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.

Thinking of Moving to Argentina? A Word to the Wise

article from April 10, 2012

By Jamie Douglas

Once a favorite destination for expats, Argentina is being turned into a sadly neglected country by nationalistic socialism, rampant political corruption and total economic ineptitude. Que lástima.

The government of Cristina Fernández de Kirchner is currently nationalizing whatever it can get its hands on, starting with YPF-Repsol and Petrobras, the Spanish and Brazilian oil companies that have been doing business in the Southern Cone nation because this country is unable to run its own oil exploration. These exploration companies, rather than dealing with one authority, have to pay off the corrupt local officials of every province they want to do business in, to hell with international treaties.

The nation is racing backwards at supersonic speed, and will soon be back in 2002.

Example 1: We live near a relatively large town with several major supermarkets. During Easter Week, they were out of milk for three days. While orange juice is a luxury here, selling for over US$2 per liter, stores rarely have it. Rice, sugar, flower, cooking oil, and even the beloved mate are all in short supply.

Example 2: Fuel stations are often out of fuel. Many times, the amount of fuel you are allowed to purchase is limited to AR$50, when they have it at all. Of course, if you have the extra US dollars per gallon, you can go to one of the rare Shell or Petrobras stations and pay more to fill your tank.

I actually got to fill up the modest tank on my Renault today. And the wait was only about 20 minutes. During the peak harvest season, many trucks waited in line for days to get fuel while the fruit and produce rotted. Nobody in the government did anything about it. Meanwhile, exports to Chile, Bolivia and Paraguay continued unabated. There are some highly intelligent people at work here, somewhere, but not in the government.

Example 3: The last time the economy tanked, it was because of fiscal mismanagement and the lunatic idea of tying the new peso, called the austral, to the US dollar. And a lunatic idea it was. It led to the biggest sovereign default in the history of the world. It makes Greece look downright attractive in comparison. A lot of it, of course, had to do with high-cost imports of luxury goods. After the catastrophe, the Argentine government decided to set up a free-trade zone in Tierra del Fuego, where they would manufacture air conditioners and assemble computers, fans, microwaves and all kinds of domestic appliances. That would be wonderful, if the consumer would actually save money on these domestic products. I took a close look at the tiniest of microwaves today just to see where it was made because it cost US$250 for the same kind you get at Wal-Mart for $30. Sure enough, it was made in Tierra del Fuego!

Item 4: Taking your profits out of the country:  Forget it. Repatriating your money is forbidden unless you can get that unobtainable permit to send dollars out of Argentina. So what is a multinational company like, say, BMW to do? (It’s not like they sell a lot of their cars here.) In order to repatriate their money, they have to buy rice and export it to someplace that wants it, paying to ship it, warehouse it and broker it. Now that is messed up!

Item 5: As an Argentine citizen, you cannot take or send more than US$300 per person per month out of the country. It is illegal to send money to relatives who may be croaking in a hospital in Bolivia or anywhere else. And effective April 2, Malvinas Day, Argentinean citizens are unable to use their credit and debit cards abroad at all. All the borders and airports now have money-sniffing dogs, and they are quite good a sniffing out the loot, which will then become property of the state.

On the other hand, there are so many properties available all over this marvelous country that if you want to make a go of it, you will have many choices at very affordable prices. The important thing is to come here with family and all and get a feel for it. Having a working knowledge of Spanish is essential. Outside of the major cities, you will not find many fluent English speakers. But do not go down the street loudly proclaiming how this person dresses like a clown (it might be Cristina!) or that one there has a beer gut. You might be surprised at how many people understand English.

Jamie Douglas

San Rafael, Argentina

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.

Easy Credit in Argentina

article from March 21, 2012

By Jamie Douglas

We live outside a relatively small town southwest of San Rafael in Mendoza province. To say that the area is very poor would be a good description. Out in the country where we live, a few kilometers away from the small dusty town of Salto de las Rosas, many of our neighbors are illegal Bolivian and Peruvian immigrants who make a living from the dirt that they inhabit. Literally! I don’t know if they own the land they live on, as it looks more like they are squatters to me. Almost all the homes are made of mud bricks. It is not much, but to them it is a lot more than they could ever accomplish in Bolivia or Peru. Not much wealth is displayed externally, except for the TV antennas on every shack, and more and more are sporting the US$50 satellite systems being sold in small and large stores alike.

