capecoralblogger

Archive for the ‘Continental Travel’ Category

Sovereign Man Notes from the Field Date: July 21, 2011 Reporting From: Split, Croatia

In Business, Business/Political Trends Worldwide, Continental Travel, currency, Expatriation, Food and Staples, Government, History, Money and Finances, Offshore accounts, Opportunity, Personal, Sovereign Man, Taxes, Travel on July 21, 2011 at 7:42 pm

Sovereign Man

Notes from the Field

Date: July 21, 2011
Reporting From: Split, Croatia

Print. Lie. Borrow. Deceive. Deny. These are a the principal tenants of the Greek restructuring plan that were released today from Brussels… it’s as if EU policymakers put it together after shaking a Magic 8-ball.

The whole world knows that Greece is bankrupt and has been living bailout to bailout for over a year. Deep in debt and devoid of cash, the country has completely forsaken its sovereignty in exchange for becoming a ward of the European Union; Prime Minister George Papandreou is now a hapless stooge awaiting instructions from Germany.

It’s ironic that the Greek proposal released today calls for a ‘Marshall Plan’ of investment across Europe… given that the last time Greece was being controlled by Germany was during the country’s occupation by Nazi forces after being vanquished by Hitler’s 12th Army in April 1941.

And so, with limited debate and even less fanfare, Europe has just officially signed on to destroy its own currency. Utterly worthless, quasi-defaulted Greek debt will become perfectly acceptable collateral, much in the same way that the US Federal Reserve took every scrap of toxic paper it could find off banks in 2008 and 2009.

Given the favorable market reaction, European politicians must be feeling pretty proud of themselves. The euro is up. The stock market is up. Oil is up. Well, never mind about oil, they’ll blame that on evil speculators… just like food prices.

And the proposal is so deliberately vague, they can go back home and tell constituents whatever they want. Angela Merkel can tell German voters that the French are paying for it, and Sarkozy and tell French voters that the Germans are paying for it. Win, win!

The European sovereign default SOP has just been set. When Spain, Italy, Portugal, and Ireland’s time of insolvency arrives, it will be handled just like this: Print. Lie. Borrow. Deceive. Deny.

Every day it becomes more and more obvious that the financial system as we know it is breaking down. The United States and European monetary union, whose currencies comprise nearly the entirety of the world’s fiat reserves, have both signed up to debase their currencies as rapidly as possible.

This is going to kick inflation up another notch as anyone holding on to Greek debt is going to trade out of it as quickly as possible. All that money has to go somewhere… and it’s a sure bet that a lot of it will feed rising commodities price (which translates into more inflation).

If you haven’t found a safe haven for your savings yet, it’s time to start. Now. No more excuses. A few you could consider:

Swiss franc, Norwegian krone, Singapore dollar, Chilean peso: These four currencies are generally regarded as safer, stronger, and managed by less obtuse central banks. In a world of fiat, these are among the least worst of the bunch.

Unidad de Fomento (UF): This is a special unit of account used in Chile that was set up during the hyperinflation days of the 1960s. The UF is designed to keep pace with inflation and it’s possible to establish a bank account denominated in UF in Chile. I’ll be telling SMC members how to do that in an upcoming issue.

Agricultural Property: Nothing hedges your risk against rising food prices like being able to produce your own food. This idea underpins the concept for the resilient community we’re planning in South America.

Precious Metals: Portable, divisible, durable, and scarce, precious metals are the classic hedge against rising prices. Gold and silver aren’t going to go up in a straight line, and gold in particular is due for a correction, but in a world ruled by an economic magic 8-ball, it’s a much safer store of value than a government IOU.

High quality equities: If my only two options are Apple stock and a bank account earning 0% interest, I’m going with Steve Jobs. The chief problem with equities is that the more money that central banks print, the more money flows into equities… pushing valuations up to dizzying (and unsustainable) levels.

Firearms and ammunition: Weapons and ammo serve a dual purpose of providing better home security, as well as a reasonable store of value. Unfortunately, they can also serve a third purpose– putting you on some government agency’s radar.

This list is by no means exhaustive… but if you have the majority of your savings just sitting there wasting away, it’s time to act.

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: July 20, 2011 Reporting From: Split, Croatia…..”Take Heed America” added by Admin/floridabusinessportals.com

In Business, Business/Political Trends Worldwide, Continental Travel, Expatriation, Government, History, Interesting places, Money and Finances, Offshore accounts, Opportunity, Personal, Sovereign Man, Taxes, Travel on July 20, 2011 at 8:06 pm

Sovereign Man Notes from the Field

Date: July 20, 2011

Reporting From: Split, Croatia

Bruce Lee, a long-time hero of mine, died 38-years ago today, and in tribute to his intellect and philosophy, I wanted to blow the dust off an old quote of his that seems quite prescient:

“Those who are unaware they are walking in darkness will never seek the light.”

Each day it becomes increasingly obvious that there are essentially two kinds of people in this world– those who are unaware that they walk in the darkness, completely oblivious to the real dangers in the world, versus those who understand reality and seek the truth. The former group comprises the vast majority of society.

