Yahoo Finance, there were 136 new highs and 164 new lows among nearly 4,000 issues traded.  That would provide the initial trigger for the Hindenburg.  As noted in prior pieces, there are a myriad of filters, but honestly, one needs no filter other than a gas mask to see that the "House Of Cards", known as the U.S. Financial System is on the verge of collapse.

But that's not all.  Nearly every asset market has gotten incredibly and feverishly over-extended, including precious metals and mining stocks.  We have discussed other technical indicators which are also very  ominous,  and  those are discussed  here:, and

Add to that the rising inflation pressure showing up in prices at WalMart and other retail stores, plus in today's report on the Producer Price Index.  Creeping inflation will put a cap on the Fed's ability to perform it's levitation tricks or a full blown hyper-inflation episode will ensue even sooner.  It, too, is inevitable, once monetary velocity picks up.

So, what's an investor to do?  Go To Cash!  The only investments likely to survive this assault will be the very oversold U.S. Dollar and very short-term Treasuries.  Yeah, the returns suck, but even 0% is better than losing 20% or more in a fairly short period of time.

Unlike the meltdown of 2008, which, too, was forsaged by a series of Hindenburg Omens, this one will not be an exact repeat.  This time, Gold, Silver, Commodities and precious metals mining stocks ought to hold up much better.  A correction to their 200 Day Moving Averages would be the most likely scenario, as discussed in this recent "Marko's Take":

Better to wait for another entry point, well below current levels, than to sweat it out in a volatility spike down that may just give you a heart attack.  And, the bargains that will become available will be well worth waiting for. 

So, how long may stocks go?  Obviously, no one knows, but a Dow Jones Industrial Average of between 6,000 and 8,000 would seem to be a logical target occuring early in 2011. 

It's going to be a very, very cold winter for most investors.  Store lots of blankets!

Marko's Take

Sunday, November 7, 2010

The Educators Are The Ones Needing Education (Part 1)

We live in a world of very constrained and limited resources.  But imagine, if you got more resources, even adjusted for inflation year-after-year.  Your performance ought to improve, right?  Not if you are one of the fine public educators in this country.  The more you spend, the more your performance deteriorates.  Of course, your job is protected by a hostile teacher's union and tenure.  You can't be fired no matter how bad you are at what you do, yet you complain how you're so damn underpaid.

Perhaps the benchmark standard test for scholastic achievement is none other than the Scholastic Aptitude Test (SAT).  This exam was designed by educators to be objective and is used in college admissions to differentiate among qualified candidates.  It is also used to award scholarships.  For those unfamiliar with this test, you can learn more by clicking here:

Average national SAT scores by year, Verbal and Math are listed below while in paratheses are inflation-adjusted per capital spending on education according to the U.S. Department of Education

1972 530 509  ($4,489)  1986 509 500   ($7,007)  2000 505 514  ($8,923)

1973 523 506                 1987 507 501                   2001 506 514

1974 521 505                 1988 505 501                   2002 504 516

1975 512 498                 1989 504 502                    2003 507 519

1976 509 497                 1990 500 501  ($7,749)    2004 508 518

1977 507 496                 1991 499 500                    2005 508 520

1978 507 494                 1992 500 501                    2006 503 518 ($10,041)

1979 505 493                 1993 500 503                    2007 502 515
1980 502 492                 1994 499 504                    2008 502 515

1981 502 492                 1995 504 506     ($7,796)

1982 504 493  ($5,639)  1996 505 508

1983 503 494                 1997 505 511

1984 504 497                 1998 505 512

1985 509 500                 1999 505 511

As can be easily gleaned from the chart above, per capita spending even after adjustments for inflation has MORE THAN DOUBLED from 1972 to 2006.  At the same time Verbal scores have declined from 530 to 503 while Math has edged up from 509 to 518.

Average test scores are also directly correlated to household income.  The higher the average household income, the higher the average test scores.  So, while there has existed a debate as to the racially biased nature of the test, most of the racial differences are explained by income differences rather than genetics.

