News from Around the Hemisphere, Jan 15, 2014 (reposted from original location)

article from January 15, 2014
By Jamie Douglas

First off, an apology to my readers: I have not been writing as often as I would like, as I am not well... but not ill enough to refrain from occasionally spouting my opinions and pointing out interesting facts.

Mexico’s continuing problems

Poor Mexico! After the recent elections, there was hope that the violence would subside somewhat, but it is only getting worse in the states that have been flashpoints in the unfortunate war on drugs, which has cost over 100,000 lives over the past few years – one of which is the state of Michoacán, where I used to reside until I went to buy the newspaper for my morning coffee at Pátzcuaro restaurant where expats, artists and criminals alike would mingle.

Since that morning eight years ago, when I was shocked to see photos of 22 mutilated corpses on the back pages of La Voz de Michoacán, things have gotten progressively worse. In a recent article in Proceso [spanish], it is revealed that the Knights Templar, successors to the Zeta crime syndicate, have now entered politics on behalf of the PRI, the hyper-corrupt Mexican political party that bled the country dry for generations. After a brief respite, the PRI is back in power, with a little help from their usual election fraud along with the Knights Templar, who have become an economic force to contend with, as they have made hundreds of millions of dollars running the port of Lázaro Cárdenas and illegally mining iron ore.

As a result of long-standing collusion between the local, state and federal government and the cartels, Michoacán has come close to being an ungovernable failed state, and the neighboring states up and down the Pacific coast may follow.

When will the powers that be realize that the unfortunate war on drugs had the same results as the prohibition in the United States did? It enabled criminal elements to take over the country with diluted and dangerous unregulated alcohol, corrupting most major police forces by flooding them with money.

Panama and Nicaragua race for a wider canal across the isthmus

In 2006, Panama’s then-president Martin Torrijos announced a plan to expand the Panama Canal so it could accommodate today’s VLCCs. He boldly stated that this project would turn Panama into a first-world country. Perhaps he did not anticipate all of the corruption that would inevitably follow this proposal. Perhaps he underestimated the larceny of the Martinelli administration. But one thing is glaringly obvious: The conglomerate that bid on the work grossly underestimated the cost and time for building this ambitious project – and therein lies the current problem. The Panama Canal Authority is refusing to pay for the cost overruns and has threatened to take over the project by force mejeure.

Regardless of what will happen in this chapter of Panama Canal history, Panama will not be a first-world nation until it rids itself of all the scams that are at home there, including the banking and real estate sectors, much of which is run by American and Canadian expats, con men and women and convicted criminals trying to sell anything they can think of.

Meanwhile, a Chinese investor has put together a consortium of wealthy business people from China to build a canal clear across the isthmus in Nicaragua. This project is slated to begin in December of this year; and if successfully completed, it will be quite a thorn in the side of the Panama Canal Authority. But with the enormous nature of the project, one should not hold their breath. China may be riding high at the moment, but nothing lasts forever. The Chinese economy is already feeling the pain of the costs of their armed forces and high-speed rail networks.

I wonder why Mexico has not pursued the logical choice of building a trans-isthmus canal from Tehuantepec to the Caribbean. Perhaps the cost and logistics are too prohibitive, along with the opposition of the indigenous people.

Venezuela and crime

Venezuela’s sweetheart, actress and former Miss Universe Monica Spear, and her husband, Thomas Berry, were brutally murdered a few days ago when their car broke down. Their little 5-year-old daughter was also shot but survived.

Venezuela is a spectacular nation, blessed with abundant natural resources and stunning beauty. From Angel Falls to the Caribbean islands, nature has blessed this nation with abundant and fertile lands, not to mention the crude oil reserves in Lake Maracaibo and the gold in the ground.

Unfortunately, the riches of the nation have been distributed unequally to the point of forcing many into a life of serious crime. The homicide rate is near the top of world statistics, and the prisons are overflowing. The staggering amount and wide distribution of serious crimes is affecting everyone from the very poor to the very rich. Ironically, Monica Spear and her family moved to Miami out of fear for their safety. Nearing the end of a holiday vacation, fate caught up with them.

If there is one good thing that can be said about it, it is the fact that thousands of people came to her funeral and thousands more protested the senseless violence the Bolivarian nation is confronting.

And now the weather

After an early spring followed by another cold front, the Southern Cone countries of Brazil, Uruguay and Argentina have been hit with several waves of severe weather, which included some of the most intense lightning and thunder this observer has ever witnessed.

