You don’t have to be a conservative, a liberal or anything at all to understand America as we know it is about to get flattened. The White House says the deficit will be $1.5 trillion—in 2010 alone. All up, the national debt is now racing past an astonishing $12 trillion.

In fact, if President Obama’s own economic projections are on target, he’s going to add $10 trillion on to the federal debt in the next 10 years.

That’s more than four times the deficits of George W. Bush’s presidency… and more than all of the other presidents – combined.

Whether you agree with them or not, or who you blame for them, one thing is clear, America is facing a fiscal train wreck—andit’s heading stragiht towards you.  These are the largest deficits as a percentage of GDP since 1945, when the country was paying for World War II.

It doesn’t matter whether you talk best case (a recovery in 2010) or worst case (a Greater Depression). We’re merely talking about different shades of disaster.

When you’re dead you’re dead. There aren’t some people who are “more dead” than others.

The debt plague that’s coming will wipe out trillions more in Americans’ savings.

Millions of hard working people will see their precious last dollars wiped away as America teeters… and then loses her economic footing… a victim of the greatest accumulation of debt the world has ever seen.

This Is How America Ends

Last year alone the US government spent $433 billion of your money on interest payments to the holders of U.S. debt. The interest the government pays on its debt is the fourth largest expense in the federal budget. Only defense, social security and health spending eat through more public money.

Already, in this year’s budget, 21 cents out of every dollar of federal income taxes is needed to pay just the interest on the debt.

Very shortly, it will take all our income taxes just to pay the interest.

But long before your debt reaches “infinity” you go broke. You are unable to pay even the interest on your debt, much less the principal, and nobody will lend you money anymore. That’s what happens to people like you or me.

If you are a government, you have another choice: You print money to get out of your fix. Then inflation takes off… interest rates take off… and the dollar becomes worthless.

We’re closer than you think to these grim scenarios.

It’s too late to reverse the situation. President Obama’s spending program certainly does not do so. And the Congress—both Republicans and Democrats alike—show no sign of regaining their common sense and averting a looming disaster for America.

Unforunately, the United States government will be forced to default on such obligations as Social Security, Medicare and military pensions…  Or the government will pay for everything in full – with worthless money.

In a moment, I’ll tell you more about which one it’s going to be.

We’re simply out of time.

Short term here are some events I expect to play over the next decade.

• No matter who you are, your taxes will go up. The government will continue to raise taxes in an attempt to keep its spending programs alive. The Obama administration is already planning to raise corporate taxes, already the second highest in the world. The costs of this will be passed on to you whenever you buy something.
• The US dollar is already being undermined as the world’s reserve currency as US debt holders led by China, Russia, India and Brazil move to protect themselves against dollar depreciation. Soon the dollar will lose its reserve currency status.
• The Social Security Ponzi scheme will collapse. The government will be unable to borrow the funds it needs to replace all the money it has already spent from the Social Security trust fund.
• Interest rates in the U.S. will rise to 6% plus as the government needs to raise the rate to stimulate foreign demand.
• Excessive government borrowing will push up mortgage rates and trigger another leg down in the housing market. Huge numbers of prime borrowers have already begun to default on their mortgages, triggering what is destined to become another wave of toxic asset writedowns at banks.
• The government will default on Social Security payments and Medicare and Medicaid obligations. It will not do so in an open way. Instead, it will fail to accurately index-link Social Security benefits to the cost of living… it will ration hospital stays and doctors visits… and it will deny expensive treatments and medication to state-insured patients (beginning with the elderly)
• The US will enter a long period of economic stagnation coupled with inflation.
• In years to come, the period between 2008 and 2018 will be known as America’s “lost decade.”
• Oil prices fall to $25 a barrel before breaking through their July 11 2008 high of $147.90 a barrel.
• Unemployment rates will rise to 20%.

It’s too late to stop these events.

But it’s not too late for you to protect yourself.  It’s urgent that you take action now.

The purpose of this report is to help you decide what to do – and even help you get rich during the coming bad years.

GM’s Collapse Is a Preview
of Our Future Economy

They say history repeats itself.

This means that you can understand it well enough to profit from its predictable patters.

In other words, if you know what trends to expect you can reap huge wealth.

I’ll jump ahead here a little bit and tell you something else: The forces at work right now are the most powerful forces in over 500 years.

Terrible suffering will occur. Things most of us never imagine. But big money is going to be made at the same time.

Did ordinary Americans know they were in something called the “Great Depression” in 1930?

No.

They thought their problems would blow over. But they were wrong. US stocks didn’t reach their 1929 level for another 25 years – until 1954.

To understand where the US economy is headed, look no further than the collapse of General Motors.

“I think it is important to recognize that General Motors is a canary in this country’s economic coal mine; a forerunner for what’s to come for the broader economy,” warned legendary billionaire bond investor Bill Gross in a recent note to investors.

GM’s mistakes have been America’s mistakes… And its problems will be America’s problems.

Take the enormous unfunded health care and pension problems shared by GM and the U.S.

“Reportedly, $1,500 of every GM car sold in the dealer showrooms goes to pay for current and future health benefits of existing and retired workers,” Gross points out.

GM is liable for nearly $60 billion in health-care costs. But the total future healthcare liability for all U.S. citizens can be measured in the tens of trillions.

Just as GM’s debt problems lead to its collapse, Washington’s addiction to debt will lead to the collapse of America’s economic standing in the world.

Here’s something the Obama administration doesn’t want you to know: We cannot solve a debt crisis by issuing more debt.

It’s as simple as that.

Obama and his cronies in the Federal Reserve are on a fool’s errand. In the end, all debts – private and public – must be serviced out of earned income.

And since the country’s income is falling as its debt burden is rising, this debt must also come down.

The Bubble of All Bubbles

The US is the world’s biggest debt addict.

And government debt is now expanding faster than ever.

Most people don’t stop to think about it. But America has the biggest deficit of any serious country in the world.

The US deficit is 13% of total annual economic output. Compare that to Russia at 2.6%… Spain at 6%… France at 5%… Brazil at 1.3%… Even Argentina has a much smaller deficit than the US – at only 3.6%.

And that’s only the beginning…

Even if we ignore the relentless build-up of spending on Social Security, Medicaid and Medicare, the cost of bailing out the banks and failed industrial behemoths like GM and Chrysler will soon send the federal-debt-to-GDP ratio to well over 100%.

Then there’s Obama’s ambition to spend trillions more on health, the environment and education. Each of these programs will force the White House to borrow trillions more dollars from foreign powers such as China, Russia and Japan.

There come the “unfunded liabilities” of Social Security, Medicare and Medicaid.

It’s difficult to believe. But there is currently no funding mechanism in place for Social Security’s unfunded liabilities. They amount to $13.6 trillion – only slightly less than a year’s worth of US GDP (around $14 trillion).

This is small change compared to the gaping hole in Medicare funding.

There are three components to Medicare:

1. Medicare Part A covers hospital stays. Its unfunded component is $34.4 trillion.
2. Medicare B covers doctor visits. Its unfunded component is worth $34.0 trillion.
3. Medicare D covers the drugs benefit. Its unfunded component amounts to $17.2 trillion.

The total unfunded liability for Medicare is $85.2 trillion – just over 600% of US annual GDP. And Medicare and social security together have unfunded liabilities worth 700% of last year’s US GDP.

The Plague of the Black Debt
(Plus the Most Profitable
Investment in the U.S.)

In three years, from 1347-50, about one person out of every three in Europe died of bubonic plague.

This was the famous Black Death.

Whole villages were wiped out, left to return to the wilderness. In cities, thousands of houses were boarded up and deserted.

