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Sovereign Man Notes from the Field Date: May 31, 2011 Reporting From: Santiago, Chil

In Business/Political Trends Worldwide, Government, Opportunity, Political, Taxes, Travel on May 31, 2011 at 1:11 pm

Sovereign Man
Notes from the Field

Date: May 31, 2011
Reporting From: Santiago, Chile

As I told Sovereign Man: Confidential subscribers on our monthly teleconference yesterday afternoon, I’ve been focused over the last several months on sniffing out the best deals in Chilean farmland for our planned resilient community. We’re definitely close.

As my base is here in beautiful Santiago, however, I wanted to take some time today and tell you about the real estate market in the city.

First, you should know that Santiago is a truly fantastic city. In terms of weather, you can hardly beat it: bright, blue sunny skies and a temperate, Mediterranean climate where it hardly rains. And yet, you’re no more than an hour or two from both world-class ski resorts, as well as the beach. (Note: the city does have a problem with smog, which is worst in the winter).

Furthermore, Santiago is just a nice, clean, modern, first world city… something like Madrid meets Chicago. It’s a pedestrian-friendly city with great mass transit and a privatized highway system. There are parks everywhere among the sprawling towers, and you see locals everywhere enjoying a coffee in the city’s numerous cafes and eateries.

(as an aside, Santiago has something you won’t find in too many other places in the world… a concept called ‘cafe con piernas’ or coffee with legs. Think of it as a combination of Starbucks and Hooters…)

Most of all, this place is civilized; Santiago is devoid of the sort of destitute squalor you would expect of a Latin American capital. Obviously some parts of town are nicer than others, but overall I find it every bit as nice as Europe or North America with every amenity you could ever want or need, and all at a pretty nice cost of living discount.

Compared to what I’ve seen elsewhere around the world, real estate in Chile (and Santiago in general) is a relative bargain. Bear in mind, I think about real estate in terms of square meters, which for our metric challenged readers is 10.76 square feet… so a 1,500 square foot 3-bedroom home is about 140 square meters.

My unequivocal, universal standard for ‘cheap’ residential real estate in big cities is $1,000 per square meter. It’s really hard to find this anymore in the world. Ecuador comes to mind– there are a number of good quality properties in Cuenca and Quito for $1,000 per square meter.

I’ve also seen a number of existing condos in Medellin, Colombia for this price, as well as parts of the Yucatan peninsula in Mexico (such as Merida).

In parts of Santiago, it’s possible to find some bargain properties for $1,000 per square meter. In the area around Parque Forestal near in the center of town and the Bellas Artes district, you can find some lovely older properties for between $1,000 to $1,200 per square meter.

The construction quality is excellent– these buildings are solid concrete, built to last… and they’re huge too. You can find many apartments in excess of 300 square meters (3,225 square feet) with a beautiful view overlooking the area’s numerous parks.

The neighborhood is undergoing a gentrification process and is becoming popular now with young professionals, the art crowd, and Santiago’s rapidly growing gay community… the triumvirate of a promising real estate market.

It’s also a protected, historic area, so the chances of a new eyesore going in anytime soon are slim.

Property taxes are a joke; owners might pay $40 to $100 per year in taxes on a reasonably-sized apartment, while rents command a 6% yield at present. I expect the rental yield to increase over the years, along with property values, as supply is constrained and demand is increasing.

In other parts of Santiago– the upmarket areas of Vitacura, Las Condes, La Dehesa, or Providencia, property prices can run between $2,000 to $3,000 per square meter. This is much more expensive than downtown, but it’s still quite reasonable to what I’ve seen elsewhere in the world, including in Argentina and Uruguay.

Even in Asia, which has some of the cheapest cost of living on the planet, it can be hard to find good quality construction for less than $2,000 per square meter. In Bangkok, many upmarket properties sell for in excess of $5,000 per square meter, no doubt a bubble fueled by cheap credit and Chairman Bernanke’s exported monetary inflation.

Santiago has been much less prone to such speculative bubbles; the central bank here has taken rather steps to both hike interest rates and allow the peso to appreciate. In the face of coordinated currency devaluation and exchange rate games in just about every other country on the planet, these are undoubtedly bold moves.

The peso is now near its 10-year high against the dollar, and the central bank’s benchmark interest rate is 5%. In the Greek-induced financial system meltdown part II that I expect to occur over the next 2-years, Chile will consequently emerge as one of the safe havens (i.e. least scathed countries) because of the responsibility it is taking now.

Until tomorrow,

Simon Black
Senior Editor, SovereignMan.com

This article appears courtesy of SovereignMan.com: Notes From The
Field
, a free newsletter dedicated to individual freedom,
internationalization, asset protection and global finance. For a
complimentary subscription, visit http://www.SovereignMan.com

Sovereign Man Notes from the Field Date: May 30, 2011 Reporting From: Santiago, Chile

In Business, Business/Political Trends Worldwide, Government, History, Opportunity, personal and business, Political, Taxes on May 30, 2011 at 7:33 pm

Sovereign Man
Notes from the Field

Date: May 30, 2011
Reporting From: Santiago, Chile

I had the opportunity to tour Chile’s national military school yesterday. As you may know, I spent some time in the military myself in places that were not especially pleasant, so the visit was quite meaningful for me.

My host was a particular gung-ho Chilean Army officer; curiously, he told me that many of his fellow officers in Chile petitioned the government to authorize a deployment of soldiers to Iraq and Afghanistan. They want to participate in the action, if for no other reason than for the opportunity to improve training at home.

