Smart Money

Dear Reader,

Statistics show that over 1,000,000 people where foreclosed on in 2007.

Experts predict that even more will be foreclosed on in 2008.

What are these people doing?

Many are just walking away. Thinking that once they turn over the keys the bank will do what it has to do, take possession of the house, and that will be that.

Oh, people of little knowledge.

Its all about the contract.

Here’s a definition of foreclosure for Black’s Law Dictionary:

Procedure by which mortgaged property is sold on default of mortgagor in satisfaction of mortgage debt. If proceeds from sale fail to pay debt in full, mortgagee creditor may obtain a Deficiency judgment.

Foreclosure is just legal mumbo-jumbo for repossessing the collateral – the house.

You’ve still got the contract. You still owe all the money, with interest.

Once the house is repossessed it will be sold. When and for how much? Only time will tell.

But, based on what I’ve been reading, it will take a long time for all the reposes to be sold. And, with the price of houses going down, most of these houses will be re-sold for a lot less than what is owed.

Will the banks come after people?

You have two things to consider. These banks create money out of thin air. They lend this funny money to you, with interest. And they still end up losing money, go figure. These bankers are paid a lot of money. Do you think they’ll even hesitate to come after you if it means saving their high paying job?

Then, you’ve got all those collection attorneys. They’ve got to be suing and stealing from someone to earn a living. It might as well be you.

Here’s what you need to consider. If you just walk away, two, three, five, years from now you could end up being sued for a lot of money. You’ll either have to defend yourself, hire an attorney, or get your wages garnished, you property stolen, and what ever else they can do to collect the money.

Worst of all, you ‘ll being paying for a house you don’t live in and haven’t for along time. Sort of like alimony: the screwing you get for the screwing you got?

Not a real bright thing to do.

Or, you could stand up and fight them now.

What do you have to lose? Pretty much nothing.

What do you have to gain?

During the battle all you have to pay is property taxes (you don’t want govco to come and evict you) and utilities. No mortgage payments. Its like living rent free.

The lender or bond holder may agree to waive any deficiency amount. You actually walk away completely free and clear.

The lender or bond holder may negotiate new terms, reduce the amount of the loan and interest rates so you can now afford the house.

And if you’re real committed, you might end up winning, which, as a matter of law, you should, and you’ll own your house free and clear in a couple of years.

Not a bad deal…

What will it be? Now or later?

How I learned a 36-year-old financial secret over breakfast at Raffles Hotel.

Dear reader,

My name is Gary Scott. I’m not clairvoyant…I have no special powers.

But I do know a clear economic signal when it hits me over the head…and a big one hit me during a trip to the Far East on May 5, 1971.

I was having breakfast at Singapore’s historic Raffles Hotel…one of the perks of being a successful young financial hotshot selling US securities overseas.

I was good at my job. I was confident, relaxed, and completely in command (I thought) of the economic principles I used in my business.

One of those principles was that the US dollar was the rock-solid benchmark currency of the world.

In those days, the dollar was backed by a dependable relationship with something real…gold. Like the sun rising each morning, the world knew exactly what a dollar would be worth from day-to-day.

Over breakfast on Raffles’ terrace that morning in 1971, I opened the Singapore Straits Times and discovered that my world…everybody’s world…had changed in the time it took to read a three-word headline.
“US Dollar Devalues.”

The unthinkable had happened. America had severed the long-standing link between the dollar and gold.

For the first time in decades, no one knew how much a dollar was really worth.

International currencies markets convulsed.
Broke…With A Pocketful of Dollars

Back then, I traveled with nothing but US dollars. All Americans did. The world wasn’t yet run by credit cards. Until that fateful day in May, you could go anywhere in the world with nothing but dollars in your pocket. They were, literally, as good as gold.

In the wink of an eye, all that changed.

I found myself in the most famous hotel in Singapore with a wad of US dollars…unable to pay my hotel bill. I couldn’t even pay for breakfast! No one would take my dollars…not even the money changers would touch them.

I was terrified. In the time it took to eat breakfast, I’d gone from being a successful international businessman to being a penniless beggar thousands of miles from home.

By that evening, the newly unhinged dollar finally found a temporary value on world currency markets, and I was able to pay my bills.

But I’ve always remembered the lesson I learned that day, stranded in the most historic hotel in Singapore, my pockets stuffed with dollars as worthless as scrap paper.

The lesson was simple…never again trust the US dollar, or any other single currency.
The Simple Truth No US Stock Adviser Wants You To Know

That lesson has served me well for three and a half decades, because since that day, the value of the dollar has been spiraling steadily downward.