I call the coming disaster in America the Plague of the Black Debt.

The coming tidal wave… the ultimate collapse of this debt pile… is actually in plain view.

It’s right there in President Obama’s record debt projections… in the spiraling deficits and pork-laden federal spending programs.

Barack Obama knows… and Ben Bernanke knows… that as soon as the printing presses stop… the whole swindle will come to light.

That’s because the sucker’s rally in stocks… and the glimmer of hope it brings… is all based on the printing presses in Ben Bernanke’s basement stuffing those duffel bags with brand new, sequential dollar bills.

Investors are searching for fool’s gold: credit markets are improving due to the guarantees behind improvements in credit markets, not due to a reduction in risk… the government’s intervention is now distorting asset prices across all categories… sovereign CDS widening represents the shift of credit risk from private investors to taxpayers… the pulling of governmental guarantees would be akin to an earthquake just as the house of cards is getting higher and higher… and the political risk tornado will destroy whatever it is the earthquake leaves.

- Tyler Durden, Zero Hedge, April 3 2009

No, I don’t expect millions to die (although it’s possible if society collapses.)

What I do expect is that the world will be changed, totally and permanently. Things will never be the same again.

Let me put it simply as simply as I can. The coming debt plague will destroy America’s economic leadership.

Unless you prepare urgently now, it will leave you in indentured servitude. You will be left behind to pay the greatest accumulation of bad debt the world has ever seen.

Budget experts estimate that federal taxes would have to rise by 64% to cover the unfunded liabilities of the federal government. And that doesn’t even include your share of the cost of the ongoing multi-trillion-dollar bailouts and stimulus programs.

There’s no way to sugarcoat what’s happening.

Remember, the Congressional Budget Office’s own estimates say Obama will add almost $10 trillion to the total federal debt by 2019.

That’s about as much total debt as was outstanding at the beginning of 2007!

This will trigger the worst financial calamity in America’s history… far worse than what we’re experiencing now.

In fact, I believe it will become the greatest economic disaster in recorded history.

“We misread how bad the economy was, but we are now only about 120 days into the recovery package. The truth of the matter was, no one anticipated, no one expected that that recovery package would in fact be in a position at this point of having distributed the bulk of the money.”

Vice President Joe Biden,
July 5th 2009

Consider the following facts…

There’s roughly $11.5 in debt outstanding. Then there’s another $10.1 trillion for the on-balance sheet Obama spending. Another $99.1 trillion is coming for unfunded entitlement programs such as Social Security and Medicare.

That’s something close to $120.7 trillion by 2019.

And it’s roughly another $120,700 in debt for each of the 100 million families in America.

Now, I know this all sounds meaningless. The kinds of numbers we’re talking about are the kind of numbers that used to be used in astronomy, not economics.

But “120 trillion” has 13 zeros: 120,000,000,000,000.

To put that in perspective, in 1980 that national debt was just $930 million.  Not even $1 billion!

This will have a devastating social impact:

• I see social security benefits being cut to the bone. They’ll probably only go to the neediest.
• I see at least 21 million unemployed or in make-work public assistance jobs.
• Sick and elderly will be cared for at home. Almost nobody will be able to afford nursing home care.
• I see millions more homeowners “upside down” – with a mortgage bigger than the value of the home.
• Washington will continue subsidizing and nationalizing US industries. Government interference in commercial markets will have far-reaching repercussions that your average bureaucrat couldn’t fathom.

Now, picture yourself in a neighborhood where the houses on either side of you are empty and for sale.

Windows are broken out. Homeless and squatters break in and sleep there.

There are no police to stop them because local government is broke and the tax base has fallen sharply.

For the same reason, the streets are full of potholes and the streetlights are broken. Power outages are common. In this dark, menacing environment, crime runs wild.

Almost everyone drives a “clunker” because few people can afford a new car anymore.

Mountains of green garbage bags pile up, stinking to heaven, because it’s three weeks between trash pick-ups.

In short… The suburbs will become slums. It has already happened in communities that went broke. Just look at most of modern day Detroit.

It is going to happen in many more communities – perhaps even yours.

It doesn’t give me any pleasure to predict these things. But I want to get this information to as many people as I can… because you can prepare yourself.

You and those you love can avoid this catastrophe. And the more of us who preserve our wealth, the better it will be for our country when the time comes to rebuild.

THE PLAGUE OF THE BLACK DEBT:

How to survive America’s Next Bubble Collapse

Millions of middle-class Americans are about to suffer the biggest wealth wipe out in history as a $110.7 trillion debt avalanche buries the economy… It’s too late to reverse course… But it’s NOT too late to protect yourself and your family…

By James Dale Davidson,

You don’t have to be a conservative, a liberal or anything at all to understand America as we know it is about to get flattened. The White House says the deficit will be $1.5 trillion—in 2010 alone. All up, the national debt is now racing past an astonishing $12 trillion.

In fact, if President Obama’s own economic projections are on target, he’s going to add $10 trillion on to the federal debt in the next 10 years.

That’s more than four times the deficits of George W. Bush’s presidency… and more than all of the other presidents – combined.

Whether you agree with them or not, or who you blame for them, one thing is clear, America is facing a fiscal train wreck—andit’s heading stragiht towards you. These are the largest deficits as a percentage of GDP since 1945, when the country was paying for World War II.

It doesn’t matter whether you talk best case (a recovery in 2010) or worst case (a Greater Depression). We’re merely talking about different shades of disaster.

When you’re dead you’re dead. There aren’t some people who are “more dead” than others.

The debt plague that’s coming will wipe out trillions more in Americans’ savings.

Millions of hard working people will see their precious last dollars wiped away as America teeters… and then loses her economic footing… a victim of the greatest accumulation of debt the world has ever seen.

This Is How America Ends

Last year alone the US government spent $433 billion of your money on interest payments to the holders of U.S. debt. The interest the government pays on its debt is the fourth largest expense in the federal budget. Only defense, social security and health spending eat through more public money.

Already, in this year’s budget, 21 cents out of every dollar of federal income taxes is needed to pay just the interest on the debt.

Very shortly, it will take all our income taxes just to pay the interest.

But long before your debt reaches “infinity” you go broke. You are unable to pay even the interest on your debt, much less the principal, and nobody will lend you money anymore. That’s what happens to people like you or me.

If you are a government, you have another choice: You print money to get out of your fix. Then inflation takes off… interest rates take off… and the dollar becomes worthless.

We’re closer than you think to these grim scenarios.

It’s too late to reverse the situation. President Obama’s spending program certainly does not do so. And the Congress—both Republicans and Democrats alike—show no sign of regaining their common sense and averting a looming disaster for America.

Unforunately, the United States government will be forced to default on such obligations as Social Security, Medicare and military pensions…  Or the government will pay for everything in full – with worthless money.

In a moment, I’ll tell you more about which one it’s going to be.

We’re simply out of time.

Short term here are some events I expect to play over the next decade.

