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Dominican Republic
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Our December 31, 2008 Newsletter
Edition
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DOMINICAN
REPUBLIC REAL ESTATE:
.
Many
of our clients have been asking about the real estate situation in the
Dominican Republic, and the following is a short list of properties
currently on the market, almost all of which are new construction.
.
In Juan Dolio (directly on the
beach) - New Construction consisting of 2 bedroom, 2 bath, 1,000 square
foot condominium with swimming pool and jacuzzi facing the beach for
residents. Terrace in each condominium facing the ocean, modular
kitchen. US$180,000
.
In Juan Dolio - New Construction of
private villas in closed community, 3 bedrooms, 3 baths, private
terrace with jacuzzi, starting at US$175,000.
.
In Arroyo Hondo section of Santo Domingo
- One bedroom, one bath condominium apartment with balcony and off
street parking for one vehicle. US$35,000
.
In Evaristo Morales section of Santo Domingo
- New 2 and 3 bedroom condominium apartments with 1150 and 1350 square
feet of living space. Amenties include: two and half bath,
balcony, pre-instalation for A/C, imported Spanish tile
throughout. Building comes with elevator and common gas for
residents, off the street parking for two vehicles per apartment,
emergency generator for building. Starting at US$147,000.
.
In La Julia section of Santo Domingo
- New 2 and 3 bedroom condominium apartments with ocean view, 1200 and
1400 square feet. Each with balcony, 2 off the street private
parking spaces for each unit. Starting at US$165,000
.
In Gascue section of Santo Domingo -
New Construction, 1200 square foot 2 bedroom condominium apartments and
1500 square foot 3 bedroom condominium apartments. Amenties
include: Ocean View, balconey, 2 offstreet parking spaces per unit,
swimming pool, childrens play area, elevator, intercom, common gas,
emergency geneator. Starting at US$145,000
.
.
IN
THE NEWS:
.
.
UN SAYS CARIBBEAN ECONOMIC GROWTH TO SLOW
TO 1.9% IN 2009 FROM 4.6% IN 2008. December 30, 2008
.
Economic
growth in Latin America and the Caribbean will fall next year to 1.9
percent from its estimated level of 4.6 percent for 2008, the U.N.
Economic Commission for Latin America and the Caribbean said
Thursday. Almost all the region's countries gave priority to
macroeconomic equilibrium and generated budget surpluses, Alicia
Barcena, the ECLAC executive secretary, emphasized upon presenting the
document. Barcena said that today
the region is better prepared to confront the global economic slowdown,
but it is certainly not immune to it.
.
Looking
at individual countries, this year it was Uruguay that led the region's
growth with a rate of 11.5 percent, followed by Peru at 9.4 percent;
Panama, 9.2 percent; Argentina, with growth of 6.8 percent; and
Ecuador, 6.5 percent. Brazil grew this year at 5.9 percent, one
tenth of a percent more than Bolivia, whereas Paraguay grew at 5.0
percent; Venezuela, 4.8 percent; the Dominican Republic, 4.5 percent;
Cuba, 4.3 percent; Chile, 3.8 percent; and Honduras, 3.8 percent.
.
http://www.laht.com/
.
EDITORS NOTES:
If you recall, we have talked about this before. With the US
looking at a contraction of minus 6 percent in 2009, a positive GDP
growth of 2 percent in Latin America does not look that bad.
Again, part of the reason has to do with lending practices of the banks
in many of these other countries (zero money down mortgages and
so-called Liar loans did not exist), and part has to do with the lack
of excessive personal debt encumbering the local populations. In
terms of the Dominican Republic, while it could be the case that
activity in the real estate market slows down (we are talking about the
true local market, by the way, and not these inflated multi-million
dollar properties marketed to foreigners in the tourist areas), we do
not see any drops in real estate values. Why? Simply
because many Dominicans own their own homes for cash (priority number
one for a Dominican is to pay off the mortgage, and not use their home
as an ATM), and or they have perhaps 40 percent or more invested in
their homes as a down payment. In any event, we can see some
similarities in Europe as well (minus the UK of course, which copied
the American plan of borrow until bankruptcy), whereby even though a
recession is looming, the average citizen is not necessarily drowning
in credit card debt or mortgage debt. As the US and UK now embark
upon Zimbabwe like economics, other countries certainly should be
arguably better off, based on the fundamentals.
.
.
EXPATRIATES
FEEL THE EURO'S PINCH
By
Jenn Abelson - December 29, 2008
.
