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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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Dominican Republic Real Estate, Residency Filing, Banking and Interest Rates.
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Economics commentary, inflation, housing, stock markets and investing -
Plus a Whole Lot More !
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Our October 20, 2006 Newsletter Edition
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SANTO DOMINGO REAL ESTATE:
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In an effort to keep clients posted about the local real estate market
in the Dominican Republic, we often highlight new construction projects
in our newsletters to offer some information for comparison.
Since it has been a short while since we offered this kind of
information, we decided to give you a bit of a real estate update for
what is going on in Santo Domingo:
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New 2 and 3 Bedroom Apartments in La Julia (2 and one half bath,
balcony, maid quarters, imported tile throughout, modular Italian
kitchen, pre-installation of A/C). Building has secure
underground parking, remote control entrance gate, two elevators and
full building emergency generator). Prices start at US$128,000.
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New 3 Bedroom Apartments in Paraiso (1,800 square foot apartments plus
3,800 square foot penthouse available - 3 and one half bath, main
bedroom with walk in closet, large living room, Italian Kitchen,
imported European bath, laundry area and maid quarters). Building
offers 2 underground parking spaces per apartment, fully lobby,
intercom system, full building generators and large lobby with
elevators. Prices start at US$158,000
.
New 2 and 3 Bedroom Apartments in Naco (1300 square feet and 1800
square feet, 2 and one half bath, modular kitchen, pre installation of
a/c, 2 elevators, full building generator and 2 parking spaces per
apartment). Starting at US$126,000.
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New Residential Homes - project of 11 houses in Arroyo Hondo ready in
September 2007, 2 levels with 3 bedrooms and 2 plus one half
bath. Prices at U$136,000 with US$6,000 deposit to start and
periodic payments as construction progresses.
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Regarding Beach Front Property:
Joanne Hammond from Coldwell Banker on the North Coast has recently
told us about new Condos - in Cabarete directly on the beach. This is a
new development now selling pre-construction. The one bedroom, 2-bath
start at $116,000 and purchasers can opt into the rental pool, whereby
they agree to use the condo for no more than 9 weeks per year and the
remaining weeks put the condo into the rental pool. The administration
manages the rentals completely and split the revenue with the owners
50-50. They claim to already have a very high occupancy rates for their
other properties, and if the owners take the rental pool option he
waives the $185 per month maintenance fee. Joanne says it is a
great option for investors who don't want the hassle of managing
rentals or the worry of maintenance fees and want an annual return on
their investment. Contact Joanne directly as follows:
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Ms. Joanne Hammond, Email: j.hammondcoldwellbanker@gmail.com
Direct Tel. 809-657-4141
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In summary, for those people who want to tell you that a new home in
the Caribbean is unaffordable, you can have some assurance that such a
commentary is not true. In addition, many of our clients have
sold overpriced real estate in the US and Europe, have taken out the
equity, purchased a new home for CASH in the Dominican Republic (with
NO mortgage), and have invested the remaining left over funds to have a
monthly income coming in. In other words, a decent lifestyle can
be had IF you know how to do it. For more information about our
property search services (for the greater metropolitan area of the
National District - Santo Domingo) please feel free to send an email us
an email: cmaldonado@ascot-advisory.com or telephone as well (809-334-5387).
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IN THE NEWS:
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CHEN CASE SHEDS LIGHT ON CHINA'S MONEY LAUNDERING PROBLEM
By Graham Lees - October 5, 2006
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HONG KONG -- The arrest of the most high-profile public figure in China
in a decade may be a shocking example of endemic corruption in the
world's biggest out-of-control economy, but the question on the lips of
some financial investigators in the West is: Will the trail of Chen
Liangyu's ill-gotten loot lead to the United States? The shadow
economy in China, a combination of embezzlement, bribery, tax avoidance
and underground banking of both legal and illegal money, is huge, and
growing. Much of this money is laundered abroad, mostly via Hong
Kong, say investigators, and there is growing evidence that one of the
favorite eventual destinations is the United States. Despite all
the usual assurances from the private banking industry, even in a
highly regulated environment like the U.S., the post 9/11 Patriot Act
had little effect on the private banking industry.
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http://worldpoliticswatch.com/article.aspx?id=237
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EDITORS NOTES:
You mean to say the United States is one of the favorite places for
corrupt Chinese officials to launder their money, and this goes on
right under the noses of US regulators? Say it isn't so.
Well, I know one thing, many Americans tell me it is a real hassle to
get a savings or checking account opened at many US banks these
days. I wonder how these Chinese guys are able to do it so easily?
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CAYMAN'S WAR ON TAXPAYERS?