The trend toward deteriorating test scores is even true among the Advanced Placement Exams which, if passed, give high school students college credit.  The rate of test taking is at all-time high, while at full 41.5%
of tests taken result in a failing grade

So, we've identified the extraordinary failure of public education spending.  What's the solution?  It's known as school vouchers, which we'll explore in part 2 of this series.

Meanwhile, Marko's Take is here to save you each more than the $10K per capita you're being forced to spend.  We're still free and more informative than Encyclopedia Brittanica.

Marko's Take

Saturday, November 6, 2010

World War III Continues...Conducting War With Information

We've discussed a new approach to thinking about how modern warfare is conducted.  Instead of using traditional armaments such as fighters, nukes and submarines, war is now conducted through use of such diverse means as financial, economic, trade, cyberspace and terrorism

But that's hardly all.  It is now possible to use really high-tech approaches as triggering forces of nature such as earthquakes and weather to create damage to crops or structures or even generate tsunamis.  It is possible to use pyschological tactics, known as psy-ops, to instill debilitating emotions to your enemy.  If that doesn't do the trick, then how about inflicting massive environmental damage to your opponent? (

But, the use of information  is yet another technique for financing, as opposed to conducting, war.  Of course, excellent intelligence and reconnaissance is critical to execution of a battle plan.  But information has another use:  surreptiously financing a war, without disclosure to Congress or the American people.
Fortunately, for the first time, Marko's Take will reveal a bona-fide true story of how this medium was actually employed in some of the major foreign operations of the last half century.

We had the privilege of being provided with the opportunity of speaking with Dr. Julio Antonio del Marmol, PhD.  Dr. del Marmol has been an incredibly active member of the international intelligence community for nearly half a decade and tells stories that would make Jason Bourne look like a couch potato.  He has had no less than 56 separate attempts on his life, and obviously, survived each one.  He will be revealing each of these attempts and how he escaped, in an upcoming documentary called "One More Attempt". 

Beginning at age 13, del Marmol began trasmitting data about Castro's Cuba from within to the international intelligence community.  In 1971, his cover was blown, and he fled his home country to then be recruited for a new assignment: to cooperate with agents against Cuba.

His operations are even more secret than Animal House's "Double Secret Probation".  For del Marmol to have been able to conduct his operations, naturally, required very large sums of money.  The environment in that time frame was extremely unconducive to any official monetary support.  Vietnam was a growingly  unpopular boondoggle and the flower generation was making known its message of love and peace. Supporting covert operations would be about as popular as Herman Munster at a House of Mirrors.

So, the entities working with del Marmol began to provide him with the ultimate in insider information:  They gave him advance notice of expected increases in prices of certain assets and other tips on important events which had extreme value to an investor or businessman.  We're not talking about the an advance copy of the crop reports as in "Trading Places", either.

In 1971, as del Marmol began to build his non-conventional army, he was provided with the strong suggestion that the price of oil was going up.  About 6 months later, the Arab Oil Embargo happened, generating tens of millions of dollars.  Subsequently, he was given other "forecasts" such as the breakup of the Bell monopoly which he used to begin a very successful and lucrative business in payphones.

Of course, today, he would have Marko's Take to accurately forecast the future, but the good doctor is now retired and living what looks to be a very productive life. 

Del Marmol's role was to provide what he refers to as his "services".  Those spanned the gamut, from real spy stuff such as facillitating a regime change.  Thankfully, it was not his idea to eliminate Castro with the exploding cigar, but we anxiously await hearing about that one.  His other activities included setting up a sting by purchasing large amounts of cocaine from Columbian drug lords in order to expose the connection with Cuba.  He also used money, often obtained from other sources, for many benign purposes such as building roads, schools, hospitals, airfields and bridges to instill goodwill among native populations that were suffering from oppression.  They also provided badly needed food and medicine.

Del Marmol's forces were involved in some very major operations including Panama, Grenada, Congo and Ethiopia.  They were peripherally involved in supporting insurgents in Afghanistan during the Russian occupation.  They had some, but limited, involvement in Europe.  The end game, in each case was regime change or preservation of a friendly regime under seige.  The various administrations in power feared the "domino effect", especially in South and Central America.  It was particularly feared that Mexico would become a Cuban satellite and a very hostile enemy with whom we'd would share a very long border.

