Archive for October, 2010|Monthly archive page

Simon Black…Notes from the Field….SRI LANKA…..via e-mail

In Business/Political Trends Worldwide, Continental Travel, Interesting places, Offshore accounts, Political, Travel on October 29, 2010 at 6:38 pm

Sovereign Man
Notes from the Field

Date: October 29, 2010
Reporting From: Colombo, Sri Lanka

I want to start off this missive with an important announcement: Sovereign Man will be hosting its inaugural comprehensive offshore workshop from February 18-20, 2011 in Panama City, Panama.

This is something that I’m very excited about, and I’m devoting a lot of time and attention to ensure that the workshop is a massive success– long on action, short on fluff.

To give you an idea, I’m inviting my trusted contacts like lawyers, private bankers, immigration specialists, brokers, trustees, and tax planners from all over the world, and you’ll be able to work with each of them, one-on-one.

This includes things like residency and naturalization, opening bank and brokerage accounts, storing gold overseas, registering foreign companies, establishing a trust, and even tax and legal advice so that you can legitimately maximize the benefits of each.

In short, this workshop will not only bring the world’s best offshore specialists to a single event and make them personally available to help you start planting multiple flags.

More importantly, we’ll start off the workshop with a “Starter’s Guide” seminar, which I will lead personally. Do you ever look at all the offshore options and wonder “There are so many choices, how do I even get started? Which is right for me?”

At this event, I’ll personally take you through how to analyze all of the options for your own situation to see which will be right for you… and once you’re ready, a team of providers will be standing by to personally assist you.

My goal is that you leave this workshop with a bank account established, a structure established, and being well on your way to having foreign residency approved for future citizenship.

I hope to see you there– once again, it will be from 18-20 February 2011, so save the date now… more details will follow soon. And with that, let’s move on to this week’s questions.

First, Stephan asks, “Simon, can you comment on the differences between opening a bank account in mainland China versus Hong Kong?”

They’re huge. Opening a bank account in mainland China is incredibly simple– in the time it takes for you to brew a pot of coffee, mainland banks will have your account open, UnionPay card ready, and even a local brokerage account.

At the moment, though, I wouldn’t recommend this for the uninitiated because there are some challenges. First, you have to go there in person to open an account in most cases, and this can be a pain for many people given the travel and visa hassles.

Second, there are still exchange controls in China, so it can be cumbersome to move money out the country unless you have another account in Hong Kong.

My recommendation is to first open an account in Hong Kong; you can always choose to hold your currency in renminbi if this is what you’re looking to do… and because it’s Hong Kong, you have the full weight and authority of mainland China to defend the banking system against foreign inquisitors.

Next, Paul asks, “Simon, online privacy is really important to me, so I appreciate you recommending Cryptohippie as a solution for secure browsing. I wonder– is it possible that company executives could be forced to give up our personal information to US authorities?”

Great question. Cryptohippie is one possible tool to safeguard your online privacy– the technology goes far beyond basic VPN or proxy service, and I’d encourage you to get in touch with the company directly to find out more and about how the technology is audited.

One of the things that I really like, though, is that the founders split operations into two separate legal entities and built a brick wall between the two. One company handles customer data, the other encrypts the web traffic, and the two don’t ever cross paths.

That being said, I’m happy to report that Cryptohippie is planning to move offshore soon– management realizes that it’s simply too inconvenient to be in the US any longer.

Subscribers to this e-letter receive a 7-day free trial to Cryptohippie’s service, so you can try it out risk free. Premium subscribers to Sovereign Man: Confidential receive the 7-day trial as well as a $40 discount.

Next, Richard asks, “Simon, I was curious as to why you didn’t on Indian real estate– any thoughts?”

Indian real estate is extremely cheap; I came across some of the cheapest raw land I’ve seen in Asia priced at just pennies per square meter. In upmarket urban areas, golf course condos with ocean views can be had for less than $100,000… you get the idea.

Given the supply and demand fundamentals (rising wealth coupled with a fixed amount of land available in urban markets), as well as the prospect of a rising currency, I think that Indian property makes for a pretty reasonable speculation… except for one thing:

Foreigners aren’t really allowed to own property. In order to qualify, one must be an Indian citizen, an overseas citizen of India, a person of Indian origin, or a foreigner who has become a permanent resident. The latter is a fairly difficult thing to do.