Monday, October 2, 2006
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In the wake of a report by Senators Carl Levin and Norm Coleman, the
Cayman Islands in its capacity as an offshore financial centre has come
in for some serious criticisms over the last few months. In the
media in both the US and in Europe, Cayman and other offshore financial
centres have faced harsh criticisms when it comes to the issue of tax
avoidence by citizens of those countries. Not the first report
from America to question the issue of tax havens, Tax Haven Abuses: The
Enablers, The Tools and Secrecy is particularly critical of Cayman and
as some experts have suggested it raises questions about how much
responsibility this country has for other nations' tax laws and
collection issues. The Senator has accused the Cayman Islands and
other offshore havens of facilitating tax evasion that costs other
countries billions of dollars every year and that this country among
other jurisdictions has in effect declared war on honest
taxpayers. The Levin report makes a series of recommendations
aimed at making it harder for US citizens to use offshore
accounts. Mr. Levin's report suggests that tax haven abuses cost
the US taxpayers an estimated $40 to $70 billion dollars each year.
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http://www.caymannetnews.com/
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EDITORS NOTES:
Making it harder for US citizens to open accounts abroad? Tell me
something I do not already know. The question is why? Is it
that all of a sudden there is an exponentially higher percentage of
Americans cheating on taxes, or is it something else (such as the
flight of the middle class along with their money)? The Cayman
Islands and other so-called tax havens have been doing their thing for
DECADES, so why all of a sudden now are these politicians so
concerned? Sounds to me more like the equivalent of bill
collectors trying to make sure someone does not have the chance to file
for bankruptcy before they can collect. In any event, while the
previous complaint against the so-called tax havens was they were
harboring drug dealer funds and other such illicit gains, now the
attack is pointed once again on taxation. It should be noted that
the US is one of the very few countries in the world that claims the
right to tax citizens on worldwide income (at least passive income)
regardless of where the citizen is living or has funds invested.
The British of course have a different perspective and are much fairer
in this regard. In any event, the above US Senator says that the
Cayman Islands have in effect declared war on honest taxpayers. I
would say it is the other way around, and someone should give the good
Senator a mirror (and not the two way
kind).
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On another note, one other tax haven in the news recently is
Belize. S&P notes that Belize, which has a sovereign rating
of CC-, has signaled that it intends to restructure its debt in the
near future, which typically means that it will be in default (so says
Standard and Poors, and reported by Business-Week magazine).
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Source: http://www.businessweek.com/investor/content/oct2006/
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Also from Belize as reported on October 5, 2006 From News 5 in Belize:
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Arrests have yet to be made following the disappearance of one hundred
Belizean passports earlier this month but today the Immigration
Department has recommended the suspension of the two officers being
investigated by police in connection with the theft. According to a
release issued by the Government Press Office, the formal request to
suspend Finance Officer Audrey Bennett and First Class Clerk Jacqueline
Wagner from their duties pending the outcome of the official
investigation has been sent to the Director of the Public Services
Commission. The release goes on to state that the department will also
be making additional recommendations for disciplinary measures. We
understand that since the incident, both women have been placed on
leave. If the Public Services Commission accepts the department's
recommendation, it would mean that they would receive half salary until
the conclusion of the investigation. To date, authorities have only
been able to say that the one hundred blank passports are missing and
that there is no sign of burglary or forced entry. The documents were
reported missing by Bennett after she returned from holiday last week.
She and Wagner were subsequently detained by police for questioning but
never charged. This is the second time in less than fourteen months
that passports have been stolen from the Immigration Department Offices
in Belmopan. Last August, two hundred went missing. Two of those stolen
documents later popped up in Hong Kong but no one has ever been charged
with a crime.
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http://new.channel5belize.com/
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EDITORS NOTES:
While we reported in our last issue about many people seeking out
second citizenships and in turn second passports, we have cautioned
readers time and time again about getting involved with, shall we say,
nebulous programs (and Belize does of course have an official legal
government sanctioned economic citizenship program). Our office
does assist with the residency and naturalized citizenship processes in
the Dominican Republic and Panama. While it may be quicker and
maybe even cheaper to obtain such documents through incorrect channels,
often enough cheap is expensive (and could land you in the pokey as
well). If some person, company or even attorney offers to obtain
documents with an instant name change or without the normal process
(offering a passport via mail order is one tip off in many cases), be
very alert as chances are, it is not the real thing or something is
awry. If you have never broken the law before, now is not the
time to start in your new country of citizenship. In most cases,
going through the normal and legal process is not that daunting or
difficult and in truth not as costly either, all depending upon the
jurisdiction of course.
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WHO WILL PAY THE US DEBT?
