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

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