Torrential rains in Brazil took their toll in human lives, and Uruguay also had several casualties, including a police officer who was killed in downtown Montevideo when hit by a swinging door he was trying to secure during one of the storms, which packed winds of up to 100 km/h.

Argentina also suffered one of the worst heat waves in their recorded history that was compounded by the failure of the electric grid in Buenos Aires, causing brownouts, blackouts and several heat-related casualties. The worst incident happened in the small beach town of Villa Gesell, where four youngsters were killed on the beach by lightning and another 22 injured. The tragedy happened so quickly that the victims never had a chance to escape.

I will not opine on the cause of all this severe weather, from the polar vortex to the unseasonably severe cold in Antarctica that caused an Australian tour boat to get stuck in the pack ice, forcing other important scientific programs to be interrupted when several additional ships had to be sent to their rescue. The Australian organizer of the trip defended his expedition as having valid scientific value by explaining that the lay observers on the ship were qualified to make observations of the current conditions in the region.

Antarctica, being the last frontier on this planet, has been exploited for high-end tourism for several years, and this latest problem is no different from any other for-profit organized tour.

Jamie Douglas

At large in Uruguay

I encourage you to write me at cruzansailor [at] gmail [dot] com with any questions or suggestions you may have. Disclaimer: I am not in any travel-related business. My advice is based on my own experiences and is free of charge (Donations welcome). It is always my pleasure to act as a beneficial counselor to those who are seekers of the next adventure.

Expat News and Info Jan 6, 2014: Libya, Brazil (reposted from original location)

article from January 6, 2014
By Jamie Douglas

Working in Libya

During the attack on Libya that deposed Muammar Gaddafi, I wrote two articles (here and here) for Expat Daily News forecasting that there would be many openings in the oil fields of Libya, which holds the largest oil reserves in Africa, to rebuild the infrastructure that has been neglected for decades and also to build new high-capacity pipelines.

Sure enough, there is now a sizeable population of expat workers under contract to various companies as well as the state-owned Libyan oil company. But one must always be careful when navigating the explosive atmosphere of this country. After 40 years of iron-fisted rule by the despot, there is still a lot of hatred against Westerners present in this oil-rich nation.

Sadly, two expats decided to go on a romantic beachfront picnic in western Libya recently, but instead of having an undisturbed time on a lovely beach, they were later found shot to death, execution style.

Tripoli itself has several enclaves of expats who only move in heavily secured convoys, and life is very difficult for them, as they are unable to move freely. The concept of accompanying family members is impossible to realize, but the excellent salaries are enough incentive for foreigners to go live in this desert wasteland that is suffering from all kinds of security issues.

Brazil, the “B” in BRICS

The only Portuguese-speaking nation in the New World, Brazil is the fifth-largest nation in the world. It is home to over 200 million people, the majority of which live in poverty.

The nation had become the darling of investors, with its ever-growing GDP, and the currency of the nation, after years of wild swings and hyperinflation, became one of the strongest in Latin America. Along with that came a new era in politics that brought socialist Lula da Silva into the office of the presidency. New wealth was created with industries and a middle class was established, but the very poor still existed below what the World Bank considers to be abject poverty, US$1.25 per day per family.

With all the newfound wealth, one would have expected the administration of Lula da Silva to institute stronger social programs to stabilize the destitute and build a sustainable social safety net. But instead, he committed the nation to take on the Soccer World Cup as well as the Olympic Games, squandering billions of dollars in the process.

His successor, Dilma Rousseff inherited a mess of corruption that ate away at the core of the government, with ministers and governors as well as local politicians robbing the nation’s coffers.

The nation initially was spared the impact of the meltdown that was triggered by the real estate bubble in the USA and Europe, but by late 2013, the Brazilian real had lost almost 30% in value, and the nation was downgraded by the major ratings agencies.

The new affluence has brought in many manufacturers and there has been a boom in auto sales, which, in turn, has created a demand for refined petroleum products, a large portion of which has to be imported, adding to the problems of inflation and the nation’s trade deficit.

Meanwhile, the construction projects for the World Cup are way behind schedule and the quality of the construction can only be described as shoddy, leading the FIFA President Sepp Blatter to issue an unusually blunt statement on January 6, 2014.