Francesca
DeMeo moved to Paris from Massachusetts last year with visions of
glamour and adventure. She would travel Europe, entertain friends at
her posh apartment, study at the world-renowned Paris Observatory, and
indulge her gastronomic fantasies. But the euro, which turns 10
years old on Jan. 1, has laid waste to DeMeo's dreams as well as those
of Americans across the continent. They weren't counting on the demise
of the dollar against the euro, which is now worth $1.40. That
represents a roughly 50 percent drop in the dollar's value since
2000. As a result, Americans living in Europe, who were already
struggling to make ends meet, are finding it even more difficult as the
value of their US savings plummets and Europe grapples with economic
turmoil of its own.
.
Students
and expatriates have had to adjust their lifestyles; businesses that
employ Americans in Europe have been forced to pay more dollars to keep
up; and US retailers with European outlets have scaled back operations
and sustained losses. DeMeo, a 24-year-old Fulbright scholar, has
moved out of her apartment and into an inexpensive dormitory room half
the size. She buys food at cheap outdoor markets instead of chic
charcuterie shops. With a limited stipend to live on, she spends her
free time tutoring French students in English and baby-sitting for
extra pocket money in euros, rather than traveling freely around
France, Italy, and Spain. I avoid at all costs using my dollars
from my American bank account, DeMeo said.
.
http://www.boston.com/
.
EDITORS NOTES:
If they keep running up the national debt and expanding the money
supply the way they have been doing, many people will long for the good
old days, when the US Dollar was only down or devalued by 50 percent
versus the Euro. Ms. Francesa Demeo, the young lady mentioned in
the above article, says that: I avoid at all costs using my
dollars from my American bank account. A smarter move would have
been to convert her dollars to Euros (or something else), before it
continues to loose even more of its value. The latest statistics
we have looked at suggest that the US Federal Reserve has been
exploding the monetary base at an annual rate of 75%. They just
don't seem to care anymore, as desperation overtakes common
sense.
.
.
DOLLAR'S
AUTUMN RALLY PROVES SHORT-LIVED
By
Carter Dougherty and David Jolly - December 17, 2008
.
The
dollar, which rallied from historic lows in the summer, is firmly back
on a downward trajectory as the world digests the implications of a
brutal recession in the United States. While financial markets
around the world were convulsing after the bankruptcy of Lehman
Brothers on Sept. 15, the dollar rallied as dollar-based investors,
including hedge funds, liquidated assets and returned the money to the
United States. That forced the dollar sharply up, and seemed to
highlight its role as a safe store of value even in times of crisis.
But the Federal Reserve's blunt admission this week that it need to
virtually eliminate short-term interest rates and resort to
unprecedented tactics to hammer down borrowing costs at longer
maturities took the shine off the dollar. There's a reason behind
the fact that the Fed had to go this low, said Franz Wenzel, deputy
director of investment strategy at AXA Investment Managers in
Paris. The U.S. economy is in deep trouble.
.
http://www.iht.com/articles/2008/12/17/business/euro.php
.
EDITORS NOTES:
Mr. Anthony Faiola of the Wasington Post reports on December 18, in an article titled, Dollar's Slump Erases Months Of Solid Gains,
that: The dollar yesterday staged one of its biggest one-day drops
against the euro and fell to a 13-year low against the Japanese yen as
near-zero interest rates and the Federal Reserve's
plan to print vast sums of cash DILUTE THE VALUE of the greenback.
.
While
that policy may ultimately aid an economic recovery, it is robbing the
dollar of value as investors anticipate less interest on their
dollar-denominated investments and more bills in circulation, making
each one worth a bit less. In response, investors are dumping the
dollar and buying up other currencies. If the dollar's fall is
unchecked, it could jeopardize the long-term faith of foreign investors
in the value of the American currency and could cause foreign investors
to dump U.S. stocks and other assets, whose value would be worth less
in euros or yen (end of quote).
.
(Editor) The dollar gained in
strength versus some other currencies previously, but not because the
US economy is on the mend and investors thought greenbacks are the way
to go in terms of economic fundamentals. Rather, some investors,
both individual and institutional alike, decided there was no other
good options at the moment and dumped all the money into US Dollars,
and T-Bills paying zero percent interest. What will happen if
these investors all of a sudden decide that holding US Dollars, or
dollar denominated bonds is no longer the best option? Case in
point is the following December 17,
2008 news item from AFP:
.
CHINA SAYS LENDING TO US WILL NOT GO ON
FOREVER. China warned Wednesday it would not keep lending
money to the US economy indefinitely, even as new data showed it had
consolidated its position as the top buyer of American government
bonds. China's increased purchase of US Treasury securities
should not be interpreted as an endorsement of the assumption that the
US can borrow its way out of the current financial crisis, the China
Daily said in an editorial. The warning from the state-run
newspaper, an English-language daily that mainly addresses a foreign
audience, came after the US Treasury Department reported a steep
increase in Chinese holding of US Treasury bonds. The China Daily
said that, given the global economic crisis , the consequences would be
serious if China and other nations stopped channeling money into the US
economy. Interest rates in the US would rise to undermine that
government's efforts to bailout distressed financial institutions and
companies, it said (end of quote).