This is your voting electorate and mainstream media audience, and they’ll buy every bit of propaganda that’s sent their way… whether it’s support for the war(s), ruinous economic programs, child molesting TSA policies, or just plain old fear and hate. In its latest effort to spread fear and hate, the Ministry of Love, also known as the Department of Homeland Security, has produced an Orwellian new video intended to encourage Americans to rat each other out.

If you’re not in a place to watch the video right now, I’ll summarize briefly. First of all, it’s one of the most pathetic attempts at filmmaking in the history of motion picture; the average shampoo commercial has better acting and production quality… and is much more subtle in its message.

In the world of Homeland Security, terrorists all drive unmarked full-size vans, wear hooded sweatshirts, and deposit backpacks in conspicuous public places. They might as well have had a cackling James Bond villain twirling his moustache in the corner.

At its core, the video is filled with scenes of ordinary citizens spying on each other and alerting the authorities to their compatriots’ suspicious deeds. In my favorite scene, a woman calls the police after snooping over the shoulder of a young man typing away on his smartphone. Naturally, it’s all for the common good… for everyone’s safety and security. In fact, everyone shares in this responsibility according to DHS, so we should all be on our toes to rat each other out at the first sign of suspicious activity.

Apparently this is yet another obligation that comes with citizenship. For the majority of people who watch this video, their chests will swell with pride in the knowledge that they now have a role to play in their country’s security. These are the folks walking around in the darkness, unaware. You can’t talk to them about things like personal liberty as they’ll just regurgitate the propaganda they’ve been spoon fed since birth. These are the same folks who take their shoes off at the airport and proclaim, “Whatever it takes to keep us safe,” or “I have nothing to hide!”

Truthfully, real criminals aren’t back alley types, but rather the policymakers who spread fear and paranoia in the name of justice. They cloak their crimes in good deeds while building a brainwashed class of future Thought Police. If Orwell had written a prequel to 1984, this would all be part of it. It seems the boiling frog is getting just a bit warmer..

. Until tomorrow, Simon Black Senior Editor, SovereignMan.com

SIMON FINDS NUMBERED ACCOUNTS FOR DEPOSITS AS SMALL AS $8,000 Not yet a Sovereign Man: Confidential subscriber? This edition could have been a double issue. Here’s what you’re missing in what may be the best month yet: * This country may be a small country wedged in between two European powerhouses, but it checks just about every box for Simon. Hint…it’s NOT Switzerland. From safety, lightning-fast Internet, low taxes and minimal government intervention, this country should be on the top of your list for places to visit. Simon shares where to stay and how to fly in and out. For a land-locked location, it may be one of his favorites! * Simon proves this country isn’t just a tourist spot. He’ll show you how to get residency for an relatively small investment . Find his contact to get it done quickly. He also highlights the most difficult documentation requirement and how to be sure you have it covered. * Privacy in offshore banking? YES, this stable, European country still has private, numbered accounts AND will do business with US Citizens. Simon will share the different banks and even has negotiated a discount for Sovereign Man: Confidential members. You won’t want to miss this. * Ever-opportunistic, Simon will give some easy entrepreneurship opportunities in an emerging frontier, Kosovo. These options are the equivalent of “selling shovels to gold miners”. * Mark Nestmann also returns to go further in depth for those interested in expatriation with an honest assessment of the worst-case scenario. * Tim Staermose also offers his actionable insight from his most recent China trip. You need to have an understanding of the social and financial implications of the coming bust. To learn more about SMC and get access to the archive, click here for more information.


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: July 13, 2011 Reporting From: Thessaloniki, Greece

In Business, Business/Political Trends Worldwide, Continental Travel, currency, Government, History, Opportunity, Political, Political parties, Sovereign Man, Taxes, Travel on July 13, 2011 at 4:37 pm

Sovereign Man

Notes from the Field

Date: July 13, 2011
Reporting From: Thessaloniki, Greece

I went to dinner last night in an upmarket area of Thessaloniki. It wasn’t a touristy part of town at all, nearly everyone there was local.

As we walked down a narrow cobblestone path flanked by traditional Greek restaurants, all the various hostesses and proprietors ran out to greet us and pitch their menus.

“We have the freshest seafood!”

“We have the cheapest prices!”

“We offer free drinks and dessert!”

Within seconds, outright calamity ensued with each thrusting menus in our faces, pulling at our shirtsleeves, and shouting over the competition. Then a shoving match… and then finally an all out physical altercation, literally coming to blows over what amounted to a $20 dinner tab.

Now, aggressive behavior is common in this part of the world; it gets even worse in Turkey and North Africa. But there is an element of desperation that I have not yet seen before here. Given the graveyard of former restaurants gone bust nearby, it’s clear that last night’s owners are trying to stay afloat at any cost.

Later in the evening, I dropped by the city’s ancient agora ruins. Inside I could see a number of stray dogs marking their territory as they saw fit, and it was the perfect metaphor. This place has literally gone to the dogs.

