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often not covered by the mainstream media, articles of interest
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Dominican Republic Real Estate, Residency Filing, Banking and Interest Rates.
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Economics commentary, inflation, housing, stock markets and investing -
Plus a Whole Lot More !
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Our April 15, 2006 Newsletter Edition
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IN THE NEWS:
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WITH BIG BOOST FROM SUGAR CANE, BRAZIL IS SATISFYING FUEL NEEDS
By Larry Rohter, April 10, 2006, New York Times
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PIRACICABA, Brazil -- At the dawn of the automobile age, Henry Ford
predicted that ethyl alcohol is the fuel of the future. With
petroleum about $65 a barrel, President Bush has now embraced that
view, too. But Brazil is already there. This country expects to
become energy self-sufficient this year, meeting its growing demand for
fuel by increasing production from petroleum and ethanol. Already the
use of ethanol, derived in Brazil from sugar cane, is so widespread
that some gas stations have two sets of pumps, marked A for alcohol and
G for gas.
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http://www.nytimes.com/2006/04/10/world/americas/
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EDITORS NOTES:
Let us get this straight. The nation previously deemed Third
World, impoverished, and economically screwed up is expected to become
energy self-sufficient this year. In plain English, this means
ALL of their energy needs is generated internally - no foreign oil, no
imports, no foreign problems. How did they manage that?
Well, it seems they have been working on it for the past 30 years, ever
since the Arab Oil nonsense of the 1970s gave them a wake up
call. Not so dumb those Brazilians - huh?
.
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SOME PARENTS LET CHILDREN CHOOSE COLLEGE, AND PAY
By Jonathan D. Glater, April 10, 2006
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Alexandra Baldari and her parents have talked a good deal over the past
year about how to pay for her college education, and the upshot is
this: If she enrolls at the University of Miami in the fall, she will
bear much of the cost, which could total $40,000 or more a year, on her
own. The problem here, said Ms. Baldari, who lives in Parkland,
Fla. is I'm 18 and looking to go to college, and my parents are looking
to retire. Ms. Baldari's parents earn about $100,000 a year, but
her mother, Anne Angelopoulos, said little is left after paying for
housing, three cars, gas, food and utilities, as well as saving to
contribute to Ms. Baldari's 11-year-old brother's education.
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http://www.nytimes.com/2006/04/10/education/
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EDITORS NOTES:
What a decision - Do you retire or do you send your kids to
University? The truth is, Americans cannot afford both, and in
some cases, neither. Here is an idea. It costs US$40,000
per year right now to attend the University of Miami. That comes
out to US$160,000 for four years of college. I do not know if the
University of Miami has the classrooms decorated with 18K gold, or
where the justification comes for that kind of cost, but so be
it. What you do is, you buy a brand new comfortable house or
luxury apartment in the Dominican Republic for US$125,000 (retirement
problem solved, at least in terms of a place to live mortgage
free). Then you enroll Johnny or Jane in the best private
university in Santo Domingo or Santiago. Medical school (at one
of the best private universities) will cost about US$1,000 per
semester. That comes out to about US$8,000 total over four years,
but let us round it up to US$10,000 for arguments sake. Out of
our original US$160,000 after buying a house and paying four years of
college, we are left with US$25,000. So, we can either buy Johnny
or Jane a brand new car as a graduation gift, or we can send him or her
to finish up their last year in Barcelona, Spain to one of the many
European Universities that have an interchange program with the private
universities in the Dominican Republic. This results in Johnny or
Jane with the chance to live and study in Europe, broadening their
perspective and also ending up completely bi-lingual. Not such a
bad idea, when you consider English is already the second language in
places such as Florida and California, but I digress. If your
child complains that this does not sound like such a great idea, remind
them that even if they do graduate from a US University, after spending
a ton of dough to pay for it - with student loans up to the eyeballs,
they will most likely be working in India or China anyway.
Especially true if they end up studying engineering or computer
science. If they want to become the best educated nursing home
attendant in Ohio, then another story of course. Otherwise,
considering that companies like Monsanto has announced they will be
laying off 5,000 American chemical engineers and shifting all the work
to China or India - that is where the jobs will be anyway. This
is just one possible, and very practical solution for mom and dads
retirement, not to mention their children's
education.
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BEHIND THE SCENES IN THE BELTWAY - By Al Martin, March 27, 2006
Post-PATRIOT America: Will Russia and China Be the Last Bastions of Freedom?