.
In
regards to the activities of the US Treasury and Federal Reserve, Mr.
J.S. Kim wrote an article dated December
15th which was titled - Is The
Great Depression the U.S. Treasury's Playbook for the Current Crisis?
Mr. Kim offers the following very poignant commentary:
.
Paulson
defended his actions by stating: There is no playbook for responding to
turmoil we have never faced. We adjusted our strategy to reflect the
facts of a severe market crisis. In fact, there is such a
playbook. Consider the plan of the Federal Reserve in response to the
1929 US stock market crash that ushered in the beginning of the Great
Depression. During the Great Depression, though thousands of
small US banks failed, some of the largest banking institutions like JP
Morgan thrived. In 1930, the Federal Reserve Board and the 12 Federal
Reserve banks advanced some of the largest US banks $13,022,782,000 to
re-capitalize their balance sheets and to offset the losses that they
suffered through speculation on risky assets (Source: US Congressional
archives, US Congressman Louis McFadden). In a scathing speech made on
the floor of the US Congress that addressed this behavior, Congressman
McFadden stated, When the swindle began to fall, the bankers knew
it in advance and withdrew from the market. They got out with whole
skins and left the people of the United States to pay the piper.
.
Because
the exact same thing happened during the Great Depression that is
happening today, US Treasury Secretary Paulson's actions should not
come as a shock to any student of history. In fact, not only are the
actions taken by the elite banking cartel during the Great Depression a
playbook for what is happening today, it is a virtual blueprint.
.
How
can this be? John Maynard Keynes, the father of all modern economic
theory that is taught in higher institutions of education like the
University of Chicago and Harvard University once stated, There is no
subtler, no surer means of overturning the existing basis of society
than to debauch the currency. The process engages all the hidden forces
of economic law on the side of destruction, and does it in a manner
which not one man in a million is able to diagnose. It is fairly
safe to say that the same holds true today. Not one in a million men
are able to see that the root of all economic problems worldwide today
is a fraudulent, unsound monetary system.
.
http://seekingalpha.com/
.
(Editor)
Through all this, it is interesting to note that while no one wants to
use the dreaded D-Word, many government policies and activities seem to
mimic what when on during the 1930's (direct government
re-capitalization of SOME of the banks, such as JP Morgan, for
example). We can only wonder, if the results will be the same as
well? In other words, are some economic commentators correct,
when they say that they are only buying some time, and that double
digit unemployment levels, increased crime and civil disorders, not to
mention a failed currency and bankruptcy are coming no matter
what? We do not know for sure, but in the least, we would rather
wait for the movie to come out on DVD, and watch it from someplace else
very far, far away.
.
Another
excellent article was written by Mr. Larry Elliott (who is the Guardian
Newspaper's Economics Editor), on December
18, 2008 titled: Why Such
Drastic Action? The Fed Is Utterly Petrified. One
highlight from the article is the following:
.
There
is a risk that the Fed's manipulation merely substitutes a bubble in
the bond market for a bubble in the housing market, and that like all
the previous bubbles, this will collapse disastrously. And there's a
risk that printing money leads to an inflationary surge in two or three
years. The Fed knows all about these risks but thinks they are worth
taking: that's a measure of how serious things are.
.
http://www.guardian.co.uk/
.
EDITORS NOTES:
Did someone mention bubble? Another one?
.
.
THERE'S
NO PAIN-FREE CURE FOR RECESSION
By
Peter Schiff - December 27, 2008
.
As
recession fears cause the nation to embrace greater state control of
the economy and unimaginable federal deficits, one searches in vain for
debate worthy of the moment. Where there should be an historic clash of
ideas, there is only blind resignation and an amorphous queasiness that
we are simply sweeping the slouching beast under the rug.
.
With
faith in the free markets now taking a back seat to fear and
expediency, nearly the entire political spectrum agrees that the
federal government must spend whatever amount is necessary to stabilize
the housing market, bail out financial firms, liquefy the credit
markets, create jobs and make the recession as shallow and brief as
possible. The few who maintain free-market views have been largely
marginalized.
.
Taking
the theories of economist John Maynard Keynes as gospel, our most
highly respected contemporary economists imagine a complex world in
which economics at the personal, corporate and municipal levels are
governed by laws far different from those in effect at the national
level. Individuals, companies or cities with heavy debt and
shrinking revenues instinctively know that they must reduce spending,
tighten their belts, pay down debt and live within their means. But it
is axiomatic in Keynesianism that national governments can create and
sustain economic activity by injecting printed money into the financial
system. In their view, absent the stimuli of the New Deal and World War
II, the Depression would never have ended.