As del Marmol's scale of operations grew, information alone was not enough to generate sufficient funds.  Each tip could only produce so much.  Market limitations capped the amount of profit each tidbit could earn.  It was important to not score a gain so huge that it attracted attention and perhaps some sort of inquiry by regulators, the IRS or the media.

So, in 1988, it was agreed to by folks at the very top that del Marmol should be able to actually print genuine U.S. Currency.  Yes, del Marmol was given a printing press, in effect creating a personal Federal Reserve and Department of Treasury.  He had dies, plates, magnetic ink and the special paper used to print currency.  Del Marmol's plates included Twenties, Fifties and Hundreds.

In order to make the currency genuine and indistinguishable from the ones produced at the mint, del Marmol engaged in some trial runs, using standard copier paper.  With the benefit of multiple attempts, they were able to achieve a pretty accurate reproduction.

The "beta" bills were voluminous and required a virtual 24-7 destruction process.  Unfortunately, not all were elinimated.  Del Marmol then made a grave mistake.  He gave an employee permission to use some phony currency, but warned against using more than a single $100 bill at a time.  If the counterfeits were then discovered, the bearer could always claim that it was found or received in change somewhere.  Del Marmol's employee, apparently no threat to Albert Einstein, decided to go shopping at Nordstrom's with a fistfull of monopoly money.

A blue collar worker with $20,000 in walking CASH?  Needless to say, it drew the attention of the Secret Service and del Marmol was arrested for counterfeiting.  Without much detail, the seizure was reported in the Los Angeles Times

At the time it was broken, the story was so significant that it interrupted the 1988 Olympics.  Del Marmol was released by executive order after 5 months.  Reportedly, the case has been completely wiped clean from all records and remains under Federal Seal.  Took a few buckets of white out and some instuction from Russian historians to get the job done.

Cover blown, del Marmol has since retired.  Somehow, despite more cardiac moments than the bomb squad, del Marmol is still in incredible condition, looking much younger and fit that his 63 years.  He landed in the United States at age 23 knowing little English.  Now he speaks with nary an accent.  Not once did he have to 'splain anything to me!

Del Marmol is coming forth to advise the American people and the world on the, as of yet, undisclosed truth.  Still a patriot with Libertarian leanings, he is using information that he possesses as his OWN form of currency and financing to get the message out, therby assisting the creation of a more transaparent government. 

We will begin a series of pieces chronicling del Marmol's amazing life and activities.  For the first time, answers to many questions historians have had will be answered in this blog.  Wanna know about "Bay of Pigs", the "Cuban Missile Crisis", the Kennedy Assassination, Watergate or even 9-11?  Guess what?  You're in luck!  Marko's Take is on the job, doing it what we set out to do.  Bring you the unvarnished truth, bypassing our "watchdogs" (cough, cough) in the lamestream media.

Marko's Take

Tuesday, October 26, 2010

And Now For Something Completely Different: Negative Bond Yields

Treasury Inflation Protected Securities, or "TIPs", as they are popularly called, are U.S. Treasury Bonds that have a built-in mechanism to adjust returns for increases in the Consumer Price Index (CPI).  For a more detailed explanation on how they work, click here:

Yesterday, the U.S. Treasury sold $10 billion worth of TIPs which had a NEGATIVE cash yield of 55 basis points, or -.55%, with a 50 year maturity.  Huh?  How can yields be negative?  Does that mean that investors are so stupid that they would pay to lend money?  No, the adjustment feature as described in the piece linked above, adds to total return.  But, if the CPI were to come in at zero, then yes, investors would actually pay Uncle Sam for the privilege of lending him money.

Historically, cash yields on TIPs have tended to be in the positive 1-2% range.  Not today! 

So, what does this mean?  Investors are so worried about inflation eating away at their cash yields, that they will pay handsomely for inflation protection. 

What inflation?  Latest figures for the CPI have come in at a scant 1.1%.  That means that the total expected return for a TIP would be a positve .55% (the 1.1% inflation rate less the .55% negative cash yield).  Before you howl, keep in mind that the adjustment feature means that TIPs have the risk of  6 month Treasury Bills, which yield something on the order of .25%.  By comparison, a decent deal.