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There are more new warning signs for U.S. would-be expatriates. Will
Russia and China become the last bastions of economic freedom,
capitalism, and individual asset protection? What sounds like political
science fiction could become reality - Now a record number of people
are leaving the country, not simply wealthy Republicans, who wouldn't
be touched under any circumstances anyway, but we are now seeing record
numbers of upper middle class retirees expatriating and taking their
assets with them. These are people with a net worth of, let's say,
between $1- 3 million. As that number rises, it will be an increasing
drain on the economy. What you don't want to be doing is
expatriating to a country, which has signed on to Bushonian
anti-terrorism provisions within the PATRIOT Act. In so doing, that
foreign government has effectively adopted the PATRIOT Acts and has
allowed the U.S. to seize assets of Americans living in that country
under some sort of confiscation like, gold confiscation or a
re-instituted currency confiscation. People ask -- which
countries have not signed these agreements with the United States? Are
all the EU countries cooperating?
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All of the Eastern European countries now are gradually signing these
agreements. Even Poland and the Czech Republic - That's why the Czech
Republic, which was a hot expatriation destination, is no longer as
hot. People who understand expatriation and understand where the
Bush-Cheney Regime is taking the world, do not want to be in a country
that has signed on to the PATRIOT Acts in any fashion. The irony
is that the former and current so-called communist countries like
Russia and China may become the last bastion in the world for asset
protection.
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But, the long and short of it is this. Citizens have to understand that
you don't necessarily want to be in Mexico, south-of-the-border
countries or Caribbean Islands anymore. You don't want to be anywhere
like that unless you are a wealthy pro-Bush-faction Republican. You
don't necessarily want to be in the same jurisdiction that attracts
wealthy pro-Bush faction Republicans either -- if you're not one of
them. Why? First, it is unlikely, unless you are a wealthy
pro-Bush-faction Republican that you have the money to live in such
jurisdictions. Second, you obviously would not enjoy the same
protection from asset confiscation if you were not part of the
circle. So the fact is that US citizens should be prepared for
Treasury agents will be swarming the globe and taking people's assets
away in a new version of economic rendition, as opposed to CIA
operatives grabbing people and taking them to secret detention
facilities. Why do you think that the Regime has undertaken asset
identification and has upgraded and extended U.S. Treasury Form 4789 to
identify citizens moving currency, gold, silver and other bullion and
diamonds out of the country -- where you actually have to list the
foreign safe deposit boxes and banks where you're keeping them? What's
the sense of having that information if, at some point in the future,
you could not include those people in some sort of a backdated
confiscation?
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http://www.almartinraw.com/index.html
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EDITORS REPLY:
I did not reprint the entire article due to lack of space, and some of
the conclusions do sound a bit over the top (although there are some
elements of truth). In addition, the main focus of the article
discusses the idea of the current US Government administration
confiscating assets in other countries (or attempting to, better said)
of non-supporters or those that may criticize the administration in one
way or another. Which is to say, the author Mr. Martin, seems to
think wealthy Republicans that take a hasty exit with their assets will
be safe, but that the assets of Democrats will be up for grabs. I
do not hold this view, although I must agree with the general idea or
philosophy that asset confiscation in general is highly likely or in
the cards going forward, but not necessarily for partisan political
reasons (although we all know that favoritism and cronyism always
exists). However, I agree completely with Mr. Martin when he
says: a record number of people are leaving the country, not simply
wealthy Republicans. The question does remain - what are the
powers that be going to do about it? The possible answer may be
scarier than the question.
.
Politics are often a function of economics. It is the economic
tail that indeed wags the political dog. Meaning, we have some
very unique economic (and social) issues converging and in addition to
that, it is certainly true that anyone with any concern about personal
welfare has been and is currently considering moving to higher ground,
so to speak. Usually when some sort of crisis exists be it
economic or not, be it contrived or real, politicians always use this
as an excuse to consolidate power and take away both civil liberties
AND private property rights in the process (confiscation of private
property always seems like a very nice concept as well often adopted by
the politicians, in order to obtain some quick cash that is).