Chile’s politicians wouldn’t hear of it, their response being something slightly more eloquent than “no way in hell are we sending Chileans to die in that f’ing desert.” My host seemed rather disgruntled.

“Trust me,” I said, “you don’t want to go over there… and you should consider yourself lucky that your civilian leadership has the good sense to boycott the conflict. There is nothing good waiting for you in Iraq or Afghanistan.”

Young, gung-ho soldiers just want to get in the fight and don’t think much about morality, cost, or danger… so it was incredibly encouraging to hear how opposed his government was to the idea.

I further explained that, when I was at West Point in the post-Desert Storm era, the biggest thing we had to prepare for was the conflict in the Balkans. After graduation, things changed; the embassy bombings in Africa, the USS Cole, then the September 11th incident, all revolutionized the US military’s role.

In the 1980s, there was one single enemy… and the entire US military was focused on the Soviet Union. When the wall fell, the US aimlessly wandered the 1990s as the world’s policeman until ultimately adopting the role of ‘pre-emptive strike force’ in the 2000s (assuming official explanations are to be believed).

During my own career, I realized that the military was little more than a blunt instrument for bureaucrats to achieve political gain. I remember the night before the invasion of Iraq in 2003 so clearly: as all the forces were huddled at the border in Kuwait waiting to advance, I couldn’t stop thinking about the people on both sides who were about to die because George W. Bush had something to prove.

In the subsequent years, little has come from that conflict other than shattered lives, lost limbs, and a mountain of debt.

You can peel back the onion further and question the benefits of nearly every conflict– Mogadishu under Clinton, Panama under Bush I, Grenada under Reagan, the entirety of the Vietnam War under five presidents, the invasion of Greece in 1947, the occupation of Haiti in the 1920s… Cuba, the Philippines, Mexico, etc.

There are scores of other instances going all the way back to the late 1700s. And for what? To install a ruthless, puppet dictator? To maintain the country’s addiction to oil? To expand America’s domain until it matches the size of its government’s ego?

Libya is simply the latest in an endless string of folly. This logic of “let’s indiscriminately bomb a country in order to protect the civilians” can only come from the mind of a politician who quantifies benefit in votes and awards taxpayer money to defense contractors that make warfare more lethal.

Consider that there are entire industries with some of the most brilliant minds on the planet dedicated to making the military more ‘powerful’, i.e. deadly.

Today, politicians can watch a predator drone or stealth bomber rain death and destruction on a foreign population from his plasma screen. They brag about their smart bombs (which are racking up the civilian death toll) or how powerful their nuclear arsenal is, as if the efficiency of one’s destructive power is honorable.

Donald Rumsfeld famously used the phrase “shock and awe” as a promotional tool during the invasion of Iraq. It was something for the press to latch onto and fill the country with a dreamy spin on the military’s ability to exterminate foreigners like cockroaches.

They show us videos of massive explosions and Americans shriek like chimpanzees in boastful approval. Not exactly a far cry from the Roman Colosseum, is it?

In reality, there’s nothing romantic about this; the ability to kill efficiently should not be a source of pride. And the fact that a small group of elites has the power to send thousands of people to fight, die, and kill, as well as cajole an entire society into tacit support, is a total aberration of humanity.

Our descendents will surely look back on this time and wonder how we could have been so foolish– to let these people rob our freedoms; destroy our economies; kill foreigners on their home soil; and shower themselves with Peace Prize medals… all while keeping society quietly subdued with games, tricks, and bombastic patriotism.

They tell us to wave the flag, to buy yellow ribbon bumper stickers, and to remember the fallen on days like today. Truthfully, though, the memories of the fallen would be much better honored if the government quit making more of them… and stopped destroying the freedom that they supposedly died to defend.

*If you have ever doubted that freedom is on the decline, just watch this video recently shot at the Jefferson Memorial of all places.

Until tomorrow,

Simon Black
Senior Editor, SovereignMan.com
This article appears courtesy of SovereignMan.com: Notes From The
Field
, a free newsletter dedicated to individual freedom,
internationalization, asset protection and global finance. For a
complimentary subscription, visit http://www.SovereignMan.com

God Bless our Troops…..

In Political on May 30, 2011 at 9:15 am

Folks:
Please let us not forget the magnificent troops that have made all this possible. This day is a celebration for all their contributions to the American way of Life. God Bless America, One Nation under god, Indivisible, with Liberty and Justice For All…

Sovereign Man Notes from the Field Date: May 27, 2011 Reporting From: Santiago, Chile

In Business/Political Trends Worldwide, Government, History, Money and Finances, personal and business, Political, Taxes, Travel on May 27, 2011 at 1:11 pm

Sovereign Man
Notes from the Field

Date: May 27, 2011
Reporting From: Santiago, Chile

The destruction of a currency is, without doubt, positively devastating for a society. History is generous with examples dating all the way back to 212 BC when Rome first devalued its denarius silver coin by 50%. Recent examples are also plentiful.

Zimbabwe’s hyperinflationary period is well documented; what most people don’t realize is that after inflating several trillion percent, the government simply discontinued the currency… literally devaluing the Zimbabwe dollar to zero. People holding Zimbabwe dollars lost their entire savings overnight.

Argentina’s devaluation in 2002 sent its peso from 1:1 vs. to roughly 4 pesos to the dollar. Banks closed, taking depositors’ savings with them. Those with any cash savings were paying four times as much for goods, practically overnight. Unemployment soared. Even now, over ten years later, the economy has yet to fully recover.