.
On
a gut level, we have a hard time with this concept. There is a vague
sense of smoke and mirrors, of something being magically created out of
nothing. But economics, we are told, is complicated. It would be
irresponsible in the extreme for an individual to forestall a personal
recession by taking out newer, bigger loans when the old loans can't be
repaid. However, this is precisely what we are planning on a national
level. I believe these ideas hold sway largely because they
promise happy, pain-free solutions. They are the economic equivalent of
miracle weight-loss programs that require no dieting or exercise. The
theories permit economists to claim mystic wisdom, governments to
pretend that they have the power to dispel hardship with the whir of a
printing press, and voters to believe that they can have recovery
without sacrifice.
.
http://online.wsj.com/article/SB123033898448336541.html
.
EDITORS NOTES:
We agree with Mr. Schiff whole-heartedly, and why all they are doing at
the moment will possibly only prolong the problem, and in fact, make it
worse. An excessive debt problem cannot be solved by creating
even more debt, just as offering a pyromaniac matches and a can of
gasoline will not a fire marshal make.
.
.
NEW ECONOMIC POLICY: IF YOU HAVEN'T GOT
ENOUGH OF THIS STUFF, JUST PRINT SOME MORE. By Bill
Jamieson - December 18, 2008
.
The
new big thing to save the world economy is quantitative easing. Not an
up-market euphemism for a massage, but the latest and most desperate
measure yet by central banks to stop a severe recession turning into
depression. And it may soon be adopted in the UK. Quantitative
easing is the elegant, sanitized term for the process by which a
central bank fends off the threat of deflation by effectively printing
new money, or increasing its supply. A simple model would work
like this: the government issues bonds and sells them, directly or
otherwise, to the central bank. The bank creates new money for this
purpose and pays the government for those bonds. The money is then used
by the government to stimulate the economy through public works and
infrastructure projects. Magic new money: have we really walked
into this Last Chance Saloon? Yes, we have.
.
http://news.scotsman.com/
.
EDITORS NOTES:
Ah, history repeats itself yet again. Not to be outdone by the
Colonials, the British are possibly now jumping onto the same runaway
train (maybe putting more of your investment funds into Pound Sterling
is not such a great idea, as simply one interpretation of all
this). Interestingly enough, the Pound is just about at par with
the Euro right now, in terms of exchange rates, and we might suggest,
the inflation party has not even gotten started yet.
.
.
JAPAN
SHOULD SCRAP U.S. DEBT; DOLLAR MAY PLUMMET
By
Stanley White and Shigeki Nozawa - December 24, 2008
.
Japan
should write-off its holdings of Treasuries because the U.S. government
will struggle to finance increasing debt levels needed to dig the
economy out of recession, said Akio Mikuni, president of credit ratings
agency Mikuni & Co. The dollar may lose as much as 40 percent
of its value to 50 yen or 60 yen from the current spot rate of 90.40
today in Tokyo unless Japan takes drastic measures to help bail out the
U.S. economy, Mikuni said. Treasury yields, which are near record lows,
may fall further without debt relief, making it difficult for the U.S.
to borrow elsewhere, Mikuni said. It's difficult for the U.S. to
borrow its way out of this problem, Mikuni, 69, said in an interview
with Bloomberg Television broadcast today. Japan can help by
extending debt cancellations.
.
http://www.bloomberg.com/
.
EDITORS NOTES:
Did this Japanese CEO of a credit rating agency say what I think he
said? Is he really suggesting that Japan forgive or otherwise
cancel all of its US Treasury debt? These are the kinds of things
so-called wealthy industrialized nations do regarding the outstanding
debts and loans of poor, third world, banana republic, developing
countries. Along these lines, it is interesting to note that the
International Monetary Fund claims that: countries with more than 60%
of their public debt held by nonresident foreigners run a high risk of
currency crisis and insolvency, or debt default. Gee, that sounds
awfully lot like the situation the US is in at the moment. Along
these lines, Mr. Akio Mikuni referenced in the above article also
suggest that the US Dollar will devalue further by 40 percent (how much
further down could it go?). Billy Joel had a song with the
lyrics, say goodbye to Hollywood. Say goodbye to the US Dollar
might be a more appropriate current substitute.
.
.
PATERSON'S
TAX-HIKE PROPOSAL DRAWS JEERS IN NEW YORK
December
18, 2008
.