By Dr. Abbas Bakhtiar - October 2, 2006
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Some months back, I wrote an article, the Coming Financial Crises, as a
warning to the American people about the US debt, budget and trade
deficit. Since then the situation has continued to worsen and no one
seems willing to address this important issue. It seems that
these astronomical sums worry only a few in the academia for the
politicians, the Wall Street experts and the media constantly talk
about the continuing good times and/or a controlled cooling down of the
economy. This simply doesn't add-up. Who are they fooling and
why? A pertinent question to ask would be why the opposition
party is not informing the public about the economic crisis facing the
US. The simple answer is that the opposition does not want to ruin its
chances of being elected. It is unlikely that voters would cast their
ballot in favor of a candidate or party that is going to increase taxes
and cut social spending. Also the current political system is such that
anyone that goes against the rich and the special interest groups will
not receive the necessary funds for his/her election campaign.
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The working poor families are those families that earn $34,000 per
year. According to a 2005 report by the Urban Institute, over 13
million families including 26.5 million children are living at the edge
of the poverty (median income = $38,000). According to this study many
children today are growing up in families with low incomes and with a
parent working a substantial amount. There is no agreed upon
definition of middle class. Some such as the Washington Post consider
those that earn from $40,000 to $90,000 belong to the middle class,
while others consider any family that has an income of $20,000 to
$90,000 as middle class. Here, since we use the Congressional Budget
Office's quintile system, we combine the middle and fourth quintile to
define our middle class group. Then according to this classification a
middle class family is a family whose income is between $51,900 and
$77,300 per year. The middle class is considered the backbone of
the consumer society. Their health and wealth is extremely important to
the economy. They tend to be better educated than the lower quintiles,
healthier and more politically engaged. Their size and economic health
determines the prosperity of the nation. When one looks at the
income of a middle class family one would expect that at least this
group would be in a good financial position. But all the reports point
to the contrary. The middle class is squeezed from all sides. The
costs of housing, healthcare, transportation and education for the
kids, have skyrocketed; making it exceedingly difficult to make ends
meet.
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Do the middle class families face more hardship now that they did before?
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According to Harvard Law School Professor Elizabeth Warren they do. She
says: more and more families today are sending both parents into the
workforce -- it has become the norm, it is what we now expect. The
overwhelming majority of us do it because we think it will make our
families more secure. But that's not how things have worked out. By the
end of this decade, one in seven families with children will go
bankrupt. Having a child is now the single best predictor of
bankruptcy, and this holds true even for families with two
incomes. So we looked at the data for two-income families today
earning an average income. What we found was that, while those families
certainly make more money than a one-income family did a generation
ago, by the time they pay for the basics -- an average home, a health
insurance policy, a second car to get Mom to work, child care, and
taxes -- that family actually has less money left over at the end of
the month to show for it. We tend to assume with two incomes you're
doubly secure. But if you count on every penny of both of those
incomes, which most families today do, then you're in big trouble if
either income goes away. And obviously, if you have two people in the
workforce, you have double the chance that someone will get laid off,
or double the chance that someone could get too sick to work. When that
happens, two-income families really get into trouble, and that's how a
lot of families quickly go bankrupt. This group (i.e. the middle
class) will be the one that will be the hardest hit of all groups. They
will see their disposable income reduced substantially. On one side
they will have to pay higher taxes, while they have to pay more for
government services that were previously either free or subsidized.
Many will have difficulty paying their debts (mortgages, etc) and will
have to reduce their living standard substantially to stay solvent.
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http://www.dissidentvoice.org/Oct06/Bakhtiar02.htm
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FEELING LOW IN THE MIDDLE CLASS
By Kelly Bennett, Voice Staff Writer - Wednesday, Oct. 4, 2006
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John Middleton never thought it would be like this. He and his wife
make about $70,000 combined each year -- placing them squarely in the
middle class. But he said they live like the working poor in San Diego.
Until his father died recently, leaving them some money, Middleton said
he used to have to use the services of the Money Tree to float his
bills each month. Middleton grew up in a poor family in Paradise
Hills. He took out sizable college loans to finance his education in
hopes that a degree might boost his earning power. Now an English
teacher at University City High School, Middleton and his wife, who
works in the deli at Henry's Farmers Market, rent an apartment in
Mission Hills. That cuts their gas bills since both of their jobs are
nearby. And buying a home is out of the question.
