I can't believe I'm defending Liverpool here, but I think you're wrong on this one Catcher. The idea that Liverpool have been on the decline is very dangerous and could very easily lead to complacency. The Watford loss was their first in the League and came in March. Conceding 3 against Chelsea came at the end of the season in a game they still won. The two losses against Arsenal were actually a draw in the Charity shield and a league cup game in which they fielded their youth team. Atletico was the one big loss in there for me, and of course last weekend against Villa.
I agree that Liverpool's defence have looked very suspect this season with their high line against both Leeds and Villa. But I but that down partly to very good tactics and play from the opposition, but also poor pressing that left them exposed and I put that down to the midfield combination they played. If they play the same way and also bring in Thiago, I think they'll be playing into our hands (if we have a full team out). But, as I said, I think they'll change it because they wont want to lose this one.
I think bringing in Thiago may be a bit of a mistake as he is a bit of a Coutinho type player. Klopp will want to fit him in the team but it will take away from their pressing capabilities.
We'll see how he sets up against us. as I said, I think he'll either bring back the pressers in midfield, or will go more cautious as regards his defensive line, which will make them less of a threat up top.
Either way I think we'll sit back, soak up and break in numbers when we get the opportunity. Think it will be a close game.