Belarus is the latest example. This is a country where the autocratic president Alexandr Lukashenko controls 80% of the economy through state-owned entities. He rules in the old Soviet style with KGB and secret police, demanding total servitude from his people.

Earlier this week, Lukashenko ordered his central bank to devalue the Belarusian ruble by 56%, immediately. The ruble’s official exchange rate is now 4,930 per US dollar and 6,914 per euro.

Unfortunately, dollars and euros are extremely hard to come by in Belarus… so the lack of supply and strong demand is pushing up street prices to several times the official rate.

News headlines picked up on this major leap; what you won’t see in the media is that local Belarusians knew this was coming… the warning signs were there.

Last month, most banks stopped trading foreign currencies. People rushed to the foreign banks to withdraw any dollars they had on deposit, many having to wait up to 7-days after making the request before the bank could actually provide cash.

While the official devaluation to 4,930 occurred on May 23rd, the banks were running out of foreign currency fast. Several of our local friends on the ground in Minsk confirm that by May 16th, a full week before the official devaluation, banks were charging between 10,000 to 12,000 rubles per dollar.

Grocery prices (in ruble terms) have tripled in this short period as most of the food is imported from companies who require dollar or euro payments. It now costs an entire year’s wages just to buy a simple refrigerator.

Our local contacts report that many store shelves are near empty as people are rushing to spend every ruble they have in anticipation of further rising prices. Some of my local friends have emailed saying that it’s getting difficult to even find toilet paper as people are buying up absolutely everything they can.

Economic disasters destroy the social fabric. Rising crime, political unrest, and resource shortages always result. This has been the story of Rome… of Zimbabwe… of Argentina… and just about every other place to go through such turmoil. It’s foolish to think that it can’t happen in the west.

The face of economic and political devastation in Belarus is tragic; it’s a beautiful country full of some of the warmest people I’ve ever known.

Many students from Belarus attended the summer camp that we staged last August in Europe– this was a weeklong workshop in the picturesque Lithuanian countryside designed to teach real world entrepreneurial skills, investment concepts, and free market ideals to university students.

Many Atlas 400 members generously helped support our endeavor, and the event attracted attendees from 10-different countries, including a strong contingent from Belarus. It was a wonderful experience all around, and we’ve decided to hold the event again this year.

I’d like to extend an invitation to the Sovereign Man community this year. Please note– this is not an offshore workshop to discuss multiple flags and international diversification; the purpose of this camp is to help provide younger people with the real skills and inspiration they need to succeed on their own.

If you’re between 18-24, or have children/grandchildren between the ages of 18-24 who may be interested, you can read more about the camp and apply here. Attendance costs nothing, we pick up the tab for everything during the event… you are only responsible for your travel to Lithuania.

Also bear in mind that we only have capacity for 50 students at this workshop and nearly 100 applications already. We’re looking for the most motivated students who really want to learn and be challenged, and I know it’s going to be a tough job combing through all the applications and making the final selection.

I hope to meet many of you this summer.

Until tomorrow,

Simon Black
Senior Editor, SovereignMan.com

This article appears courtesy of SovereignMan.com: Notes From The
Field
, a free newsletter dedicated to individual freedom,
internationalization, asset protection and global finance. For a
complimentary subscription, visit http://www.SovereignMan.com

Sovereign Man Notes from the Field Date: May 26, 2011 Reporting From: Hong Kong

In Political on May 26, 2011 at 7:09 pm

Sovereign Man
Notes from the Field

Date: May 26, 2011
Reporting From: Hong Kong

[Editor’s note: Tim Staermose is filling in for Simon Black today, who is out looking at property.]

One of the most interesting things going on here in Hong Kong at the moment is the gradual displacement of the US dollar, and even the local Hong Kong dollar, by the Chinese Yuan.

Walking around town, the signs are obvious: from shops that gladly accept Chinese Yuan cash for the goods they sell, to the money changers which now ALL display the Hong Kong dollar / Chinese Yuan cross-rate much more prominently than the US dollar / Hong Kong dollar cross rate.

In many ways, this is a live economic experiment.

Hong Kong has long had one of the world’s freest, most sophisticated economies; residents are free to choose what currency to accept (and save), whether HK dollars, US dollars, Chinese Yuan, gold, or anything else.

Multi-currency bank accounts are the rule rather than the exception here, and you can switch freely between all of them with a few mouse clicks, or phone call. This is one of the reasons why Simon has always been so keen to recommend banking in Hong Kong.

Yuan-denominated deposits in Hong Kong banks have more than TRIPLED this year as people look for ways to protect their purchasing power. Because the Hong Kong Monetary authority pegs its currency to the US dollar, Hong Kong ends up importing US inflationary monetary.

This is acutely felt. Since Hong Kong is little more than a barren rock, nearly EVERYTHING is imported… so prices are rising in accordance with US dollar inflation.

To guard against this constant loss of purchasing power, many Hong Kong’s residents are converting their savings to Chinese Yuan. While the Chinese Yuan closely shadows the US dollar, it has steadily appreciated and is perceived to have significant future upside should the Chinese ever allow it to appreciate more quickly.

US monetary inflation makes it inevitable that the Hong Kong Monetary Authority will come up with some sort of a scheme to either peg the Hong Kong dollar to the Yuan (rather than the US dollar), or perhaps even replace the Hong Kong dollar with the Yuan altogether.

