Panama Investor Blog

American capitalism gone with a whimper

Very interesting article from Pravda;

Excerpts: It must be said, that like the breaking of a great dam, the American decent into Marxism is happening with breath taking speed, against the back drop of a passive, hapless sheeple, excuse me dear reader, I meant people.

First, the population was dumbed down through a politicized and substandard education system based on pop culture, rather then the classics. Americans know more about their favorite TV dramas then the drama in DC that directly affects their lives. They care more for their "right" to choke down a McDonalds burger or a BurgerKing burger than for their constitutional rights.

Must read....

Just how big is the U.S. deficit? Check this out.

With all the numbers being thrown out today concerning the U.S. deficit and national debt it's getting increasingly difficult to wrap your mind around just how bad things really are.

Well, I recently found this very interesting web site that shows how quickly the the numbers are piling up. 

As a well known economist recently said, "If you're not scared, you're not paying attention".

Check it out.

U.S. National Debt Clock 

CNN asks, Where is John Galt?

Anyone who has read Atlas Shrugged clearly sees the similarity of the book with the reality of today. According to this article in CNN, the book is selling like hotcakes as the world is trying to look into the future to see what it hold, and it is not pretty.

Excerpt from CNN;

The quotation is wrong. As any reader of Ayn Rand's "Atlas Shrugged" can attest, the correct line is "Who is John Galt?" but the point is well taken.

In the midst of the credit crisis and the federal government's massive bailout plan, the works of Rand, a proponent of a libertarian, free-market philosophy she called Objectivism, are getting new attention.

"If only 'Atlas' were required reading for every member of Congress and political appointee in the Obama administration. I'm confident that we'd get out of the current financial mess a lot faster," Wall Street Journal columnist Stephen Moore wrote in early January.

It's obviously getting attention from the general public. Rand book sales are "going through the roof," said Yaron Brook, the president of the Ayn Rand Institute. According to Brook, "Atlas Shrugged," her most famous novel, has sold more copies in the first four months of 2009 than it did for all of 2008 -- and in 2008, it sold 200,000 copies. It's been in Amazon.com's top 50 for more than a month.

Not bad for a 1,100-page doorstop of a book that came out in 1957, by an author who died in 1982.

Read the story here...

Developers under fire regarding maintenance fees, again

When buildings near completion the maintenance of the structure begins. Developers who have not sold out their buildings find themselves between a rock and a hard place. On the one hand, they need a good reputation and a well maintained building in order to sell remaining units, yet when sales come to a standstill, they are in the unfortunate position of having to carry unsold inventory and maintain them too. Most people have little sympathy for the developers as they are seen as making a lot of money off the buildings and they should have contingency plans in place for a possible downturn. But experience has shown that having contingency plans  is usually not the case. Developers live by building and selling and building again. Few Panama developers have experienced a boom and bust like we have seen these last few year and none anticipated it would end so abruptly. We will continue to hear about actions against developers by property owners as more and more of them default on their promises leaving the buyer holding the bag. Beautiful buildings facing the sea will deteriorate rapidly if not maintained and the glitter of city lights will be tarnished by shortsightedness and greed.
The one possible solution is to lower prices dramatically and start a new buying boom for those who really are looking for a deal. Better to sell for less than not sell at all.

Excerpts from La Prensa:

Complaints mount against luxury apartment developers in the coveted seafront neighborhoods of Punta Pacífica and Costa del Este, the majority of them over maintenance costs for the common areas and facilities.

Owners of property in the P.H. Aqua Mare of Punta Pacifica are particularly irate after they claim to have paid an additional fee for developer Btesh & Virzí to equip and furnish the lobby, gym and recreational area prior to moving in. More than a year later, those promises are still incomplete.

Several apartment owners in that development also allege that Btesh & Virzí owe upward of $300,000 in maintenance fees on properties that remained unoccupied between February and December 2008.

Read the rest of the story here

The Dark Side Of Dubai

I used to call Panama the Dubai of Latin America as it was booming in a similar uncontrolled fashion. Of course the scale was dramatically smaller, but the marketing and hype was way over the top for what you will get in both places. Now that the booms are over and the truth is coming out. 

I get emails regularly where readers are weighing on whether to close on a city condo or just walk, but in Dubai you have other considerations to make.  The laws of this Muslim land are not at all kind or forgiving and if you are there, you are subject to that law.

The treatment of the foreign construction workers is even worse. Slavery has been a part of these countries life blood for thousands of years and when you read how the people have been duped into coming to work in Dubai and then treated as slaves it becomes increasingly clear that Dubai is a real snake pit. All glamor and beauty built on the backs of the poor and unfortunate who have been enslaved to build it. Now, it will crumble and go back to the desert where it belongs. God help those who can't get home.

The dark side of Dubai

Dubai was meant to be a Middle-Eastern Shangri-La, a glittering monument to Arab enterprise and western capitalism. But as hard times arrive in the city state that rose from the desert sands, an uglier story is emerging. Johann Hari reports

click here for the story

Is the future Argentina?

Here’s an interesting video with a perspective from an Argentine financial analyst on a possible outcome of our current financial crisis. 

 

What’s important about his analysis is that Argentina has gone through a similar crisis not once, but four times during recent history.  Although Argentina’s bust cycle has happened over much shorter periods of time, he believes that Western countries are going to experience a similar outcome.