Coincidentally, the Greek government held a ‘successful’ bond auction yesterday, unloading 1.6 billion euros of six-month bills. This sounds like a lot of money until you figure that it just barely covers this month’s interest payments on the roughly 340 billion euro debt that they already owe.

Just last month alone, the Greek budget deficit was 2.2 billion euros. Greece must continue indebting itself not only to make interest payments, but simply to keep the lights on. Meanwhile, the principal balance owed keeps rising while tax revenues are falling… making the situation perpetually worse.

Bailouts can’t fix this problem. Think about it like this: say your best friend is swimming in debt, paying $5,000 per month in interest. His best job prospect is $1,000 per month, so he’s in the hole $4,000 per month and rising.

If he receives a new $10,000 line of credit, would this fix his problems? Not at all. He’d be staring at bankruptcy again within 3-months.

Living bailout to bailout while going deeper into debt is simply an unsustainable Ponzi scheme. And given the Greek government’s current cash position and bond auction calendar, the next do-or-die bailout should come to a head this summer.

Europe will have to make a decision: (a) continue financing Greek largess and hope that taxpayers don’t care or notice; (b) take cover and allow the Greek government to default; or (c) an ‘orderly restructuring’ that combines loan workouts, haircuts for bondholders, and strings-attached cash injections from the ECB and IMF.

The most likely is the third option, but no matter how you dress it up, it’s still a default.

We’ve seen this play out once before in Dubai. The emirate underwent a steep restructuring period on roughly 50% of its $59 billion debt load in late 2009 and 2010, and it caused a deep recession and losses in the local market. Two big differences, though.

First, Dubai had a wealthy big brother in Abu Dhabi. Europe has angry German taxpayers.

Second, Dubai was isolated. Europe has a number of insolvent countries whose collective debts far exceed the capacity for any bailout.

If the market is allowed to function, the consequent derivatives chain reaction from default will cause a wave of bankruptcies among a number of large financial institutions, triggering even more government intervention (read: taxpayer bailouts) and a deflationary sell-off in financial markets.

Barring a miraculous, no-strings-attached emergency bailout, I think we can expect the opening salvos within the next few months.

So why should you care if you’re not Greek? Because the ensuing capital controls, raids on public and private pensions, and social chaos met with overwhelming police brutality will be a preview of things to come when the rest of Europe and the United States arrive at their financial reckoning days.

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: July 12, 2011 Reporting From: Chongqing, China

In Business, Business/Political Trends Worldwide, Continental Travel, Government, History, Political, Sovereign Man, Taxes, Travel on July 12, 2011 at 10:17 pm

Sovereign Man

Notes from the Field

Date: July 12, 2011
Reporting From: Chongqing, China

[Editor’s note: Tim Staermose is filling in for Simon Black today with more boots on the ground observations in China.]
 

By some accounts, Chongqing is the largest metro area in the world with a population of some 32 million. They ought to call it the largest construction site in the world.This is a place that, if you believe the official numbers, posted 17% GDP growth in 2010. It doesn’t take too long to figure out how that happened. Driving around town, I found that Chongqing is in such a building frenzy, they’re actually tearing down perfectly good (and reasonably new) buildings and infrastructure, and rebuilding them.

To give you an example, next to my 45-story downtown hotel was a building site where the constant drone of jackhammers signaled to me that there was some breaking of concrete going on. The new tower under construction had reached the 11th floor, but then they decided to tear it down and start all over again with something even bigger (102-stories).

[There are a half-dozen other such towers in Chongqing. Most of them are officially “on hold,” signaling to me that China is getting ever closer to facing its bubble reality– that demand simply cannot support such investment.]

Then there are the pavement workers… half of them digging up the road, half of them putting it back together. It is the literal equivalent of digging ditches only to fill them back up, all in order to create employment.

The government certainly hopes that actual businesses will come to Chongqing to mop up all the excess productive capacity that they’re building (and then tearing down and rebuilding).

Chongqing is, in fact, at the epicenter of the “Go West” drive in China, whereby manufacturers along China’s coast are being encouraged to move their production facilities inland to take advantage of the untapped labor pool and cheaper all-around costs of doing business.

Curiously, Ford Motor Company is one of the region’s cornerstone investors.  The company’s biggest concentration of production plants outside of Detroit is in Chongqing.  Ford aims to use the city as its beachhead in China where its market share currently languishes at a paltry 2.6%.

Perhaps in the years and decades to come, dozens, even hundreds of businesses will relocate to Chongqing. Maybe the Chinese have it all figured out and are thinking 25 years in advance. But today, it’s hard to see how ripping down buildings and roadways (and replacing them with ghost towers and the exact same roadways) could prove to be a worthwhile investment.

A half-built building is a liability. A completed building sitting empty is an even bigger liability. These aren’t signs of clever planning, but of wasteful misallocations that are starting to crack the facade of the Chinese economy.

