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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 October 12, 2006 Newsletter Edition
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IN THE NEWS:
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WHEN ROOTS TRANSLATE INTO A SECOND PASSPORT
By Gretchen Lang - International Herald Tribune - September 29, 2006
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The O'Flannerys of Santa Rosa, California, have been American for
generations. But when they learned they could be Irish as well, they
jumped at the chance. Having heard from an acquaintance in 1994
that Irish passports were available to anyone with documented proof of
an Irish grandparent, the O'Flannerys hired a private investigator to
track down the Irish birth certificate of John O'Flannery's
grandmother, who came to the United States as a child. Using that
document, first John, then his wife, and then three of his four adult
children applied for Irish citizenship. John's daughter, Carol,
says the passport has allowed her to work legally in Italy and Austria
since those countries, along with Ireland, are part of the European
Union. Another sister has bought property in Italy and her parents
might someday retire there. Across the world the children,
grandchildren and even great grandchildren of immigrant families are
taking advantage of more liberal dual citizenship and right of return
laws to get a second passport from the land of their ancestors. Some
plan to return to their home land; others simply hope to take advantage
of living and employment opportunities in newly formed or expanded
trade blocs in North America and the European Union. Countries
welcome immigrants with ancestral ties generally, hoping to benefit
from their skills and tax revenues, or, less often, for humanitarian
reasons.
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In some smaller countries the question of who can be a citizen comes
down to who has the money to pay for it. The small Caribbean nation of
Dominica, for instance, sells citizenship for $75,000 in cash. Dominica
citizens are not required to pay income tax on income earned outside
the country and automatically become members of the British
Commonwealth, which confers certain rights in Britain (although not the
right to work). All modern states have provisions for citizenship
based on right of descent, known in the courts as jus sanguinis. Where
they differ, Bauböck said, is over how many generations they allow
their citizens living abroad to pass on citizenship to children born
abroad and whether the descendants must actually take up residence in
the country to apply. Among European Union states, for instance,
Britain, Belgium and Germany limit citizenship rights to only the first
generation born abroad, whereas countries like Austria, France, Greece,
the Netherlands and Spain permit the transfer of nationality from
generation to generation with no residency requirement. Recently
a trend has emerged of countries strengthening ties with their Diaspora
by allowing them to keep their nationality while naturalizing in
another country. Countries like Italy, India, Portugal and the United
States have amended regulations to allow dual citizenship.
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http://www.iht.com/articles/2006/09/29/news/areturn.php
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EDITORS NOTES:
The above article says that many people seek out another citizenship
and another passport with the hope to take advantage of living and
employment opportunities. So, is it true then that economic
survival and a possible a better life is no longer to be had in the
United States for many middle class Americans? Despite all the
rhetoric and propaganda to the contrary, despite globalization or lack
of promised benefits from globalization - it would seem to be so.
We reported in the previous newsletter that the World Bank in 1999 said
the following: Globalization appears to increase poverty and
inequality. Maybe this is what is pushing America's middle class
out the door? Maybe they do not want to stay and wait to become
poor?
.
Many, many middle class people are indeed escaping from America (to
borrow a term coined by Roger Gallo many years ago) and are finding the
only way they can retire with the kind of lifestyle they want, or be
able to afford housing, or be able to send their children onto higher
education without going broke in the process - is to do so someplace
else (to send your kids to one of the very best private universities in
the Dominican Republic will cost you less than US$4,000 per year in
tuition. Does your son want to become a Doctor? You can
afford it in the Dominican Republic because the tuition I quoted was
for Medical School and No, they do not operate with Bananas as surgical
instruments - I don't care what your neighbor told you. How about
Public Universities, many of which are excellent by the way? I
will not even bother telling you because it will make you faint,
considering the cost of Public State Universities in the US).
Long time readers of our newsletter know we have touched upon this
theme or trend many times, so this really is not surprising.
Also, we have made the commentary that over the years that we have
noticed a trend in that our clients have become younger and
younger. Which is to say, we are seeing many families as well
with young parents who are in their late thirties with young children
in tow. Making a move could save them US$200,000 in housing costs
and well over US$100,000 in college tuition as
well.
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In any event, in terms of many processes in other countries as it
pertains to naturalization (becoming a new citizen of that country and
obtaining another passport in the process), the truth is that it often
comes down to what you have more of - time versus money. But if
you are willing to wait (and often not as long as you might think), it
certainly is possibly to obtain a very legal second passport - second
citizenship and not siphon off your savings account in the process (and
use the money saved to say, buy a house as just one option). In
other words, you can spend US$75,000 in Dominica (which is an English
speaking island in the Caribbean NOT to be confused with the Spanish
speaking Dominican Republic) or you can do the same thing for a heck of
a lot less elsewhere (the Dominican Republic being just one of many
lower cost options - and its not a bad place to live or call home
either). Either way, I do not think the decision tantamount to
rocket science, especially when it could mean a better life, lower
taxes, etcetera, etcetera, - you know the rest.