• No matter who you are, your taxes will go up. The government will continue to raise taxes in an attempt to keep its spending programs alive. The Obama administration is already planning to raise corporate taxes, already the second highest in the world. The costs of this will be passed on to you whenever you buy something.
• The US dollar is already being undermined as the world’s reserve currency as US debt holders led by China, Russia, India and Brazil move to protect themselves against dollar depreciation. Soon the dollar will lose its reserve currency status.
• The Social Security Ponzi scheme will collapse. The government will be unable to borrow the funds it needs to replace all the money it has already spent from the Social Security trust fund.
• Interest rates in the U.S. will rise to 6% plus as the government needs to raise the rate to stimulate foreign demand.
• Excessive government borrowing will push up mortgage rates and trigger another leg down in the housing market. Huge numbers of prime borrowers have already begun to default on their mortgages, triggering what is destined to become another wave of toxic asset writedowns at banks.
• The government will default on Social Security payments and Medicare and Medicaid obligations. It will not do so in an open way. Instead, it will fail to accurately index-link Social Security benefits to the cost of living… it will ration hospital stays and doctors visits… and it will deny expensive treatments and medication to state-insured patients (beginning with the elderly)
• The US will enter a long period of economic stagnation coupled with inflation.
• In years to come, the period between 2008 and 2018 will be known as America’s “lost decade.”
• Oil prices fall to $25 a barrel before breaking through their July 11 2008 high of $147.90 a barrel.
• Unemployment rates will rise to 20%.

It’s too late to stop these events.

But it’s not too late for you to protect yourself.  It’s urgent that you take action now.

The purpose of this report is to help you decide what to do – and even help you get rich during the coming bad years.

GM’s Collapse Is a Preview
of Our Future Economy

They say history repeats itself.

This means that you can understand it well enough to profit from its predictable patters.

In other words, if you know what trends to expect you can reap huge wealth.

I’ll jump ahead here a little bit and tell you something else: The forces at work right now are the most powerful forces in over 500 years.

Terrible suffering will occur. Things most of us never imagine. But big money is going to be made at the same time.

Did ordinary Americans know they were in something called the “Great Depression” in 1930?

No.

They thought their problems would blow over. But they were wrong. US stocks didn’t reach their 1929 level for another 25 years – until 1954.

To understand where the US economy is headed, look no further than the collapse of General Motors.

“I think it is important to recognize that General Motors is a canary in this country’s economic coal mine; a forerunner for what’s to come for the broader economy,” warned legendary billionaire bond investor Bill Gross in a recent note to investors.

GM’s mistakes have been America’s mistakes… And its problems will be America’s problems.

Take the enormous unfunded health care and pension problems shared by GM and the U.S.

“Reportedly, $1,500 of every GM car sold in the dealer showrooms goes to pay for current and future health benefits of existing and retired workers,” Gross points out.

GM is liable for nearly $60 billion in health-care costs. But the total future healthcare liability for all U.S. citizens can be measured in the tens of trillions.

Just as GM’s debt problems lead to its collapse, Washington’s addiction to debt will lead to the collapse of America’s economic standing in the world.

Here’s something the Obama administration doesn’t want you to know: We cannot solve a debt crisis by issuing more debt.

It’s as simple as that.

Obama and his cronies in the Federal Reserve are on a fool’s errand. In the end, all debts – private and public – must be serviced out of earned income.

And since the country’s income is falling as its debt burden is rising, this debt must also come down.

The Bubble of All Bubbles

The US is the world’s biggest debt addict.

And government debt is now expanding faster than ever.

Most people don’t stop to think about it. But America has the biggest deficit of any serious country in the world.

The US deficit is 13% of total annual economic output. Compare that to Russia at 2.6%… Spain at 6%… France at 5%… Brazil at 1.3%… Even Argentina has a much smaller deficit than the US – at only 3.6%.

And that’s only the beginning…

Even if we ignore the relentless build-up of spending on Social Security, Medicaid and Medicare, the cost of bailing out the banks and failed industrial behemoths like GM and Chrysler will soon send the federal-debt-to-GDP ratio to well over 100%.

Then there’s Obama’s ambition to spend trillions more on health, the environment and education. Each of these programs will force the White House to borrow trillions more dollars from foreign powers such as China, Russia and Japan.

There come the “unfunded liabilities” of Social Security, Medicare and Medicaid.

It’s difficult to believe. But there is currently no funding mechanism in place for Social Security’s unfunded liabilities. They amount to $13.6 trillion – only slightly less than a year’s worth of US GDP (around $14 trillion).

This is small change compared to the gaping hole in Medicare funding.

There are three components to Medicare:

1. Medicare Part A covers hospital stays. Its unfunded component is $34.4 trillion.
2. Medicare B covers doctor visits. Its unfunded component is worth $34.0 trillion.
3. Medicare D covers the drugs benefit. Its unfunded component amounts to $17.2 trillion.

The total unfunded liability for Medicare is $85.2 trillion – just over 600% of US annual GDP. And Medicare and social security together have unfunded liabilities worth 700% of last year’s US GDP.

The Plague of the Black Debt
(Plus the Most Profitable
Investment in the U.S.)

In three years, from 1347-50, about one person out of every three in Europe died of bubonic plague.

This was the famous Black Death.

Whole villages were wiped out, left to return to the wilderness. In cities, thousands of houses were boarded up and deserted.

I call the coming disaster in America the Plague of the Black Debt.

The coming tidal wave… the ultimate collapse of this debt pile… is actually in plain view.

It’s right there in President Obama’s record debt projections… in the spiraling deficits and pork-laden federal spending programs.

Barack Obama knows… and Ben Bernanke knows… that as soon as the printing presses stop… the whole swindle will come to light.

That’s because the sucker’s rally in stocks… and the glimmer of hope it brings… is all based on the printing presses in Ben Bernanke’s basement stuffing those duffel bags with brand new, sequential dollar bills.

Investors are searching for fool’s gold: credit markets are improving due to the guarantees behind improvements in credit markets, not due to a reduction in risk… the government’s intervention is now distorting asset prices across all categories… sovereign CDS widening represents the shift of credit risk from private investors to taxpayers… the pulling of governmental guarantees would be akin to an earthquake just as the house of cards is getting higher and higher… and the political risk tornado will destroy whatever it is the earthquake leaves.

- Tyler Durden, Zero Hedge, April 3 2009

No, I don’t expect millions to die (although it’s possible if society collapses.)

What I do expect is that the world will be changed, totally and permanently. Things will never be the same again.

Let me put it simply as simply as I can. The coming debt plague will destroy America’s economic leadership.

Unless you prepare urgently now, it will leave you in indentured servitude. You will be left behind to pay the greatest accumulation of bad debt the world has ever seen.

Budget experts estimate that federal taxes would have to rise by 64% to cover the unfunded liabilities of the federal government. And that doesn’t even include your share of the cost of the ongoing multi-trillion-dollar bailouts and stimulus programs.

There’s no way to sugarcoat what’s happening.

Remember, the Congressional Budget Office’s own estimates say Obama will add almost $10 trillion to the total federal debt by 2019.

That’s about as much total debt as was outstanding at the beginning of 2007!

This will trigger the worst financial calamity in America’s history… far worse than what we’re experiencing now.

In fact, I believe it will become the greatest economic disaster in recorded history.

“We misread how bad the economy was, but we are now only about 120 days into the recovery package. The truth of the matter was, no one anticipated, no one expected that that recovery package would in fact be in a position at this point of having distributed the bulk of the money.”

Vice President Joe Biden,
July 5th 2009

Consider the following facts…

There’s roughly $11.5 in debt outstanding. Then there’s another $10.1 trillion for the on-balance sheet Obama spending. Another $99.1 trillion is coming for unfunded entitlement programs such as Social Security and Medicare.

That’s something close to $120.7 trillion by 2019.

And it’s roughly another $120,700 in debt for each of the 100 million families in America.

Now, I know this all sounds meaningless. The kinds of numbers we’re talking about are the kind of numbers that used to be used in astronomy, not economics.

But “120 trillion” has 13 zeros: 120,000,000,000,000.

To put that in perspective, in 1980 that national debt was just $930 million.  Not even $1 billion!