This would be a HUGELY popular move. Hong Kong is one of the few places on Earth with a net savings rate; the loan to deposit ratio its banking system, for example, stood at 81.7% at the end of March, meaning there are only 81.7 cents on the dollar lent out in Hong Kong for every $1 on deposit in the banks.

Consequently, savers would love to see the Hong Kong dollar revalued higher by pegging it to the Chinese Yuan at the current Yuan/dollar rate of 6.50, rather than the current HK dollar/US dollar peg of 7.80.

What’s more, a move to re-peg the Hong Kong dollar is anything but far-fetched when you consider that Hong Kong’s net savers club includes the government, which is sitting on a HUGE surplus. So much, in fact, that the government recently announced it’s handing back HK$6,000 (US$770) to each Hong Kong permanent resident.

Bottom line, the clock is ticking on a Hong Kong dollar revaluation. The Yuan is a much better cultural and economic fit, and this brings me to the crux of today’s letter:

If you have significant expenses to meet in US dollars, you may be uncomfortable taking on currency risk by parking your money in a more volatile foreign currency such as the Aussie dollar or Canadian dollar. Let’s face it, they do have periods where they fall significantly versus the greenback.

By holding savings in Hong Kong dollars, though, you will have minimal downside risk if the HKMA keep the status quo and maintains the US dollar peg. Your Hong Kong dollars will always buy the same amount of US dollars they buy today.

But, you will have a free “call option” in case the Hong Kong dollar is revalued higher. It’s a bit like a “heads you win; tails you don’t lose” situation, and that’s EXACTLY the kind of trade I have dedicated my professional life to uncovering.

Until tomorrow,

Tim Staermose
Editor, SovereignMan.com

This article appears courtesy of SovereignMan.com: Notes From The
Field
, a free newsletter dedicated to individual freedom,
internationalization, asset protection and global finance. For a
complimentary subscription, visit http://www.SovereignMan.com

Sovereign Man Notes from the Field Date: May 25, 2011 Reporting From: Santiago, Chil

In Business, Government, Money and Finances, Political, Travel on May 25, 2011 at 7:18 pm

Sovereign Man
Notes from the Field

Date: May 25, 2011
Reporting From: Santiago, Chile

Debt is slavery… or at least indentured servitude of the worst kind. That looming mortgage, the high interest credit card debt, the short-term car loan– these are the forces that keep people from breaking free and taking action.

Ironically, debt begets more debt. According to FinAid, the average US student loan debt for a four-year private university graduate is nearly $36,000, and $24,000 for public. Throw in that first car loan and maybe a mortgage, and suddenly you’re staring at hundreds of thousands of dollars in demoralizing claims on your future income.

At this point, most people figure… ‘hey, I’m already in debt up to my nose, might as well get in up to my eyeballs and buy a new plasma screen on credit.’

Debt is an enormous psychological burden that influences life’s major decisions. It’s why so many people stay committed to jobs that are unfulfilling in cities they detest under conditions they find disheartening. Nobody wants to rock the boat too much… take too many risks and you could lose your job, and hence the ability to make those monthly payments.

This familiar story has been playing out across the developed world for years. This is not an ill, however, that exclusively affects individuals and families. Even at the macro level, debt has the power to subjugate entire nations to the whims of their creditors.

Enter the IMF.

In July 1944, world leaders gathered in Bretton Woods, New Hampshire to be dictated terms of the new global financial system. The US dollar was set as the global reserve currency, and the International Monetary Fund was established to shower the world’s nations with the dollars they needed to participate in this system.

Like most governmental and non-governmental organizations, however, the IMF eventually took on a life of its own.

(The CIA is a perfect example of this; formally established in 1947, the CIA was charged with… wait for it… being the ‘central’ agency to coordinate US intelligence. It grew quickly into its own beast, culminating in the creation of the post-9/11 National Intelligence Directorate. It’s job? You guessed it: being the ‘central’ agency to coordinate US intelligence.)

Over the years, the IMF became the roving economic police force of the ruling class, coercing developing nations to take enormous loan packages they had no hope of paying off.

As a result, the local IMF (or World Bank) representative in developing countries became extremely powerful figures. Leaders in poor countries were so terrified of loan default, the IMF was able to shape policy and allocate national resources as the west saw fit.

Clearly the tables have turned.

By 2011, the IMF’s biggest customers have become ‘developed’ (i.e. contracting) countries like Greece which are relying more and more on the generosity of China. Now with the IMF’s former chief locked up in disgrace for the foreseeable future, the race is on to see who will replace him.

The new order of things is very clear. The western hierarchy of the past is insolvent, and its capital has migrated south and east. Western leaders refuse to acknowledge this reality and are clinging desperately to antiquated institutions like the IMF in order to retain control of a now defunct financial system.

Newsflash: the IMF is only relevant to western leaders who live in the past. French Finance Minister Christine Lagarde’s official bid to become the new IMF chief only shows how pathetic their intentions are. It’s like someone trying to take command of the Titanic as she’s headed toward the ocean floor.

China, the world’s second largest economy, is routinely relied upon to bail out the west… yet it has a paltry 3.65% of the IMF’s voting power. Europe, however, is arguably the most insolvent region on the planet, though it insists on remaining at the helm. Ultimately, the market doesn’t care and has been orienting itself towards the developed world for years.

Little by little we are seeing signs of a revolution in the financial system– grumblings from Zimbabwe about establishing an asset-backed currency, new exchange-traded gold contracts in Asia, more bank wiring routes that bypass New York City, and corporations in the developing world issuing debt on the international market in local currency with ease.

