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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!
Want to See our Other Back Issues from 2002 - 2005?........Click Here
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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 15, 2006 Newsletter Edition
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IN THE NEWS:
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PUERTO RICAN GOVERNMENT SHUTDOWN DRAGS ON
By Frances Robles, May 1, 2006 - Associated Press
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SAN JUAN - Nearly 100,000 people were forced out of work Monday when
the Puerto Rico government ran out of cash to pay them, and lawmakers
refused to approve a loan that would fund their paychecks.
Despite nearly round-the-clock sessions in the Puerto Rican
legislature, the island woke up to a dismal picture Monday: 95,762 of
213,000 public employees are out of work. Classes are canceled at
1,500 public schools, while the Department of Education arranges
unemployment payments for 75,758 employees now out of a job.
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http://www.miami.com/mld/miamiherald/14476073.htm
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EDITORS NOTES:
The Associated Press also reports: Many basic functions of Puerto
Rico's government - such as obtaining building permits or a driver's
license - were unavailable because of the shutdown, which closed all
the island's public schools. Some 500,000 students stayed at home
two weeks before the end of the academic year, and about 40,000
teachers suddenly found themselves out of a job.
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So, Puerto Rico is broke is it? Interesting. Is it not true
that Puerto Rico is a territory of the United States? Is this the
shape of things to come, the weakest link in the chain so to
speak? Well, we must remember that the US Federal Government
almost ran out of cash very, very recently this year, until Congress
voted to increase the deficit (the amount of money the government could
BORROW in order to keep itself going financially). Maybe that is
why the US Federal Government turned down a recent loan request from
Puerto Rico (the US Federal Government seems to be barely getting by
themselves, never mind loaning anyone else money). Of course,
maybe then again this was a payback for Vieques (the Puerto Ricans did
not want a US Naval Base in their territory and successfully lobbied to
have the naval station closed. Then again, Puerto Rico never said
they would like to stop taking the financial subsidies given to Puerto
Rico, paid for by ALL the taxpayers in the 50 states). It is
interesting to note that Puerto Ricans living in Puerto Rico pay NO US
Federal Government income taxes, but are still eligible for all sorts
of Federal Government Aid, Grants, etc. According to the Welcome
to Puerto Rico.Org website: Puerto Rico has very few natural resources
of economic value and its economy relies mainly on Federal Aid from the
United States Government. Duties on imports from countries
outside the U.S. tariff wall are collected at Puerto Rico's borders but
sent to the Puerto Rico Treasury, not the U.S. Treasury.
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I am not highlighting this to be antagonistic or mean spirited, but
rather to point out the facts, and it has been speculated (via recent
political rumors) that the US Governments loan refusal is an attempt to
force Puerto Rico to accept statehood (and start paying Federal Income
Taxes as a result). However, if the politicians in Washington,
D.C. cut off the financial tap to Puerto Rico, to quote the shrunken
Jamaican head on the red double-decker bus from a recent Harry Potter
film: Hold onto your seats - Its going to be a booommpy ride
mon. Anyway, the joke now in the Dominican Republic is to keep an
eye out on the north coast for illegal immigrants from Puerto Rico
trying to sneak into the Dominican Republic on rowboats looking for
work. Many Puerto Rican schoolteachers are actually now looking
for work in the continental US (the 50 states, so to speak) and
mainland school districts are actually courting them (considering the
very high number of Spanish speaking illegal Mexicans in the public
schools), so maybe the concern of illegal immigrants from Puerto Rico
coming into the Dominican Republic is not so far fetched?
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IT'S THE ROARING SEVENTIES AGAINS: DOLLAR BREAKS 90-CENT BARRIER
By Tavia Grant, May 3, 2005
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Four short years ago, when the dollar was mired at a record low,
predictions of parity with the U.S. dollar sparked guffaws at dinner
parties. Not any more. These days, much of the debate is about
when, not if, the two currencies will trade at par. The dollar
vaulted above 90 cents (U.S.) for the first time in more than 28 years
yesterday and has had the second-best month in 55 years, according to
National Bank Financial. It extended the day's gains after the federal
budget promised more tax cuts than the past four fiscal plans
combined. Some expect the currency to hit parity -- something not
seen since November, 1976 -- within the next few months, while others
say it is still years away.