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TOURISTS CHOOSING CARIBBEAN NEIGHBORS OVER PUERTO-RICO
By David McFadden, Associated Press Writer, September 21, 2006
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SAN JUAN, Puerto Rico -- More vacationers are choosing to wile away
their Caribbean holidays in the Dominican Republic or Cuba, rather than
the traditional top destination of Puerto Rico, as those nations
increasingly focus on boosting their tourism offerings, an industry
group in the U.S. territory said. Puerto Rico, which was the
region's most popular vacation spot for four decades until the island
recently lost its top rank to the Dominican Republic, has not
effectively worked to develop the sector in the last few years,
according to a study commissioned by the Puerto Rico Hotel and Tourism
Association. The Dominican Republic, which leads the Caribbean
with 674 hotels offering nearly 60,000 rooms, has earmarked money for
developing beaches, new golf courses, all-inclusive resorts and other
attractions. Meanwhile, the tourism sector in Puerto Rico, which has
12,700 rooms in 145 hotels, has remained largely stagnant, officials
said.
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http://www.usatoday.com/travel/destinations/2006-09-20-puerto-rico-tourism_x.htm
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EDITORS NOTES:
The FBI released its annual crime statistics report on September 18,
2006 for 2005, and once again, the Murder Capital of the United States
is Washington, D.C. with a murder rate of 35.4 per 100,000. Quite
astonishing that this city is also the political capital of the US and
calls itself home to the main headquarters of the FBI, NSA and all the
other alphabet acronym law enforcement and spy agencies making up the
nations government apparatus. So, why mention this recent FBI
report and why are tourists running away from Puerto Rico (a US
territory) and heading for the Dominican Republic? Well,
according to the same report, Puerto Rico comes in with a murder of
rate of 19.6 people per 100,000 (one of the highest in the entire
Caribbean) and the murder rate is now up by almost 4 percent nationwide
in the US as a whole. Based on these statistics and the figures
involving murder and violent crime in the Dominican Republic, you are
TWICE as likely to be killed or become a victim of violent crime in
Puerto Rico (or St. Thomas for that matter) as you are in the Dominican
Republic. Based upon this we can certainly speculate that it is
No wonder the tourism rate is UP in the DR and down in. In any
event, tourists are kind of funny in that they would prefer to take a
vacation in a place they will NOT likely be murdered. Sounds
strange, but what can you do? Also, the tourism statistics also
say people would rather visit Cuba these days as well, rather than
Puerto Rico. Cuba? Things must really be bad these days
crime wise in America if foreign tourists would rather visit a
communist country - don't you think?
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Another unrelated but interesting statistic regarding illegal drugs for
2005 involves Afghanistan, another country controlled (or supposedly
controlled) by the US military. It has been reported that
Afghanistan has had a record year for Poppy harvests in 2005 AND
Afghanistan now, in 2006, supplies 90 percent of the world's heroin
(with a good portion of that fueling the new heroin problem in the US
among upper middle class teenagers, but that is a topic for another
day). What ever happened to the war on drugs? Did the US
win that war, or is it going as well as some of the other wars?
Has the US decided to turn a blind eye to drug trafficking these
days? I don't know, I am just telling you what has been
reported. As Mr. Ripley used to say - Believe It or Not.
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DOMINICAN REPUBLIC SEIZES COCAINE THAT PASSED THROUGH PUERTO-RICAN PORT - The Associated Press - September 18, 2006
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SANTO DOMINGO, Dominican Republic Authorities in the Dominican Republic
have made the largest cocaine seizure ever in the Caribbean nation,
discovering a shipment that passed undetected through the U.S.
territory of Puerto Rico, officials said. Dominican agents on
Monday seized 2,250 kilograms (4,960 pounds) of cocaine hidden in a
shipping container that left Venezuela bound for Europe, said Roberto
Lebron, a spokesman for the anti-drug agency. Earlier this month
that container passed through the Port of San Juan in Puerto Rico
without being checked, said Wendy Vallejo, a spokeswoman for U.S.
Customs and Border Protection.
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http://www.iht.com/articles/ap/2006/09/19/news/
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EDITORS NOTES:
The woman from U.S. Customs and Border Protection says it passed
through without being checked. Maybe the term Border Protection
is a misnomer? They are doing one heck of a job on that Mexican
border - eh? Too bad the politicians will not give them any real money
to get the job done (maybe there is a reason for that - see
below). We constantly hear about the failings of other countries
and governments, so what does all this mean? Has the US given up
on drugs whereas the Dominicans are on the job? Is the situation
in US controlled Afghanistan and now Puerto Rico an indication of a
brand new tactic? I really don't know, but it sure sounds a bit,
shall we say, in direct contrast to the official hype. If you
think about though, it does make sense. I mean, if you believe
Bob Guccione's version of ancient history, that nutty Roman Emperor,
Caligula, set up a government run brothel to balance the budget and get
some revenue coming in. In modern day America it used to be the
case that the guys with all the dough were the pimps (just as in
Caligula's time). Now of course they claim its the drug dealers,
who are earning all the cash. After all, this is why we had all
these so-called anti-money laundering initiatives, because these bad
guys had a whole lot of dough from the drug biz - no? Go where
the money is I guess.