This is also an election year, which will see Dilma Rousseff try to hang on to the presidency of Brazil. Her current approval rating is 52% among the desperately poor but at an all-time low of 0% among the upper classes. She has looked at the example set in Argentina for years, covering free food, TVs, cash handouts, large child allowances and generally buying the election with the poor on her side a la Evita Peron.

There is no doubt that the disenfranchised Brazilian masses need government assistance, so just imagine what could have been done with the trillion dollars the nation is spending on itself to celebrate its exit from “developing nation” status.

One of the biggest priorities Brazil should have is to create decent jobs to get the millions of young unemployed into mainstream Brazil. There will always be favelas (slums), but the living conditions there should be improved by creating much-needed infrastructure for the poor instead of giving them a little money.

Jamie Douglas

At large in the Americas

[Image of Tripoli Central Business District via Wikipedia]

I encourage you to write me at cruzansailor [at] gmail [dot] com with any questions or suggestions you may have. Disclaimer: I am not in any travel-related business. My advice is based on my own experiences and is free of charge (Donations welcome). It is always my pleasure to act as a beneficial counselor to those who are seekers of the next adventure.

Expat Financial Advice: In the U$ Dollar We Trust (reposted from original location)

article from December 30, 2013
By Jamie Douglas

As 2013 draws to a close, many of us are wondering what may lie ahead for us in the coming year.

Where to place your trust

A little over three years ago, I wrote two articles – Basic Financial Advice for New Expats and a follow-up – urging my readers to not believe in all the false prophets of doom and gloom in regard to the US dollar. This is a follow-up on both of those articles, which focus on Latin America.

As we have all witnessed the boom and bust of the “nouveau riche” BRIC nations over that period, one nation that, until recently, seemed isolated from the world’s economic troubles has been Australia. But the Aussie dollar has lost over 15% in value over the past year, as China has been affected by the global slump and its demand for the mineral wealth in Australia has waned.

In its place, the Chinese have taken their hoard of 1.4 trillion US dollars to buy into the mines and mineral rights of other mineral-rich nations around the world, even landing in tiny Uruguay to exploit that nation’s meager iron ore deposits.

While global currencies have an uncertain future, with more problems forecast for the Euro Zone for 2014, the almighty US dollar has held its course, with the help of steady support from Ben Bernanke, and has gained substantially against virtually all Latin American nations’ currencies, with the exception of those currencies that are either fixed to the dollar or those nations that are using the dollar as their own currency.

A December 27, 2013, Bloomberg News analysis of Latin American currencies should be sufficient to convince all travelers and expats in the region to keep their money in US dollars or Swiss francs to protect their nest eggs. And as Jeffrey Grossman, president of BRG Brokerage, explains, “compared to all the other currencies, as we always say, even when it’s at its weakest, [the US dollar is] still the best horse at the glue factory. In 2013, the Dow Jones Index gained 25% and the Standard and Poor´s Index gained 28%.

Where not to place your trust

Never automatically trust fellow expatriates who want to help you invest your money in crash-proof funds or metals. In many cases, their job is to fleece you with fancy schemes to buy fractional ownership in vineyards in Argentina, teak farms in Central America or, worst of all, to get suckered into one of those pricey seminars to sell you real estate, urging you to invest in Colombia as if there was not a civil war raging there for the last 50+ years. The vultures at Escape Artist (Disclaimer: I was indirectly involved as a writer with these people several years ago, but distanced myself after I realized whom I was dealing with) and similar publications will gladly fleece you of your life savings ...but wait – I have a bridge for sale somewhere!

Enjoy the day, commit an act of selfless kindness and have a great new year!

Jamie Douglas

Still at large in South America

I encourage you to write me at cruzansailor [at] gmail [dot] com with any questions or suggestions you may have. Disclaimer: I am not in any travel-related business. My advice is based on my own experiences and is free of charge (Donations welcome). It is always my pleasure to act as a beneficial counselor to those who are seekers of the next adventure.

Argentina's New Fiscal Policies

article from November 18, 2011

By Jamie Douglas

Since Cristina Fernández de Kirchner’s sweeping landslide reelection on Oct 23, mainly because of a fractured opposition that failed to form a coalition to oppose her, there have been a number of new regulations dealing with foreign exchange. All foreign mining and energy companies will henceforth be unable to repatriate their income, and the private exchange houses are restricted to buying dollars, being prohibited from selling them.

On Wednesday, Oct 26, the Official Gazette published Special Decree 1722, ordering all revenues created by the mining and energy sectors in Argentina to be negotiated at the local foreign exchange market, a measure aimed to stem capital flight, as well as a forced attempt to flood the market with “fresh” dollars to control the high demand for the US currency by everyone in the country. The measure also aims to control the inflation that is being denied by the Casa Rosada.