A
budget plan by Gov. David Paterson that would plug budget shortfalls by
slashing spending and raising taxes on items from sugary soft drinks to
iTunes downloads is drawing criticism in New York. In an attempt
to close a $15.4 billion budget gap, one of the largest in New York
history, Paterson's $121 billion plan includes major reductions in
state programs, and a wide range of tax increases for everyday goods
and services. We're going to have to take some extreme measures,
Paterson said Wednesday.
.
The
proposed budget calls for 137 new or increased taxes, consolidation of
more than a half-dozen state agencies and the closing of more than 10
state facilities, including six children, family and youth
centers. The plan also includes reductions in school aid by $698
million, $3.5 billion in health-care cuts and the elimination of 521
state jobs. New Yorkers would face tax hikes on beer, wine,
non-diet soft drinks, and digital services like iTunes downloads. Cab
fares would rise 4 percent while the cost of cable and satellite TV
services, tickets for sporting events and movies would also jump by the
same percentage. Although spending reductions are clear
priorities for Paterson, he has not ruled out income tax
increases. This is where we are, Paterson said.
.
http://edition.cnn.com/
.
EDITORS NOTES:
And there you have it or this is where we are, the current Governor of
New York tells us. The man that seemingly has taken elocution
lessons from Mike Tyson wants to implement 137 new or increased taxes,
and he says higher income taxes are on the table too. Stayed
tuned, as we would wager more of this to come from other municipalities
and states across the nation, regardless if some of these states end up
formally declaring bankruptcy, or not. Governor Paterson has
recently said that his initiatives were shared sacrifice. Or, we
can offer up that other wonderful catch phrase: We are all in this
together. Funny though that some share more of the sacrifice than
others, or stated another way, the term WE often means YOU, more
specifically.
.
It
seems to be the case more often than not, that US Congressmen and other
officials, are more concerned about saving or aiding corporate campaign
donors, then they are about making policy (and monetary choices) that
would probably be best for the overall country (that might be in
conflict, or detrimental to some private industry). Which is to
say, there are times when what is good for General Motors is good for
the country, but there are also times when what is good for the average
citizen and nation as a whole, is not so appealing for GM.
Corporate America cannot have their cake, and eat it too, especially
when the average citizen always gets the tailpipe regardless (so to
speak). In other words, low income taxes for corporations when
times are good (and much higher income tax rates for individuals) and
then tax-payer funded bailouts afterwards, when corporations get
themselves into trouble (and due to foolish decisions we might add).
.
Strikingly,
as unemployment increases seemingly in lock step with the national
debt, members of Congress will give themselves yet another raise in
2009, amounting to a US$4,700 pay increase, translating into new
average salaries of US$174,000 with the esteemed House Speaker Nancy
Pelosi earning $217,400, all of which places such elected official in
the top 6 percent of national income brackets. At a time when
there seems to be no money for initiatives or programs that benefit the
average citizen (corporate citizens, such as banks and brokerage firms
of course another story), these additional pay increases for 2009 add
up to an additional $2.5 million to the federal budget. A mere
drop in the bucket, regarding the overall budget (which is already
predicted to exceed US$1 Trillion Dollars in terms of the deficit), but
many average people would of course gladly take those drops if offered,
we think.
.
When
examining appointed officials, such as Robert Rubin and Hank Paulson,
is it really true their loyalties to their former employers (and their
own stock options) are left on the door mat when they enter
government? Perhaps Mr. James
Howard Kunstler said it best when he wrote in a recent (December 22, 2008) article
that: Public sentiment toward the accelerating economic fiasco
has shifted, seemingly overnight, from a mood of nauseated amazement to
one of panicked grievance as the United States moves closer to an
apparent comprehensive collapse. What seems to spook people now
is the possibility that everybody in charge of everything is a fraud or
a crook. Legitimacy has left the system (end of
quote).
.
(Editor)
All of us, as individual citizens, really have no control over what any
central bank or politician may, or may not, do. However, knowing
what the results will be, of the actions taken (economically and
politically), plus understanding the varied lessons of history, at
least gives us some guidance. The result being, to consider
getting our money secure, maybe in other countries, maybe in other
currencies, and perhaps with some assets in the form of gold or silver
as well. In addition, having other options, such as a second
passport and a second home (in another political jurisdiction, meaning
another country to be more precise) certainly could not hurt either
(even if for nothing more than for banking purposes, having another
citizenship never is a bad idea).
.
In
any event, raising taxes happens to be one of the dumbest things
politicians can do, during a recession or economic downturn, unless
they want to guarantee that things get even worse. While
politicians are often brilliant at shooting their mouths off and
swaying public opinion, what they know about economics would not fill a
teacup, or do they in fact know exactly what they are doing, and do not
care? They do of course know how to give themselves pay
increases, regardless of performance. But is that really anything
new?