In summary, his observations and recommendations are these:

Step one: Modern capitalistic governments always privatize profits and socialize losses for their financial institutions.

 

Step two:  When the losses become too big, devalue the currency.

 

Step three: Export the losses to the creditor countries.

 

Step four: When resources become scarce around the world, war is ultimately the solution.

 

What to do?  Take your paper money and buy hard assets – land, gold, cars, houses ……. anything but cash.  This is how people survived in Argentina and this is the only way to hold on to your wealth in an inflationary environment.

 

Is he right? Only time will tell but it’s worth 15 minutes listening to what he has to say.

Watch the video here.

Foxes in the hen house

I want to share with you a great article by Chris Martenson which clearly shows that the U.S. is completely controlled by banking interests who are shifting all the citizens money to a few at the top. This is such a sad state of affairs and so blatantly obvious yet people fail to see it and be outraged. I am outraged and angry with these fools who are looting us and playing us for chumps.

Excerpt: The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we’re running out of time.

read the op ed here.

Who's responsible for the current economic meltdown?

The financial crisis has crippled economies around the world, caused governments to bail out failed banking institutions, cost tax payers trillions of dollars and threatens to destroy the pensions and retirement plans for millions of people.

But what caused this financial meltdown and who is really responsible?  Although governments around the globe would like you to think it's a complicated problem that was impossible to predict, the truth is actually much different.  The roots of the current crisis can be traced back to the systematic removal of financial regulations over the past decade (by both Republican and Democratic administrations) and massive fraud by Wall Street aided by willing regulators.  In fact, the fraud and manipulation continues to this day.

To truly understand the depth of the deceit and the total failure of the government regulators responsible for keeping our banking system safe, I urge you to spend a few moments to watch this interview with William K. Black.

Excerpt:

For months now, revelations of the wholesale greed and blatant transgressions of Wall Street have reminded us that "The Best Way to Rob a Bank Is to Own One." In fact, the man you're about to meet wrote a book with just that title. It was based upon his experience as a tough regulator during one of the darkest chapters in our financial history: the savings and loan scandal in the late 1980s.

Click here for the interview with William K. Black

Comments on Dubia's downfall

The International Herald Tribune Blog by Kevin Brass carried a post about several major project cancellations in Dubai. Of greater interest to me are the comments to the article by people at ground zero in Dubai. It is amazing that there are few articles about the real problems being experienced by property buyers and very little main stream press about the markets demise in these once highly touted areas of growth.These comments readily apply to what is happening in Panama too.

FROM IHT

The market there is a complete mess, and begging for good governance. In no particular order - here’s what’s happening. Dubai and Ajman leads the pack.

1) Change of tack in visas - after years of promising it - a 180 degree turn in policy means a smaller potential buyer pool.
2) Thousands and thousands of undelivered projects, which in turn creates and artificial shortage. It also creates tremendous uncertainty
3) Un regulated developers - that don’t own the land, have no intention of starting construction. The law doesn’t force them to. Instead, they embezzle the money, or use it for marketing etc.
4) Contracts are routinely delayed from when the booking deposit is put down….and when it does show up, totally diverges from what is advertised, promised.
6) The developer requests post dated cheques that are impossible to stop, for any reason.
7) A regulator (RERA) that is primarily focused on developers and creates a smokescreen of protection, that soon evaporates. Even cases where RERA has ruled in favor of the end investor, developers openly continue to flout rules.
8) Even the big developers are stuck for cash, and thus not issuing refunds on projects that they have canceled.
9) The whole game was dependent on thousands of new buyers coming in and making down payments, but in the current environment and given all of the local uncertainties that has stopped.
10) Unregulated construction standards and out of control maintenance charges.

Markets everywhere are impacted by the global crisis - but much of what is listed above is locally created.

Buyer beware - but if you have a very compelling reason to buy - check the various online forums, get a lawyer, don’t use post dated cheques - and stay away from off plan.

Lastly, I am honestly stunned that none of the worlds major newspapers have picked up on any of this and say written about this in the Western media. You’d all be doing your readers a favor, by doing some objective research into this.

Indians flee Dubai as dreams crash

As they flee they abandon their cars at the airport with the keys in the ignition. The construction and real estate party is over and Dubai is reeling. The bigger they are, the harder they fall. At least they can still go snow skiing!

Excerpts: from Daijiworld: Local police have found at least 3,000 automobiles -- sedans, SUVs, regulars -- abandoned outside Dubai International Airport in the last four months. Police say most of the vehicles had keys in the ignition, a clear sign they were left behind by owners in a hurry to take flight.

The global economic crisis has brought Dubai's economic progress, mirrored by its soaring towers and luxurious resorts, to a stuttering halt. Several people have been laid off in the past months after the realty boom started unraveling.

Faced with a cash crunch and a bleak future ahead, there were no goodbyes for the migrants -- overwhelmingly South Asians, mostly Indians - just a quiet abandoning of the family car at the airport and other places.

"The construction and real estate industry has been hit following the global slowdown and the direct fallout is that professionals working in the realty industry are rapidly losing their jobs," said a senior media professional, in-charge of a realty supplement in Dubai. "In fact, my weekly real estate supplement usually had 60% advertisement and ran into 300-odd pages. In the last seven weeks, it's down to 80 pages and with fewer advertisments," he added.