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http://www.theglobeandmail.com/servlet/story/LAC.20060503.RDOLLAR03/TPStory/Business
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EDITORS NOTES: Those damn Canadians! How dare they think
their money is just as good as the ole US Dollar! What is the world
coming to -eh? Well, possibly a precursor of things to come as
the US Dollar continues to loose value versus other currencies.
We are starting to see many parallels economically with the 1970s both
in terms of oil and energy (remember the energy crisis??), inflation,
stagflation, etc. Maybe the Mexican Peso will start trading at
one to one with the US Dollar? Nah, probably not, Mexican Pesos
are too spicy.
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FIXING THE WORLD ECONOMY, PART 97: The International Monetary Fund wants to help resolve global economic imbalances. Good luck.
May 2, 2006
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Last weekend, finance ministers of the world's leading industrial
countries agreed to enlarge the role of the International Monetary Fund
and equip it to help resolve global economic imbalances. The deal
was acclaimed, by the ministers and their officials at any rate, as a
transformation of the institution - - - a great and overdue
reform. Unfortunately, it wasn't. This problem of international
imbalances is not exactly new. Back in 2002, the then-chief economist
of the IMF declared that America's current-account deficit and the flow
of credit from overseas needed to finance it were unsustainable. U.S.
borrowing from abroad was on an unprecedented scale, he said. It could
not continue at such a pace. At some point, foreigners would lose their
appetite for American investments, the global demand for dollars would
fall, and the exchange rate would slide.
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http://www.theatlantic.com/doc/prem/200604u/nj_crook_2006-05-02
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EDITORS NOTES:
Pay attention to the last line here folks: The global demand for
dollars would fall, and the exchange rate would slide. If you
have US Dollars, then the other guy's money would be worth more than
yours (you get the idea).
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THE GREATEST ECONOMIC CRISIS IN MODERN HISTORY
Executive Intelligence Review (EIR), VA - May 1, 2006 - By Mr. Lyndon LaRouche
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This nation and the world are now facing, in the weeks and months
immediately ahead, the greatest crisis in modern history; a greater
crisis than World War II. This does not mean that it's a hopeless
situation; it means that it only seems hopeless. I can tell you,
presently, the U.S. Congress, the Senate in particular, has no
comprehension at present of what they're dealing with, or what's about
to hit this nation, and what's about to hit them. As of today,
they don't know what to do! And if you see what they're doing, lately,
you know, they don't know what to do. They may have watches, but they
don't know what time it is.
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Now, the money is being printed, which is generally registered under
the category M3. And notice that you can't find out what M3 is, any
more. They officially decided to hide the figure! Because, if the
figure were published, it would show you how much money is being
printed, printing-press money by the Federal Reserve System, and being
pumped into the system now, to bail out and fund these financial
interests.
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http://www.larouchepub.com/lar/2006/webcasts/3318apr_27_opener.html
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EDITORS NOTE:
The entire piece on-line is well worth a read and we would encourage
you to take the time to do so. Mr. Larouch offers some
interesting insight, not to mention historical perspective as well.
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GOLD TOPS $700, OIL EXCEEDS $71 ON IRAN NUCLEAR PLAN CONCERN
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May 9 (Bloomberg) -- Gold jumped to $700 an ounce in New York for the
first time since October 1980 and crude oil rose above $71 a barrel as
tensions increased over Iran's nuclear- research program. The
near-term floor of prices is somewhere around $70 a barrel for oil,
said Michael Lynch, president of Strategic Energy & Economic
Research in Winchester, Massachusetts. There are people in the
market who see prices around there as a buying opportunity. Gold
also gained on speculation central banks will sell their dollar
reserves and buy gold. Some of China's economists are urging the
country to quadruple its gold reserves to 2,500 tons from 600 tons,
Reuters said, citing an official industry newspaper. China's reserves
have remained stable since December 2002. China wants to move
away from U.S.-denominated assets, said John Licata, chief investment
strategist at Blue Phoenix Inc., (an energy and precious-metals
consulting company in New York). This is good for gold as the
dollar weakens.
