Panama Investor Blog

Record Number of Americans Ready to Expatriate

Thanks to Mike for sharing this article from whiskeyandgunpowder.com

International Living promotes a cheap lifestyle abroad and spends a great deal of time and copy trying to convince folks that there is a $30k home on a beach somewhere waiting for them. The main reasons most of these folks are considering leaving the USA have more to do with seeking a low cost of living rather than protecting significant assets, but it does highlight the fact that many thousands are seriously considering packing up and moving abroad.

Apr 12th, 2010 | By Dan Prescher | Category: Featured, International

In a survey of readers on March 22, 2010, InternationalLiving.com found that nearly 96% of respondents said they are more likely to move out of the United States than they were last year.

More than 500,000 readers of the company’s free Daily E-letter were asked a single question: Are you more open to moving outside the United States than you were 12 months ago?

A stunning 95.6% of those who responded said they were now more willing to make the move and leave the U.S.

“We suspected from record attendance at our global conferences this year that something big was happening to attitudes in the U.S.,” said Jackie Flynn, publisher of InternationalLiving.com.

“The economy is faltering,” said Flynn, “unemployment is at record levels, the health care debate nearly caused a civil war, and there are real wars being fought on two fronts in the Middle East. The cost of living is going up so fast that people are being priced out of their retirements. It’s no wonder our readers are getting serious about moving abroad.”

One such reader is Elaine Yakos-LeBron, an advertising executive in her early 60s from Washington D.C.

“I attended an InternationalLiving.com conference several years ago, after my husband died,” said Yakos, “but when I got back to the States, with the economy down the tubes, I was lucky to keep my job and not be laid off. I dropped anything to do with moving or buying abroad. I just focused on work.”

But then, Yakos said, she decided to attend the InternationalLiving.com Ultimate Event V, held this past February in Quito, Ecuador.

“After losing over a third of my money in the market,” she said, “I’d had enough. I told my financial advisor that he should be ashamed of himself for making more on my money than I was.”

Yakos was impressed with what she learned at the InternationalLiving.com conference. She also realized she wasn’t alone in looking for options outside the U.S. Nearly 400 people, mostly Americans, were there with her.

Along with attending the conference, Yakos spent some time touring Ecuador. It wasn’t lost on her as she was driving along Ecuador’s sunny Pacific coast that there was four feet of snow on the ground back home.

“I don’t have deep pockets, and I’ve been hit by the downturn like everybody else,” said Yakos. “But I’ve always wanted to live where the weather is great and I can hear and see the surf. I learned that I can do that in a place like Ecuador because it’s so affordable.

“After the conference I went to Manta and made a deposit on a condo overlooking the water. I’m a little nervous, but I’m also excited. I now have a lovely place to vacation, and when I do get ready to retire, I’ll have the life I want.”

Elaine Finnegan, InternationalLiving.com events director, said Yakos’ story isn’t unique, and that record attendance at global conferences and seminars so far in 2010 bears out the survey results.

“At our Ultimate Event in Ecuador last February we had the largest crowd for any event in our 30-year history,” said Finnegan. “Nearly 400 people just like Elaine Yakos-LeBron flew all the way to Quito for a four-day conference about living and investing abroad. That’s unprecedented, yet it seems to be continuing.

“We’ve already broken last year’s attendance record for our Live & Invest in Panama event coming up April 18-20,” said Finnegan. “For the first time, we’ve actually had to cap registrations. Our International Real Estate Investment Forum in Toronto June 3-5 is already half full, and we haven’t even started advertising it yet.

“There seems to be a groundswell of discontent in the U.S.,” said Finnegan, “and we’re seeing a record number of people who are ready to vote with their feet and get out while they can still afford to do so.”

Regards,
Dan Prescher
Whiskey & Gunpowder

Block a road and go to jail, I like it!

The Panamanian assembly is considering a law that will hand out two year prison sentences for intentionally blocking roads during protests. In Panama it is common practice for anyone with a beef to just block a road to get attention to their cause. This year a few locals blocked Boquetes main road for over an hour during morning rush hour while they protested a restaurant that wanted to put in slot machines. Panama City is always having road blockages for various issues people want to raise. Of course the unions are against such a law as they say it is the right of free assembly, but they give no thought to the difficulties this causes everyone who is trying to get to work or home or whatever. Common sense may reign in this matter and I for one am very happy about it.

from La Prensa:

José González Pinilla
[email protected] [email protected]

  The punishment of imprisonment for street closures came in last night to the full National Assembly, igniting the debate between the ruling and the opposition.