There are less cumbersome speculations among some Indian equities traded on foreign exchanges, including some companies that specialize in land banking. I’m currently looking in to a few of these.

Last, Chloe asks, “Hi Simon. I’m curious if you always have a plan for where you are going next? What makes you decide when to move and where to travel?”

I usually have specific reasons when I travel– getting a feel for the opportunities on the ground, having a meeting, scouting an investment deal, or just personal reasons.

To give you an example, I’m headed to Thailand on Monday to meet up with some friends and partake in a bit of medical tourism. Afterwards, I’ll be headed to Singapore for business and will hopefully be able to squeeze in a trip to Cambodia for deal sourcing.

People often ask me if it ever gets old– the travel. Of course not… travel is always full of unique and interesting experiences, and it doesn’t get old. ‘Traveling,’ on the other hand, which is the act of getting from point A to point B, does get tiresome after a while, especially when it’s so frequent.

I suspect that by the end of this year, I’ll probably slow down a bit and start spending more time in a single place– a few weeks or even a few months instead of just a few days. This will be good for productivity since we have plans for some large projects next year, including the sustainable community.

Have a great weekend.

Simon Black
Senior Editor,

Notes from the Field —- by Simon Black…..via E-mail……

In Business/Political Trends Worldwide, Government, Political on October 28, 2010 at 7:07 pm

Sovereign Man
Notes from the Field

Date: October 28, 2010
Reporting From: Colombo, Sri Lanka

In ancient Sanskrit, the name means “venerable island,” and the Arabs used to refer to it as “Serendib” for serendipity. Sri Lankans tend to agree– they find their small island of 20 million to be littered with good fortune, and many foreigners will concur.

Sri Lanka is perhaps most famous for its multi-decade civil war between government forces and the separatist Tamil group, which comprises about 10% of the island’s population. The war was long and bloody with both sides carrying on vicious extermination campaigns involving large groups of civilians.

In 2009, the government of Sri Lanka finally declared an end to the war against the Tamils after successfully neutralizing the opposition’s leadership. Left without a cogent head, the Tamils capitulated and the entire country endeavored to rebuild its war-torn economy.

(enthused by the news, international investors bid Sri Lanka’s stock market up by over 100% in 2009; P/E valuations are now in the mid-20s and dividend yields around 1%… not exactly a screaming buy…)

For years, textiles and agriculture dominated the economy, particularly the production of rubber, cinnamon, tea, coffee, grains, and ganja– hey, it’s for medicinal purposes…

The country is now feeling the effects of significant inflation, however, no doubt the result of its policy to keep its currency cheap against the US dollar. Its exports may be strong, but Sri Lanka is importing inflation from the US courtesy of quantitative easing, and locals on the ground are feeling the pinch.

The Sri Lankan rupee has remained artificially suppressed against the dollar while agricultural commodity prices have been steadily rising in dollar terms. This makes food more expensive to locals in Sri Lanka.

To give you an example, prices for staple food items like coconuts have risen by 30% in the last two months, sparking calls by the left-leaning government to control prices and regulate consumer behavior.

We all know that these sorts of policies never end well– price fixing causes production inefficiencies because farmers aren’t able to grow their crops profitably. This eventually forces many producers to go bust, thus reducing supply and eventually leading to shortages and even higher prices.

As we have seen many times in the last few years, food riots are just a half-step behind food shortages… and when there are widespread food riots in the world, I’m convinced that the currency wars will come to a screeching halt.

In the interest of self-preservation, developing nations’ governments will respond to the riots with a coordinated effort to dump the dollar and export inflation right back to the United States. This is no cause for panic, but it should give anyone holding dollars a reason to get prepared… more on this in the future, for now, let’s get back to Sri Lanka:

The other thing that’s really interesting about this place is the security culture. Troops are everywhere here, I’ve lost count of how many different types of military and paramilitary forces there are.

It turns out that for such a small country (20 million people), Sri Lanka has a pretty huge military numbering over 230,000. That’s about 11.5 troops per thousand population. By comparison, the US has 9.78 troops per thousand, 6.91 in the UK, 5.5 in China, 5.47 in Canada, and 2.06 in India.