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HOLOCAUST EXHIBIT HONORS DOMINICAN REPUBLIC
By:Stephen Stirling - 09/11/2006
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Borough officials gathered at Queensborough Community College Sunday
for the unveiling of a Holocaust exhibit honoring an unsung hero of
World War II: the Dominican Republic. The Harriet and Kenneth
Kupferberg Holocaust Resource Center at the college officially opened
its new exhibit, Sosua, Refuge from the Holocaust in the Tropics, which
pays tribute to the compassion and generosity showed by the Caribbean
nation during the war. The Dominican Republic was one of the few
countries to offer a safe haven for refugees fleeing persecution in
Germany and Austria offering to open its doors to 100,000 Jews
desperately eager to leave the Nazi controlled areas when other
nations, including the United States, kept them shut.
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http://www.timesledger.com/
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EDITORS NOTES:
So, the Dominican Republic took in these poor refugees at a time when
the US would not? At least that is what a newspaper covering the
middle class section of Queens, New York is saying. I will tell
you something else you don't know. The Dominican Republic took in
a number of refugees from Lebanon when the civil war broke out there in
the 1970s as well. And the Dominican Republic took is some of the
refugees from war torn Yugoslavia in the 1990s - at a time when the US
forbade them to enter US territory also (seems to be a common theme we
are seeing). And what about today? The Dominican Republic
is taking in the middle class refugees from Canada, Europe and US
escaping another kind of shall we say, war (the war against the middle
class). The Dominican Republic is not perfect, BUT it really is
not that bad either (in fact, using the FBI statistics, you are four
times as likely to be murdered in Washington, D.C. than in Santo
Domingo). FOUR TIMES. Talk about a tale of two
cities. However, in all honesty, many Americans are now becoming
aware of the Dominican Republic and have learned the negatives things
they heard are indeed false. CNBC recently reported the following
earlier this year:
.
Real estate in the Dominican Republic is so hot that even before they
broke ground at the project Roko Ki they had sold $100 million in
properties, 90 percent to Americans -- that too, all in one day. Many
Americans fall in love with the Dominican while on vacation. A record
number of tourists visited this past season after Hurricane Wilma
pummeled Cancun, Mexico. Even Hollywood is taking notice.
Recently Brad Pitt was flying about the island looking for his piece of
paradise. Fellow actor Vin Diesel is planning on building in Boca Chica
and Robert Deniro is also actively
looking.
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http://msnbc.msn.com/id/13941226/from/ET/
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EXISTING-HOME PRICES FALLS FOR 1st TIME IN 11 YEARS
By Rex Nutting, MarketWatch - Sept. 25, 2006
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WASHINGTON (MarketWatch) -- The collapsing U.S. housing market crossed
another milestone in August, as the median sales price of existing
homes fell for the first time in 11 years and for just the sixth time
in the past 38 years, the National Association of Realtors said
Monday. The median sales price fell 1.7% year-over-year to
$225,000 in August. Sales of existing homes fell 0.5% in August
to a seasonally adjusted annual rate of 6.3 million, the industry group
said. It was the lowest sales pace since January 2004. Sales have
fallen five months in a row. Sales are down 12.6% in the past
year. Realtors said the price decline shows the market is
stabilizing, but other economists said the correction has a ways to
run. The existing-home market has fallen a long way from its top,
but there is more to come, said Phillip Neuhart, an economist for
Wachovia. Meanwhile, inventories of unsold homes rose to a
13-year high. It was the first time since April 1995 that median
prices had fallen on a year-over-year basis. It was the second-largest
decline in the 38-year history of the Realtors survey, exceeded only by
a 2.1% drop in November 1990.
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http://www.marketwatch.com/News/Story/
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EDITORS NOTES:
The existing-home market has fallen a long way from its top, but there
is more to come, said Phillip Neuhart, an economist for Wachovia
Bank. So an economist from a major US bank says watch out for the
economic equivalent of a falling rock zone? Don't you worry about
it Mr. Neuhart. The Federal Reserve is going to put the printing
press on steroids for you. Maybe your bank should buy a real
estate brokerage concern, like Century 21 or some similar
company. This way, you can funnel all those foreclosed houses the
bank will soon have to another in-house company and keep the sales
commissions in house. It is just a thought. In a current US
television commercial, the US based Century 21 real estate brokerage
touts the idea of a real estate agent learning to speaking Chinese so
he can sell a home to a Chinese couple newly arrived and just off the
plane. Maybe all those foreclosed homes can be marketed to the
Chinese? What the heck - they seem to have all the money these
days.
.