  Marcos Gonzalez, a member of Democratic Change, took up the proposal which was presented at the meeting last Monday by his fellow Augustine Sellhorn (alternate member), to punish with 365 days in jail who hinder the freedom of movement.

  Gonzalez reworked the proposal and presented a paper which states verbatim as follows: "Whoever, by abusing their right of assembly or demonstration, through the use of violence, prevent or impede the free movement of persons or vehicles on public roads in the country, or from damaging to the public or private property shall be punished with imprisonment of six months to two years. "

  The PRD bloc called the proposal the "jailhouse" that seeks to "intimidate" the people.

This article was included in the bill that restores the criminal record, which is discussed in the second debate.  In addition, he has included this project another controversial article, which complicates the political parties the implementation of the recall.

  At press time, the session was in the midst of PRD's legislative tactics to delay approval of the project in the second debate.

VEA 'Carcelazo' enciende debate

How about an "educated and experienced" immigration visa?

An article in La Prensa today highlights the difference between executive salaries and  those of government officials in Panama. One thing that I consider a tribute to this administration is that many of the ministers and vice ministers are businessmen who are making a fraction of what they make in the private sector operating their businesses. They work in government because they want to make a difference during their term and then go back to their private sector jobs a soon as their term is up. This is the way politics should be IMO. In previous administrations you had only a few ministers with qualifications other than having helped get the president elected. They wanted the power and popularity, but did little of substance.

But this administrations ministers see significant challenges at lower levels than ministers and vice ministers. It is hard to attract talent when  the private sector offers two to three time the salary and benefits. I do understand the challenges of trying to accomplish great things when talent is so limited in a small country like Panama.

The solution may just come down to a form of educated and experienced immigration visa. If there were more talent available the cost of talent would not be as high. There are millions of talented unemployed around the world who would probably welcome a challenge working for a government in a foreign land.

minerva bethancourth
[email protected] [email protected]

  The Government needs to attract talent from the private sector to develop many of the projects he plans to run.

  However, one of the main obstacles to attract specialists and professionals who thrive in the private sector is the low wages paid in the governmental sphere.

 The minister of Economy and Finance Alberto Vallarino is aware of the situation.  In a talk recently he expressed some frustration with the need to attract talent from the private sector to develop the work contained in the investment program, valued at $ 13 billion 600 million and the wage gap that exists.

  Of the 14 ministers that the current government has more than 50% comes from the private sector, therefore, are used to a rhythm and different working method is practiced in the machinery of government.

  There are even a lot of brain drain from the Government, just over wages, a source said.

  A review of the return of some ministries offers a view on the wages earned in the government, and helps to establish comparisons with the fees that are charged on private enterprise.

  Within the high charges in the governmental sphere, we see the post of minister and deputy minister, who enjoyed a salary of 3 thousand dollars and 3 thousand 500 dollars, not including the fees of which are another component in the salary.

 Extrapolating these jobs to a private company, where higher charges are the manager and his senior executives, salaries ranging from 5 thousand dollars and 18 thousand U.S. dollars, according to a market survey conducted by the firm KPMG. The wage gap is significant, making it difficult to recruit private practitioners in government.

  However, jobs related to the area of technology, engineering and special projects within the government reflect higher wages to the median wage in the central government, which is located at $ 738, according to the report template to February of this year.

According to Linnet Jessica Benitez, manager of Advisory Services of KPMG People, no doubt that wages in the private structure influence in attracting talent.

  Another aspect to consider, according to Benitez, is that private enterprise tends to provide other cash benefits for executives, such as annual increases in productivity or performance bonds (which range between 16% and 25% annual compensation).  They also offer profit sharing, fringe benefits, life and hospitalization insurance, provision of car, pay union membership or professional associations and social clubs.

 "When you consider all of the executive compensation package (ie salary plus benefits in cash and in kind), it becomes even more evident the difference between a sector and the other," he reflected.