And that’s a fact that no American money manager or investment adviser wants you to know…since becoming unhinged from gold, the dollar has been losing value faster than safe and reasonable dollar investments can cover.

Even if you’d started 36 years ago with a portfolio of dependable, low-risk, value-oriented investments earning six percent a year in dollars, you’d lose buying power.

That’s right…36 years of rock-solid six percent annual returns on dollar-denominated investments would leave you in the hole!

That’s because in the past 36 years the dollar has lost 75% of its real value against other major currencies.

Can you imagine any investment adviser selling US investments in US dollars telling that to their clients?

Dear Reader,

From:  The 5 Min. Forecast

“My husband and I eat rice at least twice a week,” writes a reader in response to our highlight of U.S. food rationing yesterday, “and we usually buy it in 10-25-pound bags at Costco. When I read in today’s 5 that Costco was going to start limiting rice purchases, I ran out during my lunch hour to stock up.

“First I stopped at a back street discount/restaurant supply store to check the prices, thinking I’d do some comparison shopping. The discount store had various brands of brown rice in bags ranging from 3-50 pounds, but the rack sections where the bags of elephant, basmati and jasmine rice are normally stacked were empty.
“I dashed over to Costco and found pretty much the same situation. There were dwindling stacks of brown rice still available, but except for Uncle Ben’s instant rice, all the white rice was gone. I grabbed 50 pounds of brown rice while the getting was good.
“I suspect every Chinese, Japanese, Thai and Indian restaurant in town has snatched up all the white rice they can get. I wonder how long I’d have to hang out in the rice aisle at Costco to see a food riot right here in the U.S.”

The 5: If it weren’t so serious, we’d find a food riot at Costco fairly amusing.

Editor:  Be sure you make those minimum monthly payments on your credit cards.  We wouldn’t want to ruin our credit rating, even for food.  Would we?

Dear Reader,

Eric Roseman has discussed the growing global food crisis in the A-Letter recently, but it’s quickly escalating into agricultural Armageddon.

Just last week Kazakhstan, one of the world’s largest grain exporters, imposed a TOTAL ban on wheat exports. In other words, wheat can NOT leave the country. This is just the latest of many desperate attempts to hold down soaring local prices.

Wheat has skyrocketed 92% higher in the past year, but may soar even higher, as export restrictions in Russia, Ukraine and Argentina have closed one-third of the global wheat market.

Meanwhile panic is gripping Asia as rice prices have more than tripled in the past year. Rice is a staple food source for three billion people in developing nations of Asia and Africa. It’s easy to see why there is panic and rioting in the streets. The price of benchmark Thai rice broke through the US$1,000 a ton mark for the first time ever last week, up from just US$300 this time last year.

The escalating food crisis is easily the biggest problem facing Asia and other emerging markets - much more troubling than the credit crunch. After all, people in these nations can do without bank loans or new credit cards, but they can’t stop eating!

Offshore A-Letter

Little Red Riding Hood is skipping thru the forest road when she sees

The big bad wolf crouched down behind a log.

‘My, what big eyes you have, Mr. Wolf.’

The wolf jumps up and runs away.

Further down the road Little Red Riding Hood sees the wolf again

And this time he is crouched behind a bush.

‘My what big ears you have, Mr. Wolf.’

Again the wolf jumps up and runs away.

About 1/4 mile down the road Little Red Riding Hood sees the wolf

Again and this time he is crouched down behind a rock.

‘My what big teeth you have Mr. Wolf.’

With that the wolf jumps up and screams, ‘Will you knock it off,

I’m trying to poop!’

Dear Reader,

“There’s a myth that all you need to do is outline your vision and prove it’s right - then, quite suddenly, people will line up and support you.

“In fact, the opposite is true. Remarkable visions and genuine insight are always met with resistance. And when you start to make progress, your efforts are met with even more resistance. Products, services, career paths … whatever it is, the forces for mediocrity will align to stop you, forgiving no errors and never backing down until it’s over.

“If it were any other way, it would be easy. And if it were any other way, everyone would do it and your work would ultimately be devalued. The yin and yang are clear: Without people pushing against your quest to do something worth talking about, it’s unlikely it would be worth the journey. Persist.”

Seth Godin

Rich people act in spite of fear.
Poor people let fear stop them.

Earlier in this book we discussed the Process of Manifestation. Let’s review the formula: thoughts lead to feelings, feelings lead to actions, actions lead to results.

Millions of people “think” about getting rich, and thousands and thousands of people do affirmations, visualizations, and meditations for getting rich. I meditate almost every day. Yet I’ve never sat there meditating or visualizing and had a bag of money drop on my head. I guess I’m just one of those unfortunate ones who actually has to do something to be a success.