So, other than the fat half-percent yield, why should anyone buy these?  Simple, hyper-inflation is not only likely, it is inevitable.  Proof?  A falling dollar, an accelerating commodities market and most significant of all, the now snorting bull market in precious metals.  Oh, and let's not forget that none other than "Helicopter" Ben Bernanke's belief that inflation is TOO LOW! 

The only reason we have NOT yet seen the explosion in inflation is something called monetary velocity.  For a fuller explanation of this aspect of money supply, click here:

For investors, all roads lead to Gold, Silver and precious metals stocks.  While it appears that we are in the midst of a sharp correction, this will only be a minor bump on the road to MUCH higher prices.  For a review on where we are in the "Mother Of All Bull Markets", click here:

The Federal Reserve, entrusted with controlling inflation, is actually the engine of inflation.  For a more thorough explanation of the Fed, as it is known to its friends, check out this video as to how it is supposed to work, versus how it has actually fared:

With friends like these.....

Marko's Take

Friday, October 22, 2010

Reid His Lips: No Global Depression

You gotta LOVE them Democrats!  Al Gore, for example, not only invented the internet but also concocted the fraud popularly known as "Global Warming".  Of course, he has slightly forgotten the facts and chosen to conveniently appeal to voter's emotions  Sorry, Al, but your nose is growing!

Now Harry Reid, soon-to-be outgoing Senator of Nevada is taking credit for single-handedly preventing a Global Depression.  Ridiculous?  Here is Mr. Reid telling us that:

Mr. Gore and Mr. Reid brilliantly never allow the facts to get in the way.  Mr. Reid's constituents, however, may politely disagree.  New data on Las Vegas' economy would tend to cast a wee bit of doubt on his preposterous assertion.

Joblessness in Las Vegas reached a record 15%  in September, even as unemployment in Nevada stayed unchanged in the month, according to new numbers from the state Department of Employment, Training & Rehabilitation.

Despite worsening local conditions, the state's jobless rate failed to rise for the first time since January. Unemployment in the Silver State stayed unchanged in September at 14.4% . On top of being the first stabilized state number in 2010, it's only the second time the jobless rate remained steady since the recession's beginning in December 2007.

Las Vegas also happens to be the home of the one of the absolutely worst real estate markets in the nation.  Enquiring minds, especially the sagacious readers of "Marko's Take", wonder how Mr. Reid could possibly have had any positive effect on the entire planet, when the rather small town of Las Vegas could be suffering so.  Would someone out there in reality-land please send him this blog?

Last I checked, unemployment in Las Vegas and in the entire country for that matter, was well in excess of 20%, especially when the phony stats are adjusted for incidental factors such as folks that have given up looking for a job, because it's practically impossible.  All you have to do is subscribe to the wonderful publication known as "ShadowShats" ( to understand the ongoing fraud known as government economic statistics.  Talk about an oxymoron!

Or, if Mr. Reid would consult one of the Democratic Party's best known benefactors, Mr. Warren Buffett, he might come up with a different conclusion  Ironically, I have yet to hear back from Warren on this open letter.  Could he be in Margaritaville with his nephew, Jimmy?

Mr. Reid, as the Soup Nazi would say "NO SOUP FOR YOU!"

Marko's Take

Thursday, October 21, 2010

Correct Me If I'm Wrong

The long-awaited, overly-predicted correction in Gold, Silver and mining stocks has now begun.  After the smash on Tuesday for 30 bucks in Gold we have what appears to be a continuation pattern with today's further drop of additional drop of another $20.  What's a "continuation pattern" you ask?  A highly technical term?  Nah, it means a top below a top followed by a new low beneath a low.  That is the initial condition for establishing a new downtrend. 

The correction ought to be sharp but not very deep.  Gold's 200 Day Moving Average (DMA), which ought to contain the decline, is now at $1,200, suggesting additional downside of about 10%.