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YOUNG COLLEGE GRADS IN FREE FALL
Posted August 29, 2006
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Today's income release from Census was filled with all sorts of
interesting numbers. Real median household income rose for the first
time since 1999. But it turns out that all of the gain came from
foreign-born households--immigrants in other words. The income of
native households remained statistically unchanged. That will
give both the pro-immigrant and anti-immigrant forces plenty to talk
about. More disturbingly, the numbers show that young college
grads face a steadily worsening future of falling wages. The real
earnings of workers aged 25-34 with a BA dropped by 3.3% in 2005. All
told, the earnings of young college grads are down by almost 8% since
2002.
.
http://www.businessweek.com/the_thread/economicsunbound/
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EDITORS NOTE:
Interesting numbers they say, and this is Business-Week saying so and
not some angry left wing underground publication. College grads
earnings are down by 8 percent since 2002 and face a steadily worsening
future of falling wages. Falling wages is indeed very interesting
(very broke in terms of Americas next younger generation I would say -
if they keep this up).
.
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U.S. HOMEWORK OUTSOURCED AS E-TUTORING GROWS
Dated September 28, 2006
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BOSTON, Massachusetts (Reuters) -- Private tutors are a luxury many
American families cannot afford, costing anywhere between $25 to $100
an hour. But California mother Denise Robison found one online for
$2.50 an hour -- in India. It's made the biggest difference. My
daughter is literally at the top of every single one of her classes and
she has never done that before, said Robison, a single mother from
Modesto. Her 13-year-old daughter, Taylor, is one of 1,100
Americans enrolled in Bangalore-based TutorVista, which launched U.S.
services last November with a staff of 150 e-tutors, mostly in India,
with a fee of $100 a month for unlimited hours. Taylor took
two-hour sessions each day for five days a week in math and English --
a cost that tallies to $2.50 an hour, a fraction of the $40 an hour
charged by U.S.-based online tutors such as market leader Tutor.com
that draw on North American teachers, or the usual $100 an hour for
face-to-face sessions. I like to tell people I did private
tutoring every day for the cost of a fast-food meal or a Starbucks
coffee, Robison said. We did our own form of summer school all
summer. The outsourcing trend that fueled a boom in Asian call
centers staffed by educated, low-paid workers manning phones around the
clock for U.S. banks and other industries is moving fast into an area
at the heart of U.S. culture: education. It comes at a difficult
time for the U.S. education system: only two-thirds of teenagers
graduate from high school, a proportion that slides to 50 percent for
black Americans and Hispanics, according to government
statistics. China and India, meanwhile, are producing the world's
largest number of science and engineering graduates -- at least five
times as many as in the United States, where the number has fallen
since the early 1980s.
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http://www.cnn.com/2006/EDUCATION/09/28/
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EDITORS NOTES:
In the last newsletter we told you how nannies are being imported from
China so toddlers in the US can learn Chinese. Now this
e-tutoring phenomenon, supposedly so the roughly sixty percent of US
High school kids can TRY and graduate with the help of someone in a
third world nation (one third of the American Caucasian kids will NOT
graduate and half of the black - Hispanic population will not either,
regardless if they have Raji the math wiz on-line, or not). The
article also says that China and India, meanwhile, are producing the
world's largest number of science and engineering graduates. In
the words of Alfred E. Neumann: What Me Worry?
.
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READERS WRITE IN:
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John, I have been shopping around for various offshore investments in
addition to those I already have in the Dominican Republic. I
recently had the experience of a British firm specializing in offshore
investments more or less telling me to go to hell since I am a US
citizen. Big Brother is watching.
.
EDITORS REPLY:
Well, I would say Big Brother is probably watching for sure - watching
himself go broke and will do anything he can to make sure you do not
move your piggy bank. Maybe big brother is planning on tapping it
in the near future to cover all the debt being accumulated?
Difficult to say for sure, but in my opinion, why so many Americans are
indeed seeking dual citizenship options (just so they can do something
as simple as getting a bank or investment account open for themselves
somewhere else). Too bad you have to go abroad to find financial
freedom, but on the other hand, thank goodness that you can - at least
for the moment.
.
.
ANOTHER READER WRITES:
.
Dear John - Please put on your web site information about options
investing in the US stock market. The US equities markets have
run up since mid August 2006 and have continued this huge run, but the
end of the quarter is on this Friday. The Dow is about 75 points from
an all time closing high and has moved about 1000 points in 5 weeks.
The S&P 500 has reached a 6-year high and has moved up 9 % since
August 2006. These conditions represent a major over bought situation.
If you have any other investments in the stock markets world wide, not
just in the US, You should have some down side protection incase of the
10 % pull back that most analysts are calling for. By using options,
you can purchase put options that protect against a sell off. All
healthy markets have pullbacks, especially in bull markets. The pull
back is usually within 2 years of the bull-run, and so far more than 2
years into the current bull-run since 2004 there has not been the 10 %
pull back that is expected. Leading indicators show that recession is
near, note the inverted yield curve and a falling housing market.
