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WHERE CAN YOU AFFORD TO RETIRE TAX FREE?           WHY ARE SO MANY OF THE MIDDLE CLASS LEAVING THE US & EUROPE?

Our July 2003 Newsletter:
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Bargain Real Estate in Samana, Dominican Republic.  Links for Newspapers in the Dominican Republic with national circulation,  Readers Write In  Section
John Schroder - Author of The Ascot Advisory News Letter Bulletin and Numerous Expatriate  Articles
FAMOUS and INTERESTING QUOTES:
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Mr. George Washington (First President of the US) Said:
Government is not reason; it is not eloquent; it is force. Like fire, it is a dangerous servant and a fearful master.
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Mr. Thomas Jefferson (Former US President and author of the US Declaration of Independence) Said:
The democracy will cease to exist when you take away from those who are willing to work and give to those who would not..

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GETTING THE FACTS DIRECTLY:
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Part of the problem with news stories and rumors is that they are often changed, altered and dare I say, perhaps even distorted when they travel half way around the world.  Even worse is the case when the news (and rumor) is originally in another language as well.  So, my suggestion is to read the original information directly for your-self.  Of course the question then becomes - How can you do so when the original news stories are in Spanish, or what ever other language?  The answer is a very convenient free service from Altavista and Babelfish.  Using the link below, you can translate entire web pages and on-line news stories directly from the local on-line newspaper editions in the country you want to investigate:
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http://babelfish.altavista.com/

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To read news stories directly from the on-line versions of the major local newspapers in the Dominican Republic, visit the following links below (cut and paste the web page address into the box on Babelfish and have the entire page translated into English).  Also, I would highly suggest you read the editorial sections as well for a very good insight into what some people are saying or thinking in contrast to the sound bites alone from politicians often reported as fact in the foreign press.
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NEWSPAPERS IN THE DOMINICAN REPUBLIC:
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LISTIN DIARIO NEWSPAPER
http://www.listindiario.com.do/
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HOY NEWSPAPER
http://www.hoy.com.do/
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NACIONAL NEWSPAPER
http://www.elnacional.com.do/

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NEWSPAPERS IN PANAMA:
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THE PANAMA NEWS (English)
http://www.thepanamanews.com/pn/v_09/issue_11/frontpage.html
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EL SIGLO NEWSPAPER
http://www.elsiglo.com/

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IN THE NEWS:
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IS THE UNITED STATE FLAT OUT BROKE?  By Jon Dougherty, June 6, 2003
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When the government announced this year its publicly held debt was in the neighborhood of $3.6 trillion, it was quoting a figure that ignores massive imbalances in other mandatory spending programs - such as Medicare and Social Security - which actually inflate the national debt by a factor of 10, according to published accounts Dallas Morning News columnist Scott Burns wrote June 1 that the government's debt is actually a mind-numbing $43 trillion, hinting that data was left out of the current budget document because it may have hurt President Bush's chances to sell a tax cut to the American people.  In his column, Burns said he met in January with Boston University economist Dr. Laurence J. Kotlikoff at a restaurant in Sante Fe, N.M., shortly after John Snow had been named to replace Paul O'Neill as secretary of the treasury. Burns said he met Kotlikoff as part of his work on a new book project.  The newspaper columnist said Kotlikoff received a phone call as they were leaving the restaurant informing him that six months of work by two economists was going to be deleted from the president's budget, which was to be published in February.  The material to be deleted from the budget document was an updating of generational accounting. Mr. O'Neill had requested an estimate of the true, long-term obligations of the U.S. government, Burns wrote.

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Burns said the Federal Reserve has put the net worth of all U.S. households at just $40.6 trillion.  This problem, therefore, goes way beyond whether to tax the rich, the poor or the middle-income, he said.  Republicans and Democrats have distracted us with unending battles between haves and have-nots for decades. Over the same period, they have bankrupted the country, Burns wrote.