I’ve written extensively that China’s renminbi is being increasingly considered a reserve currency to compete with the dollar and euro. Other developing countries have already entered into swap agreements to accumulate renminbi reserves, and even western companies are issuing renminbi-denominated debt.

There are signs of more liberalized exchange controls all the time; it’s possible for individuals and corporations to hold savings in renminbi through a variety of ways… you can even walk into the New York City Bank of China branch and open an account.

The latest move is American Express’s new renminbi-denominated Travelers Cheques– a ‘cash equivalent’ issued by a non-Chinese financial institution. This is a major step, and its implications are far, fare more important than whichever white person is jonesing to head an irrelevant organization of the past.

Western leaders simply don’t want to accept their loss of primacy; they’ve become enslaved themselves, not only by the insurmountable sovereign debts they’ve accumulated, but by their stubborn refusal to acknowledge the simple reality of a new system they can’t stop and don’t control.

Until tomorrow,

Simon Black
Senior Editor, SovereignMan.com

This article appears courtesy of SovereignMan.com: Notes From The
Field
, a free newsletter dedicated to individual freedom,
internationalization, asset protection and global finance. For a
complimentary subscription, visit http://www.SovereignMan.com

Sovereign Man Notes from the Field Date: May 24, 2011 Reporting From: Santiago, Chile

In Political on May 24, 2011 at 6:28 pm

Sovereign Man
Notes from the Field

Date: May 24, 2011
Reporting From: Santiago, Chile

Just about every day now, a ‘crisis’ unfolds somewhere in the world as if carefully adapted from the pages of Atlas Shrugged.

It’s such a massive aberration and departure from the free market… yet amazingly enough, this elitist system of sociopathic narcissism passes as democracy– “rule of the people.”

The real irony is that the west, which fancies itself the paragon of modern, civilized society, has it the worst. Day in, day out, the developed world gets plundered and violated more by its kleptocratic leaders than any tinpot dictatorship. The stroke of genius is how well they masquerade their thievery.

The US Senate, for instance, introduced a bill late last week to limit the amount that the Defense Department spends… on printing. Never mind multiple front wars, unlawful invasions, and million dollar Tomahawk missiles… they’re focusing on the big picture: print costs.

Meanwhile, NATO forces continue waging war in Libya, now escalating the air campaign with supplemental rotary wing squadrons. When they introduce attack helicopters to the battle space, you can be sure that ground forces are not too far behind.

Needless to say, this all carries tremendous cost to taxpayers. To a normal person, the math is simple… each of us is forced to live within our means, and any deviation outside of that is quickly squashed by the credit market.

In the consequence-free environment of politics, however, costs are magically pushed forward to the distant future, while benefits and goals are muddled amid grandiose, unquantifiable platitudes like “freedom,” “security,” and “prosperity.”

It’s amazing that people demand more accountability from their favorite sports team. Any head coach who notoriously overspends a team’s budget and has no strategy for success other than eloquent speeches about “victory” and “sportsmanship” would quickly be shown the door…

… and yet, a political system in which malignant forces steal resources from the productive, waste the vast majority on folly, and redistribute the breadcrumbs in order to buy votes and maintain the status quo, is hailed as ‘rule of the people.’

Around the world, people are voicing their utter disgust with this system… in some places violently (Egypt, Syria), and in others at the polls (Spain, Finland). In either case, governments are reaching deep into their playbooks to maintain the status quo of kleptocratic elitism, including:

– sending government forces to open fire on their own people
– confiscating public and private pension funds
– banning protests and public demonstrations
– lying about secret bailout meetings
– conjuring villains to justify huge spending programs (like $150,000 body scanners)
– printing trillions of dollars and denying price increases
– fraudulently misstating macroeconomic indicators and sovereign balance sheets
– engaging in military conflict to distract the population at home
– eliminating financial privacy
– allowing police agencies to spy on their own citizens without a warrant
– imposing exchange controls and restricting the free flow of capital
– raising taxes, without warning, overnight

Generally, the more dire the economic circumstances, the more desperate the government, and hence the more severe their tactics… and this is why we’re seeing the brunt in the Middle East, North Africa, and even parts of Europe, all regions which are forced to deal now with a grim economic reality.

For a very short while, the United States is in a position where it can continue kicking its can of problems down the road. When you can print your own currency, issue debt to people who are still dumb enough to buy it, and temporarily export inflation to the rest of the world, you can keep the party going for a long time.

Individual states, on the other hand, are not so fortunate. The Illinois State Treasurer, for instance, just announced that they are “on the verge of financial disaster,” and that the share of debt and unfunded liabilities for every household in the state amounts to $42,000 each.

Illinois has already raised taxes and will likely do so again… soon. This will likely drive many talented, mobile people out of the state to relocate to greener pastures.

It certainly begs the question– if state governments are set up to fall like dominoes, and the federal government is its own looming disaster, why bother looking within the same country for greener pastures?

There are a lot of places in the world with healthy economies, solid fundamentals, and great lifestyles which welcome foreigners with open arms through a very transparent process.

Here in Chile, for example, you can be up and running with official residency in no time. In Singapore, Lithuania, and Estonia, you only need to register a local corporation. In Abu Dhabi, Hong Kong, Qatar, Cayman Islands, etc., you can obtain a visa by accepting employment. All have strong job markets open to foreigners.