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http://www.voiceofsandiego.org/articles/2006/10/04/housing/
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EDITORS NOTES:
Funny how the US Tax Authorities think an income of US$70,000 is an
amount that should be subject to higher tax rates, yet in reality, you
are probably just about getting by on it. And according to some
recent statistics - The average American family has $3,800 in cash in
the bank, no retirement account whatsoever, owes $90,000 on their
mortgage and owes $2,200 in credit card debt leaving a grand net worth
total of US$1,600 (after subtracting credit card debt from savings and
assuming like many new homeowners today, there is probably no equity in
the house either, especially if purchased with a no money down,
floating rate interest only mortgage).
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AFTER YEARS OF GROWTH, WHAT ABOUT WORKERS' SHARE?
By Eduardo Porter, New York Times - October 15, 2006
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JOB growth is starting to slow, and wages are barely keeping up with
inflation. Five years into a relatively robust economic expansion, it's
understandable that many American workers feel that they are not
getting their fair share of the pie. In fact, the share of the
economy devoted to workers' wages and benefits has eroded in the United
States over the last five years. But if it's any consolation, the trend
for workers in other rich industrial nations isn't much better.
The portion of the economy going to the workers in wages and benefits
is perhaps the broadest measure of the workers' share of economic
growth. The numbers are based on how many workers are employed and how
much they are paid for their toil. In the United States, this
economic slice, including wages, health insurance and pension benefits,
declined 2.5 percentage points from 2000 to 2005, to 56.5 percent of
gross domestic product, according to the United States Bureau of
Economic Analysis. Workers in some countries have lost even more.
According to data from the Organization for Economic Cooperation and
Development, the forum of industrialized countries, the workers' share
of gross domestic product in Germany fell 3.1 percentage points over
the last half-decade. In Japan, the decline was 3 points. Over
all, the workers' share of the economy fell in 4 of the Group of 7
industrialized nations. The recent declines are hardly atypical.
While there have been some periods when the workers' share has risen,
the overall trend since the 1970's has been downward in most
industrialized countries. For workers, perhaps the most important
question is, how long will the slide continue? To begin with,
consider changes in the composition of the American economy. In 1975,
manufacturing accounted for 28 percent of output, while finance
accounted for 18 percent, according to an analysis by the Organization
for Economic Cooperation and Development. By 1995, the relative
importance of these sectors had flipped -- with finance accounting for
27 percent and manufacturing for 22 percent. This shift took a
chunk out of the workers' share because banks and other financial
companies use fewer workers than manufacturers to do what they do, and
they don't pay their workers proportionally more. And well-known
forces continue to whittle away at the workers' share. Cheap imports
from China and cheap call centers in India have increased the
competition for jobs. New technologies have also replaced many
middle-income workers. And immigration is on the rise in much of the
industrial world.
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In the United States, where labor unions have lost much of their
bargaining power and few workplace regulations limit employers'
decisions, companies have had an easier time reducing real wages. In
the last year, wages have risen only enough to keep pace with
inflation. In real terms, the wages of non-management employees in the
United States are now 10 percent below their level in the early 1970's,
according to Labor Department statistics. In Western Europe,
collective bargaining has been more successful in keeping wages up.
These differences affect the distribution of the workers' share.
America's low-wage labor market is virtually nonexistent in the
European Union. There is no Western European equivalent of the American
earning $5.15 an hour, the federal minimum wage, on the overnight shift
as a convenience store cashier. A $7-an-hour baby-sitter is nearly
impossible to find in London. Over all, the wage distribution in Europe
is much less polarized than it is in the United States. If
historical experience in the United States serves as any guide,
workers' compensation could still fall a long way. It was a different
world then, but it is worth noting that in 1929, workers had less than
half of the economic pie.
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http://www.nytimes.com/2006/10/15/business/yourmoney/
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EDITORS NOTES:
Why are there constant references to the Great Depression Era of the
1930s in many economics related news articles these days? Do the
economists see many demographic and economic statistic
similarities? In any event, the truth is that the statistics are
there and indicate a number of unfavorable long-term trends. One
of course is falling wages and another lost jobs all together.
Aside from that, the economic mix has shifted from a manufacturing -
export driven economy to a service industry - net import kind of
economy. Over the long haul, when you import more than you
export, in reality, the economic wealth of the nation is flowing out,
which leads to other kinds of issues as well. The only modern
industrialized nation that still exports more than it imports, is
Australia (and the only modern industrialized nation that actually
sells more to China than they buy).
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HAS THE WORLD BANK LOST CONTROL?
By Adam Lerrick - Monday, September 11, 2006
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The World Bank is in big trouble. Major middle-income countries, the
cream of the Bank's portfolio, are curbing their borrowing and paying
down their balances, setting off alarms at the Bank. Net loan flows
have shifted $30 billion over the last seven years, from positive to
negative. Instead of drawing a net $14 billion from the Bank in
1999-2002, these nations repaid a total of $15 billion in 2003-2005.