In other words, there’s a soldier around every corner in Sri Lanka… and with no Tamil militants to fight anymore, the government has them doing everything from painting rocks to directing traffic. It’s an unconscionable waste of taxpayer dollars, and one I hope is phased out quickly.

Colombia is going through similar growing pains; now that the FARC has been effectively subdued, the country is struggling with its efforts to demobilize both its military as well as its national psyche. You don’t fight a multi-decade civil war and not walk away with a hefty military and a lot of emotional baggage… same deal in Sri Lanka.

While it will take some time, though, I’m convinced that Sri Lanka will work its way out of its post-war problems– the culture is incredibly opportunistic and pioneering.

During the war, many Sri Lankans left to seek education and employment overseas. Remittances became a significant portion of the economy (totaling $3.3 billion in 2009). Now that the war is over, many of the expatriates are coming home, and they’re bringing their savings and international skills with them.

This is a long-term bullish trend for a dynamic economy that is now enjoying a new peace.

The last thing I want to mention about Sri Lanka is the lifestyle. It’s cheap… almost as cheap as India but substantially more developed. The average GDP per capita in Sri Lanka is twice that of India, and it shows– the infrastructure is in better condition, the environment is much cleaner, and extreme poverty pales by comparison.

It also costs nothing to stay here– the 1,500 square foot, 3-bedroom luxury apartment I’m renting goes for about $1,200 per month including utilities. You’ll be hard pressed to spend $15/plate when going out to eat, and quality medical care is some of the most cost effective in the world.

You may also be pleased to hear that English is widely spoken with strong fluency, and the country is indescribably beautiful.

Over the next few days I plan on attending a national investment conference where I should have the occasion to hobnob with central bankers and a few ministers. They’re really trying to roll out the red carpet for foreign investors by demonstrating a “Business First” attitude in Sri Lanka.

These events are usually just political hot air, but I’ll let you know if I find anything interesting.

Until tomorrow,

Simon Black
Senior Editor,

Where is your thinking today???…Time is short……….by admin

In Business, Constitution of The United States, Events in Cape Coral, Government, Jobs, Political on October 27, 2010 at 7:31 pm


How are your thoughts forming???, are you getting ready to stake your claim in the voting booth??

How about the car that is being talked about endlessly, where do you want to sit???? What do you think of the Presidents remark regarding “sitting in the back seat”?? What about sitting along side, on a bench seat of sorts, and helping to make the necessary and important decisions we need to have made. I for one, feel that that is the most comfortable, I don’t like to look at the back of peoples heads who claim to have all the answers for this country’s problems. This same remark goes for both parties and would have the same relative meaning and direction if the positions were reversed. The folks who started this country working together did great things and the same must be applied today. In my humble opinion, these 2 years past have been a nightmare for decent folks and the greater institution of this country. Nowhere has it ever been proven that the government has provided impetus for the starting of businesses. Business start up is by individuals and personal collaboration rather than input from any form of government. As I see it, government has always had its hand out, to always take away a good portion of the fruits of individual imagination and development. A person does not first approach the government for his business ideas and start up, a person starts and forms and then goes to the government to receive instruction as to how he will be relieved of a good part of his gains. You can contribute to the demise of this principle if only you stand up, take up a stance and help to position this country of ours so we again take the high road instead of the low.
Look at all the options, look for people who will honor the constitution and move to keep its “teachings” alive. Future generations are depending on this.

DO THE RIGHT THING on November 2, 2010……..

Notes from the Field…..Simon Black……via e-mail

In Medical treatment on October 27, 2010 at 7:07 pm

Sovereign Man
Notes from the Field

Date: October 27, 2010
Reporting From: Trivandrum, Kerala State, India

In life, you can either be an Elvis person or a Beatles person. I’m an Elvis man myself. Fortunately, so was Ashok, the brakeman on train #6302.

I serendipitously ended up meeting Ashok by mistake– I boarded his train as it was literally pulling away from the station thinking it was the one that I was supposed to be on. It wasn’t.

As my companion and I chased down the train, Ashok was poking his head from the second-to-last car, and he helped us aboard after I hurtled our luggage onto the carriage. Only once on board did I realize that a) we were on the wrong train, and b) we weren’t even in a passenger car… we were in the brake room.

Lucky for me, Ashok seemed more transfixed by my beautiful friend’s flowing blonde hair rather than the fact that two strangers were illegally aboard his car.