So much superfluous construction did create temporary economic growth… but now you can see the visible signs of unemployment rising. The sheer volume of downtrodden and destitute Chinese on the streets, coupled with rising consumer prices and declining output, all suggest that deep instability is looming.
The Chinese have an old proverb: “Keep your broken arm inside your sleeve.”  They have been telling lies to the world and masquerading as an economic miracle for years, but the signs of stress are showing.
Yes, China does have the right kind of potential with over a billion people, substantial productive capacity, and a high savings rate. But these dizzying growth rates have been a total illusion. With so much of the world’s economic hopes pinned on the continued fantasy of 10% growth, it’s going to be a hard landing for everyone once China’s reality sets in.
Until tomorrow,

Tim Staermose
Editor, SovereignMan.com 

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


Sovereign Man Notes from the Field Date: July 11, 2011 Reporting From: Pristina, Kosovo

In Business, Business/Political Trends Worldwide, Continental Travel, Government, History, Personal, Political, Travel on July 11, 2011 at 6:41 pm

Sovereign Man

Notes from the Field

Date: July 11, 2011
Reporting From: Pristina, Kosovo

Can you imagine being trapped inside your home country, unable to leave? It may be closer to a reality than you realize. I’ll tell you a quick story to explain.

This weekend I rented a car in Bulgaria with the aim of driving through Serbia, Kosovo, Macedonia, and eventually into Greece. Now, I’m no virgin to land border crossings in the developing world and understand the corruption and incompetence that typifies customs checkpoints. But this weekend’s experience was much more.

With documents in hand, I drove to my first border crossing in Strezimirovci, Bulgaria. After clearing customs on the Bulgarian side, the Serbian officers decided that they would not allow me to enter with the normal papers, and instead required that I obtain another customs form to proceed.

Unfortunately, they had no such customs form at their station, so they turned me around and sent me to another border check point in Kalotina, over an hour away.

The road from Strezimirovci to Kalotina skirts the Serbian border for a large part of the drive– quite literally, on one side of the road is Serbia, and on the other is Bulgaria. It’s all part of the same landscape with no discernable difference… these are just invisible lines guarded by gun-toting monkeys.

When I arrived to Kalotina, I found the ‘office’ where I was supposed to obtain the new document– just a simple, roadside concession stand. The ‘agent’ was the shop’s proprietor, a chain-smoking Serbian woman with rather mannish features.

Once I paid the appropriate fee, she spent the next 10 minutes hacking at her keyboard to produce an official looking Cyrillic document with lots of stamps and seals.

While I was waiting for her to finish, four different customers came into the shop to stock up on snacks and drinks. All they wanted was a cold one for the road, but they eventually got tired of waiting and left.

These four customers represented potential transactions that could have contributed something to the economy. Instead, though, they were preempted by an unnecessary bureaucracy that adds absolutely no value whatsoever.

As expected, the Serbian customs agent barely glanced at the form when I crossed the border this time. Finally on Serbian soil, I pointed my car towards Pristina.

Now, Serbia still pretends like Kosovo is part of its sovereign territory, and Serbian police are under strict instructions to make the immigration checkpoint on the Kosovo border as painful as possible.

The vehicle line at the checkpoint was backed up so much that it took several hours to pass. All along the way, there was not a single bathroom, vending machine, fuel station, or even street light. It’s obvious that they want to incovenience travelers to the point that people will think twice before visiting Kosovo again.

When it was finally my turn, I drove up to the policeman and handed him all of my papers. He slowly went through every single detail, looking for any technicality he could find to prevent me from crossing.

The rest the station was staffed with 10 other agents.  All brandished automatic weapons slung over their backs, yet each stood around doing absolutely nothing. One person was “working,” and the other ten were smoking, eating, drinking, and shooting the breeze.

Frankly, I pity all of these border agents whose only function is to deny, obstruct, or otherwise frustrate the forward progress of other human beings.  These people will go their entire careers contributing nothing of value to the world, and destroying what others are trying to create. It’s truly a pitiful existence.

This weekend’s affair was a clear example of what happens when a government imposes mind-numbing bureacracy to prevent freedom of movement. And if you think it can’t happen where you live, think again.

In the US, the government now requires all citizens to have a passport in order to pass the border, even when driving into Mexico or Canada. Obtaining a passport, however, is neither free nor guaranteed.  You must apply, pay an ever-increasing fee, and wait for weeks to be approved and receive it.

Recently, the State Department quietly proposed a new ‘biographical questionnaire’ in lieu of the traditional passport application. The new form requires you to provide things like:

– names, birth places, and birth dates of your extended family members
– your mother’s place of employment at the time of your birth
– whether or not your mother received pre-natal or post natal care
– the address of your mother’s physician and dates of appointments
– the address of every place you have ever lived in your entire life
– the name and address of every school you have ever attended

Most people would find it impossible to provide such information, yet the form requires that the responses ‘are true and correct’ under penalty of imprisonment.

Naturally, the privacy statement on the application also acknowledges that the responses can be shared with other departments in the government, including Homeland Security.

If this proposal passes, then US citizens will have a nearly insurmountable hurdle to obtain a passport and be able to leave the country at will. Even if it doesn’t pass, it’s a clear demonstration of what the people who run the country are thinking.