All that is needed is a minimum of $10,000 USD to by put options and
protect your long investments from the sell off that will occur.
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EDITORS REPLY:
Mr. Jeff Donner, one of our favorite financial planners and an all
around good guy sent in this item. Jeff owns a licensed
securities brokerage and management firm in Florida, and he has worked
with many of our clients over the years. In fact, he was one of
pioneers that taught clients how to use various kinds of life insurance
and specialized retirement plans for small businesses, to save on
taxation and protect family assets. He is so concerned about the
current market he telephoned me after he sent this in, to make sure I
let people know how precarious the US economy actually is - and why
they need to hedge. We hear you Jeff, we hear you. To
contact Jeff about this and other investment ideas: Mr. Jeff
Donner, Donner Management Group, 8551 W. Sunrise Blvd - Suite 209,
Plantation, Florida - Tel. 954-217-9421. Cell Phone.
954-605-2737, Email: jkndonner@bellsouth.net
.
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ANOTHER READER WRITES:
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The New World Order plan is to in slave the entire world with a small
elite as masters. Freedom is the old world order! Their
goal is to turn the world into a hell. As Captain Ahab said in
Melvilles Moby Dick. My means are sane, it is just than my end
(goal) is insane. Your readers should resist the New World Order
with any and everything at their disposal. They could be victims of
slavery or mass murder.
.
EDITORS REPLY:
They say a really good conspiracy theory is one you can never
prove. I am not one to run with things I cannot find hard
information to support, but the truth of the matter is, in the words of
Bob Dylan - The Times They Are A-changing. In other words, I do
indeed believe there are some trends or dynamics at work, which are
identifiable from hard and fast statistics. We do not always have
all parts of the puzzle (the who, or in the case of this particular
discussion, the identities of the conspiratorial parties assuming they
might even exist) but we can predict the possible outcomes, which is in
my opinion far more important than identifying the villains.
Why? Because if you have a very good idea regarding the outcome,
you have the ability to protect yourself and your family by changing
how and where you invest, how you manage your personal finances, where
you choose to live and so on. This is much easier to do (and less
stressful) than trying to take out the villains (whomever they might
be) who most likely are probably better armed and are much wealthier
than you anyway.
.
In any event, since we are exploring conspiracy theories, I have an
item fresh off the press. Which is to say, not to go off on a
tangent, but the issue of illegal immigration is a hot topic these
days, and just one example of public rhetoric versus actual
reality. Personally, my opinion always has been that - The US
Government secretly favors illegal immigration, despite verbal claims
to the contrary. Exploring this a bit more - I have often asked
the question: How is it possible that one of the wealthiest nations on
the planet with such advanced technology and resources does not seem
willing to seriously tackle the problem of its borders? I
speculated on a number of reasons, mostly economic of course, but very
recently my sixth sense was unfortunately proven correct. I am of
course talking about the new Security and Prosperity Partnership
apparently cooked up on March 23, 2005 (also known as the North America
Union) by President George Bush, Mexican President Vicente Fox and
then-Canadian Prime Minister Paul Martin. Recently, the
government watchdog group Judicial Watch released relevant documents
obtained through the Freedom of Information Act. These and other
sources indicate an effort to produce a structure not unlike the
European Union, with a new common currency supposedly to be called the
AMERO (rumor has it they were considering to call it the HOMERO, in
honor of the popular American cartoon character Homer Simpson, but I
guess they changed their minds), a new biometric passport or passport
equivalent document, COMPLETELY OPEN BORDERS and a three-nation
governing body of some sort. So, it would appear that the lack of
attention by US politicians to the border NOW does makes sense.
The US government has given lip service to illegal Mexican immigration
because the goal is to open up the borders anyway (or so it would
seem). In any event, for what it is worth - visit the following:
.
http://www.judicialwatch.org/5979.shtml
.
http://www.cfr.org/publication/8102/building_a_north_american_community.html
.
http://www.vivelecanada.ca/article.php/20060926201822195
.
http://pesn.com/2006/09/29/9500242_NorthAmericanUnion_and_energy/
.
http://www.spp.gov
.
This last one above is the official US Government site for the new
North America Union, Security and Prosperity Partnership thing -
whatever you want to call it.
.
Here is what is being said on the Vive Le Canada Site (see link below):
.