This will have a devastating social impact:

• I see social security benefits being cut to the bone. They’ll probably only go to the neediest.
• I see at least 21 million unemployed or in make-work public assistance jobs.
• Sick and elderly will be cared for at home. Almost nobody will be able to afford nursing home care.
• I see millions more homeowners “upside down” – with a mortgage bigger than the value of the home.
• Washington will continue subsidizing and nationalizing US industries. Government interference in commercial markets will have far-reaching repercussions that your average bureaucrat couldn’t fathom.

Now, picture yourself in a neighborhood where the houses on either side of you are empty and for sale.

Windows are broken out. Homeless and squatters break in and sleep there.

There are no police to stop them because local government is broke and the tax base has fallen sharply.

For the same reason, the streets are full of potholes and the streetlights are broken. Power outages are common. In this dark, menacing environment, crime runs wild.

Almost everyone drives a “clunker” because few people can afford a new car anymore.

Mountains of green garbage bags pile up, stinking to heaven, because it’s three weeks between trash pick-ups.

In short… The suburbs will become slums. It has already happened in communities that went broke. Just look at most of modern day Detroit.

It is going to happen in many more communities – perhaps even yours.

It doesn’t give me any pleasure to predict these things. But I want to get this information to as many people as I can… because you can prepare yourself.

You and those you love can avoid this catastrophe. And the more of us who preserve our wealth, the better it will be for our country when the time comes to rebuild.

But consider the forecasts we made that came true:

• The Crash of 1987.
• The crash in Tokyo stocks and real estate, with losses in the trillions. (Our readers tripled their money on the fall in Japanese stocks… with a low-risk investment you could buy from any U.S. broker.)
• The end of the Soviet Union and the Cold War
• The fall of the Berlin Wall and German reunification

And more recently:

• The credit crisis
• The collapse of the U.S. housing market
• The recent government bailouts and the nationalization of U.S. banks

All this is history now. And we are now faced with far more treacherous economic times than ever before.

Our objective at Strategic Investmentis to protect you from the bad news and to help you actually grow wealthy from it.

Following are three investments. They are my short list of ideal money-makers during the coming bad years. (They are yours along with many more in your monthly issue of Strategic Investment, should you decide to take me up on my no-risk introductory offer. Scroll down to the bottom of this letter and click the link to get your complimentary report right away.)

1. Low-risk and High Returns from this Giant Emerging Market Bank

Brazil’s banking system is solvent. It has no problem with non-performing subprime loans.

That is one of the reasons that I recommend Banco Itau (NYSE:ITUB), the largest bank in the southern hemisphere. ITU was also the most profitable bank in the world a few years ago.

Buying ITUB is a bet that a crisis in the US and Europe is no longer an occasion to deleverage credit in the BRIC economies.

The 80% rally of the Bovespa from the bottom in Q4 2008 suggests that the local market is convinced that Brazil is prepared to find a way forward, even if the US and other major northern hemisphere economies remain stalled out in the aftermath of the credit crisis.

Two key advantages will help Brazil on its way: its large currency reserves and that its main trading partner is now China.

ITUB has averaged a 26.8% return on equity over the past three years. And unlike the large US banks, it’s well-funded and doesn’t have a balance sheet riddled with toxic assets.

Credit card loans, for instance, only make up 8% of their loan portfolio. The bulk of their loans, 38%, has been issued to corporations expanding rapidly within Brazil.

In addition to being the largest bank in Brazil, ITU has significant presence in 11 other countries. If Brazil motors forward to become the next economic superpower, as I expect, ITUB will continue to post stellar results.

2. Your Road to a 50% Return on Investment

Another bet on future growth in Brazil is CCR Rodovias-ON NM (Bovespa: Sao Paulo: CCRO3)

CCR Rodovias is the largest operator of toll roads in Brazil. Unlike the US, Brazil has made a policy commitment to privatize the operation of its highways. This means major roadways are being auctioned on a regular basis. The return on investment has been stellar – as high 50%.

As Brazil’s largest toll road operator, CCR Rodovias, is a proxy for the growth of Brazil’s middle class. I expect the number of automobiles in Brazil to continue growing as incomes rise and the middle class becomes more vibrant.

This is already happening as witnessed by CCR’s net revenue, which increased by 15.7% in the first quarter of this year alone.

And that’s just part of the story. You see, CCR is allowed to raise its toll rates alongside inflation. This has had the effect of allowing CCR to have high profit margins. Margins before interest and taxes totaled 50.7%. That means for every $100 that comes in, $50.70 is all profit. Most companies in America would be envious.

There are still fewer than 200 passenger cars for every 1,000 people in Brazil; unlike in the US, where the car market is saturated, Brazil’s car market has a lot of “open road” in front of it.

The result is that traffic has gone up 16.3% since the fourth quarter of 2008.

Brazilians tend to prefer to live in gated communities as they reach higher levels of prosperity. This implies a surge in growth in commuter communities – and more traffic on the toll roads to fill the coffers of CCR Rodovia.

3. Make $20,000 a Year from Brazilian Bonds

One of the best plays on Brazil is to buy Brazilian government bonds, if you can afford to trade in the large denominations normally required.

I first recommended these bonds in January and we have already realized a gain of almost 29% in just five months.

You have accrued interest in Brazilian real at 12.9%. It won’t be paid until July; but your accrued interest of 53.9 real also includes a currency gain of 11.46%. This adds another $29.14 in value and brings your total gain on the Brazilian we government bonds we recommended to 28.8%. For every $1,000 you invested, you now have $1,288.67.

You can see why there has been a big appetite for Brazilian bonds lately… and why aggressive investors have been borrowing in dollars and buying Brazilian government bonds yielding 10% to 11%.

I still think these bonds are a great bargain.

In the special report Turning Chaos into Cash: Three Slam-Dunk Investments for 2009 I give the details of how to use leverage to buy these bonds and net upwards of $20,000 (maybe much more) per year.

I’ve chosen to focus on Brazil in this report because Brazil has thrived as a deleveraged economy.

Punishingly high real interest rates in the recent past have kept credit out of Brazil.

As of June 30 2002, Brazilian government loans yielded 17.7%. Business loans yielded an average of 38.28%. And the average annual yield to banks on consumer loans was 60.57%.

That’s why Brazil will continue to boom and make some investors very rich.

At Strategic Investment, our secret is the theory of “megapolitics.”

Megapolitics is a concept I developed with Lord Rees-Mogg in Blood in the Streets and The Great Reckoning: Protecting Yourself in the Coming Depression.

You don’t have to read the books to understand the main idea: The world is shaped by big, powerful forces or trends that nobody can control.

Unfortunately, the current period is fraught with grave danger. That’ s because big governments and empires are much more prone to collapse than to grow and prosper

Very few people are even aware of them, but there are historical cycles that repeat themselves over and over.

For instance, there have been nine depressions, spaced about 60 years apart, since the mid-16th century.

One explanation for this is human psychology. After a depression, the generation that suffered through it is very careful and conservative. Lenders make only totally-safe, no-risk loans. Investors will only invest in sure things.

It was 1954 before the Dow reached the level it had been in the boom of the 1920s.

Then, about 30 or 40 years after a depression, a new generation begins to take over.

Its members have little memory of the crash. They think their elders are over-cautious old fuddy-duddies who are missing profit opportunities.

And, in a way, they’re right. It’s time to get more aggressive. Think of the 1950s and 1960s.

As this new generation takes control of banks, corporations, government and other institutions, these people eventually throw caution to the wind.

By about 60 years after the last crash, there’s almost no one around who remembers what it was like. Stocks and real estate have gone up for as long as these people can remember.