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http://www.bloomberg.com/
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EDITORS NOTES:
So, oil at US$70 per barrel is a buying opportunity? China is
dumping US Dollars and buying gold instead? If you have been
reading this newsletter for a while, we talked about this before, so no
new surprises here for our readers. As I am writing this, I am
reminded of one of our clients, a one Mr. B, who bought gold at about
US$290 a few years back (who must be smiling like a Cheshire cat right
about now).
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OIL PLUMMETS AS BUSH SUSPENDS DEPOSITS INTO US STRATEGIC RESERVES
April 25, 2006
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LONDON (AFX) - Oil prices plummeted, further extending yesterday's
pull-back from Friday's historic highs, after US president George W
Bush announced measures to help drive down soaring oil prices. In
a wide-ranging speech on strategies to combat skyrocketing fuel prices,
Bush announced the suspension, for several months, of deposits into
America's strategic oil reserves.
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http://www.forextv.com/
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EDITORS NOTES:
Here is the real story about this folks, just so you know. You
have heard news broadcasters on American television talking about
gasoline prices coming down. This is temporary and politically
motivated, and the reason for the drop in gasoline prices is that the
US government has stopped buying petroleum to re-stock the government
controlled oil reserves. The result is a little bit of extra
gasoline floating around out there, all timed right about as the US
hits the seasonal summer driving season (when US drivers are out and
about and when US gasoline consumption typically soars). It is
going to go back up, of that you can be sure, so enjoy it while you
can.
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GOING PLACES
- The Rich Used To Flaunt Their Roots. Now they prefer wings--and
not just the ones on their private jets. By Rana Foroohar -
Newsweek International - May 15-22, 2006 issue
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According to the 2005 World Wealth Report produced by Merrill Lynch and
Capgemini, there are now 8.3 million millionaires internationally, up
7.3 percent from the previous year, holding an eye-popping $30.8
trillion worth of assets. What's more, the top end of that
spectrum--those worth more than $30 million--is growing fastest. The
group includes numerous well-known Western business titans, but numbers
are rising faster in parts of the developing world. And while
European and American art still command the highest prices,
contemporary Chinese and Indian pieces are gaining steam, as global
nomads (many of them developing-world expats who have returned home)
push them past the $1 million mark at auction. Artists like China's Ai
Weiwei and India's M. F. Hussain are sought-after stars at global
festivals and exhibitions. The result is that top gallery owners from
New York and London are now setting up shops in Mumbai and Shanghai.
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http://msnbc.msn.com/id/12666056/site/newsweek/
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SHAPING THE NEW LOOKS
- The new rich of the developing world are not only attracting posh
brands but helping determine luxury trends. By Emily Flynn
Vencat, Newsweek International
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At a swish Paris dinner on the eve of L'Oréal's annual
financial-results announcement in February, guests drank champagne and
mingled over canapés--but that's where the resemblance to a
typical Parisian luxury event ended. Guests chatted in English, German
and Mandarin as well as French. One managing director paused before
handing out his business card to make sure it was the French, not the
Chinese, version. Most notably, the consumer everyone was discussing
wasn't the stylish European mademoiselle worrying about wrinkles but
the young Chinese woman craving whiter skin and the Indian lusting
after bright Bollywood-style eye shadow.
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http://msnbc.msn.com/id/12666628/site/newsweek/
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EDITORS NOTES:
What is the point? Well, we highlighted this previously.
The money is now in the Third World, mostly China and India to be exact
(but don't count out some other places just yet, they are coming up
too). The first of the two articles says: numbers are
rising faster in parts of the developing world. You had better
believe it. Where are the new luxury and high-end stores
opening? I will give you a hint, NOT inside the continental US
(nor Puerto Rico for that matter). What stores are booming in the
US? Walmart of course, selling every day low priced trinkets made
where? China. What are the Chinese consumers buying?