Have you reached your breaking point yet, comrades? Let me know what you think.


Until tomorrow,

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


Sovereign Man Notes from the Field Date: July 7, 2011 Reporting From: Wuhan, China [Editor’s note: Tim Staermose is filling in for Simon Black today]

In Business, Business/Political Trends Worldwide, Continental Travel, currency, Government, History, Jobs, Personal, Political, renminbi currency, Travel on July 7, 2011 at 6:33 pm

Sovereign Man

Notes from the Field

Date: July 7, 2011
Reporting From: Wuhan, China

[Editor’s note: Tim Staermose is filling in for Simon Black today]
 
When I left my hotel bound for the new Guangzhou South Station the other day , I didn’t know much about the station– where it was, how far from the hotel, etc. After about 25 or 30 minutes in the cab, I still hadn’t seen any signs for the station and grew concerned that the cabbie was just taking me for a ride.As we eventually approached the station, I began to understand why it was so far out of town.  Clearly, the only way they could find enough contiguous land to build this monstrosity was to go WAY into to the outskirts of the city.In the end, it was a 27.82 kilometer (17.39 miles) cab ride from my downtown hotel, and took 49 minutes to get there.  I know this because Chinese taxis are very efficient and give you a highly detailed receipt.

Guangzhou South Station is absolutely COLOSSAL.  By comparison, it is much bigger than any of the 3 international airport terminals in Manila where I live… and I’d say it’s over 8 times larger than theCentral Airport Express Station in Hong Kong.

For a start, the Guangzhou South Station is built on THREE levels.  I was dropped off at level 2.  When I entered there was an “Information” booth straight ahead.  It was unstaffed.  In fact, the entire second level was completely deserted.  Very spooky. It was something out of a low-budget zombie movie.

I went downstairs to the ticketing area where there were a few signs of life. Of the forty or so ticket windows, well over half were closed, and there were only a few dozen people mulling about. To give you an idea of density, imagine the largest football stadium you can think of with only a few hundred people inside. Ghost town.

With ticket in hand, I went up to the departures area… it defies logic that you have to go upstairs to departures even though the trains are at the ground level, but my guess is that the Party really wanted to build a third level just to heighten the grandeur of the train station.

Now, you’d think that if they spent so much money building a station this large, they would be expecting hundreds of trains steaming in and out at all hours of the day. Not by long shot. There was only one train at the platforms. Mine.

It was the same zombie movie theme– areas the size of multiple football fields with hardly any passengers standing around.  And yet, throughout the entire station over all three levels was expensive, high quality marble tiles and artistic finishings, all polished to a mirrored shine.

Guangzhou South Station is truly a monument to excess, exemplifying China’s ruinous “build it and they will come” attitude.

When I arrived to Wuhan about 4-hours later (going 300 km per hour on the high speed bullet train), it was the same theme: acres of empty space, hardly a soul in sight, yet all very modern and marbled with dozens of elevators and abandoned information booths. When my train pulled in, it was the only one at the platforms.

Frankly, the whole episode reminded me of Bangkok and Hong Kong airports during the SARS epidemic back in 2003.  I observed this firsthand– passenger traffic cratered because most people were scared silly of catching the deadly virus, and major airports were practically empty.

Similarly, this is what you would expect at New York’s Grand Central Station after a flesh-eating virus outbreak.

It’s interesting to note that China’s National Audit Office (NAO) recently published a report which says the country’s outstanding local government debt is now equivalent to $1.7 TRILLION. That’s a huge figure — about 27% of China’s GDP in 2010.Because the NAO’s figure was based only on a sampling of 6,500 local government-backed financial vehicles (out of more than 10,000 such vehicles nationwide), the actual magnitude of local government indebtedness is likely to be much greater.  China’s own Central Bank estimates the number to be 30% higher than the NAO figure.All of this certainly begs the question– how many more empty buildings and unused train stations can they possibly build?  More importantly, what happens to China’s economy when all this fixed asset spending starts to subside?  I’ll explore these questions more in the coming days… but in the meantime, I’d like to hear what you think about it.


Until tomorrow,

Tim Staermose
Editor, SovereignMan.com 

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


Sovereign Man Notes from the Field Date: July 6, 2011 Reporting From: Wuhan, China

In Business, Business/Political Trends Worldwide, Constitution of The United States, Continental Travel, Government, History, Interesting places, Offshore accounts, Opportunity, Political, Taxes, Travel on July 6, 2011 at 3:45 pm

Sovereign Man

Notes from the Field

Date: July 6, 2011
Reporting From: Wuhan, China
[Editor’s note: This missive was sent in from our partner Tim Staermose in China]Maybe the Chinese politburo has been watching too much deep cable, and, inspired by Kevin Costner’sField of Dreams movie, decided to churn out a bunch of empty cities. As it turns out, though, if you build it, they won’t come… and if you’ll forgive the movie analogies, these empty developments acrossChina are turning into fields of nightmares.I’ve been quite bearish on China lately. There are so many reports about how the Chinese economy is going to lift the world out of recession, and insatiable Chinese demand for commodities will deliver permanent good times in resource-rich countries like Australia.