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http://www.worldnetdaily.com/news/article.asp?ARTICLE_ID=32934

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THE FOLLOWING SENT IN BY A READER:
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Paying cash triggers alert for terrorism in new world, by Dave Addis
http://home.hamptonroads.com/stories/print.cfm?story=53519&ran=26371

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Usually, if you hear somebody say - Your money's no good here, pal, it's a nice thing. It means the barkeep is buying you a drink, or some friend or business associate has decided to pick up the dinner tab.  Journalists seldom hear that phrase, and they speak it even less.  Barkeeps know that we're always broke, and if you want to see a klatch of newspaper reporters disappear into the vapor, just toss a dinner check onto their table. It's like waving a cross in front of Dracula.  But a polite equivalent of - Your money's no good here - arrived in the mail the other day in the form of a note from the Saks department-store folks. (The only reason we have an account with them is that my wife once said she wanted to get more from Saks, and I heartily agreed -- only to learn that, as a mutant Midwesterner, I'd once again misinterpreted her soft Virginia accent.)
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Anyway, the note from Saks said that, henceforth, it would not accept cash as a form of payment on store accounts in any amount over $350. Checks and money orders and online payments and such are fine, it said, but no bills or change totaling more than $350 in any one-month billing cycle.  New federal government regulations, Saks said, made this necessary. That aroused our curiosity - As no other company with which we do credit business had advised us of any such policy. Also, as far as we could tell, the currency that the government prints still says on it, This note is legal tender for all debts, public and private.
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A call to the hotline number that Saks provided resulted in one of those long, oily recorded messages in which the guy pretty much repeated what Saks already had said in the note that came in the mail.  At the end of the recording it said I could Push 1 if I wanted to speak to a human about it. When I did, it said no humans were available and that I should call back during normal business hours. As it was 10 a.m., I'm now as confused about their definition of ``normal'' as I am about their cash policies.  My best guess, from a day's research, is that Saks is referring to elements of the USA Patriot Act, which was passed in the wake of 9/11. Sections of that law provide new powers for tracking the flow of terrorists' money.  Under a little-discussed element of the USA Patriot Act, any business that accepts cash in the amount of $2,000 or more from a customer must file a Suspicious Activities Report with the Treasury Department if the business suspects that the customer might be involved in some illegal activity.  The definitions of suspicious and illegal are wildly, wondrously vague. The business can also report you if you do multiple cash transactions on the same day that total more than $2,000.
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As someone who travels a good bit, I learned long ago that the best interpreter you can have while abroad is a fistful of crisp U.S. currency.  Abroad, banks aren't always where you need them, and they are prone to give you large piles of colorful local bills rather than the greenbacks you're accustomed to.  So it's not uncommon for me to board an aircraft, as I did just two weeks ago, with a couple of thousand dollars in cash stuffed into my nooks and crannies. (The nooks, mostly, as the crannies can be painful.)  But as someone who's short, stocky, swarthy, bearded and in possession of an oddly Middle Eastern-sounding name (it's actually Welsh), I didn't realize until now that a bank clerk might be compelled to send the Treasury Department a Suspicious Activities Report on me just for moving a mere $2,000 in cash into or out of my checking account.  I suspect that Saks self-imposed a $350 cash-payment limit because it just doesn't want to get near the $2,000 limit at which someone must make a judgment as to whether the customer is a terrorist, or just a guy who prefers to deal in cash rather than paying the banks' interest charges and transaction fees.
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I'm not one of those paranoids who see black helicopters in the night, or are prone to bore you with long explanations of the real meaning of that seeing-eye thingy that floats above the pyramid on our one-dollar bills. But some of the minor invasions we've accepted under the government's definition of the word ``patriot'' are downright spooky.  For decades, Second Amendment enthusiasts sported bumper stickers that said: When guns are outlawed, only outlaws will have guns.  I wonder how long it will be until we see stickers that say - When cash is outlawed, only outlaws will have cash.

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READER WRITE IN:
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Hello,
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I read your updates regularly.  I am somewhat dismayed about some of what I have been hearing regarding the situation in the Dominican Republic.  I wrote you a few months ago about my intention of relocating to the DR upon retirement in 3 years.  My visit there in March caused me to fall in love with the country and the people.  Now what I read makes me wonder.  I do not want to be some place that may become unstable and I become a victim of hostility because I am an alien.