For many people, the thought of heading overseas seems radical… and one’s first instinct is to find fault or excuses– ‘this is only something rich people can do,’ or ‘there is no way I could find a job’.

This uncreative, self-defeating attitude is what perpetuates the elaborate system of thievery masquerading as democracy. The truth is that there is no such thing as “rule of the people.” There is only “rule of the person,” meaning you.

You have completely control and rule over yourself… you cannot affect what the US government is going to do, or how much the European Central Bank is going to print, or whether Great Britain sends helicopters into Libya. You can, however, determine where you are going to go, and what opportunities you will seek.

This ‘rule of the person’ is the ultimate freedom that each of us possesses, yet rarely exercises. Most people will simply ignore the obvious warnings and denounce those who take action as misguided radicals.

Yet in a world where the economic bankruptcy of entire nations is matched only by the moral bankruptcy of the politicians who lead them, radical ideas are perhaps the only sensible solutions.

Until tomorrow,

Simon Black
Senior Editor, SovereignMan.com

This article appears courtesy of SovereignMan.com: Notes From The
Field
, a free newsletter dedicated to individual freedom,
internationalization, asset protection and global finance. For a
complimentary subscription, visit http://www.SovereignMan.com

Sovereign Man Notes from the Field Date: May 23, 2011 Reporting From: Santiago, Chile

In Business, Government, Money and Finances, Opportunity, personal and business, Political, Travel on May 23, 2011 at 6:42 pm

Sovereign Man
Notes from the Field

Date: May 23, 2011
Reporting From: Santiago, Chile

The world is now divided into essentially three categories:
(1) those nations that can effectively sidestep catastrophic meltdown;
(2) those nations that cannot avoid meltdown, but can afford to kick the can down the road
(3) those nations that must face their grim, unavoidable meltdown reality now

The United States, for better or worse, is in category 2. Politicians can keep pretending that the wheels on the bus go ’round and ’round because, at present, there are too many other countries in category 3… namely, much of Europe.

Greece is on the brink of official insolvency… yet in an exceedingly bizarre interview with German news magazine Der Spiegel published today, Jean-Claude Junker insists that (a) Greece is not broke, (b) if Greece doesn’t make its debt payments, this is not the same as ‘default,’ and (c) it’s OK for politicians to lie because people don’t understand capital markets.

(*Note, suspension of disbelief IS required to read this interview; Junker caps it off with a metaphoric riddle, “If the donkey were a cat it could climb a tree. But it is not a cat,” which has about as much insight as “Confucius say: Man who go to bed with itchy butt wake up with smelly finger….”)

As the Prime Minister of Luxembourg and president of the Euro Group, Junker is a very important figure in European finance… and in the interview, he makes it quite clear where his priorities lie: with the bankers.

As Junker states, “If Greece were to declare a national bankruptcy tomorrow, the country would have no access to the international financial market for years to come, and its most important creditors, the banks in Germany and Europe, would have an enormous problem…”

Well, certainly no one should expect Europe’s banks to suffer their own losses after making idiotic loans to corrupt governments. It’s much easier to stick the people with the bill by establishing a trillion dollar bailout fund with taxpayer money.

Problem is, people in Europe are starting to wake up and get it.

The anti-euro “True Finn” party in Finland recently surged in the polls to become the country’s third-largest political party and a major obstacle for any European bailout. This weekend, Spain’s ruling Socialist party was hammered with losses as voters voiced their utter disgust with the current government’s handling of the economy.

In Germany, this year’s state election results are showing that voters are sick and tired of shouldering the financial burden for the rest of Europe. Chancellor Angela Merkel’s ruling party is losing miserably, though in a pathetically desperate move, some local governments are changing suffrage limits and allowing 16-year olds to vote.

This is the strongest indicator yet of how bad the situation in Europe has become: German banks are so over-exposed to the PIIGS sovereign debt that, in the face of political revolt all across Europe, German politicians have resorted to recruiting the Justin Bieber crowd to maintain the status quo.

Simply put, if Greece fails, the banks will collapse, and European financial markets will tank. Politicians will stop at nothing to prevent this from happening… including sticking every man, woman, and child with the bailout bill, as well as pulling socialist-minded teenagers into the voting booths to ensure they stay in power.

Eventually, though, these efforts will prove fruitless. Greece has two months of cash left… and a default by any other name is still a default. The ‘have’ nations in Europe don’t want to foot the bailout bill any more than the ‘have not’ nations in Europe want to accept deep austerity measures.

This is going to cause a lot of turmoil in Europe in the short-term… and as the US government has successfully kicked its can down the road through late summer thanks to the Treasury Department plundering public pension money, investors are free to get their worry on in Europe.

I would suspect gold and silver in euro terms to do quite well as the market looks around, once and for all and realizes that there are truly no good major currency alternatives. This could be the start of a chain reaction.

Until tomorrow,

Simon Black
Senior Editor, SovereignMan.com

This article appears courtesy of SovereignMan.com: Notes From The
Field
, a free newsletter dedicated to individual freedom,
internationalization, asset protection and global finance. For a
complimentary subscription, visit http://www.SovereignMan.com

——————————————————————————–

Not yet a Sovereign Man: Confidential subscriber? Here’s what you’re missing in the current edition:

* Boots on the ground in Paraguay: Simon’s personal contacts in legal, finance, real estate, and residency, plus some very unique opportunities in agriculture and fixed income.

* A simple way to establish a bank account in Singapore without having to go there– this is just another example of something you simply won’t find anywhere else… Singapore is one of the best places to bank in the world, and Simon’s contacts can make it happen seamlessly.