The main sources of income in these latitudes are seasonal fruit picking and year-round brick making. They build these intricate structures out of raw mud bricks, with vent holes and a very unique way of stacking them, and then they stuff it with a special kind of wood and let is smolder for weeks. The end result is that giant trucks from all over the country come to pick up huge loads of bricks. There is some heavy equipment involved, such as forklifts, but it all appears to be communally owned.

I give you all the above information to show just how poor this particular area is. We are just a few kilometers south of the wine belt, so there really is a lot of poverty here for most of the year. You should know that in this region there are also a lot of really poor Argentineans as well as a number of legal Bolivians, Peruvians and Paraguayans. They have documentos to show that they are legal residents.

Now to the point of this message: We have been trying to distribute our meager income to as many locals as we can. We buy fruits and vegetables from La Familia, a sweet, hard-working family of Bolivianos selling great quality fruits and veggies out of their home; Carlito and his family provide us with meat and chicken; and we get our staple foods from the little Atomo minimarket, a branch of a larger chain.

So last Saturday I went to the Atomo to make some purchases, and in the tiny parking lot out front was a car dealer with a brand new Peugeot 207, a very small car he was trying to sell by draping two turbo-vixens over it, bending in the aluminum foil-thin skin (the turbo vixens are optional). I could not help it – I had to go find out how he was going to convince the local populace to get one of them.

“Oh, es muy simple,” he stated. “All I need is for you to come to my office with your documentos and two utility bills in your name, and you can own one with no money down, no payments until six months from now and then you have five years – interest free – and best of all, the loan is in Argentinean pesos.”

Talk about money in the bank! The Argentinean peso is constantly devaluing and nobody can predict what calamities will befall the Southern Cone nation over the next five and a half years, but it will be quite a few. So buying a few cars on these terms, taking them to a barn and shrink-wrapping them for the future should be a very good investment.

This is the economic reality today in Argentina. The banknotes are so old and worn out that you are compelled to wash your hands after handling them. Giving the cars away on these kinds of terms shows how the economic engine, which stalled a couple of years ago, is being fueled. Lies about inflation, poverty, unemployment and anything else a government could lie about led to this situation. It has gotten so bad that the International Monetary Fund is closing their regional office, the nation’s economy has tanked and all Empress Cristina can talk about is “Las Malvinas,” the old nationalistic standby for diverting attention from domestic problems.

But just like in the upcoming elections in France, Greece, USA, Germany, etc, the people will continue to be baffled by all the bullshit and make all the wrong choices, as always.

Jamie Douglas

San Rafael, Mendoza

[Photo from San Rafael Department, Mendoza, Argentina by Jamie Douglas]

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.

Interview with Cory Gearhart, Author of the Blog “Monday (or something)”

article from August 29, 2011

by Julie R Butler

The blog, Monday (or something) is an ingeniously useful resource for anyone who is trying to make plans for relocation to Central America. There, you will find detailed outlines of expat destinations, from the point of view of Cory and “The Girlfriend” as they conduct an experiment in renting a place to stay for about one month while trying to keep within a set budget in different locations. Along with observations geared toward understanding the ins and outs of living in these places, you will find lovely photos as well as amazingly detailed spreadsheets of all costs incurred during their stays in towns and cities all over the region. The following is a short interview I conducted with Cory.

JRB: The idea of sharing the information that you are gathering– cost of living based on longer term rental, as well as conditions such as infrastructure, available activities, crime, and a feel for what the expat communities are like– is just marvelous. Was the blog a part of your original exploratory travel plan, or did it come up as you were traveling?

CORY: It was part of our original plan. I have a bit of history vacationing and backpacking in Latin America and have soft plans to retire here. As I was researching cost of living info I found a lot of people with the same question (Do I have enough money?) and very few answers. I ran across PaddyinBA who put up tables of prices with kind of a "basket of goods" approach and that got me thinking, why not a full on "month in the life" approach instead?

The Girlfriend has traveled in South America with me, but never Central, so I already had a list of places that I wanted to show her. If we combined that with a bit of structured fact finding and kept our expenses low we could just barely justify the spending. So we came up with a loose list of towns and regions to investigate, put together a pack list and set out.

The blog is a combination of my notes (costs and observations), a weekly update that I had been sending out, off and on, for years to friends and family and pictures along the way. I realized early on that writing my notes for strangers was the best way to make sure they were reasonably comprehensive. Otherwise there's just too much temptation to say "I'm sure I'll remember this forever", which is so seldom true. We're always surprised to go back and see what our rent was in a previous city, even if it was only a few months ago.