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I don't have a lot of money but will be able to live comfortably when I make the move, perhaps even opening a small tourist oriented business in Santo Domingo, but if the situation is not stable, I'm not so sure.  Of course 3 years is a long time and we all might be dead by then, but I am a planner and have already started gathering facts.  Am I being too concerned or does it look like things will stabilize?  Again, I enjoy the weekly updates and will be in contact with you as the time approaches.

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EDITORS REPLY:  Well, there seem to be two parts to your question, one that perhaps deals with personal safety issues, and the other concerning the economy.   In regards to the economy, I can say that like in many other parts of the world, the economy has slowed - from an annual GDP growth rate of about 9% down to about 4% as the estimated GDP growth for 2003 (at least these were the figures at the beginning of the year).  However, looking at the numbers in the US and Europe, these numbers seem attractive by comparison for the most part.  Regardless, it is certainly true that increased sales and other kinds of taxes have had both a direct impact on the growth as it has also made cost of living higher across the board for imported items.  However, it is also true that people with US Dollars or those that have a pension or other income in Dollars have fared well.  In fact, rent, cost of real estate, and labor costs have all gone down or have become less expensive for foreigners paying in dollars (and converting to pesos at the current rate), which is one of the reasons the country remains to be an attractive destination.  For example, we recently looked at some brand new 3-bedroom apartments in an upper class neighborhood, complete with Caoba (mahogany) kitchen cabinets and so on, renting for about RD$10,000 per month (about US$325 per month).  Those very same brand new apartments are being offered for sale at 1.6 Million Pesos or US$52,000.  Where on earth can you purchase an upscale brand new apartment, in a quiet upper middle class neighborhood, with a 24-hour emergency generator system, located in a major metropolitan city for that price?  For sure, this is not possible in Miami or Los Angeles.
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Of course, again it should be noted that those without an income or savings in US Dollars, meaning the poor and the middle class, have been hurt the most as their purchasing power has gone down (partly from the recent tax increases in terms of local goods and services and partly from currency devaluation issues).  Ironically enough, this was the base support group of the current political party in power at the moment (during the last elections).  So, like people everywhere in the world, politicians always promise a free lunch in order to get elected, the voters take the bait, and then the voters find out it is not so free after all (and maybe not the full course meal they expected either).  In any event, the next election due to take place in 2004 will determine if the voting population is ready for a change or not (both politically and economically).
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With that said, I would say that Dominicans are peaceful people.  They are of course passionate about politics (and perhaps a number of other things such as baseball) and that in and of it-self may appear to translate into civil or social unrest, but the reality is that this is not the case.  In addition, it is very much understood that foreign visitors (tourists) and foreign investment plays an important role.  As such, there is no negativity towards foreigners, be they living here or just visiting, or at least I have never had such an experience (and many of our clients have reported very favorable experiences, passing complement on the friendliness of most people they have encountered).    Adding to that, in terms of social relations inside the country (perhaps focusing on foreign expatriates and how they have fared), I will leave you with something an American told me many years ago (after he himself has lived in the Dominican Republic for over twenty years), which is:  This is the only country (Dominican Republic) on earth where the Jews and the Arabs get along.  After living here for awhile, and realizing the settlement of families that left Lebanon (as just one example) in the early 1970's to escape the civil war, and how they have intermarried and mixed in with other expatriates, such as the many Jewish families that escaped Nazi Germany, the comment is 100% correct in my opinion.

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Getting back to the economic situation, I would say the country is like a thoroughbred racehorse that has had it's jockey and it's veterinarian changed at the same time in the recent past.  So, while the horse was on its way to the Triple Crown under the old jockey (winning a few prestigious races along the way), that is not the case with the new jockey.  So, one can say that the horse is very sound, but maybe the problem is the Veterinarian and the Jockey.  Again, do the horse owners want to go back and use the previous two once again or continue with what they have?  We will know next year.
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Another Reader Writes:
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Hola John:  Who cares about the Ban-Inter situation and the devaluation of the peso when you apparently have the most beautiful woman on the planet?  At least the DR's priorities are in order!
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EDITORS REPLY:  Well, I never thought about it that way, but perhaps you are right.