* Compiance reminder for US taxpayers– the forms and paperwork you need to know about

* Simon interviews Joel Salatin, famous for his role in the Food, Inc. documentary, about the massive vulnerabilities in the modern food system, and why you should not depend on Big Ag to feed your family.

* Simon answers your questions with specific contact information about gold storage, Ecuadoran citizenship, and offshore brokage accounts.

* Exclusive offer to SMC members for Tim Staermose’s 4th Pillar investment alert service

To learn more about SMC and maximizing your sovereign opportunities, click here for more information.

Sovereign Man Notes from the Field Date: May 19, 2011 Reporting From: Hong Kong

In Business on May 19, 2011 at 4:43 pm

Sovereign Man
Notes from the Field

Date: May 19, 2011
Reporting From: Hong Kong

[Editor’s note: Tim Staermose is filling in for Simon Black today who is out looking at property for the next few days.]

Two days ago I hit the banks along Des Voeux Road in Central Hong Kong to check out what gold bullion coins are available, and what the banks are charging.

Oddly enough, last time I reported on this, we got a lot of “blowback” from our readership, saying the “cheap” prices I quoted had to be incorrect.

Some people even accused me of making it up.

Well, let me again go on the record as saying that Hong Kong is “hands down the cheapest place in the world to buy gold coins.”

Well, on Tuesday afternoon at 3:39pm, when spot gold was trading at the equivalent of HK$11,597 an ounce (US$1,490), Hang Seng Bank was selling a 1-ounce Krugerrand coin for HK$11,605.

That’s a minuscule 0.15% above the spot price. If any of you know somewhere else in the world I can buy gold bullion coins for less, please LET ME KNOW! Needless to say, I put my money where my mouth is and bought an ounce.

At the same time, Hang Seng Bank was quoting HK$12,130 (US$1,558.48) for 1-ounce Australian Kangaroo Nugget coins.

That’s a premium of 4.6% above the spot price of gold prevailing at the time. (I was on the phone to my friend who gave me the then prevailing spot gold price from Kitco.com).

Nothing else was in stock at Hang Seng Bank. I asked about SILVER bullion coins, too. They didn’t have any. The teller, whom I recognized from my many previous visits, said that in her 17 years of working at the bank, they’ve actually never stocked silver coins.

Over at the Bank of China, just a few doors down from Hang Seng, they had the full complement of Canadian Maple Leaf gold bullion coins in stock… 1 Oz, 1/2 Oz, 1/4 Oz, 1/10th Oz, and 1/20th Oz were all available.

Prices were HK$12,127 for the 1-ounce size, HK$6,152 for the 1/2-ounce size, HK$3,158 for the 1/4 ounce coin, HK$1,325 for the 1/10th of an ounce coin, and HK$762 for the smallest of the lot — the 1/20th of an ounce size coin.

In US$ terms, that translates into US$1,558.10 for the 1-ounce Maple Leaf. That was a 4.57% premium to the spot price.

Interestingly, the Bank of China’s own preferred coin, the Chinese Panda, was only available in the 1/2 Oz size.

They wanted HK$6,114 (US$785.54, or US$1,571.08 for an ounce).

That was 5.4% above spot gold for those, which if you do some checking around, is actually a VERY GOOD price.

The Maple Leaf half ounce coin at the same time, as per the prices I’ve quoted above, was selling at HK$6,152 (US$790.42, or US$1,580.84 for an ounce).

So, the premium on the half-ounce Maple Leaf was 6.1%, versus just 5.4% for the Panda.

This is the REVERESE of what you’ll find in North America, where the Chinese Panda coins always tend to trade at the largest premiums to spot.

A quick check online (admittedly not the same as going to a bunch of dealers in person) shows premiums for the half-ounce Panda, for example, of as much as 9%. See, for instance:

http://www.onlygold.com/coins/ChinesePandasFullScreen.asp

I’ve said before that, for the right person, traveling to Hong Kong solely for the purpose of buying gold coins can make a lot of sense. The money you save on buying your stash of coins, will save you a bunch of money… perhaps enough to pay for your entire trip.

So, you’ll have had a holiday in one of the world’s most interesting and dynamic cities essentially for free.

On a 50-ounce purchase, at $1,500 an ounce, every 1 percentage point you can save in premium is equivalent to $750.

Typical premiums on Krugerrands in Europe and North America that I’ve seen range from 3% to 6%. (Again, please let me know if you have a source that is considerable cheaper).

Compare that to the 0.15% premium I paid in Hong Kong and on a 50-coin purchase, you’ll save over $2,100, which would be well worth the effort for some people.

Looked at another way, you get MORE GOLD FOR YOUR MONEY in Hong Kong than anywhere else I know.