It ended up being a wonderful experience, we talked for hours. It turns out that he has a keen interest in American politics and kept asking me about the issue of Obama’s religion and birthplace. Apparently infotainment is still a pretty big US export.

I was more curious to pick his brain about India; the question I ask everyone is– how can such a diverse country of 1.2 billion people who speak over 600 different languages and come from dozens of segmented religious and cultural backgrounds possibly co-exist under a single flag?

“I cannot explain it,” he said. “Only God knows.” That’s a typical answer here.

By the end of our trip, Ashok and I had become fast friends, swapping stories and taking silly photos. Then he pulled out his mobile device– something that looks a lot like a Blackberry but is incredibly more advanced– and requested something rather bizarre of me: he asked me to sing a song into the microphone.

“uh…. I don’t really…. dooooo that….” but the look of disappointment on his face was too much to bear. And so, in appreciation of his kindness and generosity (he had even offered to share his meager lunch with us), I broke into “My Way” in the style of Elvis Presley.

It may have been the strangest incident of my trip so far, standing in the brake room of a speeding train in the middle of rural India with a total stranger singing karaoke without the music. But it seemed to repay my debt to Ashok for the knowledge and kindness that he had extended.

Aside from the fact that Ashok really loves Elvis, I also learned that he has a son studying medicine in Australia. After finishing his schooling, Ashok’s son will have an abbreviated residence and then return to India to take up medical practice at an international private hospital.

In India, it’s typical for many private hospitals to have western-trained physicians; rather than staying in the west, many choose to return home because they feel like the cost-adjusted opportunities are stronger in India, and they get to spend more time practicing their craft rather than filling out insurance paperwork.

At India’s private hospitals, many of which thrive on the business of foreign patients, there is relatively little government or insurance bureaucracy to deal with. Patients pay cash, and the costs are so low that the hospitals can profit handsomely while providing world-class treatment.

Here in Kerala, there are a number of hospitals that specialize in foreign medical tourism. The CRAFT hospital, for instance, is renowned for its infertility treatment center, and the Ahalia Eye Hospital is a JCI accredited facility with numerous success stories of treating ailments where western hospitals had failed.

One of the more famous hospitals in India is the Apollo chain which also has a number of JCI accredited facilities for a variety of afflictions including cancer and heart disease.

According to the physicians and administrators that I’ve spoken to here, procedures are a fraction of what they cost in the west; hip replacement surgery runs about $6,800 and coronary angioplasty about $2,700, inclusive of accommodation, medicine, surgical fees, etc.

From my own experience, though, I’ve found that the best part of medical treatment overseas is being able to see the doctor right away– waiting time is practically zero. In many countries doctors will still even make house calls and invite you to ring them on their mobile phones if you have any problems.

This is in stark contrast to the norm in many western countries where you waste away in the lobby waiting for some nurse to triage you… and in some instances ultimately get treated by a physician’s assistant rather than a medical doctor.

Given the value for price and the English proficiency in the country, India is one of the places where you may consider planting a ‘medical flag’; these are countries with top quality medical care at a fraction of the price that you would pay in the west.

Rather than stressing about rising insurance premiums or the bungling incompetence of government-run hospitals, foreign medical care is a viable and cost effective solution for the issue that should be everyone’s #1 priority– our health, and the health of our families.

Until tomorrow,

Simon Black
Senior Editor,

In Uncategorized on October 27, 2010 at 3:03 pm Widgets

28TH Amendment…Proposed….via E-mail….

In Constitution of The United States, Government on October 26, 2010 at 9:15 am


The Time Has Indeed Come!

Governors of 35 states have already filed suit against the Federal Government for imposing unlawful burdens upon them. It only takes 38 (of the 50) States to convene a Constitutional Convention.

This will take less than thirty seconds to read. If you agree, please pass it on.

An idea whose time has come!

For too long we have been too complacent about the workings of Congress. Many citizens had no idea that members of Congress could retire with the same pay after only one term, that they specifically exempted themselves from many of the laws they have passed (such as being exempt from any fear of prosecution for sexual harassment) while ordinary citizens must live under those laws. The latest was to exempt themselves from the Healthcare Reform … in all of its forms. Somehow, that doesn’t seem logical. We do not have an elite that is above the law.