However, in terms of this argument being the case of one political
party versus another, the facts do not support this. We must
remember it was a Democratic President (Franklin D. Roosevelt) and a
Democrat controlled congress that confiscated by force the personal and
private gold holdings of citizens. It was also this same group
that concocted these various Ponzi scheme government welfare or
so-called social insurance programs we are having trouble with
today. With that said, this is in no way, shape or form a stamp
of approval on the current Republican party or administration
either. Refusing to seriously address the problems that exist,
running up the national debt to levels that will strangle the next
generation, pandering to corporate interests, and committing a nations
young people to die in a foreign country so an oil company has access
to a product to sell is not commendable either (if you think this
so-called war of liberation is about anything else, you are kidding
yourself).
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An excellent recent book on US politics and economics from the period 1917 to the present is: AGAINST LEVIATHAN: Government Power and a Free Society
By Robert Higgs (2004, The Independent Institute). If you read no
other books this year, read this one. It was written by a
economist (a libertarian - conservative one I might add) that has
done some detailed research and one who attempts to explain things as
simply as possible. One interesting factoid or point Mr. Higgs
makes is that just like any other Ponzi scheme, the first ones in make
out the best. Your parents or grandparents (all depending upon
how old you are) got a financial windfall with Social Security.
On average, after paying into the system their entire lives, they got ALL
of their money back within the first (4 ½) four and one half
years of retirement (everything after that was pure gravy).
Today's young generation will be lucky to get back even half, maybe
much less.
.
On the topic of power grabs, reduced civil liberties and centralization
of power in the executive office (office of the President), Mr. Higgs
makes the case that this has been a on-going process, certainly since
Woodrow Wilson up to the present day (and in reality the beloved
Abraham Lincoln somewhat of the first real tyrant, who locked up US
citizens at will without formal charges or trial, who closed down
critical newspapers and who suspended habeas corpus also). Of
course with that said, both US political parties are to blame and have
had their hand in this goal or agenda over the years. So, if one
wishes to argue that is the particular policy or ideology or one
political party versus another, the truth is that it has been both
political parties versus the American public as a whole. In any
event, I encourage you to get this book. It is full of
well-researched information the politicians, the high school history
textbooks you read as a young man or woman, and current news programs
seemingly forget to
disclose.
.
In any event, getting back to above article, Mr. Martin is concerned
about US Treasury officials scouring the globe looking for the assets
of US citizens to grab. One of course must realize that despite
all this globalization talk, every nation is in competition with each
other to sell its nations products (exports) and of course to seek out
new well heeled immigrants as well. What motivation does any
small nation have, that is a recipient of law abiding financially
secure new citizens, to make their lives miserable or discourage them
from coming? Will it be the promise of US or EU foreign
aid? Most of the US foreign aid goes to Israel, and the Europeans
have their own calamities to worry about (roughly one million young
people recently took to the streets in Paris, France to fight the
police - That's a whole lot of ticked off people, regardless if the
complaint is justified or not). Will it be the promise of free
trade or access to a large market? US consumers are tapped out,
and what they are buying is done on credit (which is part and parcel to
some of these problems we are now seeing with the US economy as
well). No, the real growth going forward will be and is in the
so-called third world, or developing nations if you prefer that term
instead. Why do you think US corporations are so hot and heavy to
get into these countries (and why they want lower or no trade tariffs
via Nafta, Cafta, Shafta, and whatever else)? It is not because
they want to help all those poor folks because the truth is - these
countries are not so poor anymore (and where the money and the
consumers will be going forward). If you do not believe it, do a
little bit of research to find out where upscale retailers, such as
Louis Vuitton, are opening new stores and are having the best records
of sales growth (I will give you a hint, the country is no where near
the United States nor in Europe). In addition, a recent book from
the noted Peruvian economist Hernando De Soto titled: The Mystery of
Capital highlights the huge amount of undocumented assets and wealth in
the developing markets. This wealth is undocumented and hidden
from official GDP figures because it is not part of the official legal
recording and registration process (unrecorded land titles,
unregistered gray market small businesses in the barrios or poor
neighborhoods, etc.) It is instead extra-legal, or unrecorded,
not reflected in the official economic statistics, yet it exists just
the same - and it is contrived of assets - investments constructed with
cash (not credit).
.
I do agree with Mr. Martin that the temptation to simply take assets
from citizens going forward will be too great to ignore in the future
(via higher taxation, via outright theft or inflation of the money
supply, which is another form of hidden tax against the
population). They have done it before, so why not again?