The cause is clear: The interest subsidy embedded in Bank loans, a
compelling 12 percent per annum on average in 1999, has now shrunk to
less than 2 percent as emerging nations have gained increasingly
greater access to private capital. The difference is no longer enough
to persuade finance ministers to realign their economic priorities with
the social agendas of the Bank's rich members.
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http://www.aei.org/publications/
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EDITORS NOTES:
So, the current President of the World Bank, Paul Wolfowitz, is
concerned that all these poor third world nations are paying off their
debts and are getting out from under the yoke and this is setting off
alarms (to quote from the article). I always thought it was a
good thing when people paid off their debts and in turn got themselves
out of financial trouble? Can we say then that as the US
Government goes ever deeper into debt, at the same time the Third World
is actually digging its way out?
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NAFTA HIGHWAY OR NEW SILK ROAD?
By William Hawkins - September 24, 2006
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On Sept. 7, the Security and Prosperity Partnership of North America
(SPP), a government office established in March to increase cooperation
between the United States, Canada and Mexico, released a progress
report. Among its achievements was creation of an American
Competitiveness Council to enhance North America's posture in the
struggle for hotly contested global markets. Unfortunately, major
events are already unfolding that will undermine this belated attempt
to respond to ambitious rivals who have been piling up ever-higher
trade surpluses at the expense of American-based enterprises. A
flurry of articles over the summer painted the SPP as a step toward a
North American Union that would submerge national sovereignty and open
the U.S. to mass migration and political corruption. Human Events
launched the story from the right, but it spread across the spectrum to
the Daily Kos on the left. One focus of the articles was a
planned corridor of highways and railroads from Mexico into the
American Midwest dubbed the NAFTA Highway. Some of the stories
sought to revisit the debate over the North American Free Trade
Agreement, but what is really behind this transportation network
heralds the collapse of NAFTA and its dream of a stronger continental
economy. NAFTA was supposed to combine cheap Mexican labor with U.S.
capital and technology to improve competition with Asian rivals. C.
Fred Bergsten and Jeffrey Schott, of the Institute for International
Economics, testified to Congress in 1997: We wanted to shift imports
from other countries to Mexico -- since our imports from Mexico include
more U.S. content and because Mexico spends much more of its export
earnings on imports from the United States than do, say, the East Asian
countries. Imports from Mexico grew rapidly in the 1990s on this model,
but that is not what drives activity now. Today, the massive wave of
imports from Asia is clogging West Coast ports and sending shippers and
retailers searching for new routes to bring even more foreign products
into the United States. Container ship traffic from China is growing by
15 percent a year. Between 2003 and 2005, annual imports from China
rose by $92.2 billion, and from other parts of Asia by $41.0
billion. The final terminus of the planned transport network is
the Kansas City, Mo., Smart-Port. Its Web site proclaims, The idea of
receiving containers nonstop from the Far East by way of Mexico may
sound unlikely, but that seemingly far-fetched notion will become a
reality. The Chinese firm Hutchison Whampoa has partnered with
Wal-Mart in a $300 million expansion of Lazaro Cardenas to handle
perhaps 2 million containers annually by the end of the decade. The
American Chamber of Commerce in Guangdong, China, has held seminars
promoting this Mexican port. Punta Colonet, about 150 miles south of
Tijuana, is also eyed for expansion to offload millions of additional
containers filled with Asian imports. Kansas City Southern railway has
bought the Mexican rail links and the State of Texas is negotiating
with a Spanish firm to build a corridor of toll roads from the border
heading north. While American-based manufacturers will continue
to suffer under the barrage of Chinese goods, Mexican industry will be
smashed flat by what should be called a new Silk Road rather than a
NAFTA highway. The economic development goals of NAFTA are being
abandoned.
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More than 600 of the maquiladoras assembly plants along the
U.S.-Mexican border have relocated to China, leaving their Mexican
workers behind. There is little chance for Mexican wages to rise if at
$1.50 an hour they can be undercut by Chinese labor at 50 cents an
hour. NAFTA was to be a way to lift Mexicans out of poverty and stem
illegal immigration to America. A similar argument was made last year
about the Central America Free Trade Agreement (CAFTA). As South
Carolina Republican Rep. Bob Inglis said during that floor debate, I
stand here convinced that it is the best strategy available to combine
with our neighbors to the south to compete with the Chinese. The new
transport plans make a mockery of these arguments, as they are aimed
purely at helping China improve its competitive advantage over all
North and Central American rivals. What is being built is truly a
Highway of Death for both NAFTA and CAFTA. The resulting regional
turmoil will be felt in the United States.