I truly don’t care if they are Democrat, Republican, Independent or whatever. The self-serving must stop. A Constitutional Convention – this is a good way to do that. It is an idea whose time has come. And, with the advent of modern communication, the process can be moved along with incredible speed. There is talk out there that the “government” doesn’t care what the people think. That is irrelevant. It is incumbent on the population to address elected officials to the wrongs afflicted against the populace…you and me. Think about this…

The 26th amendment (granting the right to vote for 18 year-olds) took only 3 months & 8 days to be ratified! Why? Simple! The people demanded it. That was in 1971…before computers, before e-mail, before cell phones, etc.

Of the 27 amendments to the Constitution, seven (7) took 1 year or less to become the law of the land…all because of public pressure.

I’m asking each addressee to forward this Email to a minimum of twenty people on their Address list; in turn ask each of those to do likewise.

In three days, most people in The United States of America will have the message. This is one proposal that really should be passed around.

Proposed 28th Amendment to the United States Constitution: “Congress shall make no law that applies to the citizens of the United States that does not apply equally to the Senators and/or Representatives; and, Congress shall make no law that applies to the Senators and/or Representatives that does not apply equally to the citizens of the United States .” Keep it going.

Sovereign Man….Notes from the Field…….India….via E-mail….

In Business/Political Trends Worldwide, Money and Finances on October 25, 2010 at 6:41 pm

Sovereign Man
Notes from the Field

Date: October 25, 2010
Reporting From: Cochin, Kerala State, India

India is, without doubt, one of the most intriguing countries in the world; the culture, the food, the history, the mysticism, and the beautiful landscape all make for a very compelling place to visit.

From an economic perspective, it’s also very compelling. We all know the story of India’s rising middle class– together with China, Russia, Brazil, Indonesia, and Africa, there will be roughly 1 billion new consumers in the world over the next decade, more than in the US and European Union combined.

This is a trend that simply cannot be ignored by investors or entrepreneurs, and India’s middle class will comprise one of the largest shares of this new demographic, along with China.

India is vastly different than China, though; in India, there is no government forcibly evicting people from their homes to make way for a new airport, no government-backed empty cities, no centrally planned regulations to cool the real estate market, and no controlled population movements.

As such, what takes months in China may take years in India.

Moreover, India has a fair set of challenges; sectarianism is rampant… there are over a dozen languages and scores of ethnic and sub-ethnic groups in the country, and this has given rise to secessionist groups and some violent attacks across the country.

India’s rapid social transformation is also causing problems. Once a deeply traditional and conservative society, India is now eschewing old conventions like marriage, modesty, and the antiquated role of women.

Perhaps the greatest challenge that India faces, though, is its rampant and shocking poverty, which goes hand in hand with its newfound wealth.

To give you an example, Bombay is home to more billionaires than San Francisco or Tokyo, yet simultaneously home to one of the largest slums on the planet. Poverty and prosperity are next-door neighbors, and the wealth gap is no more apparent in the world than in India.

(as an aside, many locals will still say “Bombay” instead of Mumbai when speaking to a westerner– the Maharashtrians don’t need those Hindi-speaking bureaucrats in Delhi telling them what to name their own city…)

Despite pockets of immense wealth in India, the country’s GDP per capita is less than $1,000. Considering that it took 15-years to reach this number from the time when the government started liberalizing the economy in the 1990s, it’s going to take a long time for India to just catch up to Eastern Europe.

This leaves a lot of room for growth; in fact, India’s middle class perhaps has the most growth potential among the BRIC nations in terms of population. While China’s tier-3 cities are already booming, India’s tier-2 cities are just getting started. This spells opportunity for entrepreneurs.

Doing business here is anything but traditional, though. Perhaps one of the most striking things about India is how self-contained it is– excluding certain luxury goods, Indians are not the least bit obsessed with western culture; they have their own music, movies, websites, food, etc.

Foreigners who succeed here don’t try to cram western products and services down Indians’ throats; instead, they adapt products and services to match the culture’s taste. This is a no-brainer for any international expansion, but India takes a lot more study than, say, Brazil, Russia, or the Philippines.

Given the hundreds of millions of potential consumers with discretionary income, however, the time and effort invested would be well worth it.

Coincidentally, I was having lunch with a friend of mine in London some weeks ago– he’s working on a large venture with one of the UK’s biggest media companies.