But it will not be because of ones political beliefs, and think it safe
to assume that anyone with domestic assets will be sitting ducks.
In this regard, I think they will demonstrate equal opportunity for all
in terms of who and what gets robbed (regardless of your
politics). On the topic of China and Russia, I do agree, but I
also think the same applies to a number of other non-European and
non-North American nations as well. Even a dog that gets a bit of
food from time to time, but is beaten mercifully in the process
continuously by the same person (or government) offering the hand out,
will eventual wise up and run away (and refuse the food because he
knows there are some nasty strings attached). Such will be the
case with many of the so-called Third World Nations going forward, I
predict. Brazil is just one of many such examples.
.
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SEEKING THE FULL STORY ON GDP - By Louis Uchitelle, The New York Times
Monday April 10, 2006
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The plain fact is that when it comes to measuring how much the U.S.
economy produces and who gets what share of the pie, the federal
government's most celebrated statistic - the gross domestic product -
leaves something to be desired. The GDP is useful, as far as it
goes. It tells us how much value, often called national income, is
generated each year from the production of goods and services in the
United States. The GDP also breaks out how much of that income goes
into profits and how much into wages and salaries. This is where
the trouble is. The numbers show that the profit portion of the gross
domestic product has risen mildly in recent years, while the
wage-and-salary share has shrunk slightly. There is evidence, however,
that because of the way the GDP is calculated, the actual shift is much
more pronounced. We know that income inequality is quite
substantial, said Harry Holzer, a labor economist at Georgetown
University, and this new evidence suggests that it is worse than we
thought. The Bureau of Economic Analysis, which issues the GDP
reports each quarter, is on the case. So are two prominent economists
at the Federal Reserve. They all seem to be finding that the current
methods for calculating GDP undercount the dollar returns from research
and development. What's more, this payoff is not showing up in workers'
paychecks.
.
http://www.iht.com/articles/2006/04/10/business/econ.php
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A QUESTION OF INEQUALITY - April 3, 2006
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In these times of impressive growth rates -- particularly in China and
India -- the focus of the world's attention has invariably been drawn
to the economic success of the so-called newly emerging economies,
mainly to the impact this will have on the structure of the
international economy 50 (or even 20) years from now. On the face of
it, this is an eminently sensible subject of study because what the new
development essentially means is a shift in the economic order of
things on the world scale towards what was previously called the Third
World -- a shift which, though inevitable, actually stands the world
economic order, as it was in the last century, on its head.
.
Without going into the statistics of the development, the changing
order would essentially mean a new situation where the erstwhile poor
would call the shots as it were; where the emerging economic giants
would be in a position to dictate economic (and through them political)
terms to the old `rich' nations; and where, at international forums,
the voice of the `poor' would no longer be brushed aside imperiously,
as they have been for centuries.
.
http://southasia.oneworld.net/article/view/130222/1/5339
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EDITORS NOTES:
The above article goes on to discuss the distribution of income in many
countries, arguing about an inequality in terms of the growing wealth
among individual citizens of these developing third world
nations. So, being the curios fellow I am, I decided to see if
there were any statistics on the matter. As it turns out there is
such a statistic (just posted March 30, 2006), which ranks 113
countries from worst to best (this is one list whereby being number one
is NOT a good thing supposedly). This index measures the degree
of inequality in the distribution of family income in a country. The
index is calculated from the Lorenz curve, in which cumulative family
income is plotted against the number of families arranged from the
poorest to the richest. A very low number on the index indicates
high degree of income EQUALITY - and thus such a country would be
listed as a low number on the list in terms of order ranking (such as
Sweden, Norway and Denmark) - whereby everyone in the country more or
less earns or has about the same. A very high number would
indicate extreme divergences between rich and poor (which puts you more
towards the top of the list). Guess what? The Dominican
Republic is ranked number 28 on the list, and the United States number
31. So does this mean that the United Stated is really closer to
being a third world nation than you were lead to believe, or is it that
the Dominican Republic is really closer than you were lead to believe
in terms of being not so poor and ragged? Want another
shocker? Visit the site and see what countries rank better than
the United States (remember there are 131 countries and this is one
list whereby being ranked close to the bottom is indicative of a more
fairer income distribution).
.
http://www.nationmaster.com/red/graph-T/eco_dis_of_fam_inc_gin_ind&int=-1
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Here are some more thoughts on this topic:
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MINDING THE GAP: Who's getting ahead, who's falling behind, and why?