[Editor’s Note: Tim’s new investment alert service, The 4th Pillar, is now open to the public on a limited basis. New membership is restricted, and Sovereign Man: Confidential members had a 48-hours advance. Only 13 memberships remain, after which it will be taken off the market. Click here to read more about this unique service. ]

Until tomorrow,

Tim Staermose
Editor, SovereignMan.com

This article appears courtesy of SovereignMan.com: Notes From The
Field
, a free newsletter dedicated to individual freedom,
internationalization, asset protection and global finance. For a
complimentary subscription, visit http://www.SovereignMan.com

Sovereign Man Notes from the Field Date: May 18, 2011 Reporting From: Santiago, Chile

In Business, Business/Political Trends Worldwide, Government, Money and Finances, Opportunity, personal and business, Political, Taxes, Travel on May 18, 2011 at 6:42 pm

Sovereign Man
Notes from the Field

Date: May 18, 2011
Reporting From: Santiago, Chile

Take a moment and conduct a mini thought experiment. Imagine that you’re from the future many hundreds of years from now, researching what life was like in the early 21st century. You pull up an archive of newspaper headlines from the year 2011 and read the following:

“US Congress To Vote On Declaration Of World War 3 — An Endless War With No Borders, No Clear Enemies”

“Blackwater hired by the crown prince of Abu Dhabi to put together a secret force of foreign troops”

“10 killed in US drone attacks in northern Pakistan”

“US Officials Warn Terrorism Threat Remains Post-bin Laden”

“TSA Pat Down of Suspicious Baby Is No Big Deal”

“Treasury taps federal pensions as Uncle Sam hits debt ceiling”

“Fed chief Ben Bernanke says he’s not worried about inflation”

“Global Food Prices Hit New All Time High After 8 Consecutive Months Of Gains”

“Over-50s suffer a lifestyle crash: Millions less comfortable than a year ago”

“UK And US Data Shows Stagflation Threat Deepening”

“Greek riot police, protesters clash over austerity ”

“IMF: Greece needs more austerity measures”

“IMF Chief no stranger to sexual assault allegations”

“Portugal on brink of bankruptcy”

“Contagion fears high as Italy drawn into crisis”

“Italian PM Berlusconi Faces Prostitution Trial in Italy”

To an observer who is not part of our time, it must all look like a really bad joke, like it just couldn’t possibly be true. In the same way, we look back upon history and wonder with skepticism and incredulity how our long-lost ancestors have possibly allowed the Inquisition, the Dark Ages, genocide and slavery to occur.

We fancy ourselves so advanced and enlightened… but my guess is that history will view us in the same way that we see those unfortunate brutes of medieval times: misguided, misled, and totally self-deluded.

We might not be burning each other at the stake anymore, or waging war for king and conquest, but the metaphoric comparisons run truly deep. Moreover, our story today is a similar one: there is a very small group of people in power whose decisions affect the lives of billions of people. Those of us not in the elite ruling class allow it to happen.

Their choices drive up food prices, increase war and destruction, bankrupt entire economies, reduce standards of living, degrade social stability, and force everyday people into conditions that look more and more like a police state.

Simultaneously, this elite group uses its position to shower itself with privileges and benefits at everyone else’s expense: hard-core sex parties, handing out free money to their friends, not paying their taxes, hiring private armies to protect them from their own people, etc.

It’s positively disgusting… and I have to imagine that historians of the future will scratch their heads and wonder how we allowed ourselves to be duped into such a system.

Our leaders tell us that these troubles will pass… to sit down, shut up, be patient, and put our faith and confidence in their abilities to right the ship once again. Sounds great… but there’s just one problem. Nobody’s buying it anymore.

We’re in the beginning of a period where people are finally starting to wake up and smell the fraud… and even though the establishment is furiously rearranging the deck chairs and trying desperately to maintain the status quo, the great market singularity is beginning to take hold: that which is unsustainable will not be sustained.

Glance at those headlines one more time. This system is corrupt, perverse, and wholly unsustainable. It will reset. Reasonable, sentient human beings cannot live under such a yoke in the long run.

It’s difficult to say how it will happen, when it will finish, or what it will look like at the end, but rest assured, it’s already happening, and it’s going to be a bumpy ride.

Until tomorrow,

Simon Black
Senior Editor, SovereignMan.com

This article appears courtesy of SovereignMan.com: Notes From The
Field
, a free newsletter dedicated to individual freedom,
internationalization, asset protection and global finance. For a
complimentary subscription, visit http://www.SovereignMan.com

——————————————————————————–

Not yet a Sovereign Man: Confidential subscriber? Here’s what you’re missing in the current edition:

* Boots on the ground in Paraguay: Simon’s personal contacts in legal, finance, real estate, and residency, plus some very unique opportunities in agriculture and fixed income.

* A simple way to establish a bank account in Singapore without having to go there– this is just another example of something you simply won’t find anywhere else… Singapore is one of the best places to bank in the world, and Simon’s contacts can make it happen seamlessly.

* Compiance reminder for US taxpayers– the forms and paperwork you need to know about

* Simon interviews Joel Salatin, famous for his role in the Food, Inc. documentary, about the massive vulnerabilities in the modern food system, and why you should not depend on Big Ag to feed your family.

* Simon answers your questions with specific contact information about gold storage, Ecuadoran citizenship, and offshore brokage accounts.

* Exclusive offer to SMC members for Tim Staermose’s 4th Pillar investment alert service

To learn more about SMC and maximizing your sovereign opportunities, click here for more information.

——————————————————————————–

Neither this email communication nor content posted to the website SovereignMan.com is intended to provide personal financial advice. Before undertaking any action described in this letter, financial or otherwise, you should discuss your options with a qualified advisor– accountant, financial planner, attorney, priest, IRS auditor, Tim Geithner… Also, nothing published in this letter constitutes encouragement to avoid or evade tax obligations in your home country. Furthermore, you should understand that SovereignMan.com may in some instances receive financial compensation for products and/or services which are mentioned in the letter, and in other cases, SovereignMan.com receives no compensation. The needs of the community come first, and the presence or lack of financial compensation in no way affects the recommendations made in this letter.

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