He told me that the company would be excited to generate 10 million new subscribers over the next decade… and that the equivalent media company in India will probably generate that many new subscribers by next summer.

Given the difference in growth potential, he wondered out loud, “what the bloody hell am I doing in London?”

Until tomorrow,

Simon Black
Senior Editor,

Sovereign Man…Notes from the Field…Mumbai…via E-mail

In Business, Business/Political Trends Worldwide, Money and Finances, Political on October 22, 2010 at 12:30 pm

Sovereign Man
Notes from the Field

Date: October 22, 2010
Reporting From: Mumbai, Maharashtra, India

Usually when flying from east to west on long-hauls, flights leave in the daytime and arrive a bit later in the day due to changes in the time zone. For example, you might leave London at 12pm and arrive in Miami at 4pm even though it’s a 9-hour flight.

On the flight to India, though, they obtusely scheduled our departure from Hong Kong late in the evening, arriving at about 3am. It’s like a red-eye, but in the opposite direction; in fact, if I had to come up with a name for this type of flight, I’d say ‘red face’ because everyone on board seems pretty miffed.

Fortunately, I’ve been traveling so much over the last few days between Africa, Hong Kong, and now India, my body has no idea what time zone it’s in. Everyone seems to have a method for dealing with jet-lag… sun exposure, pills, whatever. Mine is simple: eat when you’re hungry, sleep when you’re tired.

Granted, it can be a little inconvenient at times, but luckily I have a slew of subscriber questions to keep me busy at this odd hour!

First, Des asks, “Hi Simon, a few months ago I think you warned us of euro/USD parity (with USD) and a real risk of breakup of EU. Do you think you overreacted?”

Negative, I didn’t say that the euro and dollar were going to parity (meaning $1 = 1 euro). This past July, while the euro was low against the dollar and it seemed like every knucklehead was going on TV talking about parity, I wrote the following:

“To me, the best indicator is simply watching a bit of Bloomberg or CNBC. When all the guests who come on the show talk about euro/dollar parity, it’s time to exit the short [euro] position.”

Exiting the short euro position back then was a good idea, it’s surged over 10% since I wrote that letter. The thing is, though, the euro’s recent surge is not a vote of confidence for the euro, it’s a vote against the dollar.

Both of these currencies are fundamentally weak; their problems took decades to develop, and those problems aren’t just going to disappear in a couple of months.

Favor among the major currencies will shift back and forth– it’s like turning an hourglass over and watching the sand drain in the other direction. Eventually, the market will turn the hourglass over and capital will flow back into the dollar.

Again, this won’t be a vote of confidence for the dollar, but rather a vote against the euro– a financial determination that the dollar is the ‘least worst’ store of value at that particular moment among the major currencies.

Another thing I’ve written about before is purchasing power parity between the two currencies. In my estimation, in order for goods and services to be roughly the same price given tax rate differentials and the like, the euro should be priced between $1.18 and $1.25.

Anything significantly more than $1.25 is an ‘anti-dollar premium’ that the market is willing to pay for a safer store value. When we saw the euro fall within this range, the market was indicating that it no longer believed the euro to be a safer store of value.

Lastly, on the subject of the EU, don’t conflate the European Union with the economic union of the eurozone. They are related, but distinct.

The eurozone will absolutely break apart. The ‘have’ countries like Germany and Luxembourg will not continue to write blank checks to support the ‘have nots’ like Greece and Portugal. And the ‘have not’ problems are just getting started.

Next, Carol asks about dual passports: “Simon- I’m a citizen of New Zealand. I live in the US and have acquired a US passport. If I intend to travel to NZ, do I exit the US with my US passport, enter NZ with my NZ one, and come back to the US with my US passport? Is it possible to switch passports arbitrarily?”

Most countries will require that citizens of that country pass through immigration with that country’s passport. For example, while there is no outbound immigration upon departure at US airports, the law requires citizens to enter with their US passports, regardless of other passports carried.

If you’re traveling to third countries, you can use whichever passport you prefer. When I travel to Chile or Brazil, for example, I always use my European passport. Why? Because US citizens have to pay a hefty fee at the border, whilst Europeans do not. This alone has saved me a lot of time and money.

Last, Julia asks, “Simon, given the run-up this year in global asset prices, do you see anything out there that’s undervalued and worth investing in?”