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Another Reader Writes:
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John:  So much for the statistics from the US government.  See this article by John Crudele in the NY post today: http://nypost.com/business/217.htm
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EDITORS REPLY:  Well, I read the article and have to say that it would seem to raise another question, which is - If you cannot even trust the statistics coming out of government offices (which I would agree you cannot always do so) then who or what can you trust?   The answer is your own common sense I suppose.
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Another Reader Writes:
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Thank you John for your well-written and informative newsletter.  Would you say that the DR government policy generally encourages Americans and Canadians to retire there?  In other words, are there any particular incentives to invite relocation?  I thought you might appreciate sharing this with other readers.  The whole process is getting so obvious now that they can use terrorism as a blanket statement to accomplish all the other parts of control that they have been after for so long.  How long until only credit cards are accepted?  Thanks for a great newsletter.
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EDITORS REPLY:  First and foremost, thank you for the news article, which I have provided for all above.  In terms of relocation issues, I would simply say there are no specific programs to attract retirees or special residency status as you might have in Panama or Costa Rica, but then again, many people have chosen to retire to the Dominican Republic just the same.  In this regard, the residency process (in the Dominican Republic) itself is the same for all (regardless is you are retired or whatever status), and is very simple, and straightforward.  So, there are no complicated rules to figure out or what program you qualify for without the numerous different requirements as well.  Also, the attraction for many people is the lifestyle, the lower cost of real estate and rents (as compared to other Caribbean locations) and the fact that modern facilities are readily available, at least in the metropolitan areas (Santiago and Santo Domingo).  So, If you want to live in a Caribbean jurisdiction, enjoy lower living costs for your major expenses such as rent or real estate purchases, and still have some conveniences (modern medical facilities, modern shopping malls, movie theaters, ballet and theater, golf courses and so on) then the country may be very appealing for you.
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Another Reader Writes:
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John:  Recently on the Sovereign Society newsletter, there was mention to the recent arrest and extradition from Panama of Robert Bucci, a Fugitive, who was wanted on charges of Tax Evasion.  He happened to have been involved in the case against former U.S. Rep. James Traficant, who was convicted of racketeering.  Seeing as how you have commented in the past that it was not likely that American citizens would face having IRS agents chasing them around when they were overseas, I was just wondering what your view of this situation would be and why Panama, which is regularly advertised for the confidentiality of its financial and banking businesses, would go along with such a manhunt.  The reason for my concern is that I am thinking of relocating overseas and have been planning to use Panama banks as the resting place for my estate moneys prior to the establishment of my new home.  Please let me know what your thoughts to my situation and those of Panama's.  Signed, A Tired Taxpayer
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EDITORS REPLY:  Well, I know nothing about this individual, although I am familiar with the James Traficant case from the television news, as I am sure is the same situation for most people.  However, it sounds to me to be more political than anything else.  Meaning, since you also indicated he was involved in the case, although I do not know what involved might entail, it would seem that they were just ticked off that he took a flight out of town (after they were after him).  So, it would seem not to be a simple matter of tax evasion, but something else under the covers, so to speak.  Also, keep in mind that visiting a country on an extended basis, as a tourist, does not in and of itself offer any rights in this regard as you would still be a legal citizen of your prior country (and just a tourist).  Being a legal resident and or citizen of the country where you are living in is of course another matter altogether - legally speaking.   However, it is also true that being a convicted felon or fugitive from the law does not earn you any brownie points in the new country where you are trying to settle either, and you have no track record of being a good citizen there yet either.  Roger Gallo has some very interesting information on the Escape Artist website about such legal aspects for Americans, which you may want to read.
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Another Reader Writes:
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John, I have been looking for a place to escape the many issues I have with living in America. As a person of French Canadian, Indian, decent, with bi racial children and grandchildren of a rainbow of colors, racism is high up on my list of things I would like to leave behind. Of course economics and political agenda are high up on my list also. I have been researching The D.R., Panama for a couple of years and one of the things I noticed was that on most websites the people of the country on display tend to reflex only the Hispanic/ Euro population. I haven't found the truly negative articles about Panama only economic disparities. But the articles about the DR are truly sad. You heavily promote the DR and I guess I can assume your target group is mainly upper class people of European decent. Where does that leave educated people of color who realize that they are still limited by the racism here and want to find a place on this planet where they can live and be accepted?