The Gold Bugs Index (HUI) has now dropped back below 500, after reaching a false breakout high of 535.  In just a few short days, miners have dropped by nearly 10%.  The HUI's 200DMA is above 450, which ought to cap further reactions to another 10%.  Therefore, the correction is half over already.  Get ready for a terrific entry point! 

In recent news, as predicted in this column, China has suspended exports of rare earth metals.  For a great play in rare earth metals, we have discussed the merits of Avalon Rare Earth (AVARF)

As far as the stock market goes, the surprisingly violent bear market rally that has taken place all summer continues, but ultimately all markets must obey "The Law of Gravity".

The downside leadership in the coming stock market crash will undoubtedly be the financial sector.  The Philadelphia Banking Index (BKX) has continually under-performed every market sector and with economic conditions deteriorating, an inevitable banking crisis looms directly ahead.  Despite all the efforts of our friends at the Federal Reserve to pump out money, it appears that this privately held group has now been relegated to "toothless tiger" status

But what about those great earnings reports?  What about the coming Republican take-over of Congress?  Won't these matter?  No!  These are old news and already factored in and discounted.  The markets are looking 6 months ahead and, believe me, they DON'T like what they see.  Markets anticipate.  Once news is understood by the masses, it's WAY too late to matter!

So while that dirigible known as Hindenburg continues to levitate on a cushion of hot air from politicians, it has sprung a whoppin' leak   Of course, the Omen isn't always right, but why take a chance on getting wiped out?

What's an investor to do here?  Easy.  Hold cash and wait for the correction in commodities, metals and mining stocks.  Then, get ready to get rich as the mother of all bull markets shifts into turbo-charged high gear.

Marko's Take

Tuesday, October 19, 2010

Holding Out For A Hero

"Where have all the good men gone, and where are all the Gods?  Where's the street-wise Hercules to fight the rising odds? Isn't there a white knight upon the finest steed?  Every night I toss and I turn and I dream of what I need.  I need a Hero..."  To listen to this incredible song by Bonnie Tyler, click here:

Where have the heroes gone?  Why are we saddled with the Barack Obama's, the George Bush's, the Christopher Dodds's, the Nancy Pelosi's, the Al Gore's and the rest of the lying, hypocritical politicians as described in this piece?

But electing politicians costs money!  And, God knows, thanks to some of the wonderful folks mentioned above no one has any.

I've been Holding Out For A Hero, and just in time, we have one!  This hero, Gary Earl Johnson is described here:, and

Do you CARE about the world your kids will inherit?  Do you CARE about the brave men and women watching their brothers and sisters getting their heads blown off in Afghanistan or other idiotic adventures in the Middle East?  Do you CARE about having a planet in which you can walk outside and not get emphezema?  Do you have a business and want to see it prosper? Do you want to keep your job?  If you're a Hollywood liberal making films don't you care about freedom of speech????

If you're a Hollywood type, you automatically HATE Republicans.  Isn't worth taking a moment, to see if there's a real alternative?  Read about Gary Johnson, and see if this help open your eyes a little.  Your left wing demagogues are doing you NO FAVORS!

Do you want to change the world, but think you can't afford to help?  Oh, but you CAN!  You are far more powerful than you know!

Can you afford a happy meal at McDonald's?  Can you afford a pack of cigarettes?  Even if you can't, here's how you can make a huge difference for your kid's future:

My address book contains 2,000 people.  Let's say each one of those people knows an average of 500 people.  With one degree of separation, that's (2,000 X 500) 1 million people!  If each of those people forgoes a happy meal or a pack of cigarettes, that would produce $5million!!!!

Let's make a statement!  Let's tell lying, self-serving incompetent politicians to get take a flying LEAP!  If you lost your job because of their economical mismanagement, let's turn the table and FIRE THEM!  As Colonel Klink would say, DISMISSED!  No pension, no health care, no benefits!  And,as the Soup Nazi would say, "No Soup For You!"  Go out a get real job folks and see what life is like in the greatest country in world!  The country you almost ruined!

Please visit Gary's site and do what you can for future generations who don't deserve the mess they will inherit: Your grandkids will be most grateful.

