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2010: A Debt Odyssey

"Your fancy clothes, your fancy car, and then you see, you've gone here before, 'cos everyone knows just who you are... unhappy with the riches 'cos you're piss-poor morally..."

'Live your life' by T.I. featuring Rihanna.

The above lyric was taken from a rap song getting a lot of airtime recently. Why did I pick up on it? Because this is instructive of a u-turn reflecting changing public attitudes from bling-bling to thrift-thrift. Rap songs usually brag about riches; this one is doing the opposite. Frugal is the new cool. A sea-change is upon us, and the economy isn't ready for it.

I've said it before and I'll say it again: deleveraging is not done yet. Lots more debt to pay down. Stocks are expensive at these levels based on what we know now. American government debt is now at unsustainable nosebleed levels and scheduled to get worse (once the mid-terms are out the way watch EVERYONE'S taxes rise).

It is NOT business as normal, regardless of what the government, the big banks and the media want you to believe. 2010 is going to be interesting and next week I'll give my prediction for it, but this week let's set the stage while I think aloud...

The truth always wins in the end. The question is how long it takes to show itself. The truth is, as I've said, we are not through this yet- there's a bigger game playing out than the 'not-as-bad-as-last-year' cheerleading going on. On the other hand, countering the truth, there's a power-hungry Federal Reserve and a socialist administration looking to get through mid-term elections. This side and their propaganda, represents the lie.

Truth always wins, but will it happen in 2010?

Here's what's happening. The global forces of deflation are overwhelming and the government is trying to stave these forces off as long as possible in the hope of buying time until consumers go back to their spend-happy ways. The tools they're using to achieve this are throwing taxpayers' money at the problem.

One thing we can be certain of in 2010 is high volatility as the battle between the truth of deflation and the lies of government. Volatility is measured by the VIX index and you can buy or sell this. At around 20, the VIX is very low, so a fairly safe bet is to buy it for 2010. Volatility is one prediction I will happily make for 2010.

While the forces of deflation seem to have an army as far as the horizon, the government's tools to combat it are running thin. There's already been $787 billion in stimulus spending and $700 billion in bank bailouts (hmmm, I wonder why banks are showing profits) all from the hard work of taxpayers. It's NOT government money, it's taxpayers' money!

The nation's debt is now $12.1 TRILLION. Everyone's deleveraging apart from the politicians. $7.6 trillion of this is owed to investors through the treasury market, China being the biggest. For the first time since 1956, this is more than half the size of the nation's economy.

The interest alone is sucking the nation dry. Spending is only increasing to add to the problem. Tax revenues are dropping. The deflationary cycle will take hold unless something changes, and fast.

As a reminder, a government has 3 ways to reduce debt:

1.    Tax more
2.    Borrow more
3.    Print money

Taxing more is a 100% certainty once the mid-terms are out the way (doesn't anyone see through the politicians' shenanigans?). This will exacerbate the recession.

Borrowing more is precisely what their aim is in 2010. However, the bond market is about supply and demand the same as the stock market, and when there's a big supply of debt investors want more for their money in the form of higher interest rates. This in turn increases the interest rate of mortgages thus stifling the housing market. Again, this will exacerbate the recession.

Printing more money has been going on (they call it quantitative easing) and will continue, but the Federal Reserve is containing it because they know the consequences if they go too far: hyperinflation. Printing money devalues the dollar, which makes commodities more expensive, thus exacerbating the recession.

As you can see, there's nowhere to hide, but plenty of places to run. And the government will run all the while the people cry out for the politicians to "do something!" instead of taking the pain.

Okay, so that's set the scene a little for the 2010 prediction coming soon. Now though I'd like to set the scene for a brand new FREE newsletter coming your way imminently: Easy Street!

Retirement is to be able to live comfortably, freely and without lifting a finger.

Sound about right?

But that's still a pretty vague statement. I mean, how is that achieved?

So let's go a little further. Here's how you know you can retire:

The point at which a virtually guaranteed investment income meets your outgoings is the point you can retire.

