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Our on-line
newsletter bulletin now going on our sixth year!
Offering our clients and readers news items and headlines
often not covered by the mainstream media, articles of interest
regarding banking, economics, real estate, taxes, living or investing
abroad, plus much more. Finally, our very popular readers write
in section, with answers to some of the questions many of our readers
have - that no one else wants to answer truthfully, except us!
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Visit The Main Newsletter Section & Read Past Issues On-Line:
Dominican Republic Real Estate, Residency Filing, Banking and Interest Rates.
Panama Residency and Retirement. Naturalization and Dual Citizenship - Expatriate Issues.
Economics commentary, inflation, housing, stock markets and investing -
Plus a Whole Lot More !
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Our May 1, 2006 Newsletter Edition
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IN THE NEWS:
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FORCLOSURES CLIMB NATIONALLY
By Tim Barker, Orlando Sentinel, April 28, 2006
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Home-foreclosure rates soared nationwide in the first quarter as
consumers grappled with the rising costs of living. And while
Florida recorded a decline in foreclosures, the state still has one of
the 10 highest foreclosure rates in the nation, according to a recent
report by RealtyTrac. The first three months of the year saw a 72
percent increase in nationwide foreclosures, compared with the same
period of 2005. That's a rate of one for every 358 U.S. households. In
Florida, the rate declined 14 percent -- a rate of one for every 247
households. Economists said a variety of factors -- including
rising gas prices, interest rates, property taxes and insurance rates
-- are impacting foreclosures. Many of those expenses will only get
higher. Consumers have a lot of payments they have to make and a
significant number of those are rising, said Bob Allsbrook, chief
economist for AmSouth Bank. In the seven counties of Central
Florida, foreclosure rates fell 5 percent during the quarter, according
to the report. Three counties, however, did show increases: Lake, 16
percent; Polk, 4 percent; and Orange, 2 percent. Also filtering
into the housing picture now is the impact of the creative-financing
tools used by many consumers to buy homes during the recent housing
boom. It was not uncommon to see homebuyers using interest-only or
adjustable-rate hybrid loans that offered lower initial payments.
The problem for those buyers is that higher rates are starting to kick
in, raising monthly payments, sometimes by hundreds of dollars. That's
putting more pressure on household budgets. It doesn't take much.
One spouse loses a job or is unemployed for even a little while, said
Scott Brown, an economist with Raymond James & Associates in St.
Petersburg.
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http://www.orlandosentinel.com/business/orl-foreclosures2806apr28,
0,5708732.story?coll=orl-business-headlines
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NEW DATA FROM FORCLOSURE.COM IDENTIFIES FIVE MAJOR REGIONAL SPIKES IN RESIDENTIAL FORCLOSURES - Texas, Ohio, Michigan, Georgia and Indiana led nation in foreclosed homes. Friday, April 28, 2006
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BOCA RATON, Fla., April 28 -- Texas, Ohio, Michigan, Georgia and
Indiana led the nation last month in foreclosed homes, reflecting a
nationwide increase in residential foreclosures currently playing out
across the United States, according to new data and analysis from
Foreclosure.com, which operates America's largest and most accurate
database of foreclosed residential properties. In addition to
having the largest number of foreclosed homes in the nation, these five
states also experienced some of the fastest month-over-month growth in
foreclosures among all states, Foreclosure.com data revealed.
Texas, which led the nation in foreclosed homes, experienced a 38
percent increase in its total number of residential foreclosures during
March. The total number of foreclosed homes in Ohio, Michigan, Georgia
and Indiana also increased in each state by about one third -- an
average of 33 percent -- last month. Markets that benefited
disproportionately from the housing boom over the last five years are
most susceptible to foreclosures. However, as our March data indicates,
even areas where home prices didn't appreciate as quickly are now
seeing increased foreclosures, said Brad Geisen, president and CEO,
Foreclosure.com.
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http://biz.yahoo.com/prnews/060428/nyf136.html?.v=2
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EDITORS NOTES:
I hate to say I told you so, but we DID comment on this coming to pass
in previous newsletters, so no surprise to our readers. The
articles say home foreclosures are up SEVENTY-TWO percent over last
year. An incredible statistic while government bureaucrats sing
the political equivalent of: Don't Worry - Be Happy (and of course it
was Alan Greenspam who told you it was a good idea to get an adjustable
rate mortgage right before he retired as Fed Chairman -
remember?). Anyway, as a side note, I cannot help but laugh at
the new Century 21 Real Estate commercial on US television
lately. It portrays a real estate agent going to the airport to
meet a seemingly average middle class couple from China that are buying
a home in America (and he is practicing how to say welcome to America
in Chinese). Kind of amusing stuff - a US real estate agent
offering meet and greet services to people from a so-called third world
communist country while US banks are foreclosing on homes owned by
native US citizens left and right. How things have changed indeed.