  Regional manager for Central America and Dominican Republic Manpower, Luis Fernando González, not only affects wages to attract staff of the private sector, but other factors such as work environment, teamwork, training and development.

  It is therefore necessary to reinforce the work done in different sections of the Government with professionals from business, to gain experience and improve business areas that are experiencing a climate of motivation, organization teamwork , adherence to standards and policies.  Both private business and government management stem from different angles.

While the company seeks to maximize profit, the State must strive for the best development and welfare of citizens in various aspects, such as economic, educational and health fundamentally sentenced Tom Rodriguez, economic analyst with the National Competitiveness Centre.

 The general government budget for 2009 entered in the line of personal services, including worker-employer share of Social Security Fund, about 2 thousand 168 million dollars and generated a payroll of 516 173 thousand employees in the public sector.

Complaints against Panama developers on the rise

Several times a year La Prensa comes out with the reports of complaints against various businesses filed by consumers  and developers always lead the pack. Judging from email I get this is certain to increase as building are being delivered over the next year or so.

Machine translated from La Prensa:

Roberto Gonzalez Jimenez
[email protected] [email protected]

  The property business is still generating the most complaints in Panama.

In the first two months of the year, the Department of Settlement Authority Consumer Protection and Competition (acodec) received 87 complaints against companies in this sector, which represents 58% of the 149 complaints handled.

  Distance second from the property business is the sale of used cars (27 complaints) and dealerships (15).

  Most complaints against promoters were for breach of contract (31), return of deposits (20), breach of warranty (18) and hidden (5).

  The president of the Panamanian Institute of Law, Consumers and Users (Ipadecu), Giovani Fletcher, explained that contractual breaches go through the drafting and implementation of unfair terms, misleading advertising concerning the qualities of the projects, charges not agreed, amendments the size of property, failure to delivery dates and the setting of occupancy permits.

  Representatives of groups of developers have recognized that these practices can damage the image of Panama as the housing market, but consumers do not see that the authorities are giving the issue the attention it deserves.

"The central government administration is not necessarily getting into this subject, because they see it as one of the loads to be met by acodec" said Fletcher.

  Last year alone, the public entity resolved 188 of the 433 complaints that were filed against property developers.

  The acodec, which has always recommended to report any abuses, said that sometimes "can not give a more effective because it leaves the consumer's own case" or because certain claims are the responsibility of other officials.

  Recommendations

  Data on complaints against promoters were known a few days before the start of a new real estate exhibition in Panama.

  At these events, many citizens are attracted to good deals and sometimes do not keep the reserves needed to avoid unpleasant surprises. Ipadecu President advises consumers that before any commitment to close the contract subject to review by an expert and consult on acodec if the developer has received complaints.

It also suggests that not sign contracts in which the developer is given the power to solve unilaterally, it can be fertilizers or permitted to vary the size of the apartment and charge the customer in addition.

  Consumers should also require the exact date of delivery of the property and ensuring that the quality of materials and finishes will deliver the advertising and the contract.Acodec itself often involves a booth at fairs where they can meet the concerns of buyers.

How to protect your assets in Panama?

I get a lot of emails asking me about foundations and their benefits.  As more folks are considering Panama as a place to live they need to consider legal ways to protect their hard earned capital. This came in from Asset Protection Newsletter and provides a clear explanation of this structure and its benefits. Many folks ask me what legal firm they should use in Panama and my answer is to always use a large firm and not an individual attorney. Firms are more expensive, but they have a reputation to protect and will usually deal with legal matters in a timely and professional manner. I have heard so many nightmare stories of individual attorneys not doing the job they have been paid to do and the client have no recourse. Although there is a bar association in Panama, I have never heard of any attorney being reprimanded or losing his license over malfeasance.

Panama's Private Interest Foundations

“Foundations are the favored asset protection tools of the super rich such as the Rockefellers and Rothschild’s”

In 1995, Panama enacted a unique law creating Private Interest Foundations (PIF) which put this country in the forefront of global asset protection.  The PIF law used parts of similar laws from Switzerland, Liechtenstein, and Luxembourg.  A Panama PIF combines three legal concepts: a corporation, a trust, and an estate planning tool.