Government “economists” mistakenly believe that the funds that the foreign corporations are being forced to retain in Argentina will inject US$3-$4 billion into the economy. I do not make the connection here. How would that money enter the local market? Foreign corporations are unlikely to invest in infrastructure improvements as long as they are unable to take their income home.

By Friday, Oct 28, the central bank had begun to regulate the ability of just about everyone to sell their soon-to-be worthless Argentine pesos for US dollars, in order to stop the capital flight of US$100 million per week, or $3 billion per month. The new decrees are a complete mess of rules and regulations requiring potential moneychangers to submit their requests to the tax authorities, who will check the amount against their records of how much money has been declared, and they are sure to work their way up to the supreme court in about 10 years time.

The incoming vice president of the nation, current Economy Minister Amando Boudou, assured his fellow Argentineans on Monday, Oct 31, that the new rules are not meant to hinder transactions, but are intended to show the origin of the monies. He assured the patient that everything is fine and all is in order. That would be a first in the 201 year history of Argentina!

The vice president-elect is also urging Latin American nations to abandon the use of the US dollar altogether and start using local currencies, instead. That is in direct contradiction to an inquiry made by the Uruguayan government and several banks from Uruguay urging the Argentinean central bank to guarantee that it will buy back the hundreds of millions of pesos that Argentine tourists will spend in Uruguay during the vacation season. Many porteños cross the Rio de la Plata with sacks of Argentine pesos, which they exchange at Uruguayan casas de cambio, where the dollar now exchanges at almost 6 pesos, nearly a 50% premium for the Argentines. But the banks and exchange houses in Uruguay are understandably reluctant to buy Argentinean pesos, since there is now no way to turn them back into dollars.

Argentina’s unilateral panic rules are, of course, having repercussions internationally with investment bankers, rating agencies, the IMF and the World Bank, all of whom warned the government of La Cristina of the dire consequences of these actions. The ratings agency Fitch has advised the Argentinean central bank that the nation’s credit rating could become subject to highly undesirable changes in currency exchange policies driven by the high inflation rate that the government is denying.

Jamie Douglas

San Rafael, Mendoza

I encourage you to write me at cruzansailor [at] gmail [dot] com with any questions or suggestions you may have. Disclaimer: I am not in any travel-related business. My advice is based on my own experiences and is free of charge (Donations welcome). It is always my pleasure to act as a beneficial counselor to those who are seekers of the next adventure.

More Financial Advice for Expats and Potential Expats

article from November 28, 2010

By Jamie Douglas

Some you may have read the original piece I wrote on Nov 22, dealing with renting vs. buying when relocating to a Latin American country. Well, it started a lively discussion between those who sell real estate in various parts of Latin America and others who are considering making the leap to foreign shores. I did mention that in spite of the United States printing money day and night, it was still safer to hold on to the US$ than pretty much anything else. The reason is because everything in this global economy is interconnected, and if the US$ finally tanks, so will all other currencies.

The only safe heaven will be in “useful” commodities, of which silver seems to be way ahead of the curve. I researched one of the world’s largest currency traders, XE.com and spent hours recovering data, using the arbitrary date of February 4, 2008, when things were still smoking hot, as a baseline. I then compared this to the data from Friday, November 26, 2010.

The countries are listed alphabetically, and the three most important commodities follow at the bottom. I also included a few European currencies such as Iceland to show what lies in store for those who still believe that Milton Friedman was a genius. The influence of the Chicago School of Economics has been devastating on the world’s economies, and it was their alumni who destroyed Iceland’s economy with greed and capitalism without a conscience, as preached by Ayn Rand and her fanatical followers.

Country                US$ Loss or Gain against local currency

Argentina              + 24.74%

Bolivia                   - 8.83%

Brazil                     - 1.20%

Chile                     + 3.70%

Colombia               - 2.50%

Costa Rica             + 1.19%

El Salvador            Fixed at 8.75

Euro                      + 11.2%

Guatemala             + 3.63%

Honduras               - 1.9%

Iceland                   + 78.74%

Jamaica                  + 18.57%

Mexico                    + 15.47%

Nicaragua               + 13.9%

Norway*                 + 13.1%

Paraguay                - .698%

Peru                       - 4.9%

Switzerland*           - 8.07%

Uruguay                 - 6.12%

Platinum                + 6.983%

Gold                      +50.62%

Silver                     +58.64%

*I Included Switzerland and Norway because I received an irate letter from a reader suggesting that the only two currencies worth holding are the Swiss Franc (Yes) and the Norwegian Kroner (No). Norway’s oil boom is about coming to an end, and social spending there is bankrupting the country.