JRB: What is it that draws you to Central America other than the low cost of living?

CORY: Proximity, for one. Both The Girlfriend and I want to be close to our parents back in The States while we still have them.

The diversity of terrain is wonderful, too. In The US we could drive for 9 hours and still be in the Midwest. In Panama, for instance, we're in the Caribbean now and the Pacific is about 4 hours by car. There are places in this country where you can see both coasts from the same spot. In between are highland mountains (we just spent 2 months in Boquete, which is a pleasant highland climate with fog and evergreens). I have to hop planes in the states to see any one of those, let alone all three. I prefer living without a car so the high availability of public transportation down here is a big plus. I don't even have to plan a trip; I can usually just show up at the bus station and trust that within an hour a bus will leave going my way, and that's not just local transit but regional and international.

And I won't try to encapsulate my impressions of a Central American approach to life or philosophy or anything, but let's just say that, assuming one exists, I'm a fan.

JRB: Do you think that it is important for people who are considering moving to the places you are checking out (in Belize, Honduras, Nicaragua, and Panama, so far) to speak some amount of Spanish, or will they do fine without it?

CORY: Some places, like Honduras's Bay Islands and all of Belize, are mostly English speaking. Other places, like Esteli, Nicaragua are almost entirely Spanish. But if you're going to learn Spanish formally and have your eye on the region, then you're probably going to be taking those classes down here anyway.

For years I took trips in Nicaragua and Panama with absolutely no Spanish; I had a note in my wallet that ordered me a rum and coke, and that was it. It's frustrating and sometimes terrifying and you really have to make do with what you get, like in restaurants, but it's doable. My Spanish is still terrible. For example, I can only speak in the present tense.

JRB: When you interact with expats in different places, are you able to connect with people who have a range of experiences?

CORY: Yeah, the expats are a big part of the draw for me. The further you get out, the more interesting the stories are. There are some places where large organization are doing everything they can to funnel expats into specific towns, but there are other places where you really have to mean to end up there. I'm in Bocas del Toro [Panama] now, which is an interesting mix of both.

JRB: Do you feel that, in general, the expat communities are helpful and supportive?

CORY: Absolutely. Some places people are a little more guarded, usually in towns with more tourist traffic. But after they've seen you around for a couple of weeks or so they warm up to you, realizing that you're not just on vacation. Other places you're part of the family from day one. Some have been around so long they don't remember what it was like to adjust. They're great for stories and social info. Others have only been in town for 2 years and empathize with your practical concerns (cheap eats? laundry?) immediately. Some get really excited about the spreadsheets that I'm putting together, too, because they moved directly to a specific Central American town and are now thinking about looking elsewhere (this is especially true of expats in Costa Rica these days, due to price increases).

JRB: Many thanks to Cory and The Girlfriend for going out there, paying it forward, and offering up so much insight here in this interview and on Monday (or Something). It leaves me wondering what the connection is between people whose highest priority is getting drunk and the desire to help out one’s fellow expat by posting cost spreadsheets on the Internet... Hmmm.

Julie R Butler is a writer, journalist, editor, and author of several books, including Nine Months in Uruguay and No Stranger To Strange Lands (click here for more info). She is a contributor to Speakout at Truthout.org, and her current blog is Connectively Speaking.

email: julierbutler [at] yahoo [dot] com, Twitter: @JulieRButler

The Lowest Cost of Living in the World for Expats: South America

article from August 1, 2011

by Julie R Butler

After having given brief profiles of the cities of Central American cities with the lowest cost of living for expats, another group of cities that may be attractive as well as inexpensive are those in South America. These cities are somewhat off the beaten track, being more difficult to get to from the States or Europe, and some knowledge of Spanish is a must.

Quito, Ecuador

Quito is the capital of Ecuador and an important center of Latin American heritage. Quito’s Old City is considered to be the largest in all of the Americas. It is one of the oldest Spanish colonial cities in South America as well as one of the first locations where

the cry for independence from Spain rang out. This city is also known as Luz de América, Light of America.

At about 2,800 meters (10,000 feet) above sea level, Quito’s altitude is a formidable challenge. Additionally, Quito’s location between two high mountain ranges makes for weather that is unpredictable, and changes can be extreme. The weather is one reason why Cuenca, in the south, is more popular with expats, as it is consistent throughout the year and the altitude makes it moderate and pleasant. Another factor making Cuenca more popular is that Quito is in a more culturally traditional region, whereas Cuenca is about a third of the size of the capital, which is home to about 1.5 million people.