Protect your assets by using a PIF as a holding entity for several corporations owning different assets.  One corporation owns your home, another owns your car, and a third owns stocks & bonds, while another owns investment property, for example.  The PIF is the sole shareholder of these corporations.

Why would you want to do this? Estate planning along with privacy and asset protection are three good reasons for a PIF.  When you pass away, your heirs take instant control of the PIF in a manner prescribed by you.  No transfer of corporate shares, no probate, no estate taxes, totally private and immediate.

Why not have the PIF own the real estate, vehicles and other assets directly? One entity owning a variety of different assets is not advisable.  If you seriously injure someone with your car, in your home, or your office; a lawsuit could wipe out all of the assets owned by that entity.  Keeping each asset’s ownership separate from the others insulates legal exposure.  Maintaining several corporations under one holding entity like a PIF makes good business sense, allowing for a fast & smooth transition when selling those assets or when you pass away.

Non-Profit: The law specifically states, "Private foundations shall not be profit oriented." Exception: Foundations may engage in commercial activities on a non-habitual basis or own shares of business companies and receive passive income – such as from rental properties, stocks or dividends.

Foundation Structure:  The PIF has five main components:

1. Founder:  The founder creates the foundation registered at the Panama Public Registry.

2. Foundation Council:  The council serves the same function as corporate directors registered at the Panama Public Registry.  In order to protect the privacy of clients, law firms generally provide a nominee (straw man) council, and provide pre-signed, undated letters of resignation from the nominee council.  Thus, the council has no real control.

3. Protector:  The client is privately appointed as the protector, fully controlling the foundation, while remaining 100% anonymous and private.

4. Beneficiaries:  The beneficiaries are appointed through a Private Letter of Wishes written by the Protector.  The Letter of Wishes is a private document keeping the beneficiaries 100% anonymous.  Only the protector can change or modify the Private Letter of Wishes.

5. Registered Agent:  The law requires every PIF to have a registered agent who must be Panamanian lawyer. The resident agent generally charges a small annual maintenance fee for provision of resident agent, registered office, and nominees.

TAXES: The government charges a flat annual franchise tax (called the “tasa unica”) of $300 to keep the PIF in good standing.  There are no other taxes to be paid on PIF’s.  Bank interest, offshore stock dividends & capital gains are tax free.

FOUNDATION PURPOSES:   There are five main purposes for a foundation.

1. Holding Entity for Assets:  A foundation itself has no corporate shares.  The foundation can be the sole shareholder of your corporations & hold other assets.  You control the foundation anonymously through a Private Protectorate role.  Since the protector and the beneficiaries are both appointed through non-public (private) documents, they remain 100% anonymous.

2. Beneficial Owner for Corporations: The PIF serves as the beneficial owner for corporations, for purposes of confidentiality and asset protection.

3. Asset Protection: Under Panamanian laws, no one may freeze a foundation’s assets under any circumstances - providing the ultimate asset protection vehicle. The only exception is if the foundation is a defendant in a lawsuit or a co-conspirator in a crime.

4. Testamentary Purposes: The PIF protects and distributes your assets to your beneficiaries upon whatever triggering event you establish in your Letter of Wishes, for example, your death or incapacity. Your heirs will receive the PIF assets free of inheritance taxes, probate, deductions, red tape or legal delays.

5. Facilitates the Transfer of Funds Offshore and the Return of those Funds back Onshore: Since the foundation is a non-profit entity, it may receive donations, and it may give donations/grants, etc. to anyone you choose.  Hence, you can donate your funds to the foundation. In turn, the foundation may provide educational grants, charitable donations, etc. to anyone you choose.

In Conclusion:  A PIF offers limited liability, greater privacy, eliminates probate, and ultimate asset protection. While not being able to actively engage in business or commerce, a PIF can serve as a holding entity to own shares of corporations that do engage in active businesses whose earnings you want to protect for the benefit of the beneficiaries you appoint.