Affirmations, meditations, and visualizations are all wonderful tools, but as far as I can tell, none of them on its own is going to bring you real money in the real world. In the real world, you have to take real “action” to succeed. Why is action so critical?

Let’s go back to our Process of Manifestation. Look at thoughts and feelings. Are they of the inner world or the outer world? Inner world. Now look at results. Are they part of the inner world or outer world? Outer world. That means action is the “bridge” between the inner world and the outer world.

So if action is so important, what prevents us from taking actions we know we need to take?

Fear!

Fear, doubt, and worry are among the greatest obstacles, not only to success, but to happiness as well. Therefore, one of the biggest differences between rich people and poor people is that rich people are willing to act in spite of fear. Poor people let fear stop them.

Susan Jeffers even wrote a fantastic book about this, entitled Feel the Fear and Do It Anyway. The biggest mistake most people make is waiting for the feeling of fear to subside or disappear before they are willing to act. These people usually wait forever.

One of our most popular programs is the Enlightened Warrior Training Camp. In that training, we teach that a true warrior can “tame the cobra of fear.” It doesn’t say kill the cobra. It doesn’t say get rid of the cobra, and it certainly doesn’t say run away from the cobra. It says “tame” the cobra.

It’s imperative to realize that it is not necessary to try to get rid of fear in order to succeed. Rich and successful people have fear, rich and successful people have doubts, rich and successful people have worries. They just don’t let these feelings stop them. Unsuccessful people have fears, doubts, and worries, then let those feelings stop them.

Because we are creatures of habit, we need to practice acting in spite of fear, in spite of doubt, in spite of worry, in spite of uncertainty, in spite of inconvenience, in spite of discomfort, and even to practice acting when we’re not in the mood to act.

Excerpt from:
Secrets of the Millionaire Mind
T. Harv Eker

Dear Reader,

When I found that I could earn college credits by taking judo, I jumped at the chance. I’d been taking karate for a couple of years and I was pretty good at it, if I do say so myself. I was used to getting punched and kicked, so I figured judo wouldn’t be any big deal.

As I entered the first class, I felt pretty confident. The instructor gave me a hearty welcome and explained that judo was basically like wrestling. I paired up with a guy about my size and the instructor said to “give it a go.” My opponent quickly grabbed me and flipped me over his back and onto the mat. The pain was excruciating. All I could do was lie there in shock. This sure wasn’t karate!

If I hadn’t needed the credits to graduate, I may never have gone back. But I did need the credits, so back I went. And in the next class, my instructor taught me something that changed the way I have since thought about all challenges - physical or mental, personal or business. He taught me how to land.

Landing in judo involves twisting and absorbing the impact of the fall in your leg and hip while slapping the mat with your hand. Do that, and it doesn’t hurt at all.

Once I knew how to protect myself by landing right, I lost my fear of being flipped. A few weeks later - despite being such a novice - I agreed to participate in a judo tournament. And because I was no longer afraid of getting flipped, I actually won a few matches.

It’s amazing how much self-assurance you can suddenly have when you know how to negate the risk of something that had seemed frightening. Of course, learning how to “land” is different depending on the challenge you’re facing. But as long as you know how to minimize the potential “pain,” you can take on almost anything.

Here’s another example. When I first began doing stand-up comedy, I was terrified that people wouldn’t laugh at my jokes. My fears, it turns out, were well founded. I bombed the first time I performed my act in front of an audience. I was so bad, the crowd booed me off the stage. And the agony of that experience dwarfed any physical pain I’d ever felt.

Shortly thereafter, I began training with professional comics in a weekly workshop. There I learned that when you tell a joke that bombs, you’ve got to acknowledge it to the audience. They will usually laugh and be happy to give you another chance. So if I told a joke that got zero response, all I had to say to keep the audience on my side was, “Wow, I guess that joke sucked! It sure seemed funnier when I wrote it.”

The technique worked. No longer afraid of trying out jokes that might tank, I became fearless onstage. (And I still am.)

Learning how to fall in both judo and comedy gave me massive courage where I had once been apprehensive. And this confidence-building technique applies in almost any challenging situation. I call it “The Antidote Strategy.”

Being self-confident can help you get a job, win a new client, or get other people on your side. It can help you try a new hobby, lose weight, or even get a date. By developing an “Antidote Strategy,” you can guarantee that you’ll be at your best when attempting to succeed at just about anything.

Here is how to put The Antidote Strategy to work:

• Identify the possible negative outcome of the challenge.