.
.
EXPAT
WORKERS LEAVE US TO HUNT FOR JOBS
By
Daniel Pimlott - December 11, 2008
.
As
a business graduate from a very good university in the US, Pratik Shah
had every reason to expect an easy passage into a well-paid corporate
career. But, even after applying for nearly 1,000 jobs, he will
not move directly from his masters in engineering and management degree
at Duke University to a position at a top financial company. Instead,
he will head back to his home town of Aurangabad, near Mumbai, to
search for work there.
.
The
realities of the financial crisis and recession are creating a very
different environment for jobseekers from Asia in the US. I have
decided to move back to India, says Mr Shah, The primary reason is that
I didn't find a job here. Meanwhile, his classmates are finding
the going equally tough. Whereas, of the 150 students graduating in
2007 about 80 or 90 found jobs, this year only three have done so thus
far. Some of Mr Shah's friends have found work, only to be laid
off. On the other hand, job opportunities back home in Mumbai,
India's business powerhouse, look better, with more opportunities for
career advancement and salary growth.
.
http://www.ft.com/
.
EDITORS NOTES:
According to a recent survey in London, more than 30 percent of
expatriate workers in the UK's financial services sector expect to
leave the country in 2009. If true, then it seems like there will
be plenty of extra seats in the future when riding the London
underground, which could be a good thing, maybe (unless they decide to
raise the fares to offset decline in persons using the public
transportation).
.
.
SOME
MEXICANS LEAVING US, PLANNING NEVER TO RETURN
By
Ivan Moreno - December 12, 2008
.
After
going months without a full-time job, Daniel Ramirez has decided it's
time to return to family in Mexico. Vicenta Rodriguez Lopez says
she can't afford to live in Colorado any more because her husband was
deported. Roberto Espinoza is going back, too. After 18 years as
a mechanic for a General Motors dealership in Denver, his work permit
wasn't renewed and he didn't want to remain in the country illegally.
.
All
are leaving Colorado in time for Christmas, joining a traditional
holiday migration that will number almost 1 million people, says
Mexico's interior ministry. But they have no intention of returning to
Colorado, a place that promised prosperity. You despair. You
think, I used to earn $600 a week and now I'm getting half of
that a week? said Ramirez, 38, who lost his Denver construction job in
August. He left last week, driving to San Luis Potosi in central
Mexico. Mexico's consul general in Denver, Eduardo Arnal, said
more people like Ramirez are going home for good.
.
http://www.denverpost.com/
.
EDITORS NOTES:
Imagine if 10 Million unemployed and broke Mexicans, previously living
in the US, all of a sudden decided to flood into Guadalajara. If
they were coming home with pockets full of cash, it might be another
story, but coming back because there are no more jobs in the US (with
nothing more than lint in their pants pockets) puts a tremendous strain
on social services in Mexico, not to mention other social issues as
well. Talk about the ultimate irony. We wonder if the US
Government will take a cue from the Mexican Government, and start
printing up pamphlets telling these would be travelers how to make the
trip back safely?
.
.
DOWNTURN
SPURS SURVIVAL PANIC FOR SOME
By
Nicole Maestri - December 16, 2008
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A
paralegal, recently laid off, wanted to get back at the establishment
that he felt was to blame for his lost job. So when he craved an
expensive new tie, he went out and stole one. The story, relayed
by psychiatrist Timothy Fong at the UCLA Neuropsychiatric Institute and
Hospital, is an example of the rash behaviors exhibited by more
Americans as a recession undermines a lifestyle built on
spending. In the coming months, mental health experts expect a
rise in theft, depression, drug use, anxiety and even violence as
consumers confront a harsh new reality and must live within diminished
means.
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Besides
an increase in shoplifting, psychologists said retailers need to be
prepared for more instances of violent behavior like that seen at a
Wal-Mart store in Long Island, New York the day after
Thanksgiving. I wouldn't be surprised if we see an up-tick in
crime, related to stealing, said UCLA's Fong. I wouldn't be
surprised if we see more workplace violence and more violence at the
malls.
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http://www.reuters.com/
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EDITORS NOTES:
If shoplifting is the worst of it, consider it a blessing. Hell
hath no fury like an unemployed individual that has been tossed out of
his McMansion by the Sheriff's department enforcing a bank eviction
order, not to mention that his leased BMW was towed away the day before
by the repossession guy. We would suggest there are whole lot of
angry people out there, and many of whom would not be profiled as your
so-called typical criminal or anarchist. Case in point, the
gentleman mentioned in the above news article that was working (or no
longer working, as the case may be) for a law firm.