Half of Americans pay no federal taxes

April 15th, the dreaded tax day, is nearly upon us and an article from the San Fransisco Chronicle this month expands on the fact that nearly half of Americans (consumers) pay no federal taxes while the top 10% earners (producers) pay 70% of the taxes. And those taxes are going to go higher so those top 10% will be burdened even more. As the burden becomes greater, more of the producers are giving up their citizenship in hopes they can preserve their capital. Most producers do not mind paying a reasonable tax, but when they are marginalized, treated as idiots, called names by those on the dole,  while they are the ones paying the bills, it is understandable why so many want to get out.

Excerpt: About 47% of Americans will pay no federal income taxes at all for 2009. Either their incomes were too low, or they qualified for enough credits, deductions and exemptions to eliminate their liability.

The result is a tax system that exempts almost half the country from paying for programs that benefit everyone, including national defense, public safety, infrastructure and education...

It is a system in which the top 10% of earners — households making an average of $366,400 in 2006 — paid about 73% of the income taxes collected by the federal government.
The bottom 40%, on average, make a profit from the federal income tax, meaning they get more money in tax credits than they would otherwise owe in taxes. For those people, the government sends them a payment.

"We have 50% of people who are getting something for nothing," said Curtis Dubay, senior tax policy analyst at the Heritage Foundation. Read more here.

The bottom 40 percent, on average, make a profit from the federal income tax, meaning they get more money in tax credits than they would otherwise owe in taxes. For those people, the government sends them a payment.

"We have 50 percent of people who are getting something for nothing," said Curtis Dubay, senior tax policy analyst at the Heritage Foundation.

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2010/04/07/national/w103458D45.DTL&feed=rss.news_nation#ixzz0kzftcWjv

And Bob Bauman write in his news letter this week that more than 500 people have revolted against taxes in 2009 by giving up their U.S. citizenship, more than the last two years put together.

Growing frustration with the growth of government has spawned hundreds of “individual tax revolts” in recent months.

Last week, the Dow Jones Newswire reported that 500 people worldwide renounced their U.S. citizenship or permanent residency in the 4th quarter of ‘09. That’s more than in all of ’08 and ’07. The article attributed this exodus to “looming U.S. tax increases and a more aggressive posture by the Internal Revenue Service towards Americans living overseas.”

Certainly, diversifying overseas is a smart option. Yet if severing all ties with the country of your birth seems drastic, there is good news. You don’t need to pull up stakes permanently from the U.S. to keep more of what you earn and protect your wealth.

There are a multitude of legal, current techniques and strategies you can use to pay far less in taxes while safeguarding your financial privacy and assets—even in an era of growing government. 

Trump faces challenges in New York and Panama

According to Kevin Brass and his International Property Journal, Trumps Soho project in New York has far fewer sales than they announced in 2008 and many of those buyers may take a walk at closing as happened in Vegas with 70 percent of buyers didn’t close on their units in the Trump International Hotel and Tower.

"Turns out only about one-third of the units in the controversial Trump SoHo in New York are under contract, according to a media report.

"In June, 2008, Donald Trump, Jr. announced that 60 percent of the 391 units in the 46-story hotel-condo project had been sold, “largely to foreign buyers.” That figure was often repeated even as the market collapsed and skeptics scoffed at the idea of paying $1.2 million for a unit in the hotel-condo scheme, which restricts owners from using their unit for more than 120 days a year."

And in Panama there is the $26 plus million dollar cost overrun which threaten the financial stability of the project unless the developer comes up with the short fall by mid May.

Here is what Moody's did last week to Newland Bonds: Moodys Chops Panamas Newland

Moodys has downgraded the ratings of Panama-based Newland to B2 from B1, citing recent construction cost increases, which has resulted in a shortfall in the construction escrow account of about $26.9m. Failure by the developers to pay the required shortfall would constitute an event of default under the bond indenture resulting in the bond becoming due and payable immediately, the ratings agency says. Newland has 2 interest payments due in May and November, which the company has sufficient funds to pay through collections and a debt service reserve account. Newland is a real estate development company established to develop the Trump Ocean Club International Hotel & Tower in Panama City.

Then this from Morgan Stanley: Trump Ocean Club: Remain MW on assumption sponsors fund cost overruns

We maintain our marketweight recommendation on the TOCLUB 9.5% ’14s (B2/NR/B+) based on the assumption that the sponsors will fund the $26.9 million construction shortfall before mid-May, although we expect the 2014 Notes to trade with a negative bias until the uncertainty around the funding of the $37.7 million in cost overruns is resolved. The expected cost to completion is an additional $63.3 million, but the company still has $41.1 million in the Construction Escrow Account (CEA), requiring an additional $22.2 million plus $4.7 million for the contingency fund.