I think you'll agree with this.

So, if we're going to accomplish retirement, we have a two-pronged attack: outgoings and effortless, guaranteed income.

Maybe your dreams of retirement are way closer after all? If we could find ways to slash your outgoings WITHOUT drastically affecting the quality of your life, the goalposts instantly move closer!

Maybe your retirement plans had been based on receiving 4% from dividends on bonds and blue-chip stocks? But what if you could find a way to get the same security but enjoy 8% dividends? Again, those goalposts just shifted closer.

So by revisiting your retirement plan in this way, you can snatch back that dream and enjoy it today, not tomorrow. That's what our new publication will be about.

In our signature monthly course, The League of Power, we explain this planning in more detail and right from the first, free-trial lesson, we show you such a way of slashing your outgoings. You see, a lot of the bills you pay either needn't be paid at all or can be reduced with a phone call!

But let's rewind. Why did all this bad stuff happen in the first place? Because people bought into a fantasy!

Money flows to those who deal in realities, not fantasies. Those who think objectively, not subjectively.

The wealthiest people in the world became so for the simple reason they were prepared to think 'out of the box'. Throw me the name of anyone who made themselves wealthy by their own means, and I'll explain it's because they thought differently to most people. In fact, they thought the OPPOSITE way to most people.

This is why the rich get richer and the poor get poorer. It's why the wealthy will always be the few; because most people simply don't have the guts to think and do differently from the herd.

I cannot emphasize enough how this simple axiom can either work for you or against you!

It's all about seeing through the web of illusions you've been spun since you were born. Once you see the truth, the path to wealth becomes clear.

Something too many people didn't understand on the path to this crisis is that they truly believed in constants. But, one of the few certainties in life is that tomorrow will not be like today...

Imagine it's 1945. If I told you then that Japan and Germany would soon become the world's economic power houses behind USA, you'd have laughed at me.

Wall Street are no different, but of course, it suits them this way: the belief that things will always be the same...

Regardless of what the glossy brochures say, Wall Street exists for a single reason: to relieve you of your hard-earned cash. They make money when you 'invest' it with them; they pay you a paltry few percent while they take your money and try to make HUNDREDS OF PERCENT investing in other things... and often fail.

It was a long bull market that started in 1982. In order to get you to pay them as much of your money as possible over this period, they made you believe that stocks (and property) can only go one way: UP.

League of Power members can make money when things go down as well as up.

Any fool can make a modest profit in good times- the trick is doing it during a recession. Even better, making vast sums of money because of a recession. You would shudder at the truth behind the stock market- and how mercilessly the few truly wealthy milk it for every penny. People haven't the foggiest idea who really controls markets and how to profit hugely from that knowledge.

The sheep hand over their hard-earned money to the sharks on Wall Street and go back to sleep. The sharks lose their money and the sheep get angry and swear never to go near markets again, declaring the whole thing a big scam. Everyone dumps stocks making them cheap and savvy buyers step in.

If this applies to YOU, you'll be turned off by my talk of making money from markets. Can you see why I'm trying to beat your sheep-conditioning out of you??

People (and the 'pros'!) invest like a shoal of fish; they flit from one thing to another as a herd, driving prices for whatever up and down constantly with amazing repetition.

Property is no different really. Until recently, everyone thought they were a real estate tycoon. But as we now know, they didn't know what they were doing. Many have got their fingers burnt and plenty more will follow. Many a fortune has been made from property by the shrewd (with zero capital sometimes!), but many a fortune has been lost by the stupid.

Which group would you like to belong to?

Just like the sheep have lost interest in stocks, they are now losing interest in real estate and the savvy money will come back in.

All asset classes move in 'invisible' cycles. The sheep (and this includes most 'pros') jump on to a certain asset class at precisely the point at which the class is about to fall through the floor. My aim is to clean up on each part of the cycle and keep you informed every step of the way.

Best Regards,

Mark Patricks

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