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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 October 30, 2005 Newsletter:
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Problems with Private Pensions in the US and the PBGC, New Articles On-line, Readers Write in, plus more. . . .
John Schroder - Author of The Ascot Advisory News Letter Bulletin and Numerous Expatriate  Articles
DOMINICAN REPUBLIC REAL ESTATE ROUNDUP:
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Some people have sent in letters that said: John, you are lying to us, we went on the Internet and all we found we these very high priced tourist projects being offered for US$500,000 on up (for the Dominican Republic).  Well, the truth of the matter is, some of the high priced projects do an excellent job at marketing (in English), but this does not mean this is reflective of the true local real estate market.  If you want to spend that kind of money or even more, go right ahead.  Just be aware of what is really out there in terms of housing or property choices for your-self.
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In Sosua for example, there is a European gentleman currently renovating a resort and spa property that is offering 600 square foot one-bedroom condominium apartments for US$52,000 - Plus 1,000 square foot two bedroom units for about US$86,000.  The property has on it a 16,000 square foot swimming pool and new spa facilities are being added on for the tenants as part of the amenities being offered for living there.
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Bruce Pierson, our man in Las Terrenas, Samana tells us that you can still purchase beach-front property for about US$22 per square meter.  This is a large beach parcel of about 50,000 square meters or about 12 acres selling for US$1,100,000.  Before you balk at the price, let us put this into perspective.  There is a new high priced tourist project going up offering homes (on 1,000 square meter building lot) on the beach for US$900,000 (and they are saying it is a bargain).  Here you have more than 12 acres.  If you get twelve people together, each one gets one acre for US$100,000 each.  Imagine owning your own one-acre beachfront lot for the price of a small lot someplace else.  Plus, how many of your had been looking at property on the Bay Islands (Rotan, Etc.) a few years back?  What happened to the price of property there when they finally opened up the new airport on the island and you no longer had to take the canoe express from the mainland to get there?  Well, a new International Airport is under construction near Nagua, and the government claims it will be completed in about 18 months.  Instead of a three-hour taxi ride from Puerto Plata, you will be able to fly in to a new airport roughly 20 minutes away.  What are these properties going to be worth when that happens?
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If you still really want a sort of upper scale beachfront community complete with your very own Private Beach Club (and private beach-club bar for owners as well), Gordon Green from Punta Cana tells us you can have a 1,600 square foot penthouse apartment for US$240,000.  But, if that is too pricey, some new apartments in a manicured housing village (not on the beach, but close by) can be had for about US$67,000.  Who says there are no affordable properties in the Dominican Republic??
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IN THE NEWS:
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NOW FOR THE RECKONING: Retirement benefits promised to employees are becoming a crippling burden for a growing number of firms, especially in America   - The Economist Business Magazine - Oct 13, 2005 
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YOU didn't need an oracle to know that Delphi would end up in America's bankruptcy courts, which is where it sought protection from its creditors on October 8th. The world's biggest maker of car parts has been crushed not least by the legacy of generous pension and health-care promises made in the past to its American employees.  Despite Delphi's annual revenues of $28 billion, in a market increasingly served by low-cost workers in places like China and with raw-material costs soaring these benefits are no longer affordable.  Delphi's future pension obligations alone are valued at $8.5 billion.  Some $4.3 billion of that is "un-funded"--ie, the firm has failed to put aside enough money to meet its obligations. Its un-funded health-care promises are even larger.
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Delphi's bankruptcy may have painful consequences for its workers and retirees, who, under Chapter 11 of America's bankruptcy code, could see their benefits slashed as the company restructures its liabilities in the hope of becoming profitable again. The bankruptcy will also affect General Motors (GM), the world's biggest carmaker, from which Delphi was spun off in 1999. Having declined to rescue Delphi, GM faces disruption to its supply chain. It might also have to honor guarantees it made in the event that Delphi ever came under "financial distress"--that presumably encompasses bankruptcy.  Estimates of GM's potential liability to Delphi range from $1.5 billion to $11 billion. Alas for the carmaker, such numbers are dwarfed by its own existing pension and health-care burden, now so large that there is increasingly talk in Detroit that it too may be driven into bankruptcy.  Steve Miller, Delphi's boss and a veteran of bankruptcy wrangles in other industries, predicted this week that GM would go bust inside the next three years unless it can win huge concessions from its trade unions--something Delphi failed to do.  The numbers are awful. GM's credit rating was lowered again by Standard & Poor's on October 10th. GM expects to spend over $5 billion this year on health care alone, up by $1 billion since last year. That adds up to about $1,500 for each car made by GM, or some 3% of the firm's revenues. Much of this money is for GM's former workers: it now provides health insurance to over One Million retired Americans.  GM says that its current pension-fund liabilities are fully funded, but that claim is controversial. Outsiders think that the firm's pension obligations are under-funded to the tune of $31 billion.