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Also, my thoughts drift back to what I told you previously about
consumer behavior in many countries thought to be backwater, third
world banana republics in terms of real estate purchases. Which
is to say, we had spoken previously of the fact that a large number of
working class - middle class people in such countries buy their own
home for cash. How do they do it? Well, first they purchase
a building lot (either in a new residential development or otherwise)
and make the payments in order to pay it off over 3, 5, or 7
years. Then, they take whatever cash they have and start
building, often enough starting and stopping again many times all
depending on their cash flow situation (which is why you often see many
unfinished residential homes in the Dominican Republic, and this is the
reason). Anyway, so it takes them 5 years, 8 years, whatever the
time to finish up. The end result is a fully paid for home with
NO bank loan or mortgage. Delayed gratification has its own
rewards, unlike the no money down - got to have it now - consumer
credit economy of North America. Think about this as we watch
economic issues going forward. Which country will do well over
the longer term, or better said - which country will have a group of
citizens (consumers) who will be better off over the longer term?
The country whose economy is based on nothing but easy credit (whereby
citizens basically have ZERO equity, own nothing, and are living off
borrowed money) OR the country whereby most people have little debt and
pay cash for everything? I honestly do not think you need a
doctorate degree in economics from Harvard University to figure that
one out. Again, why are US corporations so hot and heavy to
support NAFTA, CAFTA (and the other AFTAS)? They want to get into
these third world countries in the worst way and without import tariffs
or customs duties on the their products (as the result of the trade
agreement), because you know what? That is where the money is,
and will be going forward. Those so-called poor third world
banana farmers are the guys with the cash. Or did they forget to
mention that to you on the sophisticated television business program
you watch every day? Remember: A poor man with US$1,000 in
cash is truly worth more than a paper millionaire that has NO
equity. Case in point - American Real Estate Brokerage Company
Century 21 catering to a middle class couple from CHINA looking to buy
property in the US (and I would wager to bet for CASH).
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WHY PAY TAXES? Posted April 13, 2006 by Geov Parrish
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Each year about this time, as many of us supplement our
paycheck-to-paycheck giving unto Caesar, I raise this question. This
year, let's start with the following observation from a reader, sent in
the wake of the reauthorization of the Patriot Act. He notes that
terrorism is defined, in Webster's, as the systematic use of terror,
esp. as a means of coercion, and provides a long list of examples, past
and present, where the US government has done exactly that. He then
notes that under the current Patriot Act, it is now illegal to provide
money to organizations that practice terrorism, and therefore concludes
that as a matter of national security he must refuse to pay his federal
taxes.
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Now, it's unlikely that any IRS or federal court will agree with that
novel conclusion, but our reader has a point. Why do we continue to
willingly pay for programs and policies that put ourselves, and our
country (not to mention countless people in other lands) in greater
danger? The bloodshed and corporate welfare in our name and with our
money--and our kids' money, and their kids', and their kids'--raises an
obvious but seldom-asked question: why do so many of us pay our income
taxes? It's not a rhetorical question, with the obvious
answer: Because they make us. At the local, state, and
especially federal level, we now have a political system where low,
middle, and even upper middle income people get far less back in
services and benefits from the federal government than we pay in.
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http://www.eatthestate.org/10-16/WhyPayTaxes.htm
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EDITORS NOTES:
In honor of April 15 (tax filing day in the US), we thought this to be
an article of interest. Also, I think it appropriate to quote a
very popular and common proverb from Sweden (some of the highest taxed
people on the planet) - Born Free, Taxed To Death.
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IRS TO SEEK DATA FROM PAY-PAL: Associated Press, April 11 -2006
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WASHINGTON -- The Internal Revenue Service won approval from a federal
court to ask Pay Pal to turn over information about people who might be
evading taxes by hiding income in other countries, officials said
today. A federal court in San Jose, Calif., gave the IRS
permission to ask Pay Pal -- a company that enables online money
transfers -- for account information for American taxpayers who have
bank accounts, credit cards or debit cards issued by financial
institutions in more than 30 countries reputed to be tax havens.
Pay Pal spokeswoman Amanda Pires said the company just received the
summons. We're still evaluating our options, she said. The
privacy of our customers' information is something we take really
seriously. Pay Pal enables individuals and businesses around the
globe to send and receive money online. In 2005, users moved $27.5
billion through the money transmitter. The company, owned by E-Bay, has
100 million account holders globally. The request for information
is an outgrowth of an IRS effort, begun several years ago, to trace
money that American taxpayers hold offshore to avoid paying taxes. The
IRS said many of those taxpayers access their money through credit and
debit cards. The tax collectors have already obtained information from
some credit card companies, merchants and payment
processors. Pay Pal is another one of the mechanisms by
which money stashed overseas might be spent- Eileen OConnor, assistant
attorney general for the Justice Department Tax Division, told
reporters. In some cases, the IRS obtained credit card numbers
but could not identify the cardholder. The IRS said Pay Pal might be
able to lead the tax agency to those individuals.