Marko's Take

Friday, October 15, 2010

Markets To Obey The Law Of Gravity

The Universe has been theorized about by many incredibly brilliant cosmologists, such as Carl Sagan, Albert Einstein and Steven Hawking.  While certain concepts remain hypothesized and theoretical, one constant is omni-present:  The Law of Gravity.

The Law of Gravity determines so many things we observe in the universe such as Newton's Laws of Motion.  In fact, planetary alignment also is a little understood factor in determining certain events in the financial markets.  For more on how planets affect markets, click here:

For the record, despite the fact that we've been calling for a crash for months, I still have NOT abandoned that position.  Some of the reasons are articulated here:

But today, some new very relevant information came to bear.  The Philadelphia Banking Index (BKX) has broken down and is asserting downside leadership.  Earnings reports from General Electric (GE) today were very disappointing.  Bank of America (BA) is under pressure as a result of the under-reserving for loan losses.  In fact, of the top 6 volume leaders this morning, 5 are financials and all are getting slammed.  Without a vibrant financial sector, the market can NOT advance!

In addition, the stock market appear to have completed a 50% correction of the bloodbath it took in 2008-9.  From a high of about 14,000, the Dow Jones Industrial Average (INDU) has now bumped its head at 11,000, a retracement of roughly half of the waterfall it endured all the way down to its low of about 8,000.

If the Dow should have a roughly equivalent slam it could lose another 6,000 points which would take it to a next stop of 5,000.  (It dropped from 14K to 8K, now may decline from 11K to 5K).

For the very short-term, we remain cautious on Gold and the precious metals mining sector, although this industry group, and commodities in general, are poised for the long-awaited upside explosion

Maximum downside is very limited to probably no more than 10%.  Upside potential remains massive and, despite some risk, it's worth keeping positions.  We continue to expect an ultimate high for Gold of $5,000 per ounce at the very least.  The rules of thumb we can use to project this level, are articulated here:

Happy Investing!

Marko's Take

Tuesday, October 12, 2010

Who Is Gary Johnson? (Part 2)

Ok, so his track record as Governor of New Mexico is distinguished. That's all in the past.  But, where does he stand on various positions?  Do they comport with those already expressed in this column?

From his website

On The Economy: Among other things, Johnson wants to slash government spending, cut taxes, end the costly adventures in Afghanistan and Iraq, vastly reduce and reform entitlement programs, curb the excesses of the Federal Reserve's involvement in the financial system, end government subsidies, curtail goverment interference and vastly simplify the tax code.  (I'd prefer he completely abolish the Federal Reserve.  Maybe Gary ought to watch this:

On Civil Liberties:   "The government should not intervene in the private lives of individual citizens unnecessarily. Personal liberty and freedom from unwarranted governmental control or regulation should allow law abiding individuals to pursue their own desires as long as they are not causing harm to other people."  (This extends to anti-marijuana laws, which Johnson adamantly opposes.  Johnson does NOT advocate legalizing other drugs.  On that particular sub-issue, "Marko's Take" respectfully disagrees.)

On Defense: "The United States should only be involved in just causes and should not engage in or risk military action except when needed to protect it’s specific interests. All defense budgets should be reviewed and balanced the same as any other governmental budget."  (Sounds like Teddy Roosevelt to me.  Speak softly and carry a big stick.)

On The Constitution:  "We believe that the Constitution should be interpreted according to its original meaning. After great deliberation, the Founders clearly based the blueprint for our government on the fundamental idea that there must be strict constraints on Federal power — an idea from which we have strayed much too far. We believe that the proper balance needs to be restored between the different branches of government. This includes the rights of states." (I assume that, in order for this to come to pass, there will have to be a major reform of the megalomaniacal Supreme Court).

On Education:  While not specifically addressed on the website, Johnson's actions as Governor indicate that he is a strong proponent of school vouchers in place of our public funding of education. "With regard to school reform, I believe that New Mexico, along with most states in the country, is year after year after year showing just a little bit less when it comes to the results from its schools. I know of no other area in our lives where this phenomenon occurs except in public education. On the other hand, higher education in this country is unquestionably the best in the world, and we should make public education a little bit more like higher education."