Not so every day low priced stuff like L'Oreal cosmetics, Cartier
jewelry, Moet champagne, and similar items (things they do not sell in
Walmart). Look at this way. At least you know where all
your dollars spent at Walmart are
going.
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READERS WRITE IN:
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John - I have been planning a move to Costa Rica for a few years,
currently living in Hawaii. Working on all our documentation for
residency. The "rentista" law will be changing there on Aug. 12 and
instead of posting $60k, because I have 6 children I will have to post
$300k after this deadline. Therefore, because we may very well not make
this deadline, I am back to the drawing board. I need the bottom line
on what it would take for me to acquire residency for us all in DR.
Anyway, I really like what I see on the net. The real estate seems to
be reasonable, wondering what is the catch.
.
EDITORS REPLY:
Well, we have seen Panama recently increase the economic solvency
requirement up to US$200,000 (for those people not applying as a
retiree or pensioner status). Now Honduras is increasing their
economic requirements as well? My opinion about all this is,
while I generally think both Panama and Honduras interesting places to
consider for relocation or retirement, neither one is Switzerland (and
neither is the Dominican Republic for that matter, but a heck of a lot
cheaper though). Meaning, just as with real estate, one
supposedly is paying a premium for location and or supposed
infrastructure (among other things). Raising the economic
requirements to become a resident in Honduras? They must be
joking. What can I tell you? Panama especially has recently
been over run with Americans moving there and buying property, so maybe
the Panamanian Government thinks they have it going on (and not too
long ago jumped the economic solvency requirement from US$100,000 up to
US$200,000). Now, with that said, I like Panama, and I have lived
in Panama, so this is not a completely negative comment. However,
one must ask the question - If another country only asks me for
US$25,000 (as just an example), do I really, really like Panama 4 times
as much as the less costly place (in terms of any economic or
investment requirements)? Not only that, is Honduras really on
par with Panama as a destination as well, in terms of requirements and
so on? Just as with everything else in life, one must balance out
the costs or requirements versus the perceived benefits AND how it
stacks up against other options that are available.
.
What is the catch with the Dominican Republic? I do not think
there is one. What you see is what you get. It has not been
over run by Americans (tourism is about 80 percent European and about
20 percent American, and the statistics from immigration almost
parallel to this), so perhaps that has kept the prices in line.
In addition, there still seems to be some negative rumors about the
Dominican Republic, but why I cannot fathom. For example, some
people are under the impression there is more crime or other kinds of
problems in the DR as in comparison to other jurisdictions, which is
simply not the case. But, if other people want to believe the
contrary, and this keeps the hoards away, and that in turn keeps the
real estate affordable - all the better for the rest of us.
However, it is still very true that the Dominican Republic still has
some of most affordable and lowest priced real estate in the
Caribbean. In addition, the government does NOT insist you invest
or spend US$300,000 or more to apply for residency (which certainly is
the case in other places, such as the Bahamas) - making the country
very attractive for many middle class people as well. So, as
Honduras, Panama, and many other places price some middle class people
out - you do have a very viable and affordable option with the
Dominican Republic.
.
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ANOTHER READER WRITES:
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To the Editor: A couple of things you might check out.
Kennedy made the statement that not one dime of the money collected by
the IRS goes to any government program. Reagana, following an
investigation written up in the Rose Report (I've tried to find it with
no success) made a very similar statement...not one nickel goes to any
government program. The IRS is not part of the Treasury
Dept. Look at a government flow-chart. It is not
there. They're a collection agency for other groups of people
that have nothing to do with the government. Secondly, the Euro
IS backed by hard currency. Thanks for your info.
.