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http://www.chron.com/disp/story.mpl/headline/biz/3787001.html
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EDITORS NOTES:
The last sentences of the article are what we have been saying for some
time: the IRS obtained credit card numbers but could not identify the
cardholder. No kidding? This has nothing to do with any
sort of secret plot by tax anarchists or tax havens themselves, but
rather simply a fact of life as to how credit card processing is
transacted and the business relationship between banks that sign up to
become affiliated with the credit card companies. Note the last
line: The IRS said Pay Pal MIGHT be able to lead the tax agency to
those individuals. Perhaps, and then again, a blind man MIGHT
find a two-inch wood screw located some where on his basement floor by
feeling around for it in the dark for a few weeks. Can you say Fishing
Expedition?
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I find it interesting that this topic of American Taxpayers who have
funds offshore to come up once again. Are there really that many
Americans with funds offshore? If so, then why is this the
case? Also, the IRS has a list of 30 nations that are supposedly
tax havens. Have they included the United States on that list
too? The US is one of the largest tax havens in the world, for
EVERYONE else that is not a US citizen that is. Talk about the
pot calling the kettle (you know the rest).
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LAWMAKERS NEVER FACED WITH LOSING BENEFITS
By Jim Abrams, Associated Press Writer, April 19 - 2006
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WASHINGTON -- Members of Congress occasionally lose elections, but they
never lose retirement and health benefits that most Americans can only
envy. A lawmaker who retires at 60 after just 12 years in office
can count on receiving an immediate pension of $25,000 a year and
lifetime benefits that could total more than $800,000. That
doesn't include 401(k) benefits. And any member who lasts five years in
office also can get taxpayer-subsidized health care until he or she
reaches Medicare age. It doesn't matter what a lawmaker does
before or after leaving office. Former Rep. Randy Duke Cunningham,
R-Calif., who was sentenced to eight years and four months in jail
after pleading guilty to bribery charges this year, is still entitled
to an annual pension of about $36,000 for his 15 years in the House.
That doesn't include his military pension or 401(k) benefits.
Former House Majority Leader Tom DeLay, R-Texas, who is resigning after
22 years, will qualify for an initial pension of $56,000. DeLay could
get pension payments of nearly $2 million over his expected lifetime,
according to the National Taxpayers Union, which tracks congressional
pension issues. Lawmakers also have the peace of mind of knowing
their federally backed plan will be there when they retire.
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http://www.chron.com/disp/story.mpl/ap/politics/3805966.html
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EDITORS NOTES:
As Moise from Panama used to say - such a deal. I wonder how many
of you, after being convicted of a crime, like say for example,
stealing from the company you work for, would still get the company
pension? They say crime does not pay, but that does not seem to
apply to politicians. Maybe that is why so many Americans have
money offshore, and why the IRS is hot on the trail? All that
money to pay the politicians for their retirement benefits has to come
from some place. Too bad they are talking about cutting the
Social Security benefits for everyone else (one idea presented to solve
the social security solvency problem is to cut benefits going forward
for all the poor tax-payers who actually pay the taxes in the first
place).
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SLOUCHING TOWARD FRANCE - By Michael Barone, 4/17/06
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This much is certain: the welfare state, as we know it cannot
survive. So Charles Murray writes in the Wall Street Journal in
an article on his new book, In Our Hands. No serious student of
entitlements thinks that we can let federal spending on Social
Security, Medicare, and Medicaid rise from its current 9 percent of
gross domestic product to the 28 percent of GDP that it will consume in
2050 if past growth rates continue. You can quibble about the
numbers, but the overall trend is clear: We're on a collision
course. But at the moment we don't have anyone working to stop
it--not the Republicans, not the Democrats.
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http://www.usnews.com/usnews/news/articles/060417/17barone.htm
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EDITORS NOTES:
We can no longer afford the grandiose welfare state? Say it isn't
so. Don't worry, we have helicopter Ben at the helm who has said
before the answer is to simply print more money if we need it.
Too bad the result will be higher cost of living via inflation (which
results in lower standard of living) and devaluation of the
currency. Oh well, they must know what they are
doing.