"I think you accomplish that through the issuance of vouchers to every single student in the state, bringing competition to public education and allowing children to choose schools much as they choose in higher education today."

Johnson is not a Libertarian idealogue.  Many traditional Libertarians believe in virtually no army, and other "ultra" small govenment concepts that place them not too far from anarachists.  Johnson is an economic pragmatist.  He views every political decision as boiling down to cost/benefit analysis.  That's wise.

Marko's Take?  Government is NOT inherently bad.  But, a Government that creates the wrong incentives, uses its power for self-preservation and restricts the freedoms that the Founding Fathers intended us to have IS a bad Government.  However, established properly, a smaller Government will be a MUCH BETTER Government and one that will be a partner, rather than an adversary of the citizenry.

Marko's Take

Who Is Gary Johnson? (Part 1)

Gary Earl Johnson (born January 1, 1953) is the former Governor of New Mexico, having served 2 terms from 1995 to 2003.  He is well-known for his low-tax libertarian views and as the founder of one of New Mexico's largest construction companies.

Johnson first entrance into politics was his bid for Governor of New Mexico in 1994.  He defeated incumbent governor Bruce King by a substantial margin.  He sought re-election in 1998, winning by a  10 point margin.  In his second term, he focused on educational spending reform, in particular the use of school vouchers.  He is also the first high-profile political figure to support decriminalization of marijuana.

As the result of New Mexico's 2 term limit, Johnson retired from politics at the end of his second term.  In 2009, he founded the Our America Initiative (, a 501(c)(4) political advocacy organization.  Johnson has also been the subject of media speculation as a possible candidate for President of the United States in the 2012 election.

For his 8 years in office, Johnson was the nation's most frugal governor, by vetoing over 1,000 spending items and cut taxes 14 times.  The number of vetoes exceeded the amount in the other 49 states, COMBINED!  As a result, when Johnson left office in 2002, New Mexico was only one of 4 states with a balanced budget.

So how is Johnson's track record as Governor?

According to

In the 8 years during Johnson's tenure, Real New Mexican Gross Domestic Product (GDP) grew from approximately $41.7 billion to nearly $53.7 billion, an increase of 28%.  By comparison, in the 8 subsequent years under Bill Richardson, GDP has grown by only 17%.

New Mexican Gross Public Debt rose from $12 billion to $14 billion (16% increase) during Johnson's reign, but has since exploded to $21 billion today (50% more!)
Government spending, as a percentage of GDP, rose from 20% to 23% during the Johnson years. It is currently, at 25%.

According to unemployment statistics as provided by (, Johnson inherited an unemployment rate of approximately 6.5% which fell to about 5.0% at the end of his second term.  The jobless rate is 8.5% today.  The increase is greater than the national average.

There are certainly ways that one could pick apart the economic statistics by claiming that he presided over the prosperous Clinton years, or through other ways of parsing the data.  Needless to say, this could be debated to death and reasonable people could disagree.  Marko's Take?  The objectives facts are  unequivocally supportive of his expertise as a Chief Executive. 

Oh, and one more eensie weensie thing.  Johnson has a reputation for being exceedingly honest.  Critic Roger Ebert, no friend of the Republican party by any means, said "I can quite honestly say that at this point there is not a single other Republican candidate I can imagine voting for in 2012. And I may not vote for Johnson either if he runs – but I do think he’s one of those rarest of creatures: an honest politician. And that counts for quite a lot."

Tomorrow, I will give my "Take" on his positions. 

Marko's Take

Sunday, October 10, 2010

World War III Continues...

A treatise on military strategy, called "The Art Of War" was written by Sun Tzu in the 6th century B.C. and is still studied today.  The book was so timeless that General Douglas McArthur was believed to have taken inspiration from it.  That classic playbook needs to be updated to cover means of waging war that never possibly could have been contemplated.

In "World War III Has Begun", we posited a matrix of varieties of war and how they might be employed in whole, or in part, by any country against any other country.  Traditional military war is only a small and shrinking component of warfare in the 21st Century.  The video of that piece can be accessed by clicking here:

But that was just the beginning of what we, as a world, have in store for us.  Using some imagination, and a reasonable knowledge of science, physics, economics and finance, one can concoct a variety of ways in which one country can damage another without ever firing a shot.