EDITORS REPLY:
Well, on the idea of checking out what and where the money goes once it
hits the bank account of the IRS, the truth of the matter is, I do not
think it really matters because the bottom line is - it is still money
taken away from individual citizens regardless (and neither you nor I
have any control over it). Which is to say, I have heard all of
these arguments before. Such as, the IRS is an entity set up as a
Puerto Rico Trust to circumvent the US Constitution (although they say
Puerto Rico is now broke, so hard to say how that ties in), a group of
nefarious individuals or incorporated companies actually own the US
Federal Reserve Bank (which is indeed a private corporation NOT owned
by the US government or people of the United States, that much I know
to be quite true), the US income tax is illegal, the US Government
actual went into receivership (bankruptcy) and the IRS was created to
guarantee liquidation to creditors, etcetera, etcetera and so on.
The bottom line is, legal or illegal, like it or not, the IRS is an
organization empowered to take funds or perhaps better said garnish
funds from private citizens regardless of the real purpose. All
of these arguments, conspiracy theories and tax protester claims may
indeed be true, or in the least, there are some very compelling
arguments and claims to seemingly give some degree of credence to these
things. BUT, at the end of the day when all is said and done,
they (the folks that want your money) have the keys to the jail cell
(and the guns) and you - do not. Therefore, making a public
ruckus and laying claims to what the constitution says (or does not
say) will not stop the powers that be from freezing your bank account
or otherwise taking your money. In addition, the argument about
what is true or not, legal or not, constitutional or not is really
irrelevant if those in charge (the political leaders) do not wish to
address these issues. So, my much less stressful and easier idea
is simply to vote with your feet. Of course, if enough people do
this, they may start to find ways to stop issuing travel documents to
people as a way to prevent the exodus (they already have refused to
issue passports to people that supposedly owe taxes, which is why I
cannot stress enough the need for a second passport - second
citizenship). In addition, I have passed the comment before that
I do think you will start to see currency controls in the US and some
sort of regulations prohibiting individual citizens from getting their
own money out (as the need for cash becomes more acute). This may
sound radical and I do hope my thoughts about this are erroneous, but
if history is any guide, I think not. After all, if the Chinese
stop financing the US deficit - where are they going to get the money
from?
.
In any event, there is a fairly recent book out by US judge Andrew
Napolitano titled Constitutional Chaos: What Happens When the
Government Breaks its Own Laws. Judge Napolitano was specifically
addressing the US Patriot Act, private property rights and the US Bill
of Rights - but why would you not think this theme applies to other
areas as well (such as taxation, etc.)? Indeed, what happens when
the courts, judges and politicians seemingly through the law out the
window when it comes to government power (and the abuse of same)?
I think you already know the answer, which is why I do not even bother
to talk about it, simply because I think it to be a fruitless exercise
(complaining and waving the constitution in a courtroom).
Personally I think that boarding an airplane is so much easier and less
stressful (but to each his own).
.
On the issue of the Euro, the European Central Bank supposedly holds
reserves worth 4 Billion Euros, of which 30 percent are Gold Reserves
of the Bundesbank (Germanys Central Bank) and 20 percent Gold Reserve
from Banque Du France (Frances Central Bank). Knowing a bit of
economic history regarding Europe, this makes perfect sense, as both
France and Germany have always been believers in holding gold reserves,
so it fits with historical perspective. However, I have used the
term fiat currency in the sense that average European citizens cannot
go down to the European Central Bank and redeem paper (or coined) Euro
currency for gold or silver. It may be true that perhaps the
European Central Bank could have larger gold reserves on deposit than
the US Central Bank (who knows really?), but regardless both currencies
are not redeemable for precious metals. With that said, I do
think the Euro has a better chance of holding value going forward for a
few reasons that have nothing to do with gold reserves. Which is
to say, for one thing the European economy or better said, consumer
spending, is less dependent on credit cards or borrowed money as is the
case in the US. Two, there is much more equity in European real
estate as banks often require much higher down payments for mortgages
and Europeans are much less likely to take so-called home equity loans
to fund consumer purchases. Three, many European nations are in
much better shape in terms of national debt as a percentage of GDP and
some countries, such as Sweden for example, have been making tremendous
efforts in recent years to pay down their debt. So, for these
basic reasons I tend to think the Euro possibly a better store of value
going forward. But once again, the European central bank may have
gold reserves on deposit- however that does not mean they will let you
get your hands on it (in fact, the consensus is they will be selling
it, Italy especially to cover the really nasty social welfare deficits
they are facing). On that note, the following comments posted on
April 28, 2006 by the Free Market News may be of interest (note the
comments regarding gold sales from European Central Banks):
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The point is that most who buy gold do so to protect against a
depreciating currency rather than as an investment in the classical
sense. Americans understand this less than citizens of
other countries; some nations have suffered from severe monetary
inflation that literally led to the destruction of their national
currency. Though our inflation-- i.e. the depreciation of the
U.S. dollar-- has been insidious, average Americans are unaware of how
this occurs. For instance, few Americans know nor seem concerned
that the 1913 pre-Federal Reserve dollar is now worth only four
cents. Officially, our central bankers and our politicians
express no fear that the course on which we are set is fraught with
great danger to our economy and our political system. The belief
that money created out of thin air can work economic miracles, if only
properly "managed," is pervasive in D.C.