The stage is set for another depression, caused by cheap money, bad loans and the foolish investments of the boom generation.

That’s where we are now. The “credit cycle” began to unwind in August 2007, with the collapse of subprime mortgage securities, but it still has a long way to go. The worst is yet to come.

The 500-Year Cycle

There is also a long 500-year cycle. No one knows precisely why this is.

What we do know is that this cycle is unusually precise.

Between 50 B.C. and 50 A.D. the Christian religion began and the Roman Republic was replaced by an empire. Around 500 A.D. the Roman Empire collapsed.

At about 1,000 A.D. the Dark Ages gave way to the Middle Ages. And around 1500 A.D. the Modern Age – our age – began.

We are now at the turning point of the 60-year and the 500-year cycles. If history is any guide, this will be a period of war, depression, dramatic changes in technology and vast social and economic upheaval.

All turns in the 60-year cycle follow a period of excessive debt. All involve a credit crisis, all lead to a collapse of property values, all ruin independent businessmen, all have serious political consequences  and all cause high unemployment and social distress.

This isn’t idle chitchat. There are opportunities to make enormous amounts of money.

For example, from those Brazilian bonds I told you about earlier we’re making an almost 70% annualized return! On bonds!

In four months one special type of gold company that I recommended has spiked up over 60%.

Yet another recommendation – a financial services play – made 38% in four days.

These are just some of the real fortune building returns racked up so far this year…

And I’m seeing many more of these high-profit anomalies on the horizon… many more than there were a few years ago…

That’s because we’re in the middle of a cyclical collapse. And that’s when asset mispricing and great opportunities abound.

Each of the great 60-year turning points creates a whole new class of millionaires and wipes out the accumulated wealth of the old class.

There’s really no escaping it. Society has to write off debts that were piled up too high when times were good.

Government can shuffle the pain around… but government cannot escape the pain.

The Market Is More Powerful
Than Any Government

The biggest mistake of our time is the belief that government can avoid the costs of bad debts and failed investments.

Just as the Russians found out that you can’t create a society in which no one can make a profit, we’re going to find out you can’t have a society in which no one takes a loss.

President Obama has set off on a policy of rescuing failed companies and big unions. It’s not going to work.

Anyone with a sense of history knows it…“old timers” who’ve seen crashes like this one before.

Take Richard Russell.

Russell is 84. He’s been writing his investment newsletter, Dow Theory Letters, for 50 years. It’s one of the most respected financial publications going. The People’s Bank of China is a subscriber. So are many Wall Street traders.

“People in this country don’t realize how bad things can be,” Russell told a close group of insiders recently.

“I lived through the Great Depression. I remember people standing in bread lines. It was hard to get a job, any job, back then.

“But now, you see the restaurants are still full. People are still spending money. They may be worried and they may be beginning to save, but there’s no sense of urgency.

“And there’s a rally on Wall Street. You know, every bear market produces a rally. You can expect the market to retrace its steps by one- to two-thirds.”

There are a lot of people with opinions on the economy and the stock market. You can hardly turn on your computer without getting dozens of them.

But there are not many opinions with the depth of experience and knowledge behind them as those of Richard Russell.

He’s been studying “the language of the markets” for more than half a century.

“The primary trend is down,” Russell told the same select group of friends and investment professionals recently.

In the end, Russell believes that no matter what Obama and Bernanke do, the primary trend will have its way. The bear market will continue until it “has fully expressed itself.”

“What would you do if you were suddenly in a position of power in the United States?” asked one of the guests at the recent gathering.

“Nothing,” replied Russell.

“I’d do nothing. I’d let it happen. I’d let the bear market do its work.”

But that’s not what President Obama – who’s just over half Russell’s age – is doing.

Obama wants the government to act. And this means tax, print, spend and legislate.

Prop up failed automakers. Stuff money into zombie banks. ‘Stimulate’ with pork-laden spending bills.

This year’s first ‘stimulus’ plan has conspicuously failed to create the millions of jobs the president promised. Reports indicate that the White House is now working on yet another stimulus’ to spend even more money out of an empty pocket.

Of course, Obama plans to print trillions of fresh new dollar bills to pay for it all.

Obama doesn’t remember the Great Depression. Richard Russell does.

The Most Important World Trend

Under the cover the economic crisis President Obama and his allies in the Federal Reserve are radically altering the U.S. economy.

We now have a projected budget deficit of 13% of GDP. That’s more than twice the size of the next largest deficit since the end of World War II.

The federal government now has massive stakes in the banking, mortgage, auto, health care and insurance industries.

Unfunded liabilities – Social Security, civil service and military pensions, the Pension Benefit, Guarantee Corporation, Medicare and Medicaid – are over the $100 trillion mark.

An entire year’s worth of US economic output stands at just under $14 trillion. Total federal tax receipts are just $2.4 trillion.

Something’s got to give. This much is obvious.

Well, behind the scenes something already is:  a 100% increase in the money available to the economy.

It’s the biggest increase in what economists call monetary base – made up of currency in circulation, bank reserves at the Fed and vault cash – in 50 years… by a factor of 10.

Think of this as a huge build up of potential cash, rather like a build-up of water behind the walls of a giant hydro dam.

Once the flood gates open, the water will gush out and drown everything in its path. Money will flood the economy and lead to higher inflation and interest rates.

It’s difficult to estimate the magnitude of the inflationary and interest-rate consequences of the Fed’s actions because, frankly, we haven’t ever seen anything like this in the U.S. To date, what’s happened is potentially far more inflationary than were the monetary policies of the 1970s, when the prime interest rate peaked at 21.5% and inflation peaked in the low double digits. Gold prices went from $35 per ounce to $850 per ounce, and the dollar collapsed on the foreign exchanges. It wasn’t a pretty picture.

So why is the Fed expanding the money supply so recklessly, if results are so disastrous?

That’s easy. The expansion of money can also result in higher stock prices, higher house prices and a weaker currency in the short term.

And these are three things Washington desperately wants right now.

Higher stock prices mean that banks and big corporations can raise money by issuing shares, rather than by relying purely on government hand outs.

Higher house prices would make it easier for families to pay the banks back for mortgages they took out on their houses.

And a weaker dollar makes the government’s debt pile cheaper to pay back.

James Dale Davidson is attending a conference in London.

Instead of your weekly Abundance essay, James’s research team has assembled some important crisis alerts to keep you informed as the global meltdown continues.

These alerts outline three of the most important – and bankable – market trends to be aware of in 2009.

James will continue to write his weekly Abundance letter on his return later this week.

To your continuing success,

Will Bonner

Publisher,

Abundance

P.S I’d love to hear your thoughts on Abundance. Is it useful? Relevant? Just send me a mail at info@abundanceletter.com

P.P.S James has unearthed a trade that could lead to 4,200% returns by the end of the year no matter which way stocks swing next. This trade is highly time sensitive, so if you interested in learning more about it, please follow this link immediately.

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Crisis Updates

*** “The ‘crack cocaine’ of our generation appears to be debt. We just can’t seem to get enough of it. And, every time it looks like the U.S. consumer may be approaching his maximum tolerance level, somebody figures out how to lever on even more debt using some new and more complex financing.”

- Jeff Saut, chief investment strategist, Raymond James & Associates, September 2007

The current economic crisis is a debt crisis, plain and simple. And it cannot be properly dealt with by getting into more debt.

Nevertheless, this is precisely the path the Bush and Obama administrations decided to take the country on.

The recent turmoil has commonly framed as a “credit crisis.” But credit’s necessary corollary, debt, has always been the real issue.