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NORTHWEST MISSOURI TEENS CHARGED WITH THREATENING SCHOOL SHOOTINGS - April 17, 2006
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PLATTE CITY, Mo. Two northwest Missouri teens are in custody and
charged with threatening a Columbine-style attack at their high
school. Trevor Fattig and Sean Amos attend Platte County R-3 High
School. County prosecutor Eric Zahnd charged the two 17-year-olds with
felony counts of making a terroristic threat. Zahnd says Fattig
and Amos told classmates they planned to bring explosives and firearms
to school on Thursday.
.
http://www.wlns.com/Global/story.asp?S=4781647&nav=0RbQ
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EDITORS NOTES:
Are things getting better, or are they getting worse? Want to
know why so many young middle class Americans are moving their families
to other countries? Is it not obvious? A very interesting
read is the letter sent in below, in our readers write in section,
regarding the relocation experience of an American Expatriate in
Colombia and his sons experience in the local school system
there. By the way, recent statistics claim illegal immigration
and illegal drug trafficking is up 40 percent in the US (as of April
2006). There are so many illegal drugs now in the US that that
street price of these drugs has gone down (supply and demand).
You see, even drug dealers benefit from globalization and free
trade. However, aside from this, the price of oil is up, the
price of gold is up, inflation is up, home foreclosures and bankruptcy
filings are up, number of laid off workers due to domestic US factory
closings in up, violence involving guns in the schools - what the heck
is going down? Well, the standard of living for most middle class
Americans is one, and of course the value of the US national currency,
the US Dollar yet another. But hey, don't get angry with me, I am
just telling you what the US governments very own statistics are
reporting (albeit these little details tend to get omitted from the
official news and political commentaries offered up for public
consumption).
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IN INDIA, NEXT GREAT INDUSTRIAL STORY:
By Anand Giridharadas International Herald Tribune, Monday APRIL 17, 2006
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Made in China may be getting a new rival. As global manufacturers
seek new places to plant their flags, India - where factories have long
been conspicuous for their relative absence - is seeing early stirrings
of an industrial renaissance. The effects could be profound for India's
vast number of poor people, and for the international sourcing of goods
from cars to bras. Across India, total exports - mostly
manufactured goods - are rising at a 26 percent annual clip, the
Commerce Ministry reported recently. The manufacturing sector is
growing at 9.4 percent annually, compared with 6 percent a year from
1991 to 2004, according to the Finance Ministry. Special economic
zones - the same enclaves of relative economic freedom that spearheaded
China's export-led industrialization - are now spreading here,
providing tax holidays, more control over infrastructure like water and
power and less regulation. At least 75 zones are in the works, with
more than a dozen already operating.
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http://www.iht.com/articles/2006/04/16/yourmoney/make.php
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CREATING THE JOBS OF THE FUTURE
By Steve Lohr The New York Times, Tuesday - April 18, 2006
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On his Asian trip last month, President George W. Bush urged Americans
to not fear the rise toward prosperity of emerging economies like
India. Education, Bush said, was the best response to globalization,
climbing further up the ladder of skills to fill the jobs of the 21st
century. But a ladder to where? That is, where are educated young
Americans likely to find good jobs that will not be shipped off to
India or China?
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http://www.iht.com/articles/2006/04/17/business/services.php
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EDITORS NOTES:
Where will the new jobs be in the new America?? Well, as we
reported about this very same topic as projected by the US Governments
own Bureau of Labor Statistics recently, the data indicates plenty of
jobs will be in the new and improved service sector. You know,
your kids can probably find domestic employment as Ambulance Drivers,
Nursing Home Attendants, Home Health Aides (the vast majority of jobs
will be in the health care sector taking care of all those aging
baby-boomers), law enforcement (they might need more cops to crack down
on all those unruly illegal immigrants) and such related fields.
It is true that improved education leads to the opportunity for better
paying professional jobs - if such jobs are available, that is.
Hey, I just thought of something. They claim all the low paying
service jobs in America are being done today by illegal foreigners
(Mexicans mostly, but not all) because the native-born Americans
(Anglos, Wasps, etc.) do not want to do such jobs (or at least not for
the below minimum wage salaries being paid to do them). By the
way, this is not just an American problem. According to a recent
BBC news report covering economic and employment trends in the European
Union, the BBC reporter states that because of Germanys very generous
unemployment benefits, farmers in Germany hire Polish citizens to pick
Asparagus on a German farm in Germany - for Germans. In other
words, why would native Germans do farm work when the government will
pay you stay at home and do nothing (in terms of the generous social
welfare benefits)? Just as is the case with Mexican farm workers
in the US, the Germans have to get Polish citizens to pick produce
because native Germans will not do it. This is the problem with
socialism. Such unemployment and social welfare benefits are not
so generous in the US, but regardless it results in the same general
issue. Foreigners from less well off neighboring countries doing
the manual, service or minimum wage kinds of jobs because the native
born (US and wealthier Western European nations) will not. In
Darlington, England many of the taxi drivers are citizens from the
Czech Republic and the owner of the taxi company says he is glad to
have them (he claims he cannot find quality local British citizens
willing to do this kind of work, you know, really gruesome work like
driving a taxi cab). However, one does wonder where all this will
lead, as factory jobs go abroad and now higher skill level jobs
(engineers, architects, scientific research) are also being moved to
lower wage jurisdictions (such as India).