The company has yet to receive the report from the Independent Engineer, and therefore, has 10 business days from the end of the month the report is received to fund the cost overruns as per the Construction Completion Support Agreement (CCSA). We estimate this date to be May 14 versus the April 14 deadline originally reported by the company. A failure to complete this funding without a waiver from holders would result in an Event of Default for the TOCLUB '14s.

The Notes are currently offered at $92 for a YTM of 12.7% and YTC of 15.7% to 16.9% based on the three most likely scenarios that assume the cost overruns are funded. If the sponsor is unable to provide all the budgeted cost overrun funds, we expect the company to seek a waiver to use the restricted construction funds to complete the construction of the building while pursuing additional financial resources, which we think is in the best interest of all interested parties. We think if the bonds were to decline to the mid-80s, which is a possibility given the current uncertainty, it would provide an attractive entry point for investors.

Sales totaled $38.4 million in 2009, an average of $3.2 million per month, helping the company maintain its collateralization ratio of 1.25x by generating enough receivables to offset the decline in receivables from collections of $35.7 million and discounts of $7.2 million.

The company has successfully filled its Debt Service Reserve Account (DSRA) to make its May coupon payment and does not expect any issues in refilling its DSRA account to meet its November coupon payment.

The company had $51.7 million in cash as of February 2010, nearly all of which was restricted.

And finally this from a friend in the know: There is another issue that could (probably will) arise from the cost overrun and that is the contractual provision that allows the promotors to increase the sales price as much as 6% due to the increases costs.  If you were an early pre-construction buyer at lower prices you can accept that increase but if you are a later buyer at high prices this will add insult upon injury.  What I am saying is if you paid $6,000 mt2  and now the promotor invokes this clause and your purchase price increases to $6,360 you won't be a happy camper whereas the early buyer at $3,000 mt2 will pay $3,180 a more acceptable number. Even the recent bulk sales might not be exempt from this provision.
 
I think in order to enforce this provision the developer must deliver the project within (not later than) six months after the stated completion date in the contract contract provides for 40 months construction and plus 6 months is 46 months).   Depending upon how the contracts are written there are occasions that delayed construction can arise to a total rescissionon of the contract and refund of the deposits made by the buyer.
 
I have not reviewed these issues, the law or the contracts in detail in order to form an opinion but I know B&V got caught in some buildings with this problem however purchasers mostly bought at low prices and didn't want to invoke rescission as the market prices at closing (delivery) were higher that their contract prices.
 
I am still high on TOCLUB and see these issues as solvable, but they need to be looked at, analyzeded, properly answered to determine both the risk and the probable outcome.  One thing to remember is the equity stakeholders are also the contractor so they may be the beneficiary of any adjustment of the contract price other than HARD DOLLAR increases while at the same time they have to put up the additional money therefore the full 26.7MM cost overrun might not be a total 26.9MM hit to their pocketbook and they could recovered it in whole or in part when they deliver the project through the 6% cost adjustment increase assuming they invoke it.

What should you do with the coming currency controls?

Doug Casey has been very prophetic the last 20 years or so in forecasting what will happen to the U.S. and the world. I ran into Doug by reading one of his first books, "The international man" I found in a garage sale 20 years ago. He wrote it back in the late 70's and it is even more viable today than it was then. It is now a collectors item and sells for $474.93 on Amazon. Casey is now building a Safe Haven in Argentina, kind of along the lines of what I built here in Panama.

The International man was the book that set me on the very course I have taken in leaving the U.S. in 1995 and eventually settling down here in Panama. If I had not read that book I might still be back in the U.S. and Valle Escondido might still be a coffee farm.

This interview with Doug Casey is rather timely with last weeks post about the new law in the U.S. affecting offshore investments and banking. He is certain that currency controls are on the way by all governments and the window is closing for those who want to get their money into other forms of assets that are not so susceptible to government controls.

Here are some highlights, but you can read the whole article here....