Among country’s greatest attractions are its natural beauty and amazing biodiversity, having the coastal plain, the sierra, and the Amazon Basin as well as the Galapagos Islands, all in a relatively small area. Ecuador also has one of the lowest costs of living in South America.

Although Ecuador has been a very popular destination for expats for the past few years, one of the main concerns is political volatility. The Correa administration has made great strides in reducing poverty in Ecuador, but authoritarianism, the expelling of the US Ambassador to Ecuador, and the police coup or whatever that was that occurred in September of last year have not exactly been signs of stability. Another problem to be aware of is growing drug violence.

Asunción, Paraguay

Paraguay is a landlocked nation that sits between Argentina, Bolivia, and Brazil. It is defined by the Paraguay River, one of South America’s major river systems, which divides Paraguay into two distinct geographic regions: the largely uninhabited semiarid Chaco to the west and the forested Paraná to the east.

The population center is in and around the capital, Asunción, located on the Paraguay River in the south of the country. It is another of the continent’s oldest Spanish colonial cities, having served as a base from which both colonial expeditions and Jesuit missionaries were launched, a trading port, and after Buenos Aires was sacked by indigenous warriors, the uncontested regional center of power. It is also known as the location where one of the first rebellions against the Spanish arose.

Paraguay’s history, tragically, has been one of the most war-torn in Latin America, which has stifled the country’s economic development. Although the most recent political upheaval was in 1999, Paraguay has continued to face daunting problems caused by poverty due to marginalization of the Guarani people as well as corruption and political uncertainty, and it is a major smuggling and piracy haven.

Asunción is just below the Tropic of Cancer, so the weather is mostly hot and humid, with a dry season from June to September. Typhoid vaccinations are recommended, and mosquito-borne dengue fever is a concern. This city of more than two million inhabitants has its charms, among them, lack of infrastructure such as paved roads, and farm animals wandering about at will.

La Paz, Bolivia

Bolivia is South America’s other landlocked nation, although both of these interior nations do have access to the Atlantic Ocean via the Paraguay River. There seems to be a direct correlation between the astoundingly high rate of poverty – more than 60% of the population – and the large number of indigenous peoples. This country has also had its fair share of military and political upheaval, having lost over half of the territory claimed upon independence from Spain in wars with its neighbors as well as experiencing the familiar destabilizing politics that are common throughout South America. Despite fierce political opposition and pressing economic factors, President Evo Morales, Bolivia’s first indigenous leader, has managed to spur growth and induce modest improvements in poverty levels.

Very diverse geographic regions range from the Bolivian Altiplano in the west, to Amazonian rainforests in the northeast, to the Chaco in the east. The administrative capital, Nuestra Señora de la Paz, is located in a bowl at 3,650 meters (11,975 feet) in altitude among the high mountains of the altiplano. Its climate is cool year round and fairly dry, with more rain falling during the warmer austral spring and summer months.

La Paz’s early history is marked with several sieges by the indigenous Aymara people, and yet again, the city lays claim to South America’s first call for independence from Spain. Today, 2.3 million inhabitants live in this metropolitan center in the Andes.

Probably the biggest challenge to living in this, the least expensive major city in all of South America, is dealing with the altitude, which affects not only us humans, but will also ruin computer hard drives that are not specially made for high-altitude use. And, of course, there are the common issues that come with being in such an economically split society. Spanish is a necessity, as is understanding that Bolivia under Morales is yet another Latin American country that does not have good relations with the United States and is lacking a US ambassador.

Julie R Butler is a writer, journalist, editor, and author of several books, including Nine Months in Uruguay and No Stranger To Strange Lands (click here for more info). She is a contributor to Speakout at Truthout.org, and her current blog is Connectively Speaking.

email: julierbutler [at] yahoo [dot] com, Twitter: @JulieRButler

The Lowest Cost of Living in the World for Expats: Central America

article from July 19, 2011

by Julie R Butler

The latest information about which cities have the lowest costs of living for expats has come out, but many of those cities are not attractive destinations for retirees or people looking to build new lives. I would like to address those cities that might be of interest to people who are looking for not only a low cost of living but also a challenge. The expat communities in these locations are not as large and well developed as others that have been popular for some years now.

The cities from the list of the lowest cost places for expats that hold the greatest potential fall into three regions of the world: Central America, South America, and the former Soviet Union. I will begin in Central America.