.
In many ways we shouldn't be surprised about this trust in such an
unsound system. For at least four generations our government-run
universities have systematically preached a monetary doctrine
justifying the so-called wisdom of paper money over the "foolishness"
of sound money. Not only that, paper money has worked
surprisingly well in the past 35 years-- the years the world has
accepted pure paper money as currency. Alan Greenspan bragged
that central bankers in these several decades have gained the knowledge
necessary to make paper money respond as if it were gold. This
removes the problem of obtaining gold to back currency, and hence frees
politicians from the rigid discipline a gold standard imposes.
.
Many central bankers in the last 15 years became so confident they had
achieved this milestone that they sold off large hoards of their gold
reserves. At other times they tried to prove that paper works
better than gold by artificially propping up the dollar by suppressing
market gold prices. This recent deception failed just as it did
in the 1960s, when our government tried to hold gold artificially low
at $35 an ounce. But since they could not truly repeal the
economic laws regarding money, just as many central bankers sold,
others bought. It's fascinating that the European central banks
sold gold while Asian central banks bought it over the last several
years.
.
Source: http://www.freemarketnews.com/Analysis/110/4691/2006-04-28.asp?wid=110&nid=4691
.
So, it has been noted that while there are some exceptions, the central
banks of the so-called wealthy industrialized (and we will also use the
term socialized democracies) nations have been selling gold - AND the
Asians have been buying. Why and where is this all going is the
real question.
.
.
ANOTHER READER WRITES:
.
In your article on Offshore Mutual Funds, you make the following
statement: You are actually paying tax twice on your US mutual
fund investment. Once every year that you own the fund and of
course again when you redeem your shares. This is not true or
misleading at best. As you pay taxes every year on capital gain
distributions, your cost basis also increases. So when you
finally sell all shares, the cost basis is the original amount invested
plus capital gain distributions and dividend distributions. So
you do not end up paying taxes twice.
.
EDITORS NOTES:
I stand by what I wrote, and I will explain it once again. If you
owned individual stocks, as the value of those stocks might go up,
unless you sell, you are not paying taxes on the paper gain (until
actually realized). The down side to owning mutual funds inside
the US is (and I am not knocking mutual funds as an investment idea)
that the buying and selling or capital gains incurred by the fund
manager is passed out to the individual share holder as a distribution,
and taxed of course as a result. However, this is more the direct
result of an accounting regulation imposed by the US Government rather
than for any other reason, and my suspicion is for taxation
purposes. If you invested in some of the SICAV mutual funds out
of Luxembourg, this type of annual taxable distribution is not the
case, and such gains are simply retained or rolled up, which in theory
should push up the value of the fund shares accordingly. In any
event, if someone has an accountant in the US that is willing to
tabulate and track all of this, then yes you are correct in what you
say. However, I would wager to bet that most average middle class
investors do not engage in this sort of accounting labyrinth, and end
up paying taxes twice, once on the declared 1099 distribution and again
later on any gain resulting from differences in original and sale
price. However, many mutual funds are set up differently outside
the US and such a problem does exist (the taxation issues).