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EDITORS REPLY:  My experience has been that ironically enough, racism is more of a problem and an issue in the so-called most democratic and free country on earth (USA) than almost any other place on the planet.  I do not know why it is so, but such is one of the great mysteries of life.  With that said, you do have some forms of racism or more correctly discrimination throughout Latin America, but I would tend to say it more economic than due to color or race.  Meaning, in many Latin-American countries it is very true that much of the wealth, land ownership and large businesses are or were owned by descendants of the Europeans (Spanish mostly of course).  So, the upper crust of society and elite social circles tend to consist of this group.  Ironically enough, the Panamanians call this group the Robbie-Blancos (or white robbers loosely translated) where as you do not have such a terminology in the Dominican Republic.  In addition, if you look at the actual statistics, there is a higher degree of the population in the Dominican Republic of mixed races than in Panama.  So, it is difficult to imagine race issues in a country where the majority of the population might be a combination of Europeans, slaves brought over from Africa to work the plantations and the native Taino Indian population.  In other words, in the DR, you have this combination that has resulted in numerous skin colors (ranging the full spectrum) and some very beautiful looking people as well.  I myself do not consider myself to be white (as in the color of white paint) even though I suppose that is how I am classified, although I do gravitate towards the pink or red side of the color spectrum after two hours in the sun (I wish I were tringueno or olive skinned color so I would not burn like a pot of cooked shrimp), but such is what god gave me.
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In any event, the point is, you have more of economic and social class disparities than anything else, so it is not a case of racism as much (there are poor white people too, and very wealthy not so white people as well I might add).  However, on the issue of Haiti (there are so-called white blond haired blued Haitians there too, believe it or not) the Dominicans have a problem with the Haitians trying to cross into the DR illegally and it just so happens that the vast majority of Haitians are dark skinned.  But this is not racism, it is economics, just as the US has a problem with Mexicans trying to cross into the US illegally (and I suppose most Mexicans can be called a shade of Trigueno also) - who might be working illegally and taking away jobs from local citizens, although that is another story altogether.   In short, I do not know what you read, but I have to say, considering all the different people and groups that have settled in the country (Europeans, Africans, Arabs, Jews, Chinese, Japanese, etc., etc.) the DR is one of the most tolerant places on earth that I am aware of.   Everyone has a chance to improve them-selves (if they want to), and if you cannot get a job for some reason - create one.   In other words, start your business, which is most new immigrants have to do anywhere (who always face discrimination) in the world due to a number of factors (language being just one).  The people from China and Korea know this all too well, and they tend to succeed no matter where they go (most own the small grocery stores in Panama, and many have the same kind of businesses in the Dominican Republic as well). And this is something much easier to do (starting a business) in a country that does not burden you with extensive regulations and other bureaucratic nonsense.  In my opinion, injustice and discrimination does indeed exist throughout the world in different degrees and in different forms.  However, if you make your religion, your prior citizenship, your race, your face or anything else as an excuse for not succeeding, you are only fooling (and hindering) your-self.  The ultimate last laugh is to succeed, and become financially (and emotionally) well off, whereby the people that perhaps put you down did not or could not do the same.       
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Another Reader Writes:
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I have been trying to open an offshore account, but it is not as easy as one might think. The responses to my inquiries are "You must be a resident" or I have to put up a large sum of money for the deposit. I am a first timer at this and while I will be leaving the US within the next year, I would like to open an account well before my departure date. Is it usually this hard or am I doing something wrong?
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EDITORS REPLY: Welcome to the new world order - everyone is a drug dealer, distantly related to a terrorist, or just plain old unsavory in general (unless you can prove otherwise of course).   No, you are not crazy.  This is just the way things have gone - in some places, but not all.  In short, the establishment of a bank account in another jurisdiction, especially for an Americans (due to pressures from the US to stop middle class Americans from leaving town with their money) has become very difficult.  Of course, it is all said and done based upon the premises of money laundering and now the new theme of the day is terrorism.  Ironically enough, if you study history, drugs and terrorism is nothing new.  Also, so-called offshore banking and the idea of setting up Trusts or similar vehicles (either in your own country or somewhere else) is nothing new either.  In fact, we can say it has existed for well over 50 years at least.  So, what is different today?