At the centre of this massive debt crisis has been the U.S. Federal Reserve under Alan Greenspan and his successor, Ben Bernanke.

Over the past two decades, the Fed created and sustained the country’s chronic debt addiction by unprecedented monetary expansion. This massive monetary expansion fueled an extraordinary economic boom. But it was a false boom, because it was built on debt rather than real capital.

The scale of the debt expansion was monumental.

When Greenspan took over the Fed in 1987, public and private debt in the U.S. totalled $10.5 trillion. Following his departure from the Fed in 2006, this figure had more than quadrupled to $43 trillion. By 2007, public and private indebtedness was three times bigger than the nation’s GDP.

Ominously, but disregarded by both Washington and the Fed, the previous record of public and private indebtedness to GDP was set in 1929.

Subprime mortgage debt, in August 2007, was the first part of this sprawling debt bubble to fall. But this debt collapse was by no means contained to the housing market. By their very nature, housing bubbles, involve banks and the whole financial system. And the subprime debt collapse triggered a highly volatile series of subsequent debt collapses and near debt collapses that we are still experiencing today as aftershocks, almost two years after the subprime component burst.

It is odd, then, that the federal government’s response to this debt crisis should be to pile on more debt. And yet that is exactly what it is doing.

President Obama’s budget will double the national debt in five years and triple the national debt in ten years. Meanwhile, the Fed is sustaining interest rates at near zero. And it is simultaneously pumping new money into the economy under the new euphemism of “credit easing.”

Worse still, both the government and the Fed are committed to do “whatever it takes” to ‘fix’ the economy. This means they will continue to try to borrow and print their way out of trouble, regardless of the long-term consequences.

*** So where does this leave you and your savings and investments?

There are three likely long-term consequences of the current trend in government spending and Fed money-printing.

1) Higher gold prices

According to commodities expert Byron King, investors are flocking to gold (and silver) right now. And that’s because investors don’t trust the world’s governments or paper currencies.

This can be seen in the gold holdings of ETFs.

This from Byron:

By the end of 2008, gold holdings of ETFs reached a record level of 1,090 tonnes, according to the World Gold Council (WGC). Thus, ETF holdings now exceed those of Switzerland and many other large and important nations. (Check the listing below.) In the fourth quarter of 2008, investors purchased ETF gold interests representing 96 tonnes of gold. (Far more than the total gold reserves of Australia.) This followed the purchase of an unprecedented 145 tonnes (more than the reserves of Saudi Arabia) in the previous quarter, according to the WGC. These are astonishing levels of demand, where there was almost none just a few years ago.

(The full article can be found here .)

This rush to gold will only increase as government-created inflation takes hold.

Three of the world’s smartest investors now see U.S. inflation as inevitable.

Warren Buffett recently said the following about the government’s attempts to stimulate the economy with Keynesian spending programs: “We are certainly doing things that could lead to a lot of inflation. In economics there is no free lunch.”

Investment guru Marc Faber also sees the government creating inflation. Faber echoes Buffett’s conviction that the Fed will be unable to put the inflation genie back in the bottle when the economy starts to turn around: “The massive money printing we have and the massive deficits we have now will make it difficult when there are some price pressures for the Federal Reserve to actually increase interest rates.”

Meanwhile, commodities bull Jim Rogers says it’s not just the U.S. government that’s responsible for inflationary policies.

“Governments are printing money everywhere, borrowing stupendous amounts,” he told Bloomberg. “Throughout history that has led to problems… and it will this time too.”

2) Devaluation of the dollar

According to Casey Research’s chief economist Bud Conrad, this fiscal year’s $1.75 trillion budget deficit will, by the time all is said and done, come in a lot closer to the $2.5 trillion.

This is hugely inflationary.

Right now, the dollar is strong, thanks to the massive flight to safety that has occurred recently.

But inflation has already ravished the value of the dollar. And that will only increase as the government, under Barack Obama, cranks up spending rates to historic proportions.

Today, $250,000 will only buy you 77% of what it would have in 1998. And just 56% of what it would have in 1988.

According to legendary investor Doug Casey, “A decade from now, given the inflation rate we expect, the dollar’s purchasing power will erode by another 50%, and probably a lot more than that. In fact, at the current rate of money creation, by the time the dust settles, $250,000 might be the annual wage commanded by burger flippers.”

(For more of Doug’s analysis of the fate of the dollar, follow this link .)

The bottom line is that Obama’s spending programs will require massive Treasury issuances. And the only way to absorb these issuances will be for the Fed to flood the market with dollars.

3) The bursting of the U.S. Treasuries bubble

The massive debt collapse we have witnessed recently has, to a degree, been mopped up with the help of U.S. government debt.

The federal government has been able to plug holes in the banks by issuing debt and handing over the money it raises to the banks to plug the leaks on their balance sheets.

Investors have seen U.S. Treasuries as a safe haven to park their cash. This has facilitated the government’s spending programs. But this confidence in Treasuries is unsustainable for three reasons.

This from Louis Basenese at Investment U:

• First, because the government can’t get away with near zero yields forever. Investors will eventually demand a respectable return on their money. Especially foreign governments. In the last quarter alone they increased their U.S. debt holdings by 12%, according to Bloomberg . To load up even more will require additional compensation.
• Second, because inflation is around the corner. Never has a world government spent (or planned to spend) so much and avoided it. The only way to curb the resulting inflation will be for the Fed to abruptly reverse course, and begin raising rates at the first signs of an economic recovery.
• Bottom line, the only way for rates to go from here is up, which means bond prices will head the opposite direction.

(Follow this link to read more from Louis.)

These three trends are all long term. Keep an eye out for more updates from Abundance to find out how to play them for profits.

To your success,

The Abundance Research Team

nothing in this e-mail should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investment advice.

We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended in this letter should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Protected by copyright laws of the United States and international treaties. This Newsletter may only be used pursuant to the subscription agreement and any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), in whole or in part, is strictly prohibited without the express written permission of Abundance Letter . P.O. Box 925, Frederick, MD 21705 USA ]]> http://strategicinvestment.com/2009/02/16/3-bankable-trends-to-follow-in-2009/feed/ 0 http://strategicinvestment.com/2009/01/02/surviving-the-bailout-the-grim-arithmetic/ http://strategicinvestment.com/2009/01/02/surviving-the-bailout-the-grim-arithmetic/#comments Fri, 02 Jan 2009 05:53:15 +0000 james davidson http://strategicinvestment.com/?p=280

James Davidson

Editor,

Abundance

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Your Increasing Tax Burden and How to Avoid It

Point number one is that Obama has confirmed he will take rapid action to cut taxes for 95% of Americans. At first blush, cutting taxes for 95% sounds like a grand idea. However, look closer. The top 5% of income earners already pay 60% of all income tax, up from the top 36.64% in 1980. The corollary to Obama’s tax reduction, which will go mainly to people who don’t pay income taxes, is that a large increase is scheduled for the high earners.

A hint of the magnitude of the coming burden was offered by T he Washington Post on January 2, when it published its assessment of the cost of the bailout as already announced.

According to Post, if equally apportioned over the 139 million tax returns filed last year, the toll of the bailout would be $61,871 per taxpayer. But taxes are manifestly not apportioned equally. Even before Obama’s tax hikes take effect, 60% of the tax burden falls on 5% of earners –roughly speaking, those who earn $250,000 or more annually.

If you are one of them, your share of the bailout cost will be about $750,000. Pencil that into your balance sheet.

If you have substantial assets, you undoubtedly took your share of losses from the estimated $32 trillion trimmed from stock markets last year. (Stocks worldwide lost 48% of their value.) Trillions more were lost in real estate, bonds and commodities. But it is very possible, especially if your portfolio was well positioned, that you will lose more from bearing your lopsided share of the almost $9 trillion bailout burden than from your investments.