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Of
course, we speculated about this possibility some time ago in previous
newsletters. How interesting is it, psychologically speaking,
that some people coming from so-called wealthy industrialized nations
are fearful about intermingling with what they perceive are poorer (and
thus supposedly dangerous) citizens in another country (fearful they
might kill you for a camera, or perhaps even less, as the common wisdom
might be), while yet at the same time, the first thing a guy from a
wealthy country presumably does, once the loss of a job occurs, is to
go out and shoplift (using the example mentioned in the article).
Using the law firm employee once again as an example, here is a person
that probably already has more material goods and possessions than many
people in other countries, and yet his first instinct is to steal
because he is supposed perturbed at the establishment (funny,
considering how some would define him to be part of the
establishment). Human beings are interesting creatures
indeed. Another related news item regarding this topic is
below.
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CRIME
INCREASES IN SOME AREAS AS ECONOMY FAILS
By
Kevin Johnson - December 21, 2008
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Nothing
about the failed bank robbery here earlier this month was
ordinary. The suspect, a 51-year-old woman, does not fit the
typical criminal profile. The weapon, a crudely assembled fake bomb, a
tangle of wires protruding from a handbag, is not often a weapon of
choice. And the demand, $50,000, was relatively modest by some criminal
standards. The only thing about it that seemed to make sense to
local Police Chief Robert DeMoura was Maria Oliva's explanation when
she was caught a short distance from Rollstone Bank & Trust.
Frustrated by her inability to find a job, DeMoura says, Oliva told
police she was pushed to the breaking point. The chief is not defending
her alleged act, for which she has been charged. Yet it is only the
latest in a rising number of offenses in this small northern
Massachusetts city that DeMoura links to the failing economy.
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http://www.usatoday.com/news/nation/2008-12-21-crime-and-economy_N.htm
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EDITORS NOTES:
As I ponder some of these news items, I am reminded of the movie titled
Trading Places, with Eddie Murphy and Dan Ackroyd. While billed
as a comedy, the plot of the film of course was to examine what happens
when you take a fairly wealthy and successful white man, make him broke
and homeless, and in his place, substitute a poor black street
hustler. As it turns out, the Harvard educated well heeled
character from the movie was only one paycheck away from robbing,
stealing, etc. Does art imitate life, or is it the other way
around?
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ARIZONA
POLICE SAY THEY ARE PREPARED AS WAR COLLEGE WARNS MILITARY MUST PREP
FOR UNREST; IMF WARNS OF ECONOMIC RIOTS
By
Mike Sunnucks - December 15, 2008
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A
new report by the U.S. Army War College talks about the possibility of
Pentagon resources and troops being used should the economic crisis
lead to civil unrest, such as protests against businesses and
government or runs on beleaguered banks. Widespread civil
violence inside the United States would force the defense establishment
to reorient priorities in extremis to defend basic domestic order and
human security, said the War College report. The study says
economic collapse, terrorism and loss of legal order are among possible
domestic shocks that might require military action within the U.S.
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International
Monetary Fund Managing Director Dominique Strauss-Kahn warned Wednesday
of economy-related riots and unrest in various global markets if the
financial crisis is not addressed and lower-income households are hurt
by credit constraints and rising unemployment.
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Nick
Dranias, director of constitutional government at the libertarian
Goldwater Institute, said a declaration of marital law would be an
extraordinary event and give military control over civilian authorities
and institutions. Dranias said the Posse Comitatus Act restricts the
U.S. military's role in domestic law enforcement. But he points to a
1994 U.S. Defense Department Directive (DODD 3025) he says allows
military commanders to take emergency actions in domestic situations to
save lives, prevent suffering or mitigate great property damage.
Dranias said such an emergency declaration could worsen the economic
situation and doubts extreme measures will been taken. I
don't think it's likely. But it's not impossible, he said.
The economy is in recession. Consumer spending is down, foreclosures
are up and a host of businesses are laying off workers and struggling
with tight credit and the troubled housing and financial markets.
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http://www.bizjournals.com/phoenix/stories/2008/12/15/daily34.html
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EDITORS NOTES:
We offer a quote from Mr. Lazaros Apekis, president of the Hellenic
Federation of University Teachers, when asked to explain why anarchy
and rioting has continued unabated in Greece. He says that the
youth demonstrations are a genuine social revolt, and he also offers
that the target is a political system that has sold out the public in
favor of private interests (end of quote). Somehow this all
sounds strangely familiar (as my mind quickly remembers bank bailouts
and the like). Could this be the new Souvlaki heard round the
world (or favorite new fast food for the world's middle class, so to
speak)? We do not know, but it is interesting to note it was the
Greeks that invented Democracy, and Jacuzzis too. When commenting
on the continued civil disturbances in Greece recently, Mr. Uri Gordon
writes in one of the Israeli newspapers: A new benchmark has been set
for what can be expected in Western countries during the coming era of
economic depression and environmental decay.