March 8, 2006 - Wall Street Journal On-Line
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They are questions that grip us in fits and starts. Author Douglas
Coupland worried in his 1991 novel Generation X about Brazilification,
or the widening gulf between rich and poor and the disappearance of the
middle class, but much of that anxiety faded by the late 1990s as
workers benefited from a long-running expansion. Then the tech bubble
burst, and by 2004 Democrat John Edwards was able to campaign for
president on the argument that there are "two Americas" -- one for the
ultrarich, and one for everyone else. To what extent should we be
worried about the distribution of economic gains? The Wall Street
Journal Online asked economists Heather Boushey of the Center for
Economic and Policy Research and Russell Roberts of George Mason
University to debate to what degree inequality exists, and just how
much it matters for the economy and society.
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http://online.wsj.com/public/article/SB114182443308492484.html?mod=todays_free_feature
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And now the Official Government Spin Doctor Mr. Snow, snows us with the following:
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INCOME GAP NARROWER BY TREASURY'S MEASURE
By Nell Henderson, Washington Post Staff Writer - Thursday, March 23, 2006
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The income gap between rich and poor in the United States has shrunk in
recent years, Treasury Secretary John W. Snow said yesterday,
addressing an issue frequently raised by critics of President Bush's
economic policies this election year. There has been a decline in
the inequality from a high point in 2000 through 2003, the most recent
year for which figures are available, Snow said during a meeting with
reporters yesterday, referring to Treasury data based on tax
returns. But much of the decline in inequality during that period
reflected the popping of the stock market bubble, which peaked in 2000,
when executives pocketed fat bonuses and stockholders reaped huge
profits from selling shares, according to economists inside and outside
the Bush administration.
.
The Treasury data, which include profit from the sale of stocks and
other capital gains, also show that the gap was still larger in 2003
than in 1990, when the top 5 percent of earners took home 12.9 percent
of the nation's income. And census data, which do not include
capital gains, show that income inequality grew from 2000 to 2003 and
increased again in 2004, continuing a quarter-century trend.
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http://www.washingtonpost.com/wp-dyn/content/article/2006/03/22/AR2006032202137.html
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ESSAYS: INCREASING INEQUALITY IMPERILS NATION
By Cecil Johnson, Knight Ridder News Service
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While the United States remains a spectacularly rich country by any
standard, we are drifting toward a Third-World-like distribution of our
riches. For tens of millions of Americans, the alternative to
unemployment has become a dead-end job that doesn't necessarily pay
enough to cover basic living expenses, writes co-editor James Lardner,
a senior fellow at Demos, a New York-based think tank. Lardner
says many who are ostensibly doing better are paying the physical and
emotional price of long commutes and hours, excessive borrowing and the
stress of knowing that if something goes wrong, their whole shaky
financial world could come crashing down. To put it another way,
the American middle class is slowly coming apart, and we are learning
in the process how essential it has been to economic opportunity and
democratic government - perhaps the two ideals that come closest to
defining our sense of national identity, Lardner writes.
.
http://www.sltrib.com/business/ci_3663687
.
EDITORS NOTES:
Could not have said it better myself. In fact, I can relate,
especially the long commute part of the comments. So, where do
you go? Follow the money (perhaps follow the major corporations
also), which is now showing up in many places you probably would have
called a desolate third world banana republic weed bin twenty years
ago. Is everything completely bright and rosy in all of these
developing markets? No, not just yet, but if the economic and
other trends are any leading indicator - they are on the way, and
little flowers (metaphorically speaking of course) are breaking ground
here and there.
.
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READERS WRITE IN:
.
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Hi John!
.
I greatly appreciate your information. It's very sad that the
people in this country are so ignorant about what the U.S government
does in/out of this country. My question is, do you know of any
websites for real estate in Punta Cana or Barahona? I'll greatly
appreciate your response. Thank you very, very much for your hard
work! Signed - Born in Santiago, Grew up in Brooklyn - Hopefully
I can go back soon!
.
EDITORS REPLY:
Well, the one gentleman I can suggest you contact is Mr. Gordon
Green. Gordon is an American Expatriate that owns the Remax
office in Punta Cana, and someone that has always been very fair and
honest with our clients. You can reach Gordon either by
email: ggreen337@yahoo.com by his cell phone: 281-380-3790
.
.
ANOTHER READER WRITES:
.
I always enjoy the information you manage to dig up that doesn't always
make the headlines. I believe this article confirms my suspicions about
the Federal Reserve and their true monetary policies. Hope this
link works:
.
http://moneycentral.msn.com/content/P146592.asp#msnhp
.
EDITORS REPLY:
Thank you for news link. I would say in general, that each and
every one of us need to search out real news and true economic figures,
because what we get on the national or cable news channels is half
propaganda, half manipulated information. There are a number of
things going on out there in the world of politics and economics that
simply get brushed over. Which is to say, there is real and
unbiased news and then there is political spin, be it in terms of
statements or reports about the economy, immigration, jobs, war,
politics and so on. One interesting book published yearly with
this in mind is: Censored. A collection of news stories collected
by the editors from the previous twelve months (Censored 2006 is a
collection of news items from 2005, etc.) - that seemingly were never
picked up by the wire services. All in all a very interesting
read, although I have to admit quite a bit left leaning in terms of
content and views, but if you can ignore that, very interesting
stuff. Which is say, whether the content is from the left or from
the right, that does not mean necessarily that it is untrue. Of
course, the political party that is out of power or out of favor for
the moment they will tend to be more focused on digging up information
that is contrary to the current party line (and providing the
information is factual, truthful and well researched, a healthy thing
in a free society). For this reason, you should not shy away from
getting information and views from both camps. As they say, there
are two sides to every story and somewhere in the middle is the
truth.
.
Here is another interesting news article by Mr. Bill Fleckenstein - If there's no inflation, why do we fight it?
.
http://moneycentral.msn.com/content/P143793.asp
.
Mr. Fleckenstein says:
Basically, this approach allows the Bureau of Labor Statistics
mathematicians to substitute lesser-price items for those that might
have had price increases. They assume, for example, that if tuna is
pricey, you might just switch to cat food. Whatever the actual
rate of inflation is in this country, it's higher than the reported
year-on-year price increase of 4%. (Whether the rate is 5%, 6% or some
other higher number, I do not know.). But the Fed -- under
Greenspan, and so far under Bernanke -- has behaved as if money supply
growth didn't matter and as if price inflation were all that mattered.
Even as they have raised interest rates in an effort to slow the
economy and reduce demand, they've continued to let money supply grow
at close to double-digit rates. M3, the most inclusive measure of the
money supply, grew at a seasonally adjusted annual rate of 8.7% in the
three months from November 2005 to February 2006. That's faster than
the annual rate -- 8% -- for the 12-month period beginning in February
2005. In other words, as the Federal Reserve was fighting
inflation by raising interest rates to 4.75%, from 4% in November 2005,
it was letting the money supply grow by an inflationary 8.7%. While it
was fighting inflation by raising interest rates to 4.75%, from 2.5% in
February 2005, it was letting the money supply grow by 8% (end quote).
.
Personally, you must realize that what politicians say and what they do
are two different things. The US Central Bank (Federal Reserve)
has been running the printing presses and the comments about the
differences between interest rates and the rate of inflation (over
printing of the money supply) is accurate in my opinion. Sort of
like someone that starts to take diet pills, and then increases their
intake of ice cream, cookies and so on. What are you doing?
What will you accomplish? Now the latest stroke of genius by the
US Federal Reserve is to eliminate the M3 statistics, as to not
disclose this over heated printing press issue to the general
public. Why? What is the reason or agenda? One has to
ask the question as to the benefit or reason for no longer disclosing
this information going forward. As an economist or anyone
analyzing economics, the more information the better (so why now less).
.
.
ANOTHER READER WRITES:
.
I am an Expatriate that lived in the Dominican Republic from
1990-1996. I went to the medical school in the Dominican Republic
at the Universidad Central Del Este (UCE) in San Pedro de Marcoris, and
I myself can write a book as an expatriate in the Dominican
Republic. I also agree with the author you can live better in the
Dominican Republic than in the USA, but I would like to add to this by
saying you can even make more money in the DR than in the US.
People that say that the DR is a nice place to retire and referring
that your fortune has to come from somewhere else (and therefore you
can live comfortable in the DR) do not understand or underestimate the
economy of the DR. Yes it is true you can live better and carefree
without Uncle Sam constantly after your hard earned money, but think
again about money to invest in real estate and to deposit in bank (to
live off the interest). Sound great and is probably true, as I
have lived there and I can agree, but think again you can live anywhere
in the world if you have money to invest and prepare (and plan) for
your future. What I can tell you is about my personal experience
and analysis of the DR. First I would like to explain that my
studies and plans to become a doctor was not planned in the DR. I
was living in the US and after suffering a near fatal auto accident in
Florida I was under great pain and suffering going to therapy and not
working at the time p so, I decided to take my new wife any newborn
child to the DR to accompany me, with only the help of one family
member and some savings (and the help of student loans to help for the
tuition). I left to the Dominican Republic with nothing and came
back with a fortune (for a young kid and family) returning to the US
after medical school. This is the way I did it after living in the DR
for a while. I started to notice that things in the DR did not
depreciate as much the way things depreciate in the US. An example
would be some student would buy a TV for US$300 and later graduating,
would turn around 4 years later and sell it for the same price or more
before they returned back to the US. This was applied to almost
anything that was used in a household, could be bought and used for 4 -
5 years. There was not a big difference from new and used but for
them it was because it was in Pesos. I would ask, did so and so
sell everything and I would calculate how much each American was
returning to the US with, and some were taking back the sum of US$5,000
more or less on average per student (0f their personal
belongings). So, I said to myself, imagine if I can import 20
times that amount and sell it to locals, I could make a fortune.
So, I started importing all types of household items at a huge discount
from the US to the DR via cargo (via plane and by sea) and in my
suitcase every time I traveled from the US back to the DR. While
everyone was going to the movies and having fun, I was hunting for
things to sell in the DR. What I immediately noticed, there was a
demand for this and these people were willing to pay cash for
everything on the spot - now that is capitalism at its best. When
I had enough gathered, I would do an open house sale from my house -
and everything was sold in a matter of days with people wanting more
and more. The average return of investment to profit ratio was
300 percent. That's right, you heard correctly, for every US$100
I invested, I got back US$300. Now you do the math with larger
amounts and you can tell that this was very profitable (try to make
that return in the US). In such a short period of time and still
going to medical school to become a doctor, I did this for as long as
the remaining time in the Dominican Republic. The business just
got larger and larger.
.
All the nice houses and cars in the DR can confirm the available
business opportunity successes. Most people are under the
impression this all comes from money brought in from the US or drugs,
which in some cases is true, but the real truth is you can make a
fortune without leaving the DR. This has to do with inflation and
supply - demand. If you know what people need and are willing to
pay, you can always make money anywhere. The only difference is
that in the DR lots of people do have money, but just nowhere to spend
it wisely. If you give them an alternative to save some money,
they will jump at it (and it is a win - win situation). This can
also be confirmed by all the Arab descendent Dominicans, which have a
strong history as being successful business people in the DR. I
myself witnessed other people making a fortune overnight by starting a
small venture. There is a lot of freedom in this country, it is
not heavily regulated and there are little or no competition or
barriers. All you need is a little money and a little
confidence. Please take it from me -if I can do it anybody can do
it.
.
EDITORS REPLY:
Thank you for letter and for writing about your experiences.
While I can say that starting any kind of business requires some effort
and self-motivation, it is also true that in countries such as the
Dominican Republic, it can be easier and less expensive to do so when
one does not have burdensome government regulation and taxation to deal
with. The problem in many so-called modern industrialized nations
with bloated social welfare schemes is that entrepreneurship is stifled
and to some extent, punished. A young reader in Austria wrote in
a while back to discuss what it was like to start a small business in
Austria (and why it is not worth it). This
person went to say that one puts his or her own money at risk in a new
small business, certainly without any help from the government (and no
way to get your money back from the government if your business fails
for whatever reason). Yet, at the same time, the government puts
all sorts of licensing fees and labor law restrictions on you, not to
mention the very high social welfare program taxes you need to pay for
employees. Then, to add insult to injury, if you are very lucky
(after maybe losing money or breaking even the first 18 months) and can
earn a profit - then the government takes away up to 60 percent of it
in taxes. Who in their right mind would want to open a business
and risk money in an environment like that? Not many, and this is
the reason many small businessmen (and women) and moving
elsewhere. Small countries with little or no burdensome taxation
(and with no costly social welfare plans which do not work anyway)
offer a reasonable and sensible environment to invest or do business
in.
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