The Council of Foreign Relations has recently published a document
entitled Building a North American Community, which is the blueprint
for the merging of Canada, United States and Canada into one
super-state / trading bloc. The CFR document calls for a common
security border perimeter around North America by 2010, along with free
movement of people, commerce and capital. Here are just a few of
the changes that we can expect in the North American Union, as reported
by the Council on Foreign Relations. These are not simply idealistic
recommendations on paper; many are being rolled out now with almost no
public knowledge. The United States will be dissolved as an
independent nation, and will allow Mexican aliens free access to
America's land and resources. As the statistics show, an amazing
20,000,000 Mexicans are living in the United States illegally, and the
Bush administration is doing no more than paying lip service to the
issue. With the creation of the North American Union this problem
will disappear overnight. The borders, even as we are being brainwashed
to believe need-increased levels of security - will be erased
overnight. The Border Patrol will eventually be eliminated. The fear
and panic regarding U.S. borders since 9/11 has been another sham,
particularly evident now with the impending elimination of borders. A
North American parliament will take over the governance of the
continent, in much the same way that it has happened with the European
Union. In Europe, a non-elected committee rules the union, whose laws
supersede the laws of its member states. That means that the laws of
the European Union would trump the laws of France, Germany or any other
member state. A gigantic super-state will require a gigantic budget, so
Canada's financial resources will stretched much further.
.
http://www.vivelecanada.ca/article.php/20060907114430765
.
The interesting thing is that the Canadians are really, really, really
ticked off. Once again, I do not like to blindly jump aboard the
bandwagon of what many might call a conspiracy theory or jump the gun
in terms of speculation. BUT, on the other hand, assuming these
things are true and assuming this is the coming blueprint, it does make
sense or better said, does explain a number of actions (or lack
thereof) on the part of politicians. Regardless, you know
something must be up when the normally very calm and non-abrasive
Canadians start lashing out. Ironically enough, NAFTA has been
very good to Canada and they were a net beneficiary in terms of
relocated factories and trade related issues. Now of course the
so-called North America Union (NAU as it has been abbreviated)
supposedly involves a 10-lane super highway initiative direct from
Tijuana straight up to Manitoba (with some sort of a Mexican government
controlled customs facility in Kansas City, to be paid for by the good
taxpayers in Kansas, or so it has been reported). So, now
Canadians are worrying that the Mexican immigration problem, which
really has been solely a US problem, will now affect Canada. In
other words, one could surmise that Mexicans will be able to take a
Greyhound Bus for a few dollars (or should I say Ameros?) northward
across America's heartland straight up to Winnipeg. Of course the
assumption is with this new biometric E-Z Pass identification or
passport thingy (which one assumes ALL citizens of the new NAU will
obtain) they no longer have the need to crawl through dirty, rat
infested sewer pipes along the border. A good thing for them I
guess, and certainly it will put the coyotes out of business (the two
legged kind as opposed to the four legged kind). In any event,
since NAFTA was such a tremendously good deal for average US citizens
and the middle class (you do know I am being sarcastic I hope), I can
only speculate and wonder about the marvels to be had with the new
United States of North America (or whatever the heck they will call
it). So, is there a conspiracy theory at work? I don't know
really and even if there is, not much most of us can do about it - in
terms of stopping it (there are many very wealthy business and
commercial interests pushing for this, so I think you are kidding
yourself if you are going to go up against such a group in terms of
opposing the idea). However, I would say, start brushing up on
your Spanish so you can converse with your new countrymen and maybe
think about putting up a road-side taco stand near that new Kansas City
customs check-point thing-a-ma-jig. All those Mexican travelers
are going to be hungry. You see, there will be new and exciting
business opportunities right at home after all.
.
On another note, I have encountered a number of people who have said -
I will never give up my US passport (and one does not have to, since
the US State Department does say dual citizenship is permitted publicly
and in print, although they keep moving the on-line information around
and changing the links for some darn reason or another). Seems to
me, if all these tirades against this SPP initiative are indeed true or
if the complaints valid, you may very well be giving up your US
passport anyway (whether you want to or not). The question then
becomes, is this really the new passport, or the new kind of country or
citizenship that you really want? I guess we will have to keep an
eye on this to see where it goes, and we will explore this further, as
it surely will have an impact on economic issues in the US (which is
one thing we are concerned about and how that affects other things,
financially speaking).
.
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ANOTHER READER WRITES:
.
You are what is wrong with the world today. Paying Dominicans
$122 per month is an insult to humanity considering the profits being
made in the Free Trade Zones. Would these corporations not profit
if people were paid double that?
.
EDITORS REPLY:
All the perceived or real injustices in the world are my fault? I
suppose the problems much easier to fix if it were
true.
.
The Dominican Government did not invent the Free Zone concept (they
copied the idea from other countries). There are free zones (or
were in the past at least) in Mexico, Panama, Cayman Islands, Jamaica
and an entire lengthy list too long to mention. The idea behind a
Free Zone was (is) to encourage foreign businesses to relocate in order
to create jobs, and specifically businesses or operations geared
towards exports of their product or service. Every country is in
competition for jobs, investment, trade, etc. and every country tries
to lure business and investment one way or another. The US to
some degree does the same thing by offering cuts in local property
taxes, income taxes, lower utility rates and so on to lure a new Toyota
or other kind of manufacturing plant to a community in the US. Of
course many Americans do not want to talk about that because it
translates into US based jobs. Trade policy and incentives are
ONLY unfair when some other country has a more attractive deal than
yours - am I right? Granted, the American working in the new
foreign owned auto factory in the US earns US$18 an hour, but because
the local town had to give the store away in terms of tax and other
incentives - your residential real estate taxes went up to make up the
difference. Why? Because the new section of the highway
that had to be built or fixed, the off ramp for the factory, and new
utility hookups needed for the factory has to be paid by someone (if
not the factory then the residents of the community). Good deal
or not? Not for me to say, but there is no free lunch, and no
perfect scenario as everything is a trade off.