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http://washingtontimes.com/commentary/20060923-084008-4624r.htm
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EDITORS NOTES:
My grandfather used to say, there are two sides to every story and
somewhere in the middle is the truth. Well, there is the truth
(and in the case of politicians, the truth does indeed seem to come in
many different shades) and then there is everything else. Make no
mistake about it. All this has nothing to do with helping the
overall US economy or individual citizenry, poor downtrodden Mexicans
or little green men from Mars either. This is about helping
larger retailers unload even more stuff from China quicker and cheaper,
using Mexican dockworkers and Mexican Truck Drivers (who earn about
US$1,000 per month - notably much less than unionized Teamsters in the
US who are perturbed to say the least). Good for them if that is
what they want to do, but there is a fallout and downside to all
this. The above news article says: The resulting regional turmoil
will be felt in the United States. You better believe it, both
economically and socially as income gaps become wider and wider.
These free trade agreements were supposed to make poor Third World
nations with large disparities in income look more like the US in terms
of PREVIOUS middle-class income demographics. Instead, it has
made the US look more like the Third World nations, at least for many
average citizens (large multinational corporations are doing quite well
in terms of cost reduction for labor and higher profit margins - for
now). Allowing the middle class to go broke means the customers
eventually will be tapped out, and you have to try and sell to someone
that still does have money to spend. Ergo, those very same free
trade agreements and why many major US conglomerates want unfettered
access to the Third World (as the Third World is not as broke anymore
as you are lead to believe and the middle class is growing rather than
receding in many of those markets).
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A HITCH IN GLOBALIZATION OF HEALTH CARE
By Saritha Rai, New York Times - October 11, 2006
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BANGALORE, India A few weeks ago, Carl Garrett, a 60-year-old North
Carolina resident, was packing his bags to fly to New Delhi and check
into the plush Indraprastha Apollo Hospital to have his gall bladder
removed and the painful muscles in his left shoulder operated on.
Garrett was to be a test case, the first company-sponsored worker in
the United States to receive medical treatment in low-cost India.
But instead of making the 20-hour flight, Garrett was grounded by a
stormy debate between his employer, who saw the benefits of using the
less expensive hospitals in India, and his union, which raised
questions about the quality of health care overseas and the issue of
medical liability should anything go wrong. I was looking forward
to the adventure of being treated in India, Garrett said the other day.
But my company dropped the ball.
.
Garrett, who works for Blue Ridge Paper Products in Canton, North
Carolina, had volunteered to get his treatments in India in return for
a share in the company's savings. Blue Ridge now says it will find
Garrett a treatment alternative in the United States and offer the
overseas health care option only to its salaried employees. Indus
Health, the health care service provider in North Carolina that would
have chosen the hospital, arranged the trip and paid for Garrett's
treatment in India, acknowledged that its plan to send Blue Ridge
workers to India was on hold but said it was exploring deals with other
companies. The union's resistance highlights a critical hurdle in
the globalization of the health care industry: Who is liable if
something goes wrong in a distant Indian hospital?
Underlying the debate is the even more explosive issue of potential job
losses in health care in a country already sensitive to the large-scale
shift of white-collar service jobs to cheaper overseas locations.
Even as the debate continues about insurers' role in health care
outsourcing, hundreds of uninsured and underinsured Americans have
already gone on their own to India for treatments. With medical
costs in India routinely 80 percent lower than in the United States,
experts predict that globally standardized health care delivered in
countries like India and Thailand will eventually change the face of
the health care business.
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http://www.iht.com/articles/2006/10/11/business/health.php
.
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OVERSEAS RETIREMENT: ADD UP COSTS
October 8, 2006 - By Janet Kidd Stewart
.
Live better for less in Thailand! Retire to Costa Rica! Breeze
through magazines aimed at retirees, and you'll find headlines just
like these, urging regular folks, not just the very wealthy, to
consider foreign residences. The allure is clear: lower living costs
and warm climates. And as baby boomers retire with more foreign travel
experience under their belt, they already may have acquired assets,
homes or even spouses overseas. But all that globetrotting can
come with a steep price when retirees factor in the reality of the U.S.
tax system, currency differences and estate challenges, experts
say. For many people, the appeal of international assets means
much more than simply stashing 20 percent of a retirement portfolio in
foreign stocks, said Edmond Walters, chief executive of eMoney Advisor
Inc., a unit of Commerce Bancorp that offers online planning tools for
investors and advisers. A lot of executives today have relocated
overseas, and they're falling in love with places outside of the U.S.
and considering them as places to retire, said Walters, whose company
offers planning software to advisers that tracks assets in multiple
currencies. And it's not just ultra-wealthy executives.