While there are individual exceptions, valuations are too high in most public equities markets… not to mention I don’t have any confidence in the balance sheets of large cap stocks, especially financials. Does anyone really know what’s under the hood at Goldman or Citi? I certainly don’t.

Sovereign bonds are unsound and out of the question– I won’t voluntarily loan money to politicians. Many currencies and commodities are near all-time highs, not exactly time to go rushing in from an investment perspective.

For me, the most compelling offerings are private deals; there are a lot of brilliant entrepreneurs that need access to capital, even if it’s a small amount. They can’t get it from banks anymore, and many non-public investors are still pretty tight with cash.

This means that the few investors out there who are willing to cut a check are getting great terms for the best opportunities, leaving potential for 10x, 20x, or even 100x returns.

On the balance, the best risk/reward ratio for me is where I can actively influence a small company that’s solving a problem and providing value in the marketplace.

Have a great weekend.

Simon Black
Senior Editor,

Assimilation and Multiculturalism….Important words and meaning…….by Admin

In Business, Business/Political Trends Worldwide, Money and Finances, Political on October 21, 2010 at 8:54 pm

These are important words and have important meanings in todays view here in the United States of America. Assimilation has almost lost its real meaning and is being replaced by multiculturalism, are you aware of this??

Assimilation was foremost in the minds of folks who came here in the late 19th and early 20th centuries. These folks had a desire to learn the ways and new language of the newly adopted country. Their anxiety was greatly appreciated, adding another notch into the building of our society. There was a collaboration of like minded individuals here as to living in the same areas and contributing to each others welfare. Even though the community was close knit, the commonality of language was recognized so that the communication of thoughts and ideas were transferred easily. This need was communicated to their children so as to provide a better and stronger foothold for future generations. This demonstration of “networking” has proven this nation to great advantage. The very thought of undoing the mechanism of assimilation is very un-nerving. Our country, at the start of the 21st century cannot tolerate this line of thinking.

This brings me to Multiculturalism – It seems that we are using this term rather than the former to provide a direction for our nation in the 21st century. This is and will be an intolerable situation. The very flow of ideas and thoughts get lost if we have a multitude of languages which so many of us are not familiar with. Just think how it would be if you could not communicate with your neighbor due to language barrier. Maybe even the tellers at your local bank would be difficult to speak with. So many of us are/were upset with the “Press 1 for English” concert in so many areas. Multiculturalism is expensive also. many words need to be printed and described rather than just one word/words to signify a particular designation or direction. Times like now do not advertise expenditures of such a great volume for something that is not the most beneficial to all concerned. You/Me and the country are far better off with just one known language for everyday communication with each other.

Give it some thought for the coming days.. It could make for a better LIFE.

We are in Juan Williams’s corner, although we are conservative, we feel his right of free speech has been very much violated. NPR should be relieved of all the input of Tax payer monies.

The days are counting down, Nov 2 is coming very fast. I hope you are planning to VOTE this time. All votes are needed. Your government needs to be shown just how awake we all are and how willing we are to take on the important issues of the season. Please do not let the opportunity slip by. Our elected officials need to see that we are not asleep and willing to take the status quo.

God Bless America……

One Nation Under God, Indivisible, with Liberty and Justice for ALL…

Sovereign Man…Notes from the Field……..via e-mail

In Business, Business/Political Trends Worldwide, Jobs, Money and Finances, Political on October 21, 2010 at 3:55 pm

Sovereign Man
Notes from the Field

Date: October 21, 2010
Reporting From: Hong Kong, SAR

I’m seeing some things on the ground here in Hong Kong that are the first signs of a coming dollar crash.

We’ve talked before about how the global financial system is based on enormous flows of capital– trillions of dollars flow from one country to another, from one currency to another, and most of it is controlled by large banks, funds, and institutions.

This system requires extremely large economies with extremely large money supplies that can adequately absorb huge capital flows. If you and I go buy a few thousand dollars worth of Peruvian sols, for example, no one will notice. But if JP Morgan decides to buy $1 billion worth of Peruvian sols, the Peruvian sol is going to spike.

As such, there are really only three places in the world where the currencies can absorb huge capital flows– the US, Japan, and eurozone. Coincidentally, these are also among the three sickest developed economies.