What does this mean? As I see it, you basically face a choice of three broad strategic options.

Strategic Option # 1 : You stay the course, taking your marching orders from the lyrics of the great hit song of 1932.

They used to tell me I was building a dream

I was always there, right on the job .

Like the everyman hero of Brother, Can You Spare a Dime ? , you can “follow the mob” and do whatever you are expected to do – even if that means paying for everyone else’s mistakes. But remember, the result won’t be much better than that described in other lines from this song of the Great Depression:

They used to tell me I was building a dream

Why should I be standing in line, just waiting for bread?

That may sound dire, or exaggerated. But, then again, it may not be.

Strategic Option #2 : Run for the hills. This allows you to put British economist David Ricardo’s “Equivalence Theorem” into practice. Ricardo wrote that investors could see through government fiscal policies, pick them apart if you will, and take individual steps to minimize their costs. One thing Ricardo did not emphasize, however, is that you can simply get out of a country where politicians intend to impose high, disproportionate costs on you.

Whether the government raises your taxes this year or next year, on current evidence it is clear that the view of the Democratic Party is that one person out of twenty should bear more than 60% of the costs of running the government. These costs have manifestly escalated by trillions over the past six months, and they seem likely to rise even higher as the economic downturn deepens.

You probably need to earn millions of dollars over the next decade or two to sustain your lifestyle and provide for your retirement. The question is whether you can best do this in the U.S. or elsewhere.

Even if the U.S. is still the best place to invest money to earn a high return, you may be better off making those investments from another country, one where you will be able to keep more of the money you earn.

An irony of last year’s financial debacle is that before the full measure of the wipeout was evident Congress passed a law designed to add a few feet of financial barbed wire to what The Economist describes as “America’s Berlin Wall” (June 12, 2008, p. 89). The glorious sounding Heroes Earnings Assistance and Relief Tax Act imposed new penalties on Americans seeking to escape U.S. citizenship.

As The Economist reported, “That expats want to leave at all is evidence of America’s odd tax system. Along with citizens of North Korea … Americans are taxed based on their citizenship, rather than where they live. So they usually pay twice – to their host country and the Internal Revenue Service. As this makes citizenship less palatable, Congress has erected large barriers to stop them jumping ship. In 1996, it forced people who renounced citizenship to continue paying income taxes for an extra ten years.”

The new law, which the government meant to be more draconian than previous legislation, actually allows for a cleaner break. It establishes a one-time exit tax based on capital gains realizations on worldwide assets. Under the law, any high-income American who relinquishes citizenship must act as if he had sold all his worldwide assets on departure. If the unrealized capital gains taxes on these assets exceed $600,000, you must pay your capital gains tax to make good your escape.

When the government conceived and passed the law in the first half of 2008, the Wipeout of 2008 had not made its way into the consciousness of the Congress. The Congressional Budget Office even calculated that the federal government would net an extra $285 million in exit tax payments over five years. But the collapse in value of almost every category of asset over the second half of 2008 renders the exit tax much less punishing than it was conceived to be.

Indeed, as The Economist observed, “But even as the law tries to prevent people from renouncing their citizenship, it may have the opposite effect. Under the new structure, it would make financial sense for any young American working overseas with a promising career to renounce his citizenship as early as possible, before his assets accumulate. For everyone else, plunging stock and property prices mean now may be as good a time as any to hand back the passport, says Kurt Rademacher, a partner at Withers, a global tax-planning firm.” We explore these issues more fully in Crisis Strategy Alert .

Strategic Option # 3 Whether you decide to stay or go, you have a lot of work ahead of you to recapture losses and recover from the costs of the bailout. Whatever your previous thoughts about retirement, it is fair to assume that necessity will keep you hard at work until you’re the age of Raul Castro or older. If you are a baby boomer, as I am, you face a grueling physical test of your stamina. The next two decades will not be a time when you can allow yourself to lie back and become feeble.

The challenges ahead have hardly been conveniently timed. The financial crash and deepening downturn that threaten the deepest depression since the 1930s may be a prelude to a fall in living standards dictated by demographics.

Rapidly aging populations in most of the wealthy countries, combined with burgeoning retired populations dependent on “pay-as-you-go” transfer programs, are a recipe for falling living standards. Unless productivity increases faster than workforces decline, simple economic arithmetic dictates that living standards must fall. In Western Europe and Japan, more than half of all adults will be older than the official retirement by2020. Many countries, including Italy and Spain, will have more residents in their 70s than their 20s.

In a time like that, you don’t want to be one of the frail elderly. Old-age benefit systems and government health care programs of most of the developed countries will be stretched to the ragged margins of bankruptcy. If you depend on them, you are likely to be disappointed. So what can you do? The answer is relatively simple, if unwelcome.

The Easy Way to Extend Your Vitality

If you can extend your vitality, and evidence suggests you can, now is the time to take steps to do so. Specifically, I recommend taking time to exercise, as well as using a few anti-aging supplements that have strong research support.

First, let’s look at exercise. I have been an avid exercise devotee for all my adult life. After competing on the cross-country team at Oxford, I continued a habit of outdoor running, daily body weight calisthenics and resistance training.

I also cultivated a serious study of exercise physiology. Much the way that some people collect baseball cards or football memorabilia as a hobby, I sought out information about the most effective techniques for exercise. For some years, I have read journals such as Peak Performance and Medicine & Science in Sports & Exercise to indulge my curiosity and learn. As time passed, I was surprised to find that many of the commonplace training techniques I formerly employed were probably suboptimal.

Here’s what I learned that could be of interest to you.

Beginning in the mid to late 1990s, researchers began to more fully explore High-Intensity Intermittent Exercise (HIIE) as a training alternative to prolonged medium- or low-intensity sessions of what is commonly, and misleadingly, known as “cardio” training.

In perhaps the most important finding in the modern history of exercise physiology, Izumi Tabata and colleagues at the Japan’s National Institute of Fitness and Sports showed that HIIE training may improve V̇O2max (the maximum capacity of an individual’s body to transport and utilize oxygen) by as much as, or more than, moderate intensity continuous-exercise training.

Tabata’s interval-exercise training protocols involved very short duration efforts (20 to 30 seconds) at extremely high intensities (170% to 200% of the work rate eliciting V̇O2max). In a total of four minutes a day, athletes undertaking Tabata protocol showed decisively better fitness results than those doing prolonged aerobic exercise for an hour daily at 70% of their V̇O2max.1

Other studies have shown that HIIE results in the positive changes in red cell volume typically associated with endurance training.

Meanwhile, a Canadian study 2 showed that subjects who did HIIE for four minutes a day for six weeks lost nine times more body fat than a control group that did prolonged cardio an hour a day for eight weeks.

So a fair summary of recent authoritative research is that you can achieve significant health benefits of exercise in a very short time period. Obviously, it is easier to find four minutes a day for HIIE than it is to find an hour or two for continuous-exercise training.

I have used the Tabata protocol (20 seconds of exertion, followed by ten seconds of rest, repeated eight times for a total of four minutes per set) with excellent results. I also frequently do multi-joint resistance exercises, such as heavy squats or Tee Push Ups with dumbbells in a Tabata format.

I have found that I can bring my pulse rate into the 180’s at the age of 61, which is up to 25 beats per minute higher than my predicted maximum pulse. Note that this is a measure of cardiopulmonary intensity and fitness. The predicted maximum pulse is only a forecast, not a speed limit. The higher you bring your pulse, the more intense the exercise and the greater the training benefits you gain. I target 115% of my predicted maximum pulse in my exercise sessions.

I have enjoyed the benefits of maintaining a high level of fitness throughout my life. As a result, I can exercise today at a higher level of intensity than I would have been able to manage had I begun yesterday. That said, much of the fitness advice dispensed at the level of popular culture is wrong.

For example, I lifted the following bogus advice, which is not unlike the advice you might hear from the trainer in a local gym, from a public source on exercise intensity: “You gain the most benefits and lessen the risks when you exercise in your target heart rate zone. Usually this is when your exercise heart rate (pulse) is 60% to 80% of your maximum heart rate … Do not exercise above 85% of your maximum heart rate. This increases both cardiovascular and orthopedic risk and does not add any extra benefit.”

Malarkey.

Unless you are already in ill health, this is gravely misleading advice. In fact, there is growing evidence that prolonged exercise of the type typically recommended by trainers and ill-informed doctors results in a transient or even persistent depression of cardiac function.

Not so with HIIE; if it doesn’t kill you on the spot, it will strengthen your heart and make you healthier all over.

The “Holy Grail” of Anti-Aging

One of the most promising aspects of HIIE in extending vitality that exercising at higher intensities literally keeps you younger. A study of 2,401 British twins published in the Archives of Internal Medicine shows that the DNA of individuals who exercised more intensely than their twin did appeared to be as much a decade younger. This even though they were born at the same time with identical or similar genetic make-up (some of the twins were fraternal).

The study’s authors, led by Lynn Cherkas, an epidemiologist at King’s College London, examined just the ends of DNA strands. Called telomeres, these act something like the plastic caps on shoelaces, preventing the DNA in chromosomes from unraveling.

Previous research has shown that older people have shorter ends than younger folks do. Indeed, biologists say the caps shrink every time a cell divides. But not everyone’s DNA ages at the same rate. What Cherkas found most compelling were the results of her comparison of 67 pairs of twins in which one exercised much more than the other. Among those, the exercising twin had longer telomeres than his or her more sedentary counterpart.

Evidence that intense exercise extends the length of telomeres is as close as anyone has ever come to the “Holy Grail” of anti-aging.

Since you’re facing the prospect of slaving away for decades to recover from the Wipeout of 2008 and pay-off the costs of trillions of dollars in bailouts, you might want to devote a few minutes a day to HIIE, which may help keep you younger and healthier. (Check with your doctor to determine the proper pathway for you to begin a HIIE program.)

I recommend as part of your commitment to your health that you buy a sophisticated heart monitor to keep an eye on the progress of your exercise program. I use the Suunto t6. It calculates numerous physiological functions such as excess post-exercise oxygen consumption. You normally need gas exchange monitoring in an exercise laboratory to measure this.

The Suunto t6 is probably the most sophisticated device on the market. But be warned that the instructions for programming it are appalling and customer service is a trying if you need a repair.

Try This “Red Wine” Lift

While you’re at, you may also want to supplement with nutraceuticals, which have shown promise in maintaining vitality. Among the most promising is the anti-oxidant Resveratrol, which is prevalent in red wine.

Recent studies have shown that adding Resveratrol to the diet of yeast, fruit flies, worms and a species of fish increased their life spans up to 70%, 29%, 24%, & 50% respectively.

Resveratrol also caused fat related deaths drop 31% in obese mice. And the obese mice that were fed Resveratrol performed much better in movement and agility tests than obese mice not fed Resveratrol. Studies also show that mice fed Resveratrol had 100% more endurance than mice not fed Resveratrol (i.e., they were able to run twice as far on a treadmill). This could come in handy if you will still be working when you’re in your 80s.

Also of interest is a study published in Proceedings of the National Academy of Sciences that describes the powerful synergistic abilities of alpha lipoic acid and acetyl-l-carnitine to significantly combat aging. Together, these two nutrients have been shown to help combat diabetes, maintain proper cognitive function, support heart and liver health, support energy production, protect the body from radiation and chemical toxins and maintain immunity.

In addition to normal vitamins such as B, C and D, you can also benefit by including high potency doses of Ubiquinol, the active antioxidant form of Coenzyme Q10 in your diet.

Ubiquinol has been proven to have significant health-enhancing effects. For example, patients suffering from advanced congestive heart failure showed significantly improved heart function after supplementing with Ubiquinol for just three months. And cardiologist Peter Langsjoen found that critically ill patients who supplemented with Ubiquinol experienced a 24% to 50% increase in their hearts’ ability to pump blood.

Try it. You’ll want a strong heart to perserve and achieve Abundance in the years to come.

Crisis Updates

The Death of the Dollar?… Trillion Dollar Deficits for Years… GM’s Delusions of Grandeur…

** The dollars down, but it’s certainly not out.

• From mid-July to the end of November, the U.S. Dollar Index rose a whopping 23%. This tracks the value of a dollar against six major currencies.
• Anyone who knows anything about currency trading knows it’s not normal for a currency to move 23% in such a short time. Forex traders consider a one percent daily move to be big news.
• So it would make sense that the U.S. Dollar Index would have to see a rapid price decline after rising 23% so quickly. It has to go back to the mean, after all. And that’s exactly what happened. The dollar fell 11% between mid-November and mid-December.
• But this drop doesn’t necessarily signal the beginning of a new downtrend. As of now, it only signals a correction. We can see this by looking at a chart below.

• As long as the dollar stays above its 200-day moving average, the recent uptrend will stick. But that’s not to say we won’t see dollar weakness ahead.
• It’s possible for the dollar index to trade between 78 and 88 for the next two or three years. It could even move past 88. But betting that it will move under 78 is premature. If you really want to capitalize on a drop in the dollar, wait for a confirmation of the downtrend by allowing the U.S. Dollar Index to trade under 78 before shorting.
• At that point, you could make some good money buying up the Rydex Weakening Dollar 2x Strategy H ETF (MUTF:RYWBX) . For every one percent the dollar losses, you gain two percent. And with Bernanke dropping money from helicopters, it is only a matter of time before the dollar starts seeing bigger drops.

** The Congressional Budget Office estimates that the 2009 budget deficit will reach $1.2 trillion.

• That was one day after President-elect Obama said, “Potentially we’ve got trillion-dollar deficits for years to come, even with the economic recovery that we are working on at this point.”
• The government has already backstopped the financial markets to the tune of over $8 trillion. Now our politicians are starting to spend obscene amounts of money in a failed effort to “jump start” our economy.
• If the markets continue to suffer, the government will have to cover losses for years in the future. This means they will continue to create funny money to cover those losses. And inflation should become a big concern.

** According to Bloomberg, General Motors said it has enough government loans to cover its worst-case forecast for U.S. auto sales and won’t need more if the economy holds up.

• It’s extremely difficult to believe that a one-time loan to GM would be enough to fix their problems. A former Merrill Lynch auto analyst has said that GM’s plan “all depends on a lot of difficult-to-forecast factors, like the size of the market.” And during congressional testimony, another analyst said Detroit would need up to $125 billion to become whole again. This is very different from the less than $20 billion that GM and Chrysler got from the government in December.
• The truth is that GM is taking a big fat guess on the amount of taxpayers’ money it needs to stay afloat. And to make matters worse, it seems GM’s management is far too detached from reality to make a good business decision.
• Considering GM’s current predicament, why would anyone believe GM to be right about its super-ambitious forecast? Don’t believe a word of it. GM will ask the government for more money this year… more losses will force the government to create more money… and the politicians leading us will be “forced” to spend more to try and “buffer” a recession in vain. Buy gold .

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