.
So, does this mean that native-born US citizens will start to come into
conflict with the illegal immigrants for the shrinking pool of jobs
left (assuming the vast majority of jobs remaining will indeed be in
this very same so-called service sector)? Will it mean that this
pressure will keep labor rates low (maybe push them lower) as college
educated chemical engineers compete with illegal Mexicans for nursing
home jobs in the future? Will the American middle class standard
of living continue to go down as a result? I do not know, but a
worthwhile group of social-economic questions worth asking. I
guess we will have to wait and see how all this pans out, but from the
looks of it, there will be some dramatic changes on the horizon.
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JURY FINDS EX-GOVENOR OF ILLINOIS GUILTY IN CORRUPTION CASE
By Monica Davey and John O'neil - The New York Times, April 18, 2006
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George Ryan, the former governor of Illinois who drew international
notice by emptying his state's death row, was convicted today of all
charges brought against him in a sweeping federal corruption
case. After more than five months of sometimes complicated
testimony in his federal case, and after five weeks of still more
tangled deliberations, a jury convicted Mr. Ryan, a Republican, of
granting state business to associates in exchange for cash and presents
for himself, his family and his friends.
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http://www.iht.com/articles/2006/04/18/america/web.0418gov.php
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EDITORS NOTES:
Many people often tell us that they are afraid to relocate to a foreign
country. They say - John, you know there are many crooked and
corrupt politicians in those Third World countries. Yes Sir -
sure are.
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IRAN'S OIL BOURSE: A THREAT TO THE U.S. ECONOMY?
By Niusha Boghrati, Worldpress.org correspondent, April 11, 2006
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While Iran's nuclear program has become a major focus of the
international media, there are many who strongly believe that the
program is only a cover for the U.S. government's true motive in a
possible attack against Iran. What some analysts posit is the
real concern for the United States is Iran's plan to open its own oil
exchange -- the Iranian Oil Bourse (IOB) -- with the alleged goal of
becoming the dominant center of the Middle East's oil trade. What
makes the IOB the subject of such interest by the American government?
According to rumors, which first vaulted the issue into the spotlight,
the financial exchange in the aforementioned bourse will trade for oil
in euros instead of the U.S. dollar. The dollar has long been the
dominant currency for international oil trade. The debate over
the ultimate financial impact of trading oil in euros rather than
dollars is a complex one, but according to some experts such a move
could lead to a huge drop in value for the American currency,
potentially putting the U.S. economy in its greatest crisis since the
depression era of the 1930s.
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http://worldpress.org/Mideast/2314.cfm
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EDITORS NOTES:
Is it really the Nukes or is it the Euros? The April 17, 2006
issue of Pravda (Russia) reports the following: The price for
Brent oil has reached a historic level, as for the first time it has
risen above 70 dollars per barrel. If the USA does launch a military
operation against Iran, experts think that the price for black gold
could reach 100 dollars per barrel.
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Source: http://english.pravda.ru/russia/economics/17-04-2006/79248-oil-01
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The reason the US government really has a pet peeve about this Euro
thing is, that it undermines US economic hegemony. Meaning, what
if all the oil producing nations suddenly said they want to get paid in
Euros, or gold bullion, or anything other than US Dollars? Well,
it creates a real economic problem for the US to be sure. This is
so because it means paying for a much-needed commodity with something
other than play-dough monopoly money (the Euro really is another fiat
play-dough monopoly money too, albeit someone else's). In any
event, the point is, many nations and not just the US of course print
monopoly money. Little scraps of paper with fancy engravings of
former dead national heroes on them, and voila - people think it is
magically worth something. So, foreigners accept these little
fancy engraved papers in exchange for real goods or products, like oil,
automobiles, computers, clothing, cell phones and so on. But what
if all of a sudden, they lost faith in those fancy scraps of
paper? What if the folks that produce the manufactured goods or
had commodities to sell (such as oil, steel) wanted to get paid in
gold, or someone else's money (that they thought was better)?
.
It is interesting to note that the former ruler of Iraq switched over
to pricing his oil in Euros shortly before his, shall we say,
displacement. Now of course the speculation exists that Iran is
planning to do the same. In the first case, we were told Iraq was
a nation of really bad guys and we needed get those weapons of mass
destruction. Sound like a familiar story with Iran? Once
again the question is asked: Is it the oil, is it the threat of weapons
or is it the threat of Euros? Who said economics was boring?