Everyone knows that the US has the largest debt in the history of the world, that the eurozone’s supranational challenges are beyond repair, and that Japan’s 2-decade long recession shows no signs of abating… but frankly there aren’t any other options out there.

Trillions of dollars of institutional money need to be parked somewhere, and as much as institutions might like to hold their cash in a better store of value like, say, the Chilean peso, there simply aren’t enough Chilean pesos in existence to absorb trillions of dollars.

This means that institutional investors are essentially left to judge a redneck beauty pageant: which of the three contestants is the least ugly?

The winner fluctuates. For the six months from September 2008 through March 2009, the dollar was the least ugly. Then for the next 6-months until November 2009, the dollar was the ugliest. From November 2009 through May 2010, the euro was the ugliest, and since May it appears that the dollar has once again been deemed the ugliest.

Undoubtedly, the Japanese yen will have its time in the spotlight as the ugliest, and we’ll continue to see all three of these currencies jockeying for position against the others. Their respective bureaucrats favor weak currencies, and they’re doing whatever they can to inflate and devalue.

In the meantime, little by little, some of these institutional flows are spilling into other currencies viewed as safer stores of value… hence the rapid rise of the Swiss franc, Canadian dollar, Aussie dollar, New Zealand dollar, Singapore dollar, Chilean peso, Brazilian real, and of course, precious metals.

For institutional funds, though, these currencies don’t necessary offer a long-term solution because they’re too small. The entire money supplies of Australia and Canada, for example, are each about $1.3 trillion, while the value of all the available precious metal is less than $6 trillion.

Meanwhile, the Bank for International Settlements estimates the size of the world bond market at over $80 trillion. Thus, you can see why institutions are having to play judge in such an unfortunate beauty pageant… there simply aren’t any reasonable options to hold vast amounts of currency.

As one of the world’s strongest and most dominant economies, China’s renminbi represents a long-term solution… but not yet. China’s economy is already #2 in the world and will likely overtake the United States within a decade. Its money supply is vast, and would be able to withstand significant capital flows.

The problem is that China has imposed severe exchange controls, and the financial system depends on the free flow of capital. Little by little, these controls have been gradually loosening… and the more these controls loosen, the more likely investors will be to abandon the three ugly sisters and move into the renminbi.

Years ago we saw the first signs– China loosened its exchange controls by allowing foreigners and locals to begin moving money overseas with limited restriction. Now the signs are becoming more frequent, and more obvious.

To start, many countries are beginning to build up foreign exchange reserves in renminbi instead of dollars or euro. Malaysia, for example, is buying renminbi-denominated Chinese bonds, and other countries like Argentina, Iceland, Belarus, and Singapore have swap agreements with China, allowing them to hold renminbi in reserve.

Perhaps even more interesting, though, are all the new bonds that are being issued in renminbi. Here in Hong Kong, I saw Asian Development Bank (ADB) just raise 1.2 billion renminbi ($180 million) through a bond auction. They’re moving to list the bonds on Hong Kong’s stock exchange, becoming the first exchange-traded renmimbi bond.

A few months ago, McDonald’s became the first multinational company to sell renminbi-denominated bonds, and Wal Mart has openly discussed doing the same. I’m convinced that one day soon we’ll see bankrupt cities in the US taking similar steps and auctioning off renminbi-denominated municipal bonds.

Furthermore, the Chinese government has also paved the way for instant, cross-border settlement services between the mainland and Hong Kong. In other words, banks in mainland China can settle and wire payments immediately to Hong Kong without bureaucratic approval… and then from Hong Kong, to the rest of the world.

Effectively, Chinese policymakers have dropped most of the exchange controls with Hong Kong, and they’re using Hong Kong’s financial system as a middle man to have a free flow of capital between China and the rest of the world.

As the Chinese government continues down this path of monetary deregulation, you can be sure that institutional funds will dump their dollars, yen, and euro and head to the dim sum market for a better store of value.

This is not a cause for panic, but merely preparation. We can see the signs of the long-term trend… and if you haven’t done so already, you should be taking steps to preserve the value of your capital. Consider holding stronger currencies in a foreign bank account, buying precious metals, or purchasing well-located foreign property.

If you wait until your broker calls to offer you renminbi-denominated muni’s, it will be too late.

Until tomorrow,

Simon Black
Senior Editor,