.
The labor component is a supply and demand commodity just as many other
things are in the market, but is one of many reasons companies elect to
relocate (taxes, utility costs, lawsuits or lack thereof, cost of
employee healthcare and other kinds of benefits, etc.). Each
country has its own level of local wages based upon a number of
factors: local cost of living, local abundance or shortage of available
employees, etc. Using another example, why is it that a telephone
company employee in Italy makes a lower wage than someone doing a
similar job in the US? Why is it that a local competitive wage
for a bi-lingual secretary in Hungary may be a lower amount in
comparison with the wage someone with the same skills and job function
working in Canada or Argentina earns? You claim that foreign (and
Dominican companies who are certainly equally allowed to set up shop in
a free zone) companies should pay higher wages to employees?
Maybe they should, but they are not going to if they can find all they
help they need at a certain wage rate (just as your boss will fire you
and hire someone will more skills and a higher education willing to
work for less to replace you, and that's life whether you or I like it
- AND more likely what will happen if they allow citizens from another
country, such as Mexico, free reign to live and work in the US, but I
digress).
.
If you are an American complaining about lower wages in other countries
in addition to lost American manufacturing (and now white color) jobs -
blame yourself and blame YOUR politicians. It was Bill Clinton
and the Democrats that gave you NAFTA and the WTO (George junior is no
peach either, as he finished off what the other guys started,
especially when it comes to the national debt, so all this is not in
support of one political party versus another). And it was you
the American consumer that has bought products made with lower foreign
labor costs abroad offered for sale in US stores at everyday low prices
(those low prices in reality cost you plenty, which is what you are
starting to realize now in terms of lost jobs, economic pressures on
the middle-class, etc.). There used to be a slogan during the
1970s in the US that said: Buy American, the job you save may be your
own. There is some truth to it, but the American consumer did not
take heed. Instead, they bought lower priced products made in
Honduras, China, Mexico, the Dominican Republic and so on.
Why? Because chances are if those goods were still made in the US
with higher wage and other costs tacked on, American consumers would
start balking at the higher prices. You cannot have it both ways,
but Americans did to some extent for some time because the TRUE rate of
inflation in the US was hidden, at least in terms of consumer
prices. Lower wage and other costs were imported from abroad,
which managed to keep consumer prices lower than that would have been
otherwise had those products continued to be manufactured in the US
with the true inflation rates applied (for labor and employee benefit
costs specifically factored in). And the American consumer had no
choice because the true rate of inflation (and devaluation of the US
Dollar over the last thirty years) has meant it has been harder and
harder to keep up with the so-called middle class lifestyle with the
wages Americans have been earning (average middle class wages have
actually declined after inflation has been factored in). Of
course, those jobs and services that could not be exported have gone
through the roof in terms of domestic costs (medical care costs,
education costs, government payroll and general spending). If you
are an American, you did not loose your manufacturing job because
someone earns a lower wage in another country. You lost your job
because YOU bought those cheaper foreign made goods and also because
your politicians made it more attractive for those American companies
to leave town (via tax incentives or lack of penalties for leaving,
lower or zero import duties via NAFTA and most favored nation trading
status with China). If there were say 50 percent tariffs on
foreign made goods (regardless if made in China, Mexico or where ever),
and assuming this made foreign made products priced the same as
domestically made products, if not made them more expensive than
domestic made goods, the local manufacturing and jobs would still be in
the US (or at least the competition would be focused on quality instead
of price alone).
.
What has been the fallout? There is now DOWNWARD
pressures on US wages not because someone is another country earns less
than you, but rather because tax and other policies allow the jobs to
go abroad (allow and maybe even encourage tax-wise the US outsourcing),
AND the new order of business seems to be lets go beyond outsourcing to
now bring the cheap labor into the United States (see the fairly new
SPP or North America Union initiative). You ask me the question:
Would these corporations not profit if workers were paid more? I
ask you the question: Are you willing to pay US$27 for a package of
Fruit of The Loom underwear if the workers making the product were
earning a US union wage rate (and getting full family health care plus
retirement benefits) regardless of where the stuff was
manufactured? You should understand who is pushing for these
trends and why. You should also understand that you probably
contributed to all this by buying those cheap foreign made products as
well. Granted, one can surely argue workers should earn
more. However, the truth is as well, you the consumer has voted
with your wallet in terms of what you wanted (you wanted lower prices
and you got them, by shipping jobs to lower wage jurisdictions - but
how else honestly did you think the lower prices would come
about?).