L: Doug, we recently talked about getting assets out of your home country, especially the U.S., where to take them and what to do with them. In so doing, you touched on the inevitability of currency controls just ahead, especially for Americans. Can you tell us more about that?

Doug: Yes, I’m quite serious about what I said about “the grim reality of impending currency controls.” As the global economy continues to deteriorate, governments will have to appear to be “doing something.” It’s going to become very fashionable to institute some sort of foreign exchange control.

Why might that be? Because obviously, people who are taking their money out of the country are unpatriotic…

L: Those bastards.

Doug: That’s right. Jingoistic Americans naturally, but stupidly, see taking money out of the country as being unpatriotic. They don’t understand that it’s mainly those prudent people who will be able to supply the capital to rebuild a devastated economy later. Besides, getting money abroad is obviously something that only rich people would do… and of course, it’s time to eat the rich, as well. For those two reasons, there won’t be much resistance to controls. And the state gets to appear to be “doing something.”

And when they do, more people – at least those with any sense – will get scared and really try to get their money out, which will exacerbate the run to the exits. The bottom line is that if you want to get your money out, the time to do it is now. Beat the last-minute rush.

I don’t know what form the exchange controls are going to take, but there are two general possibilities: regulation and taxation.

The regulations might take the form of a rule prohibiting you from taking more than X-thousands of dollars abroad per year without special permission. No expensive vacations, no foreign asset purchases without state approval.

As for the taxation, if you want to, say, buy foreign stocks or real estate, you might have to pay an “Interest Equalization Tax” or some such. So, you could do it, but it’d cost you a lot of money to do it.

Something like either of these, or both, is definitely in the cards.

Gold for bread-Could it happen here?

Hat tip to Mike for sharing this heart wrenching video about Zimbabweans forced to starvation with only mining of gold to survive. No paper money is accepted and if you want to eat you must have gold, the only form of exchange. This once prosperous African nation was brought to this present situation by Robert Mugabe, their less than benevolent dictator. As you will see in the video, they thought he was going to bring them prosperity and instead he has brought them misery and death. Think it can't happen to a first world country? When those in power turn to tyranny, it is the natural evolutionary flow of a society.

Revealed: The true horror of everyday life in Zimbabwe

A Guardian film smuggled out of Zimbabwe brings home the economic devastation and deprivation Robert Mugabe has wreaked upon his own people. With Morgan Tsvangirai, the opposition leader, preparing to take up the post of prime minister in a unity government, Sam Chakaipa, at considerable risk to himself and as an act of resistance, returned clandestinely to his village, 125 miles from Harare, to document the plight of his former neighbors.

I have researched various organizations that work to help these poor souls in order to find one that is honest and uses the funds wisely. If you feel compelled as I have to help, please take a look at this website for the Zimbabwe Benefit Foundation.

IRS Launches the "Globalization of Tax Administration"

The IRS has come out and clearly stated their goals of creating a globalized tax administration. Initially it will focus on high net worth individuals but, you can bet that once the system is in place, they will target less wealthy individuals and ordinary citizens who have chosen to live outside their county.

Yes, they are very proud of their new initiative, and it is just a matter of time before they will be working with other countries tax collectors because they are all going broke. They must continue to increase taxation and resubstitute whatever wealth you have left in order to stay in power. They have to get their GLOBAL mechanism in place so they can squeeze everything they can out of anyone they can.

Excerpts from CNSNEWS.COM

The Internal Revenue Service has launched a new global program to target what it calls “high wealth individuals,” IRS Commissioner Douglas Shulman said Monday.
 
“Through our new global high wealth operating unit we are taking a unified look at the entire web of business and economic entities controlled by high wealth individuals so we can better assess the risk such arrangements pose to tax compliance,” Shulman said at the National Press Club on Monday.
 
Shulman said the IRS is using “our robust and evolving enforcement program that ensures that everyone pays what they owe.”

The IRS initiated its Global High Wealth Industry group in the fall.  Schulman told an October 26 meeting of the American Institute of Certified Public Accountants that it would be part of “the globalization of tax administration,” which he called a “game changing trend” in tax enforcement.
 
“This brings me to another important development--a game-changing trend--the globalization of tax administration,” said Shulman.

Read they rest of the unpleasant story here....