capecoralblogger

Sovereign Man – Notes from the Field

In Uncategorized on August 21, 2010 at 5:58 pm

Sovereign Man
Notes from the Field

Date: August 20, 2010
Reporting From: Paris, France

I met a French couple last week when I was vacationing in the Tatra mountains of southern Poland, and I had a rather rude awakening: my French has gotten terribly rusty. I stammer in mid-sentence and fill the awkward gaps with Spanish and Portuguese words as an odd replacement.

French was my first foreign language– my European mother taught it to my sister and I since we were children, and I had a very solid command of the language by my teenage years.

Unfortunately for my French skills, I only find myself in a French-speaking country for just a few days each year, and my skills have deteriorated precipitously over the years in favor of other languages like Spanish which I speak much more frequently.

Needless to say, after such a poor showing last week, I booked myself on a trip to Paris to brush up on my French for a few days.

Part of being self-reliant is having a wide and useful skill set… and language definitely qualifies. If you speak a foreign language, you can solve problems and add value for others… and this is the foundation of any successful business or profession.

On that note, Jeff comments, “Simon- I bought the overseas business opportunity report that you mentioned yesterday; I’m only halfway through it, but it’s already given me some great ideas– thanks for referring it. Where do you think are the best places to go to start one of these businesses?”

I’m glad that you’re getting a lot of value from the report. It was written by a bunch of different expats and permanent travelers (not me); I know several of them, and I’ve often found their ideas to be insightful.

If you’re interested in implementing some of the ideas in the report, or one of your own, the ‘best’ place really depends on the specifics of the idea. In general, though, I would suggest picking the places where you can get ahead of the trend.

To give you an example, I think that the world will experience a massive demographic shift over the next decade as anyone with portable financial and intellectual capital leaves their home country for greener pastures.

Small countries like Uruguay will probably absorb a lot of the net migration; if you spend any time at all in that country, you can see that it’s already quite a hit with Europeans and wealthy South Americans.

Because Uruguay has a fairly small population, you can imagine the effect it will have on the economy when thousands of relatively wealthy expats descend on Punta del Este and Periopolis, effectively doubling the size of those towns.

Each of them will need a variety of products and services, and this spells opportunity for those who arrive ahead of the trend. There are dozens of other countries where this could be the case, but the same analysis applies.

Next, David asks, “Simon, I’m struck with a horrible bout of indigestion every time property tax season roles around. I despise being compelled to bribe the government just so that I may enjoy the privilege of owning what I have already purchased. Can you discuss jurisdictions which have no real estate tax?”

This is a great question… it’s a funny thing about owning property– in most cases, you never really own your property, you just rent it from the government. Stop paying that rent (i.e. property tax) and see what happens.

The worst offenders are western developed nations; in the US, there is a whole industry devoted to scooping up cheap property because someone didn’t pay his rent to the government. The whole idea is intellectually offensive.

Outside of the Caribbean or South Pacific, it’s uncommon to find places with zero property tax. In many developing nations, however, property tax regimes are much more lax.

The rates are embarrassingly low (you could pay the bill from the spare change you find in your couch), and no one comes knocking until you miss several years of payments.

I think that the idea of foreign property ownership is riddled with misconceptions that just make me chuckle sometimes. People buy the fear-mongering they read online, and many believe that foreign governments will automatically confiscate or socialize property with squatters.

In my own experience, I’m far more likely to get cheated out of a property in South Carolina than in South America.

Last, Li asks, “Simon, what’s your take on the currency markets right now? I can’t believe my eyes when I look at my Bloomberg sometimes.”

Tell me about it. I think the yen’s strength is becoming one of the biggest bubbles we have seen in a long time. Japan’s economy has P-A-I-N written all over it– they’re in debt past their eyeballs, the economy has been stagnant for 20-years, and the aging population will soon break the pension system.

And yet, the yen has surged to levels not seen in 15 years. This is a guaranteed bust. The bubble may keep expanding in the short-term, but I think financial markets will soon set their sites on Japan’s role in the race to the bottom. This has me tempted to short the yen in the near future.

Have a great weekend / passez un bon week-end.

Until tomorrow,

Simon Black
Senior Editor, SovereignMan.com

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