Retired foreign service worker Barbara Bevell Jacquin, 67, grew up in
Virginia, but lives in France to be closer to her two adult sons from a
marriage there that ended in divorce. She spent the bulk of her
career in Europe, retiring as a diplomatic courier in Frankfurt,
Germany. Now she has U.S. Social Security and pension income,
French alimony and property, and is considering part-time work.
Jacquin wouldn't trade her expatriate lifestyle, but admits it makes
for a confusing array of retirement challenges, from tax planning to
health care issues. There's really no magic solution except to
plan ahead she said, noting, for example, that some countries have
lengthy residency requirements to get into the health care system.
.
http://www.courant.com/business/
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EDITORS NOTES:
Well, as the above healthcare article indicates and this one as well,
many people are indeed realizing life can be less expensive and a
higher quality of life, more attainable abroad. And indeed as the
article says: it's not just ultra-wealthy executives. However,
there is a backlash as America's middle-class choose to say good luck
and good night, with themselves and their money in tow. The
result of this is the agenda of noble US Senators Carl Levin and Norm
Coleman who now make a series of recommendations aimed at making it
harder for US citizens to use offshore accounts. And they also
have accused the Cayman Islands and other offshore havens of
facilitating tax evasion. However, the flip side is the comment
from the news article directly above is: all that globetrotting can
come with a steep price when retirees factor in the reality of the U.S.
tax system. US tax system indeed, as the US is one of the very
few nations that claim the right to tax its citizens regardless of
where in the world they may be living, which is exactly why some people
simply do not tell them where they are living once they have left, or
some might decide to renounce US citizenship altogether (of course the
reply from the IRS is, if they think your are renouncing for tax
benefits, then they claim the right to tax you for the next twenty
years anyway. Yeah, sure - just like you would have a few things
to say if you switched long distance phone carriers and your old one
said they are going to continue billing you no matter what, because you
left them for someone cheaper). All I can say is -
Unbelievable. If you renounce citizenship, and they think you are
doing so for tax benefits, they still want to chase you for taxes AFTER
you are no longer a citizen. If you die, they want to tax your
estate. Even the Mafia lets you get out at death.
.
In any event, there is an undeclared war going on and part of the
problem is that many middle class people have finally figured it
out. Which is to say, they have concluded, if Halliburton can set
up an offshore company for tax savings, they why cannot they? If
Stanley Works can legally re-domicile the company in Bermuda for tax
and lower cost benefits, then why not apply for residency or even
citizenship in another country, which is in essence the same
thing. From my perspective, it would seem so-called corporate
citizens can do what they wish, but God forbid the middle-class should
figure it out and do the same thing (for the same benefits). All
of this is hypocrisy and a very real double standard to say the
least. Regardless, the expatriation movement of the middle-class
is very real, and it would seem the bureaucrats have taken
notice.
.
.
READERS WRITE IN:
.
Just thought that I found your website quite useful. I was doing some
research to find out the difference between civil and common law
systems and after having read through a number of books found your
website to be the most useful. The examples were great and made it
easier to understand the point. Good work.
.
EDITORS REPLY:
Thank you for the positive comments. I do not want to say that
one form of legal system is completely better than the other in all
things, but it is also true in terms of common law jurisdictions
(United States, Bahamas, any country that was a former colony of the
UK) that laws have been changed by judicial interpretations rather than
by the elected legislature. Meaning, a Judge today rules
differently than a Judge reviewing the same item 50 years ago and voila
- the law is changed in essence. We can see this with the recent
Supreme Court interpretations regarding the Bill of Rights and various
constitutional amendments. Which is to say, they have ruled the
confiscation of your assets WITHOUT trial or legal due process FIRST
does not constitute a violation because supposedly (they claim) such
protections are only afforded to persons and not to what the person
owns. But lets face facts. If they seize your home and put
you on the street, and seize or freeze all of your bank accounts and
other assets, how are you going to have access to your money to defend
yourself? There are many cases and circumstances like this,
Judges rule or decide that today in 2006 such and such a law means
something completely different than it did in 1952. Who says so
and why? A few hundred democratically elected officials
pass a law and one man (or woman) on a bench says it really means
something else (or attempts to rationalize and interpret what 200
elected officials intended). This is one main difference from a
nation with Civil Law versus Common Law systems (in the Civil Law
jurisdiction, there is less room if any for interpretation and laws
must be changed by the elected legislature - period).
.
.
ANOTHER READER WRITES (in reference to the last newsletter issue):
.
This was a very informative newsletter. Would you please copy me to
your info on what you can do for clients in Panama. It is time
for me to leave this country (United States).
.