.
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DOLLAR DROPS MOST THIS MONTH BEFORE US CAPITAL FLOW REPORT
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April 17 (Bloomberg) -- The dollar fell the most against the yen this
month and had its biggest drop versus the euro in almost two weeks
before a Treasury report today that may show foreign investors slowed
purchases of U.S. assets in February. The U.S. currency has
declined about 3.4 percent this year versus the euro and .05 percent
against the yen as investors anticipate that the Federal Reserve
nearing the end of interest rates rate increases, while the European
Central Bank will continue to boost lending costs. The forecast
for foreign purchases indicates that foreign net purchases of U.S.
assets weren't enough to finance February's trade deficit, which was
$65.7 billion. The U.S. needs to lure more than $2 billion a day to
offset a record deficit in its current account, the broadest measure of
trade.
.
http://www.bloomberg.com/
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EDITORS NOTES:
The 3.4 percent devaluation is not really the big story here, as we
must recall the US Dollar recently appreciated by about 14 percent
against the Euro not too long ago (which we think to be a temporary
anomaly to the long-term trend, and all markets tend to move
erratically in this way also, oil just another example of up, down and
then up again). No, the real story here is the possible lack of
interest by foreigners to buy US dollars or invest in US dollar
denominated assets. To repeat what we asked earlier - what if all
those finicky foreigners no longer want to accept those pretty US
Dollar Federal Reserve Notes? Hmmm - what will happen then?
.
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READERS WRITE IN:
.
Like many thousands of others, I have read your messages from DR for
years. I never answered because I knew twenty others would answer in
generally the same manner I would answer. This time is different
though, because I am currently experiencing events outlined within your
first advisory. We moved to Colombia primarily for three reasons,
one of which was an education for our sons that would NOT center around
"dumb is better, and dumbest is the best" form of education that exists
in my beautiful US. To that end, our decision is reaping rewards. One
of our sons is already better in his Spanish class than most of the
students born and raised in Colombia. Our son is infinitely
happier here with school than within the bully and belligerent
atmospheres that exist within most American schools. And, the reason is
simple. Within the US schools, if a student creates havoc, the
administration is forced to remain silent for fear of litigation. The
havoc producers understand that they are special, that they have been
given tacit approval to act as they wish, and they do so knowing there
will be little if any penalty.
.
The schools here though are quite different. All the students were born
in Colombia. The parents of the students know that if Juan or Pedro
misbehaves, the headmaster will simply exile their children forever.
That is truly bad news because one of the major pieces of information
that travels with a student from one school to another in Colombia
is...attitude and behavior. After expulsion from as few as three
private institutions, the only choice remaining for that particular
child's education is public, and in Colombia, that is one step above a
prison education. Their are no remedies in Colombia for an angry parent
who is convinced his child has been identified as an outcast because
his child is different in one manner or another. So, generally
the school atmosphere here is laced with a desire to create an
excellence in education. When our sons complete their secondary
education in Colombia - - not only will they be prodigiously bilingual,
they will have a complete understanding of the South American culture,
and they will have many South American contacts from which they can
benefit once they have completed their university academics. The
cost of their education in the US for a similar facility and benefits
would be approximately $40k per year. Here? It is approximately one
tenth of that amount (than in the US).
.
Getting cash into Colombia can quickly become a minefield though. I
have a belief that that is a result of the USG doing everything
possible to control US citizens. I doubt the Colombian government would
place many if any restrictions on amounts of capital brought into
Colombia unless the USG ordered Colombia to do so. Still, moving
and remaining here is difficult for me. Dishonesty, corruption, and
lack of honor abound, and it is tough to negotiate what would in the US
be normal human communication. Here, if one shows respect and
integrity, it is considered weakness. What is returned for being
appropriately respectful and honest is dishonesty and a complete lack
of respect. I am certain over time I will learn the system and become
better equipped to maneuver through the differences.
.
EDITORS REPLY:
Thank you for your letter and you touch upon some very important points
when considering life in another country. Which is to say, there
are always going to be pluses and minuses, positives and
negatives. Stated another way, some things will be much better
and much more to your liking (the school system and better education
your son is getting, not to mention the very much reduced and
reasonable cost) and the flip side, disorganized bureaucracy or
cultural differences at times. I will not say I think other
countries are necessarily more corrupt than the US, or perhaps better
said, that foreign politicians any more corrupt. I think the
difference is, in many countries, the shenanigans are in your face,
where as they are bit more, shall we say, covert and convoluted
regarding how deals are done in the US (see news article above).