Panama and Ecuador use the US$, and Venezuela is in such disorder that I am not going to get into it.

So you see, the US$ is holding its own, with small fluctuations, against most Latin American currencies. The gain against the Argentine peso is mostly due to inflation in that country.

Now a small piece of advice for those of you who own your own home or property in the US and Canada that is way under water, to where you will never recover your investment, and every payment you make is money that could be used on your potential move south. Consider that when you move away from the United States, your credit worthiness is meaningless. These are cash societies that function very well without 30-year mortgages and eight-year car loans for a Hummer. Hold a fire sale, sell everything you own, head to the destination of your choice, and start life anew. There are good schools in most countries, ATMs are spreading, high-speed Internet access is everywhere (You should see where I am writing this from!), and if you do your legwork, you can find excellent medical care that is affordable, even without insurance. Remember, you only live once, so stop suffering and start living your life.

Looking for further advice? Contact me. Been there, done that – all over the world.

Jamie Douglas

At large in South America

I encourage you to write me at cruzansailor [at] gmail [dot] com with any questions or suggestions you may have. Disclaimer: I am not in any travel-related business. My advice is based on my own experiences and is free of charge (Donations welcome). It is always my pleasure to act as a beneficial counselor to those who are seekers of the next adventure.

Basic Financial Advice for New Expats

article from November 22, 2010
By Jamie Douglas

In my travels and communications with folks who are thinking of relocating outside of their country, I have found that there are many sources of advice as well as many opportunities to get taken to the cleaners by unscrupulous operators.

In a previous article, I offered the choices of renting vs. buying in a foreign land. I can assure you that when you get to your destination and go to the places where expats meet for coffee and croissants on a weekly basis, there will always be people there who are looking to make a buck off you. Everyone has a deal, from that condo near the beach, to those high-yield, short-term investments, and of course there's that coffee plantation that will pay for itself in 3 years. (Why are they selling the golden cow?) You will also find many other new arrivals who have been there for a few months and may know a little more than you.

As for your cash on hand, always carry what you think you will spend along with a debit card from your bank. There are ATMs wherever there is a bank where you can extract needed funds.

There is absolutely no need to transfer your money into the country you are in just because they are offering better interest rates on US dollars. When all is said and done, you will have exposed your funds to much greater risk for very little gain. In many instances, the capital gains taxes on interest are very high, and in some instances, the banks simply don’t have the money to give to you when you want to make that withdrawal to buy a car or a house: Come back tomorrow, or the next day.

Then there is the constant uncertainty of devaluation. (Not that the US$ has done so great lately.) And who would have thought that the euro, the currency  that the Oracle of Omaha, Warren Buffet – you know, the one who said that derivatives were toxic and then lost billions on them – and George Soros, as well as Sandy Weil’s Citigroup and many others said was the safe-haven for the wealthy, would suddenly be on the verge of extinction?

But not to worry. As long as the US cotton farmers produce that special cotton that is made into that special denim, which is made into paper to make US banknotes, and the treasury does not run out of ink, there will be fresh crisp new dollar bills injected into the economy, and with few exceptions, the US dollar has been relatively stable in Latin America since the last Mexican and Argentinean meltdowns.

Hold on to your money, in US dollars or Swiss francs (CHF), and be frugal, because with the current economic situation and all the false hope being spread by the bankers and governments worldwide, we don’t really know what will happen. If anything, silver has outperformed just about every other commodity. But then again, when things go south, it’s unlikely that your local grocer will sell you meat for silver – or gold, for that matter.

So, when you go to your Wednesday morning coffee klatch with your fellow expats, just let them know your Social Security is barely covering your living expenses, and you will soon find the true friends that we all need – and you will still have your money at the end of the month.

Jamie Douglas
At large in South America

I encourage you to write me at cruzansailor [at] gmail [dot] com with any questions or suggestions you may have. Disclaimer: I am not in any travel-related business. My advice is based on my own experiences and is free of charge (Donations welcome). It is always my pleasure to act as a beneficial counselor to those who are seekers of the next adventure.