EDITORS REPLY:
Well, first off, let me say you are not alone. I have said many
times before, you can spend your time and your money fighting, arguing,
calling in to radio talk show programs, writing letters to politicians
and maybe even manning picket lines somewhere. OR you can pack
your bags, tell them to have a nice day, and move someplace where
housing is affordable, cost of living in affordable, higher university
education for your children is affordable - and whereby the future
might be, shall we say, more tenable. In the least, if you can
take out whatever equity or liquid assets that you have right now
(while you can), and purchase a home for cash, with perhaps the rest in
the bank or some sort of tax-free income producing investment, then you
are ahead of the game and can survive. It has been noted in one
of the article links below that Europeans describe the American
practice of spending home equity as burning their furniture to heat
their homes. Also stated is that a new class of poverty is
soon to arrive on the scene: the bankrupt homeowner. Reports of
negative home equity are rampant and growing, without the mindful alarm.
.
Sources (and articles you may wish to read):
.
http://news.goldseek.com/GoldenJackass/1160065579.php
.
http://www.counterpunch.org/roberts09302006.html
.
In any event, some would argue you can find cheaper housing by simply
moving from New England to say Montana or South Dakota, and that may be
quite true. However, doing so does not remove you from a country
with declining wages, declining job prospects, higher real estate
taxes, mounting national debt problems, a possible initiative to open
up the borders, etcetera and so on. While relocating to
another country is a big step and may require some adjustments, on the
same token it is probably no different than what your Grand Parents or
Great Grand-Parents had done. Meaning, they relocated to the US
with idea and hope for a better life, better economic opportunity and
so on. Ironically, that is exactly what many middle-class
Americans are doing today as well, albeit they are going in the other
direction (they are leaving the US). And in truth, not to focus
solely on the US, the middle-class in Europe is doing the same
thing. In this regard many of our clients have indeed chosen to
move to the Dominican Republic or Panama, and our office in the DR and
Panama does assist clients with residency application and
naturalization filing (second citizenship and second passport),
incorporation services, banking and investment assistance and real
estate related services (title transfer, etc.). For more
information, visit our website and complete our on-line reply form.
.
.
ANOTHER READER WRITES:
.
John - Hope you are well, enjoy your newsletters. I have read
something lately that made me think of your writing. I am currently in
China staying in a five star hotel in Beijing and I happened to start
speaking to a hotel staff member there. She was asking about
wages in America and when I said that for her job she could make $300
USD per week her reply was "that is all?" I asked if that was not
good, and said only so-so. So, American companies now need help
to get access to Chinese markets and the Chinese workers are look down
at American wages. What a difference 5 years can make in the
world!
.
EDITORS REPLY:
So Chinese workers are commenting about the very low US wages?
Welcome to the effects of globalization and the new world economic
power is now of course China (as if this is a surprise).
Ironically enough, some statistics indicate that US workers have not
had a wage increase since 1972, when average earnings were $334.60 a
week. Today, that amount is roughly $277.96 when you factor in
inflation. Business Week's Michael Mandel compared starting salaries in
2005 with those in 2001 for the US. He found a 12.7 per cent decline in
computer science pay, a 12 per cent decline in computer engineering
pay, and a 10.2 per cent decline in electrical engineering pay.
Marketing salaries experienced a 6.5 per cent decline, and business
administration salaries fell 5.7 per cent. While it is true that
there are many factory workers in China that earn exceptionally low
wages in comparison to G-7 nation counterparts, some statistics
indicate that Chinese wages are catching up to US levels, while the
productivity of the country's manufacturing workers is 14 per cent of
their US equivalents (arguably these figures might be a composite that
do not clearly examine specific jobs, and also offer so-called
productivity returns massaged into the equation).
.
Regardless though, China is certainly producing more new Millionaires
per capita annually than any other country on the planet. David
O'Sullivan, Trade Director-General of the EU Commission, says: China is
still a developing country, but once it reaches a critical mass of an
affluent middle class people who start consuming. Personally I
think China has already started to demonstrate that it has a very
sizable middle class right now. As General Motors announced it
will be laying off (firing, if you prefer) 75,000 US based workers due
to poor sales and lost market share in the US, it also announced sales
from its Chinese Joint Venture operation inside of China is up more
than 102 Percent over last year. In addition, sales of new homes
in new suburban housing sub-divisions outside of cities such as
Shanghai are booming. Poor people do not buy new cars or new
homes, and 100 percent sales growth does not happen in a poor country
whereby consumers are strapped and tapped out. Politicians may
tell you all kinds of tall tales, but the reality is, things might just
be a bit better for the average middle class citizen in China - in
comparison to his or her counterpart in the US these days. So,
the comment from the hotel worker does not really surprise
me.
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