Politicians in the US give no-bid contracts to private corporations
with who only knows what kind of under the table or deferred pay-off
later on (which of course this is all legal, but ethics and legality
are often miles apart in terms of politics). This kind of
nonsense goes on everywhere, it is the dark side of politics the world
over regardless if you like to admit it or not.
.
In any event, the one social observation I have made over the years is
that I think Americans have been lulled into a sense of pacifism or
complacency. In this regard, most Americans are not what they
used to call - street smart. Americans often place a great deal
of trust upfront with business dealings, with the expectation the other
party will complete the job (or whatever), and also knowing they have
redress or recourse with the better business bureau if not through the
courts. Which is to say, the one redeeming quality in general
about doing business in the US is a high level of service and recourse
when the consumer has been wronged in some way (although there any many
exceptions to this as well). However, this has often been abused
and the US is now a society consisting of a nanny state, whereby the
government dictates everything from what you are allowed to say in
public, or in the workplace especially, to what kind of locks you need
to put on your yard gate. In addition, there are more lawyers
than alley cats, who spend all their time suing everyone, often for
so-called injustices that would be thrown out of court anywhere
else. So, I suppose one can say there is a dark side to all this
efficiency and consumer protection as well.
.
But, what most Americans do not realize is that they have given up
their freedom in the process. Anytime you ask the government to
regulate your affairs, manage your own money for you, redress your
personal grievances, and generally speaking handle what probably should
be private and personal matters, then while on the one hand you have a
higher authority possibly preventing certain kinds of abuses (using the
full force of the government to in theory crack down on any problems),
on the other hand you have that very same authority with complete and
unprecedented control over your life (with restrictions
attached). Let us use the example of saving for retirement as
just one item. Most Americans do not save for their own
retirement. Why not? Simply because they are lulled into
the belief government will take care of that for them via payroll
deductions into the government run social security system.
However, what is the flip side? The government tells you at what
age you can retire, and how much money you will get in the form of a
monthly check, and how much you have to pay in as well. You have
no choice. You have given up the responsibility to take care of
yourself, and have given that responsibility to some one else, namely a
bureaucratic government agency. But, you have also given up your
own freedom in the process. In other words, you have given up the
freedom to handle your own affairs as you see fit simply because such a
responsibility has been voluntarily turned over to the higher
government authority. What does this have to do with living in
Columbia, or perhaps Latin America in general?
.
Well, as I hinted at previously, I think Americans especially have some
difficulties adjusting to differences in business culture and thinking
elsewhere. Again, some of the differences might be better, and
some not as good. In line with this, I have said time and time
again, no country is perfect. I often encourage clients to make a
checklist of the ten or fifteen issues or things most important to
them, and then find a country that score highest on that list.
Each one of such lists will be different for each person because all of
us have personal items of importance than differ. In any event, I
do think the key is to understand the culture, and learn how to
maneuver accordingly. Which is say, some people have said to me,
Oh - things do not work in such and such a country. Well, it is
not a case that certain processes do not work, but rather do not work
in the way you are used to. However, people in the society send
their kids to school, go to work, get their driving licenses or
building permits, and all the other things more or less common in terms
of activities in any country. You are not going to change a
culture or society, so do not even try to fight it. Instead,
learn how the locals get things done and follow their lead. You
have two choices really. Get upset, or learn how to get things
done without getting ripped off or losing your sanity in the process.
.
I will give you a concrete example. Most Americans when doing
business would not find it uncommon to pay an upfront deposit (if not
the entire purchase price) for services or products they are
buying. In turn, they have the expectation that everything will
be delivered or done on time as promised. However, it is often
the case in Latin America, you pay someone upfront, and then they
disappear. In addition, also understand that in the services
industry especially (plumbers, electricians, etc.) that a bit of
haggling and stern negotiation is required. Which is to say, you
will most likely get the over-inflated gringo price from the start, or
on the first go-round. Stated more clearly, some poor electrician
will come to your home, take a look around, and size you up based on
what he think he can get out of you, and not necessarily offer some
flat rate he offers someone else. So, do not be rude, do not
loose your temper, but rather simply be prepared to negotiate or deal
with it.
.
It is not that everyone is a crook or dishonest, but this is how things
are done, for better or worse. It is a mindset, a learned game of
besting the other guy, and it is really a sort of game which you need
to learn how to play. Also, most foreigners think the locals are
always trying to rip them off. I have news for you - - this is
what they do with each other so it is not a form of discrimination
against the foreigner. However, you are going to be fighting a
stereotype, which is, you are an American or European (ergo you are
loaded). On the other hand, Americans do have the reputation of
being fair and more generous, so they will often prefer to do business
with you rather than say an Italian (who have the reputation of being
more tight fisted than even the Latinos, in terms of shelling out
money). In line with this, your comment about being considered to
be a fool or idiot for doing certain things as you would in the US is
accurate in one sense. You think that you are being very fair,
more generous and forthright than the locals (and that they should
appreciate this even more), yet instead they view you as some idiot
with more money than brains - Am I right? Been there, done that
and the following is what I have
learned.