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In my opinion, many of the high tax governments that have taken the socialism road are both very frustrated and also very frightened.  They have major cash flow problems and are in debt, much to the point that these welfare state programs are in jeopardy.  So, what is the solution?  Raising taxes is one idea, but often difficult to do politically, especially in countries where the combined income taxes and welfare taxes (social security, government run health insurance, etc., etc.) goes up to 60% or more.  Another idea is to cut costs, and make these government run programs (and the government itself) solvent, but politicians never like that idea either.  So, the next best thing is to look for money in places they have not looked before.  Namely, chase all the bad guys and take THEIR money as part of the punishment process.  Perhaps not such a bad idea, but where do you draw the line?  Meaning, the all encompassing bad guy definition would seem to include people who do not agree with the welfare state concept, or who agree with it, but realize they personally (and perhaps their own country collectively) can no longer afford it.  Ergo, expatriates - or those people that look move their business or themselves to lower tax (and lower living cost) jurisdictions are included.  The proof of this mindset can be seen with all the flack involving some of the major US corporations that have sought to re-domicile the company in lower tax jurisdictions, such as Bermuda being just one example.  Ingrates or unpatriotic so and so, they are called.  They are also called uncaring and anti-social for supposedly not wanting to fork over ALL of their money, which might leave them or their company broke in the process.  Broke seems to be good, and the bankruptcy laws are very favorable to the concept.  Poor seems to be good also, as you have to do nothing and get everything for free.  Working hard or making money however puts you under suspicion, or at least the combined taxes and so-called law enforcement initiatives would seen to make it so.  What does all this have to do with your question?
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Well, as I said before, many governments are both frightened and frustrated.  Frustrated because they still are in debt and many middle class people continue to leave for lower cost and lower tax pastures.  Businesses continue to leave as well, but a large number have already moved their manufacturing operations elsewhere to cut costs and taxes, leaving a re-domicile of the parent company as the last step in the evolution.  So, you now have labor or unemployment issues to deal with (the factories are gone) and you also have large numbers of middle class people getting out of dodge also (they are gone, so is their money, and many probably have stopped paying into the welfare system also) - whereas in the past (remember that offshore banking, trusts and so on have been around for a very long time) it was only a quiet exodus of very wealthy people in the past.  To be sure, newer communication mediums, such as the Internet have aided in this, providing new ideas and new information to the common man (who did not have access to this information before).  In terms of the frightened comment, the same issues apply, but in a way that you know what the result is - less money to take or tax, leaving more of a cash flow problem - as the whole thing works itself through.  Meaning, this has been a trend or evolutionary process that has been going on for awhile, although I will comment that it is now the middle class part of society doing it (and they pay most of the taxes anyway, they always did).
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So, since it would be illegal and politically unpalatable in a democracy to tell citizens they are NOT allowed to travel freely to another country or invest in another country, what you do (if you are a government) is try and work the back end.  In turn, you end up putting so much pressure on other countries and specifically banks (and investment firms, etc.) to hinder the citizens of your country to come in.  Aside from this, what you also do (as a government) is make it as difficult as possible for your own citizens to take the money out as well.  So, you also have this concept (all in the name of stopping the bad guys, who ALWAYS seem to get around everything anyway) that if you have cash with you, or so-called negotiable instruments in excess of US$10,000 when you travel abroad, that basically means that you must be a criminal in such a case, or in the least someone subject to suspicion (and thus all of the reporting, forms to fill out and so on).  What can you do with US$10,000 these days?  Not much really, heck you cannot even buy a car for that amount - well maybe a super deluxe mechanized scooter.