.
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ANOTHER READER WRITES:
.
Hello John - I was reading your interesting articles on
EscapeArtist.com and had been seriously considering buying a home in
St. Kitts. Are you familiar with St. Kitts and are there reasons
you would advocate Dominican Republic? How safe is Dominican
Republic from a standpoint of crime?
.
EDITORS NOTES:
Well, I have said before, any place where there are people on the
planet, there is crime to one degree or another. The question
then is not if there is any crime in one particular place, but rather
if there is any more (or less) crime in one jurisdiction versus
another. In the recent past, we have offered readers information
and links to a study about levels of crime in many countries for
comparison. According to that study, Puerto Rico scored
exponentially higher than the Dominican Republic for murders and tiny
English speaking Dominica (not to the confused with the Spanish
speaking Dominican Republic) scored exponentially higher for house
burglaries. I forget off hand where St. Kitts falls in, but you can
check out the Nation-Master website for some of these statistics.
However, I personally have not found the Dominican Republic to be any
worse off (or we can say any better in some respects) than a large
number of other countries. For sure, the homicide or murder rate
in American owned Puerto Rico is much, much higher. In fact, many
Puerto Ricans in recent years have been moving to the DR in order to
escape the crime in Puerto Rico.
.
.
ANOTHER READER WRITES:
.
Hello John - I have received your newsletter and it was very
informative. I absolutely agree that in the previous 15 years (read:
after USSR collapse) the US have put themselves in not just a difficult
situation, but in a situation where disintegration of the state is only
a matter of time. Smiley and cheerful anchors on TV talking about job
creation and positive trends in the economy is a shameless farce that
makes Stalin-era propaganda look like child play. Ironically, not too
many average Americans are concerned or even aware. Who cares about the
economy when you got NASCAR? Or maybe it's the goddamn second part-time
job that takes up all the time.
.
I have majored in economics (3 years in Moscow, and 4 years in Toronto)
and I can't think of a single macroeconomic tool that the government
and/or Federal Reserve has available to them to positively influence
the economy. A combination of total export of manufacturing,
substandard education, current involvement in 4 wars (and more underway
in Iran, Venezuela, North Korea etc.), a world-wide perception of
dollar as a currency, inadequate for national reserve purposes (just
ask Kudrin, Chavez, or Ahmadinejad), etc. etc. is a recipe for
disaster. It's quite humorous to see various macroeconomics "experts"
babble about how they see US economy sustain its economic might at an
expansion rate of 3-4% a year well into 2020's, maintaining a leading
economic position with China being a distant second. In my very
subjective opinion, there is a strong possibility that the economy
wouldn't last until the end of the decade, making the chaos and poverty
of the 1990's in Russia after the collapse of USSR look like a fairy
tale. Well in this case all the collection companies and bankruptcy
lawyers would have to keep the economy "booming". You should be cashing
in on it too, John J (very inappropriate joke). The US economy
without exaggeration reminds me of a family that lives in a huge house
worth a million dollars without down payment, drive 2 leased SUV's, has
15 different maximized credit cards and credit lines, and main income
contributor is laid off.
.
EDITORS REPLY:
Thank you for your letter. I suppose we will have to wait and see
how this pans outs, but for sure, one cannot live on borrowed money
forever. At some point, the bills come due and this applies to
both individual citizens and government as well.
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ANOTHER READER WRITES:
.
Greetings - I want to say that your newsletters are most informative. I
would appreciate information on the safest and most secure countries to
invest or establish a business in Latin America and what
things/services are in most demand.
.
EDITORS REPLY:
Well, this is a very open ended question and difficult to answer as a
result. However, I will say that from a marketing point of view,
look for countries that have a growing economy, a growing middle class
yet do not have some of the products or services that exist in the
so-called wealthier industrialized nations. There are many, many
products or services that consumers in these growing markets will buy
simply because they now have the money to do so. But, it could be
the case such products or services have not yet been introduced.
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