I suppose that if you’re sitting on a few trillion dollars in reserves and decide to dump a lot of it into your domestic economy, it’s good for growth… at least for a while. But China is doing the 21st century equivalent of digging ditches during the day and filling them up at night.

We’ve all seen the videos of Chinese ghost cities and bridges to nowhere, but I wanted to put some boots on the ground and check it out for myself.

I started my trip In Guangzhou, and it didn’t take me long to find the first example of what I call China’s “build it and they will come” philosophy of economic growth.

Guangzhou has this new district of glitzy office towers and apartment buildings in the Tian He district called “Pearl River New City.”

It is SEVENTY percent vacant!  Prices are DOUBLE what they are in the older section of town which most people prefer living in, because there’s actually nice established neighborhoods with stores, businesses, restaurants and so on which remain affordable to average people.

They’re still building stuff in this “New City.”  Here’s a sign that showed half a dozen of the buildings with their respective heights proudly displayed.  The whole thing only sprang up in the past few years ahead of the 2010 Asian Games which were held here in Guangzhou.  In fact, they built a brand new stadium just for the opening ceremony!

Among all the impressive new skyscrapers in the Pearl River New City, I saw at least two 5-star international hotel brands– Hyatt and Westin.  I think you’ll find that if you call them and pose as a conference organizer, they have PLENTY of rooms available.

Beneath the surface (literally) this whole new district may not be so impressive.  During heavy rains, the area floods.  Apparently the developers were not as careful about what they built underground, and the drainage and sewerage systems leave something to be desired.

Traffic was light while I drove around the area with prominent local friend; he pointed out that IF the buildings were all occupied, the sheer number of people who’d be coming and going would probably cause a traffic snarl of epic proportions.

So who’s buying all of these units? Developers keep building because people keep buying, right?  They’re all mostly investment properties. Chinese real estate “investors” don’t actually care about rental yield at all.  Indeed, most of them deliberately let their properties sit vacant.

They buy apartments as an inflation hedge and are prepared to hold them as long as it takes to sell at a profit. As the theory goes, there’s always a greater fool out there willing to make an even dumber financial mistake.

I get the feeling some of the recent buyers in Guangzhou may be waiting a very long time.
The supply of rental property in Guangzhou is so vast that rental prices are roughly half as much as it would cost you to service a mortgage on the same property.

These observations– rental yields that don’t come close to covering the mortgage, empty buildings, bold advertisements heralding the grandeur of these projects, rising construction costs, cutting corners on infrastructure, etc. are all classic bubble indicators.

And as I’m going to explain in the coming days with even more boots on the ground reports, this is a bubble that’s bound to pop soon. Stay tuned.

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


Sovereign Man Notes from the Field Date: July 5, 2011

In Business, Business/Political Trends Worldwide, Continental Travel, Expatriation, Money and Finances, Political, Political parties, Taxes, Travel on July 5, 2011 at 1:07 pm

Sovereign Man

Notes from the Field

Date: July 5, 2011
Reporting From: Sofia, Bulgaria

Do you remember those days, 25+ years ago, when the Olympic games were an extension of the Cold War? We heard stories about these Soviet athletes who were groomed, practically from birth, to become champion athletes, taken from their families at a young age to live and train nonstop for the glory of the Communist Party.

Bulgarians historically excelled at summer sports like boxing, wrestling, track & field, and rowing, and today I worked out at a gym that used to house the country’s up-and-coming athletes during Soviet rule.  It’s in a neighborhood of old Soviet-era apartment buildings, all built in that concrete shoebox style that defined Communist architecture.

Such neighborhoods are a constant reminder of the days when they allowed their society to descend into a totalitarian police state. A lot of Bulgarians I’ve encountered seem embarrassed by these Communist remains, brushing the entire period off as ‘experiments in socialism.’

They’re looking to the future now, and they’re cautiously optimistic.

When you survey the various countries in the former Soviet bloc, it’s a truly mixed bag. East Germany, for example, enjoys a lavish economy after being successfully reunited over 20-years ago thanks to an incredible amount of aid and support from the West.

Slovakia has spent the last two decades creating a manufacturing powerhouse for the rest of Europe, and its citizens today enjoy a much higher standard of living than before.

Estonia built a very successful knowledge and services economy by establishing a limited, low-tax, business-friendly government. When Mart Laar took over as Prime Minister after Estonia’s independence in the 1990s, the only economic text he had ever read was Milton Friedman’s Free to Choose. It’s fortunate for his country that it wasn’t Keynes.

Belarus descended even further into totalitarianism; Aleksandr Lukashenko, the country’s first democratically elected president since the fall of the Soviet Union, has remained in power ever since, effectively seizing dictatorial control over every aspect of the economy and society.

Ukraine continues to vacillate between revolution, corrupt cronyism, and economic collapse… yet the country still has a lot of potential thanks to its resource wealth and talented young work force.