.
As for many local Dominicans who have told me, those free zones only
benefit foreign companies who come and manufacture with cheap Dominican
labor. My reply is: OK, but what would you prefer? They do
not come at all? You prefer that all those companies relocate to
China instead so some Chinese worker has the job instead of you?
Maybe the government should kick the free zone companies out, or insist
they pay a minimum wage of US$20 per hour. What will the result
of that be? The businesses and factories will shut down all by
themselves and go to Bangladesh, India, China, wherever anyway.
In fact, CAFTA or not, NAFTA or not, they already are and the arguments
about wages in any country in Latin America a mute point.
Why? Because even with the increased distance and transportation
costs, it is still cheaper for these companies to go to China than to
stay - and China has NO free trade agreement with the US. Go ask
the Mexicans, they are all ticked off because US companies are now
shutting down in Mexico and going to China (regardless of NAFTA).
Interestingly enough, the wages in the free zone have not changed that
much, but the exchange rate has. So, the US Dollar equivalent of
those wages today is certainly lower than when the exchange rate was
RD$18 a few years ago. In addition, IF the US Dollar looses
another 50 percent of its value as the OECD suggests that it should,
wages for US workers will appear to be slave wages as well when
converted to Euros or some other currency that has not lost its
value. Maybe in ten years the Europeans will be complaining about
the slave wages in the US. Who knows?
.
The answer is not to complain about lower wages in another country, and
the fact is there is nothing you can do about it. It is out of
your control. Do you honestly expect the Chinese to increase
wages simply because you do not like the fact that jobs are going
there? Get real. However, what you can do, as an individual
or as a nation, is to understand the dynamics at work and position
yourself accordingly. This is not always easy to do and it
involves a trade off, but making sure there is a well-educated work
force, making sure you have a stable local business and manufacturing
base, making sure you have the best economic policies in place for a
stable currency and stable middle class is the way to address
this. However, in terms of the US, that is not what is
happening. The politicians and with the media as accomplice to
some extent, want you to believe the fault is with some foreign boogey
man (or all the negative issues affecting the American middle class
have to do with Dominicans, Chinese or whomever else is earning a lower
salary). Tax rates have been cut for US domestic corporations,
and are the lowest they have been in decades, yet tax rates for the
average middle class have in reality gone up (if you calculate in the
AMT and now real estate taxes). In addition, government spending
has gone up, not down (the current military action in Iraq is costing
US taxpayers US$5 Million Dollars per HOUR, $120 Million Dollars per
day, $3.6 Billion Dollars per month). In addition, inflation has
been allowed to run in the US as the US Federal Reserve has been
inflating the money supply far faster than the annual GDP growth
rates. You have not seen this inflation translated into consumer
prices just yet because of the lower foreign labor costs, and the
elimination of tariffs - but you will in the first quarter of next year
(prices were kept stable for now, although prices increases for many
things in the US, such as breakfast cereal, will probably be seen in
2007). Raw materials and commodities such as sugar, cocoa,
copper, zinc and so on have run up in price - and why? Because
all these items are traded in the world market in US Dollars and US
Dollars have lost value in world markets due to the over-printing by
the Federal Reserve. Why are they over-printing? To try and stem
off the deflation that is lurking in the horizon. Also, what
better way to manage all this borrowing? You borrow one US Dollar
from China when the Dollar is worth say 100 cents, and then you print
money and pay them back with devalued money worth say 75 cents.
As Moishe from Panama would say - such a deal, but the Chinese and
other Asian nations are not so stupid. In addition, the game plan
seems to be open up the borders to keep pressure on US wages to the low
side, if not bring them down (good for businesses, bad for the
worker). However, we have seen inflation go into the US housing
market, which is apparently deflating at the moment as well and perhaps
those inflated dollars are once again going back into the stock
market. They are trying to inflate their way out of trouble, and
at the same time, try to make sure the inflation does not affect wages
or consumer prices - a dangerous and almost impossible game to win for
sure.
.
In any event, what does all this have to do with wages in the Dominican
Republic? All these things are interconnected, and are part of a
larger global economic schematic. The rubes on the left
(economically speaking) say the answer is to simply increase worker
salaries the world over and that will solve everything. The rubes
on the right say eliminate ALL tariffs and grant preference in terms of
the tax code to corporate citizens over the living and breathing
kind. Both of these policies are wrought with problems and
negative fallout, albeit the ideas presented by the supporters of NAFTA
and open borders are the US multinational companies that are befitting
and will continue to do so. However, if you wipe out the
middle-class in the process, what do you gain? Since the new
response seems to be the middle class heading for the exit, it would
seem that in order to prevent the middle-class from leaving with their
cash, which is something they did not expect or plan for, of course we
have renewed attacks on the co-called tax havens and difficulties in
banking that stem from so-called anti-money laundering
initiatives. In any event, this is not rocket science once you
connect the dots.
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