How about climatological war?  By that, I'm not referring to the absurd notion that our globe is warming from cow flatulence and SUVs.  To refresh yourself on how preposterous that entire thought process is, click here:

Rather, imagine what one country could do if it could affect weather in a relatively small area of an enemy.  Like what, you ask?  Maybe seeding an oncoming storm system with something toxic.  Clouds are sometimes seeded by farmers to produce rain in areas of drought.  While the efficacy of this practice in affecting local rain patterns is questionable, if clouds were seeded with poison, it could destroy vast areas of crops, and thus disrupt a country's food supply.  Because weather systems follow the jet stream, the poisoning could be done in international airspace without triggering a preventative response.

Another high tech plan could be to create what could oxy-moronically be called a "man-made natural disaster". Underground nuclear detonations register as earthquakes.  What if an atomic power could set up a nuke near a major fault zone that was overdue for a major earthquake?  Afraid you'd be detected?  Well, then one could be set off below the surface of the ocean floor to create a tsumani.  Indonesia, 2004 anyone?

Ecological war is waged when one country sabotages another's eco-system.  One means of accomplishing this might be to, say blow up a deep-sea drilling rig which might create a massive oil spill.  And, of course, have the extra benefit of disrupting oil supply.  BP, anyone?

What if a country is not an atomic power?  For those, there's the "Flash Crash" attack.   According to a 5 month Securities and Exchange Commission (SEC) and Commodities Futures Trading Commission (CFTC) investigation,  the May 6th Flash Crash was set in motion by a huge sale of S&P 500 futures contracts by a single firm’s computer trading program, which dumped $4.1 billion of the contracts on the market in just 20 minutes, according to “Lone $4.1 Billion Sale Leads to ‘Flash Crash’ in May,” by Graham Bowley of The New York Times; and “How a Trading Algorithm Went Awry,” by Tom Lauricella, Kara Scannel, and Jenny Strassburg of The Wall Street Journal.

This particular computer mistake, however, was unintentional.  What if a large financial power, with trading resources in excess of the $4.1 Billion, were to sell futures in all the global stock and bond markets in a giant, systematic securities dump?  Even if the damage, as was the case on May 6th, was temporarily limited to a financial "bungee jump", such an occurrence would completely undermine confidence in the integrity of the entire financial system.  Another occurrence would only demonstrate the weak link in the inter-connected fabric of the markets. Thus ,the damage would NOT be temporary.  Even cash wouldn't be safe.  The same approach could be done to various currencies.

If none of the above suffice, a country could create a laboratory-grade pandemic, release it in a country and then quarantine the nation to insulate itself from having it spread back domestically.  Concurrently with the creation of the toxin, it could also have a anti-dote prepared to innoculate its own population.  H1N1 virus or the Severe Accute Respiratory Syndrome (SARS), anyone?.

Still not enough?   How about using massive orbiting military lasers to blind a country's population?

Or, the use of sound to affect emotions?  A March 23, 1991 news brief titled "High-Tech Psychological Warfare Arrives in the Middle East", describes a PsyOps tactic directed against Iraqi troops in Kuwait during Desert Storm. The maneuver consisted of a system in which subliminal mind-altering technology was carried on standard radiofrequency broadcasts.

Subliminally, a much more powerful technology was at work: a sophisticated electronic system to ‘speak’ directly to the mind of the listener, to alter and entrain his brainwaves, to manipulate his brain’s electroencephalograph i.e. (EEG) patterns and artificially implant negative emotional states-feelings of fear, anxiety, despair and hopelessness.

The possibilities are endless and MUCH harder to defend against.  In fact, they return "first strike" capability to a variety of warring nations.

The reality of this is so frightening, that even I wouldn't dare them to "Take Me On".

Marko's Take

Come meet Gary E. Johnson, former governor of New Mexico in a private, intimate setting.  For details on the reception, click here:!/event.php?eid=167442413269476.