Bulgaria, from where I write this letter, is an interesting case. As the poorest member of the EU, there is a lot of opportunity at face value. Labor is dirt cheap. Property is dirt cheap. Living costs are a joke. English is widely spoken and is, in fact, more prevalent than Russian in the capital city.

More importantly, the government is finally beginning to privatize some of its state-owned companies, as well as make some business-friendly decisions related to taxes.

Now, this is not a part of the world where tax compliance is particularly strong. The immediate post-Soviet years turned the entire region into a veritable Deadwood, and devoid of any functioning tax authority, people got used to dealing in all cash and keeping 100% of their earnings.

Several governments, including Russia, Ukraine, and Bulgaria, have tried to make compliance easy by slashing tax rates. At just a 10% flat rate for corporate, individual, and capital gains, and just 5% on dividends, taxes in Bulgaria are now so low that some people might actually pay.

For foreigners, it’s a boon. Bulgaria has an extensive network of tax treaties with countries acrossWestern Europe, Canada, and the United States which ensure foreign-owned Bulgarian companies are only subject to the 10% rate.  Using this ‘tax rate arbitrage,’ multinationals keep a large part of their earnings offshore in lower tax jurisdictions.

At present, a number of multinationals have set up overseas headquarters and manufacturing facilities in Ireland to take advantage of that country’s low tax rate of 12.5%.  Given Ireland’s pending bankruptcy, however, the government is under pressure to raise this rate… and I expect that this will drive a number of companies to move operations to Bulgaria.

Given the country’s low tax rates, cheap minimum wage of just $185/month, and business-friendly policies, Bulgaria is a reasonable alternative for companies that want to stay within the EU’s customs union. Bulgaria is, after all, an EU member… though they likely fabricated their financial statements to gain entry in the same way that Greece did.

Simply put, Ireland’s decline will be Bulgaria’s gain, and the influx of foreign investment will be of great benefit to this economy and asset prices.

Meanwhile, entrepreneurs and investors looking to capitalize on offshore tax treaty advantages, cheap talent, and a cost effective European base may want to consider Bulgaria for their needs.


Until tomorrow,

Simon Black
Senior Editor, SovereignMan.com 

Sovereign Man Weekend Edition Date: July 2, 2011 Reporting From: Roissy, France

In Business, Business/Political Trends Worldwide, Continental Travel, currency, Money and Finances, Opportunity, Personal, Political, Political parties, Sovereign Man, Taxes, Travel on July 3, 2011 at 12:10 pm

Sovereign Man

Weekend Edition

Date: July 2, 2011
Reporting From: Roissy, France

I imagine that travel used to be quite glamorous back in the 1960s… when airline captains were accorded same social status as mid-rank diplomats, and stewardess (as they were known back then) were little more than Vegas cocktail waitresses.

Today is a bit different. It seems that most legacy carriers are still employing the exact same flight attendants that they did 40-years ago, and nightmare delays are commonplace.

In addition, there are now so many ridiculous fees involved in flying.  Just the taxes alone can add an additional 30% on top of the ticket price– another example of Thursday’s note about how taxation is just another form of inflation.

Then they tack on extra fees for the fuel. The ground service. Checking luggage. Checking in. And my all-time favorite, the “payment fee” where they actually charge you to pay them. This is very common inEurope, and if you’ve never experienced this before, don’t worry– it’s coming soon to an America near you.

Anyhow, I got waylaid here in Paris (not a bad place to be stranded) for a day on my way to Eastern Europe. After finishing up my business in Bulgaria, I plan on putting boots on the ground once again inGreece (what’s left of it). Hopefully the default will occur when I’m there… I do love a good crisis.

Speaking of PIIGS, earlier in the week I wrote a piece about my most recent observations in Spain– including remarks about some small villages in the north of the country that have been using the Spanish peseta once again (Spain’s pre-euro currency). This is certainly a sign of Europe’s post-euro future.

Remember, Europe is a continent with over a thousand years’ history of tribal warfare, genocide, inquisition, and marauding invasions. Sure they’ve been playing nice for the last 20-years, but it’s foolish to think that a German hairdresser is willing to take on greater taxes, inflation, or public debt so that a Greek hairdresser can retire at age 50. More to follow on this.

[As an aside, I also wrote about the growing police presence in Spain… and I would not characterize them as friendly. Writing from Santiago, Chile on Friday, Dr. John Cobin filled in for me to talk about how Chilean police actually treat people with courtesy and respect.]

Meanwhile, our Asia-based partner Tim Staermose has his boots on the ground in China once again. He’s tired of all the ‘economic puff pieces’ talking about how Chinese demand is going to save the global economy and promise endless sunny days, especially for commodity exporters like his nativeAustralia.

It seems that these optimists have a very short memory and have forgotten the hard lesson that all booms bust. They seem to think, instead, that ‘this time is different …,’ the four most expensive words in finance.

Last, I want to mention that we held our monthly premium teleconference for Sovereign Man: Confidential members this week; this live Q&A call is something that we do especially for SMC members at the end of each month, and this call was full of great questions.