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READERS
WRITE IN:
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Hi,
How safe is off shore banking? How might I best go forward?
Any help would be appreciated.
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EDITORS REPLY:
When many people think of the term offshore banking, usually the first
thing that comes to mind is mega-wealthy individuals who might have
accounts in the list of so-called tax haven countries. The truth
of the matter is, any time you are banking outside of your own home
jurisdiction, it is a case of such a place being offshore for you
personally. And so, if you are someone banking in Singapore,
Thailand, Costa Rica, Peru, or any other country you can think of,
generically speaking, that is offshore for yourself. And so, with
that said, your question becomes difficult to answer specifically
because it all depends upon where you may wish to maintain your
accounts. Are banking laws and government banking authorities
much stricter in some countries versus others? Yes, depending
upon which country. Is it really true that so-called smaller,
less developed nations have laws and regulations that are MORE lax than
what is the case in the modern, wealthy industrialized nations?
Not necessarily, and often the opposite is the case. In fact,
most people do not know that there is government banking insurance for
bank deposits in the Dominican Republic, and, it is certainly much more
solvent and secure than FDIC. Go figure how a small, so-called
third world nation could have perhaps stricter banking regulation and
supervision in comparison to a so-called modern, wealthy nation.
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Along
these lines, we can possibly flip the question around and ask: Is
banking really that much safer inside the US or some other supposedly
more developed country? Surely one can argue that banking
regulators in the US and the UK have turned a blind eye as various
forms of sloppy lending practices and financial chicanery have
abounded. Even now, that a problem obviously has come to light,
US banking regulators have allowed US banks to drop reserve
requirements to supposedly help the banks balance sheets, and have
relaxed even further, other kinds of balance sheet collateral
requirements. With this in mind, we would love to know what they
are smoking in Washington, D.C. (it surely is not run of the mill
tobacco).
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In
any event, establishing a bank account in other countries can, in some
cases, be as simple as depositing US$1,000 or less, in terms of minimum
balances. And in addition, bank account interest in many
countries is tax-free for foreigners and locals alike. Also, many
banks might offer the ability to maintain savings accounts in US
Dollars, Euros, not to mention other currencies as well. You
might be able to move in and out of one to the other, all in the same
bank quite easily. And aside from all that, remember that local
citizens are banking inside their own country (where you might be
banking), and do not want to loose their money either. Which
leads us back to the point that banking regulations, government
supervision practices, and even banking insurance may very well be even
more stringent.
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Now,
with that said, obviously some countries might have currency controls
(Venezuela, for example), meaning a sort of financial roach motel,
whereby the money checks in, but you cannot get it out so easily (which
certainly would deter you from investing or banking there). Other
countries might have certain restrictions for foreigners to open an
account, and it may not even be the government, but rather simply
internal policies of one particular bank, in terms of refusing to
accept an account because the owner is not a local, or holds a certain
passport (US passport holders especially, in the case of some tax haven
countries). But, that aside, there are many, many very well run
financial institutions in the world, and many them in places you may
not even think of. As an example, we highlighted in a previous
newsletter, some information about Lebanon, whereby the Head of the
Central Bank there ordered the local banks to stay away from these
toxic junk bonds and maintain a liquid reserve requirement of 30
percent. Lebanon? Yes, Lebanon.
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Getting
back to the comments we started off with, the old common wisdom was, or
is, that banking in another country is only for the mega-wealthy,
tax-dodgers or people involved with illicit business activities.
It certainly is logical to assume that perhaps some people involved
with such things are banking elsewhere, or maybe in tax havens, but can
we assume that this applies to 100 percent of banking customers in such
a case? How many people, as a percentage of any overall given
population are involved with illicit or illegal things? Two
percent, five percent, even less? The propaganda or myth that has
been perpetuated is that anyone, in the case of US citizens to be
precise, banking in another jurisdiction, and in a tax-haven more so,
must be a crook or tax cheat. But is this really true, or has
this idea been promoted for another reason, or another agenda?
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People
do bank and invest outside of their home countries for a variety of
reasons, and indeed this should be part of your overall financial
plan. Yes, indeed, some are doing so as a safety net.
Meaning, certainly some people may be fearful of political distresses
in their home country, or government confiscation (for whatever reason)
or economic crisis. Other people of course may want to take
advantage of banking in difference currencies, or the opportunity to
earn higher interest rates, or partake of investments not available at
home. Either way, having the ability to hold other currencies, or
easily purchase gold or other kinds of assets, and also having those
assets securely away from the fray, certainly provides both peace of
mind and advantageous opportunities as well.
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