.
There is a terminology in the Dominican Republic, which is Tigre (Tiger
in Spanish). If someone calls you a tigre, it could mean one of
two things (one is sort of an insult or degrading comment whereas the
other is sort of a complement). Meaning, a tigre could mean a
street hoodlum, common crook or general degenerate. On the other
hand, depending upon the circumstance or how someone uses the phrase,
if you are called a tigre - it could mean you are savvy, street smart,
a good businessman, that no one can pull the wool over your eyes (so to
speak). What do we know about the nature of tigres in the
jungle? Tigers tend to respect other tigers; chickens (and other
sort of fowl) usually get eaten. So, the answer is to learn how
to be a tigre - not the street hoodlum or thieving kind, but rather the
smart, good businessman kind. By the way, this does not mean
losing your temper, being rude, or acting like a jerk when you deal
with people. It simply means, understand how to play the
game. Many Dominicans often call me a tigre (plumbers,
electricians, construction guys I may have doing some things for me,
people selling me construction materials, etc.). I tell them no
you are wrong, I'm no tigre - I'm a lion - know what the difference is?
They usually answer no, that they do not know. I then go on to
explain a male lion usually can kick the (blank) out of a male tiger
any day of the week. They end up laughing and we usually get
along quite well after that, once we establish a basic
understanding. The final point is, learn where people are coming
from (metaphorically speaking) and how they think - and deal with them
accordingly. You are not going to change them (and them you) so
do not waste your time getting upset or losing patience.
.
On your comments about children and education, I tend to think this is
pretty much the case throughout Latin America and I see similarities in
the Dominican Republic. For example, children are taught to
respect their parents and teachers and this is very true today, in the
so-called modern, progressive 21st century. I think in the US,
everyone is so worried about respecting and protecting the so-called
civil and social rights of all groups that the end result is no one has
any rights any more, or in the least, special interest groups tend to
enforce their agenda and will on the rest. In any event, I myself
prefer the social nature and culture of Latin America. Columbia
is said to be one of the main drug producing nations, yet I will
guarantee you that you do not have drug problems in your son's
school. I will also say, without you even telling me or saying
so, that there are NO cases or problems with guns or other weapons
being brought to school by students either.
.
American society on the other hand, has gone berserk and worst of all,
the inmates are running the lunatic asylum with the backing of the
warden. Meaning, the government and courts are so worried about
protecting the so-called rights of various people and groups that
everyone is walking on eggshells. Schoolteachers in the US cannot
do their job, especially when they have students with disciplinary
problems because the school is worried about being sued if they take
any action. God forbid they fail a student or hold a student back
because of poor grades; the parents will lodge a discrimination
lawsuit. The US in terms of the society was a great country fifty
years ago, but today it is a mess. With some of its shortfalls
and differences, I will take a Latin American country like the
Dominican Republic (or Colombia) any day of the week over the US, in
terms of a place to live and raise my kids. Many of these
countries may not be as wealthy (not yet, but they are working on it)
and there may be things that frustrate you, but these people have their
heads screwed on correctly. Crooks do not get to watch cable
television at the taxpayers expense; you are not violating the civil
rights of a burglar when you shoot him if he enters your home, children
behave in school (if they do not, dad will make sure they do), and
personal responsibility coupled with ones reputation socially and in
business is of the utmost importance (at least generally speaking, the
courts and the society support this even though there may be some
people who attempt to violate this code at times). These
are some of the ideas and attributes of Latino society, and I prefer
them.
.
The US is worried about foreigners or foreign powers somehow
threatening their so-called way of life? I have news for you - it
is not going to be such persons or other governments that will be the
problem going forward. That is my assessment and opinion, for
what its worth. In addition, while I have great respect for
people like Peter G. Peterson who wrote an excellent book titled:
Running On Empty (a commentary about the current state of affairs in
the US), I disagree with his solution. Which is to say, he claims
the answer is a grass roots movement and political action to change the
course. I don't believe it. I don't believe that there is
any interest or will on the part of most US citizens or the politicians
for such changes. That is of course simply my own opinion, and
yours may differ. However, these are just some of the reasons, I
think, that people choose to live in another country or expatriate if
you prefer that term. The US politicians want to believe middle
class people are leaving because of taxes. Borrowing from a US
political campaign sound bite from the recent past - it's not the
taxes, stupid. Although, lower taxes, lower cost of living, an
economy not propped up on a very shaky house of cards (credit cards
that is) AND lower costs to give your children an excellent private
education (without the drugs and guns) never hurt either.
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