We received a lot of questions about the plans for our resilient community project, as well as details about the property we’ve selected in central Chile. I have so much to say on the topic, I was practically bursting at the seams.

We also had a lot of questions about moving and storing gold, some great places to bank overseas, how to establish a business offshore, what to do with a US-based retirement account at/near retirement age given so many threats to pension funds, and more.

The monthly teleconference is just one of the benefits of SMC membership; members also receive a monthly letter that’s packed full of actionable information from our boots on the ground around the world– internationalization strategies, investment opportunities, time-sensitive deals, contacts, and more.

You can think of it as your personal intelligence service.

Then there’s our members’ only website, where people within the community can connect, build relationships, discuss their ideas, and trade experiences. This site is a fantastic way to build a strong network of like-minded people, and it’s been my privilege to interact with so many members using this tool.

If what I’m describing sounds like it would add value to your life and help you to prepare and thrive in the tumultuous times ahead, I encourage you to read more and sign up for our no-risk membership. You’ll receive instant access to past issues, as well as the teleconference we just conducted.

Have a great weekend.

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: June 30, 2011 Reporting From: Andorra la Vella, Andorra

In Continental Travel, Food and Staples, Government, History, Interesting places, Opportunity, Personal, Political, Political parties, Taxes, Travel on June 30, 2011 at 6:34 pm

Sovereign Man

Notes from the Field

Date: June 30, 2011
Reporting From: Andorra la Vella, Andorra

In addition to being one of the most picturesque places on the planet, Andorra is a textbook example of what happens to an economy when a limited government sets up a liberal tax regime.

Like conjuring money out of thin air, taxation is just another form of inflation that either directly or indirectly sticks the end-user consumer with a higher price.

Think about it– when businesses get taxed on their payrolls and profits, it’s consumers who end up paying for it at the cash register. When governments decide to pass sales taxes or increase VAT rates, it’s consumers who end up paying more.

This is theft, plain and simple… a robbery from everyday, hardworking people perpetrated by unproductive bureaucrats. Governments around the world collect trillions of dollars each year by sticking consumers with higher prices, only to go waste it all trying to centrally plan their economies.

In his recent book Daemon, author Daniel Suarez summed this up when he wrote, “Anyone who has ever tried to share pizza with roommates knows that [central planning] cannot ever work. If Lenin and Marx had just shared an apartment, perhaps a hundred million lives might have been spared…”

The major fallacy in politicians’ logic is that if governments can collect enough tax revenue, they will be able to dump it all back into the economy, creating jobs and stimulating growth.

It sounds great in theory, but in practice, government spending is prone to massive misallocations and value distortions… let alone corruption and bribery. This is how we end up with bridges to nowhere, empty cities, expensive wars, and millions of dollars of stimulus money spent on giant signs bragging about how much stimulus money has been spent.

Spain is a great example of how this doesn’t work. For years, the government has been collecting painfully high taxes on earnings, savings, consumption, and death, then plowing this stolen booty back into the economy, effectively becoming the country’s dominant economic force.

Years of misallocations have created dismal economic conditions, as well as a horrible debt crisis.

At this point, the government has nearly run out of cash, the official unemployment rate is north of 20%, and retail prices on the street are rising by the month. So how has the government dealt with such overwhelming economic adversity? By raising taxes, of course… calling the exact same play, even though it never works.

After raising the VAT last year to 18%, personal income rates have been raised to nearly 50% on Spain’s top earners. Even middle-income earners are being taxed now at 37% to 43%. Capital gains rates have also been hiked. Guess what’s going to happen to prices?

You’d think that Spanish politicians would look at their track record and realize that government spending does not buy a one-way ticket on the economic gravy train… especially when low-tax Andorra is just up the road.

Andorra has no direct taxation on individual income, no tax on business profits, no tax on gifts, no tax on inheritances, and limited taxation on consumption (like sales tax or VAT). The net result looks a lot like Switzerland– a bright, clean, beautiful, prosperous country that consistently has some of the world’s lowest unemployment.

It’s not like Andorra is sitting on a huge oil reserve. This place is high up in the Pyrenees Mountains. There’s barely any place to grow a turnip around here, let alone drill for oil. No, Andorra has prospered because the country has set the right conditions that attract productive people and their capital, similar to what Hong Kong has done.

Prices here are reasonable. In fact, it’s much cheaper than Spain with quality as nice as Switzerland. Crime in Andorra is… well… it isn’t, basically. Standard of living is among the best in the world, and Andorrans even have the fourth highest life expectancy in the world at 82.43 years (compared to 81, 80, and 78 in Canada, UK, and United States).

With such a fantastic model right on its borders, its absolutely mind boggling that politicians in Spain, and the rest of Europe for that matter, refuse to take a page from Andorra’s playbook and set conditions for success.

For SMC subscribers, I’ll be telling you in the upcoming July edition how you can set up residency here, as well as establish a bank account. Also, don’t forget about our monthly subscriber teleconference this afternoon at 4pm eastern.

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

%d bloggers like this: