Messages/free offers from Elliott Wave International: 1) Worry and prepare for deflation – download free Important Investor Report. 2) Free chapters from Robert Prechter’s best-seller Conquer the Crash (if not registered, will need to sign up).
Bob Prechter Points Out The Many Signs Of Deflation
Everywhere you look, the mainstream financial experts are pinning on their "WIN 2" buttons in a show of solidarity against what they see as the number one threat to the U.S. economy: Whip Inflation Now.
There’s just one problem: They’re primed to fight the wrong enemy. Fact is, despite ten rate cuts by the Federal Reserve Board to record low levels plus $13 trillion (and counting) in government bailout money over the past three years — the Demand For and Availability Of credit is plunging. Without a borrower or lender, the massive supply of debt LOSES value, bringing down every exposed investment like one long, toppling row of dominoes.
This is the condition known as Deflation.
Bob Prechter uncovered more than a dozen "value depreciating" developments underway in the U.S. economy as the two main engines of credit expansion sputter: Banks and Consumers. Here’s a preview of his findings contained the free report, The Most Important Investment Report You’ll Read in 2010:
- A riveting chart of Treasury Holdings as a Percentage of US Chartered Bank Assets since 1952 shows how "safe" bank deposits really are. In short: today’s banks are about 95% invested in mortgages via the purchase of federal agency securities. Unlike Treasuries, IOU’s with homes as collateral have "tremendous potential" to fall in dollar value.
- Loan Availability to Small Businesses has fallen to the lowest level since the interest rate crises of 1980. In Bob Prechter’s own words: "The means of debt repayment [via business growth] are evaporating, which implies further deflationary pressure within the banking system."
- An all-inclusive close-up of the Number Of Banks Tightening Their Lending Standards since 1997 has this message to impart: Since peaking in October 2008, lending restrictions have soared, thereby significantly reducing the overall credit supply.
- Both residential and commercial mortgages are plummeting as home/business owners walk away from their leases at an increasing rate.
- The major sources of bank revenue — consumer credit and state taxes — are plunging as more people opt to pay DOWN their debt. Also, a compelling chart of leveraged buyouts since 1995 shows a third catalyst for the credit binge — private equity — on the decline.
For more information on the deflationary shift underway in the financial landscape, download Bob Prechter’s free report, The Most Important Investment Report You’ll Read in 2010. It contains 13 pages of commentary, riveting charts, and unparalleled insight into these urgent market matters.
Enjoy 8 Free Chapters from Robert Prechter’s Conquer the Crash
In 2002, Elliott Wave International’s president Robert Prechter published his New York Times and Wall Street Journal business best-seller Conquer the Crash, a prescient book that explained why a financial crisis was inevitable and predicted almost exactly how it would unfold.
Now in the 2nd edition, Conquer the Crash remains a very useful read. To give you an idea of just how useful, we are releasing 8 chapters of the book to all Club EWI members. Here’s an excerpt.
Robert Prechter
Conquer the Crash
Chapter 23, "What To Do With Your Pension Plan," excerpt
Make sure you fully understand all aspects of your government’s individual retirement plans. In the U.S., this includes such structures as IRAs, 401Ks and Keoghs. If you anticipate severe system-wide financial and political stresses, you may decide to liquidate any such plans and pay whatever penalty is required. Why? Because there are strings attached to the perk of having your money sheltered from taxes. You may do only what the government allows you to do with the money. It restricts certain investments and can change the list at any time. It charges a penalty for early withdrawal and can change the amount of the penalty at any time.
What is the worst that could happen? In Argentina, the government continued to spend more than it took in until it went broke trying to pay the interest on its debt. In December 2001, it seized $2.3 billion dollars worth of deposits in private pension funds to pay its bills. …
With the retirement setup in the U.S., the government need not be as direct as Argentina’s. It need merely assert, after a stock market fall decimates many people’s savings, that stocks are too risky to hold for retirement purposes. Under the guise of protecting you, it could ban stocks and perhaps other investments in tax-exempt pension plans and restrict assets to one category: "safe" long-term U.S. Treasury bonds. Then it could raise the penalty of early withdrawal to 100 percent. Bingo. The government will have seized the entire $2 trillion — or what’s left of it given a crash — that today is held in government-sponsored, tax-deferred 401K private pension plans. I’m not saying it will happen, but it could, and wouldn’t you rather have your money safely under your own discretion? …
Perhaps you have no such opportunity for a tax saving and do not want to pay the penalty attached to premature withdrawal. If your balance is high enough, you may wish to consider converting your retirement plan investments into an annuity at a safe insurance company (see Chapter 24). It is highly likely (though not assured) that such investments would be left alone even in a national financial emergency. …
If you or your family owns its own small company and is the sole beneficiary of its pension or profit sharing plan, you should lodge its assets in a safe bank or money market fund. As an alternative, depending upon your age and requirements, you may consider converting it into an annuity, issued by a safe insurance company. Such insurance companies are few and far between, but the next chapter shows you where to find them.
Read the rest of the 8 free chapters from Robert Prechter’s Conquer the Crash now, free! All you need is to create a free Club EWI profile:
- Chapter 10: Money, Credit and the Federal Reserve Banking System
- Chapter 13: Can the Fed Stop Deflation?
- Chapter 23: What To Do With Your Pension Plan
- Chapter 28: How to Identify a Safe Haven
- Chapter 29: Calling in Loans and Paying off Debt
- Chapter 30: What You Should Do If You Run a Business
- Chapter 32: Should You Rely on Government to Protect You?
- Chapter 33: A Short List of Imperative "Do’s" and Crucial "Don’ts"
Elliott Wave International (EWI) is the world’s largest market forecasting firm. EWI’s 20-plus analysts provide around-the-clock forecasts of every major market in the world via the internet and proprietary web systems like Reuters and Bloomberg. EWI’s educational services include conferences, workshops, webinars, video tapes, special reports, books and one of the internet’s richest free content programs, Club EWI.