Let’s face it. A lot of things you could do that might help you become more successful are risky. Let’s say you’ve been working on a new project idea. And to show your boss how creative and innovative you are, you want to present the idea at the company’s next staff meeting. But you’re afraid.

So Step One of The Antidote Strategy is to determine exactly what it is that you are afraid of. Will you feel stupid if your idea is rejected? Will you be disappointed? Will you be embarrassed?

• Create or find a way to prevent that negative result.

Don’t try to reinvent the wheel. Do some research. Chances are many other people have struggled with the same type of challenge and have come up with a good way to deal with it.

Let’s go back to our example. The experts I polled suggest a method similar to the one I use as a comic: self-deprecation. If your new project idea is ridiculed by your boss and co-workers, brush it off. You really can win people over by being humble - maybe even getting a laugh. So just smile and say something like, “You’re right. I guess that wasn’t one of my brighter ideas. But I’ve got more. You’ll be hearing from me again.”

• No matter how scary the challenge you are faced with, remind yourself that you have nothing to fear. You are prepared. If the worst happens, you have an antidote.

A lack of confidence prevents many people from achieving their full potential and reaching their goals. But with your safety net in place, you’ll have a winning edge - the inner strength to take a chance and boldly “jump off buildings”… because you know you won’t get hurt.

By Paul Lawrence

For Early to Rise

Dear Reader,

If you haven’t been in a coma the past several months you’ve at least heard about all the problems that the bankers, mortgage bankers, and investment bankers are having with sub-prime mortgage loans. They made these bad loans then hid them in bond packages so they could sell them, as if they were good loans.

Now, this little scam is coming back to bite them on their financial butts.

The most notable loser, to date, is Bear Sterns. This venerable old brokerage firm is now bankrupt but being bailed out to save face. With your money.

How many more of these banking firms will follow? Hard to tell since they have no idea what their alleged assets are really worth. The whole industry might be bankrupt for all we, or they, know.

But, that’s not the point I’m trying to make.

The ex-head of Bear Sterns is said to have had stock in the company that just a little over a year ago was worth $1 Billion. That same stock is now worth an estimated $61 Million. A nice little 96% loss.

Which gets me a little closer to my point.

These executives are paid millions, if not hundreds of millions of dollars each year to make profitable decisions. They’re suppose to be the Imperial Wizards of high finance. Yet, this one in particular wasn’t smart enough to sell his shares before they crashed. Just how smart is this?

How many more are in the same boat?

Now I know its hard to feel sorry for someone who went from being a Billionaire to being just a multi-millionaire. Even someone who has seen his investments go from $61 Million to just $2.44 Million, its hard to feel real sorry for them. But, you must admit, these loses are large enough to make most everyone change their style of living.

But, more importantly, what about the poor schmuck that had $610,000 in his 401K or IRA and now has just $24,000? They went from just about ready to retire to no chance in hell. These are the people who got totally screwed.

Which finally brings me to my point.

Why are people still using these companies, run by such incompetent thugs, to handle their investments?

It seems to me, that anyone with more than two live brain cells would take every dime they have in their investment portfolio, IRA, 401K or whatever, and run from these thieves.

And, why would anyone buy their stock? Do people actually expect these same people to suddenly become honest and competent?

Hey, if you got some money you just want to flush down the toilet, instead of giving to the thugs on Wall Street, send it to me. I’ll even send you a thank you note.

Dear Reader,

In a recent artilcle by ERIKA NOLAN, Executive Director in the Sovereign Society’s Offshore A-Letter I learned:

“In the past year, riots broke out in 12 different countries. We’ve also seen street protests in Jakarta. Strikes in Italy. Unprecedented government controls in 20 different countries.

“And over what? Oppressive government? Long work hours? Inequality?

“No. It’s much more basic than that. They’re rioting and protesting because they can no longer afford to eat with these skyrocketing food costs.

“And it’s no wonder. In the last six months alone, the basics people live on have surged dramatically in price. Corn prices have jumped 51%. Barley has soared 38%. Oats, 53%. Wheat, 56%. And rice - the mainstay of diets in emerging countries home to over 3 billion - shot up a devastating 67%!

“You may not have heard the hungry protesters or seen the riots - yet - but I’m guessing you’ve felt this uncomfortable inflationary squeeze in your grocery bills.

“Here in the U.S., you now have to fork over another 32% more for a loaf of bread than you did just three years ago. A carton of eggs costs you 50% more since this time last year. And overall your food bills have climbed 5% since 2007, according to the U.S. Department of Agriculture.”

When you get to the point where you can’t pay the credit card bills you don’t legally owe and buy food for your family - which will you chose?

If you’re opting to buy food - why wait until the last minute to get rid of those illegal credit card bills?