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The result of course is that many banks and investment companies outside of the US will not even talk to you if you are an American.  Why?  Simply because they do not want the aggravation of being hassled by the US State Department, the American IRS or perhaps even their own government (which is coming under pressure).  Is it illegal in many of these countries for a foreigner (an American) to establish a banking or investment account?  Not at all, but these institutions are often threatened.  For example, the US authorities might say they will revoke the institutions privileges to conduct operations inside the US IF they take on US citizens as clients and do not report such accounts back to the US.  In many jurisdictions, it might be outright illegal to even do this and the bank or investment-company can say they are prohibited under local law from doing so (and not be false or incorrect in such a statement).  Yet, the pressure of prohibiting correspondent banking or other kinds of activities inside the US is a real concern, and it affects all of the banks or brokers customers (not just Americans).  When you think about it, Americans then might make up 5 percent of the banks customers, but in turns gives the bank 85 percent of their problems or difficulties in this regard.  So, this is the reason the bank would rather give up 5% of its customers than loose all of them.  This is also the reason you often get a cold shoulder.  Not because it is illegal in any way for you as an American to open an account outside of the US (in terms of US law or regulations), and not because it is in any way, shape or form illegal for the bank or broker to accept accounts from foreigners either (inside the country where the bank is located) - but rather because of the internal policy or practice of the bank or firm NOT to bother accepting US citizens as customers.
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This is a very important point to remember, because not all banks or brokers take this point of view.  Many have in fact told me, what do we care what the US thinks?  Providing the customer is not a crook or money launderer, then why should we be prohibited from getting a new customer?  We are in the business of providing a service and getting new customers so our business grows.  Will the US government pay us to make up for ALL the lost business?  Will they worry about us if our business does not grow as much as it could because they do not like it that American citizens are expatriating abroad?   All legitimate questions as well, and why some banks say might say YES, and others say - GO AWAY (if you are American, which might be also another argument for getting a second citizenship so you can bank as a non-American in the future - something else they do not like either even though that too is in no way illegal at all as well).
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Another Reader Writes:
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I am interested in bank rates of interest in DR, and if, as you say, it is possible to earn 10%plus in pesos.  What is the inflation like? Surely there is a reason why pesos-based money-market instruments pay such a high rate compared to bank deposits in other major currencies. I am getting little more than 2% currently in Swiss Francs.
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EDITORS REPLY:  Well, there has been a capital shortage in the Dominican Republic for some time and thus one reason why interest rates have remained high both for local currency deposits and foreign currency deposits as well.  In addition, you are quite correct that the local inflation rate also has an effect as well, although the official reported rates of inflation have averaged about 7 percent or 8 percent in recent years.  In addition, the projected inflation rate has been lower than that at the beginning of this year, but has increased to about 10% with the recent currency devaluation issue.  However, the real explanation is that interest rates to borrow money have been high in tandem as well.  So, local car loans, mortgages and other general costs to borrow money in pesos carry annual rates of about 30% and about 15% in US Dollars.  So, this is how and why banks can afford to pay 7% or more for savings accounts (pesos) and up to 25% for Peso certificates of deposit.  US Dollar savings accounts pay about 3.5 or 4 percent (depending upon the bank) and US Dollar certificates of deposit anywhere  from 7 percent up to 9 percent or so.
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Another Reader Writes:
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Hi John - Thanks for your weekly update.  In view of the recent scandal in the financial sector, let me ask you: How do you rate the Banco Popular Dominicano?  Is that a safe bank?
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EDITORS REPLY:  Banco Popular is a subsidiary of Banco Popular based in Puerto Rico, so overall it is part of a fairly large and well-known banking group.  I have not heard of any negative issues involving Banco Popular, although I will say that many of my American clients would prefer not to bank with them because they are affiliated with a US based bank holding company.  In terms of the Ban-Inter issue, again, this was one bank with a very specific issue that had nothing to do with the overall economy or banking practices that involve other banks.  In this regard, it is sort of like saying: Pepsi-Cola went bankrupt because of poor investment decisions of management - so, Coca-Cola must be bankrupt as well.  Two different companies, two very different issues - and the same also true in banking.
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This information has been compiled and presented by John Schroder of Ascot Advisory Services, for the benefit of clients and readers. Ascot Advisory Services provides assistance with such matters as offshore company formation, Panama Foundations, offshore banking, and special services in the Dominican Republic regarding residency, free zone applications, etc. For more information:  
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