San Salvador, El Salvador

San Salvador is the cosmopolitan capital of Central America’s smallest and most densely populated nation. From its very beginnings, social inequalities and struggles have defined the country, as the indigenous population of Pipiles and Lucas put up a fierce guerilla resistance to the Spanish Conquest. Such struggles continued on and off, leading up to a brutal twelve-year civil war that came to an end in 1992. After a peace accord was reached, the country has grown economically. However, San Salvador still suffers from a high crime rate and gang violence. Meanwhile, the police force is notoriously corrupt. Despite these factors, Salvadorans have a reputation for being very kind and friendly people.

To get a good idea of what life in San Salvador is like, check out the blog that Jamie included in his list, What’s Up El Salvador. This is up to date and covers many aspects of expat life as experienced by a couple that moved there a few months ago who were involved in the coffee trade. The author, Nanelle, gives the best answer I have seen yet to the question, “What is the cost of living in Central America?” – a question that has no cut-and-dry answer due to different needs and expectations. Nanelle also has some great advice for learning how the pricing structure differs from what you would be used to if you are from North America and how to simplify your life to take advantage of the cost savings that do exist.

Tegucigalpa, Honduras

This city is the sprawling capital of El Salvador’s neighbor, Honduras. It is a dangerous city, where pickpockets, very aggressive beggars, and clever muggers are a constant problem. I am not convinced that this city has anything to offer expats who are shopping around for a place to live other than a low cost of living. What I do know is that Jamie and I have driven through Tegucigalpa five times on our comings and goings in Central America, and we found it to be the most poverty-stricken and saddest city that we ever encountered. Yes, Mexico City has similar sprawl and poverty, but that city is so enormous that there are areas where this isn’t so crushingly evident. Tegucigalpa is in a crowded bowl with slums covering the steep mountainsides all around, so the sense of being trapped inside is inescapable. Most expats who would be living in Tegucigalpa are of the diplomatic, corporate, or NGO type, whereas the more extensive expat communities of Honduras are on the Caribbean islands of Roatán and Utila.

While there was no civil war per se in Honduras during the 1980s, the country was nonetheless a pawn in the Cold War as a staging ground for US covert operations that helped keep the guns and drugs flowing and the entire region destabilized. The Honduran elites maintain close ties with US business interests, and the coup d’état of 2009 that illegally unseated President Manuel Zelaya was the latest frothing over of the continuing Cold War in Central America.

Managua, Nicaragua

According to the list, this is the least expensive city in all of Central America for expats to live in. Again, it is the capital and largest city in its country. Managua is home to the second-largest population in Central America (Guatemala City is the most populous). So it may come as a surprise to find that it is also the most pleasant and user-friendly of the three capital cities being discussed here.

Nicaraguan history follows a similar path to that of neighbors El Salvador and Honduras, emerging as the second poorest country in all of the Americas behind

Haiti. US intervention in Nicaragua has played no small part in the inability of the country to raise itself up out of this situation, with the likes of William Walker, whose goal it was to establish a slave state in Central America, circumventing US law in order to provide mercenary fighters to conflict in Nicaragua that predates the Iran-Contra Affair by 130 years.

I feel it is important to understand the history and the political climate of these countries, because behind the smiling faces that are happy to take your tourism or expat retirement dollars, social problems still simmer and, as in Honduras, the possibility for social and political instability exists. Nicaraguan President Daniel Ortega does belong to the Marxist-Leninist Sandinista National Liberation Front, whom the Contra mercenaries were fighting, and he is allied with Hugo Chávez as well as Gaddafi of Libya and Ahmadinejad of Iran in the name of anti-imperialist opposition to the US.

In addition to Managua, the colonial city of Granada and San Juan del Sur, on the Pacific Coast, and apparently even Esteli, in the mountains of the north, have become popular destinations for expats seeking low cost retirement living.

I highly recommend the blog, Monday (or something), where you will find very detailed cost of living charts for different locations in Nicaragua and Honduras, as well as providing windows into what expat life in these places is like.

see also: The Lowest Cost of Living in the World for Expats: South America

Julie R Butler is a writer, journalist, editor, and author of several books, including Nine Months in Uruguay and No Stranger To Strange Lands (click here for more info). She is a contributor to Speakout at Truthout.org, and her current blog is Connectively Speaking.

email: julierbutler [at] yahoo [dot] com, Twitter: @JulieRButler

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.