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http://www.economist.com/displaystory.cfm?story_id=5017138
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CORPORATE PENSION REFORM GATHERS STEAM - FORBES MAGAZINE, October 14, 2005
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The Employee Retirement Income Security Act (ERISA) created the PBGC in 1974 to insulate employees from some of the downside risk of a defined benefit (DB) pension fund collapse. The PBGC is in an increasingly precarious financial situation. Temporary legislation designed to shore up its finances will expire on Dec. 31. Lawmakers have taken seriously DB pension-plan under-funding and the precarious financial position of the PBGC.  Recent plan terminations and soaring levels of plan under-funding suggest that the current rules are inadequate. However, in order to prevent market inefficiencies, lawmakers, in addition to tightening current funding rules (and increasing PBGC insurance premiums), face the challenge of confronting two chronic issues:
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1. "Moral Hazard." Corporate DB plan sponsors have a tendency to change their behavior after acquiring PBGC coverage. To counteract moral hazard, Congress may consider strengthening funding rules to create incentives for firms fully to fund their plans.
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2. Adverse Selection. More and more firms have decided to terminate existing DB plans due to their excessive administrative and regulatory costs, or to provide only defined contribution (DC) pension plans (not covered by the PBGC). From 1980 to 1998, the percentage of workers with DB private pensions fell from 80% to 45%, according to the PBGC.
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If all corporate pension providers participated in the PBGC, risk pooling would be effective and the PBGC would function properly. However, as the most financially sound firms move out of the DB market, the remaining pool of firms seeking PBGC coverage will become weaker, exposing the PBGC to greater risks. This adverse selection will inevitably force higher premiums to offset higher risks.
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http://www.forbes.com/business/2005/10/13/pbgc-delphi-pensions-cx_1014oxan_pensions.html
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EDITORS NOTES:  I want you to pay particular attention to item number two (adverse selection) and the last paragraph above as well.  Which is to say, notice that it is stated IF ALL corporate pension providers stayed with the Defined Benefit type of pension plan, AND they all paid into the PBCG, then chances are the system would be in good shape.  HOWEVER, notice that the percentage of workers with this kind of plan (or better stated companies offering this kind of pension) went from 80 percent down to 45 percent - AND instead pension plans were switched over to Defined Contribution plans.  Corporations have NOT done this for the good of their employees, but rather to get out of the potential financial liability of being on the hook.  Even so, also notice that the article states once a company joins up with the PBCG, they tend to become a little, shall we say, wild and wooly with the management of these funds knowing the government could be stuck with the liability (this means you, the tax payer at the end of that payment chain).  Worse, let us say, you are in a DB plan and you currently have US$200,000 supposedly accumulated.  IF the PBGC ends up taking over your pension plan, each worker is only covered up to US$46,000.  So, the government rushes in to the rescue - but Surprise - Surprise (as Gomer Pyle would say) you just lost US$150,000 or 75 percent worth of retirement benefits.  Now how safe and warm do you feel about government insurance?  They never highlighted the fact the coverage is ONLY up to US$46,000 of your pension value - or did they?  I would guess probably not.  Know what kind of pension plan your company has you in, how much you have in it, and what are your options (if any) to get the money the heck out of there should you resign or retire.  
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MERK INSIGHTS: Is a Dollar Crisis Looming? - October 10 2005
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It's the 70's, stupid - Was a headline on CNBC on Wednesday, October 6, 2005 - a day when the dollar dropped sharply against major currencies. The 1970s was known for stagflation, a period of sluggish economic growth combined with high inflation. The 1970's is associated with a breakdown of the gold standard, high inflation, price controls, bad equity and bond markets, as well as a major bull market for commodities ranging from oil to precious metals.  Why do these concerns make the headlines now? Are these concerns justified? What does and can the Federal Reserve Bank do about them? What are the implications for the stock, bond and housing markets, as well as for gold and the dollar? How can you seek protection?
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The dangers of stagflation have been long in the making: if you drive an economy to maximum efficiency (or productivity) by encouraging consumers (through low interest rates) to finance their spending on credit, you get a consumer highly sensitive to increases in interest rates (and home valuations, a source in recent years to finance consumer spending). Add to that global overproduction (fostered by low US interest rates, low US taxes, and Asia subsidizing its exports through low exchange rates), and you foster low consumer prices on anything you can import from Asia and high commodity prices. US corporations have their margins squeezed and are unlikely to create as many jobs as would be typical at this stage in the economic cycle. US wage growth and job security are unsatisfactory due to the pressures of globalization. Driving this environment to extremes by responding with an economic stimulus to every crisis, we have an economy that is no longer resilient to shocks. The clearest sign that we are at an extreme is that US car manufacturers had to apply employee discounts to empty their inventories - this should not happen with the GDP growth we have. 
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http://www.forextelevision.com/FT/Text/ShowStory.jsp?id=5139
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HOW EXPENSIVE IS OIL RIGHT NOW REALLY?
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The following chart (see link) shows historical costs for crude oil adjusted for inflation using current 2005 dollars.  Based upon the value of 2005 dollars - oil actually hit US$96.81 per barrel back in December 1979 in these inflation adjusted dollars.  If this is true, then the US$60 dollar range is actually cheap, which means US$100 per barrel oil is not so far fetched after all.
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http://inflationdata.com/inflation/inflation_rate/Historical_Oil_Prices_Chart.asp
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WANT TO KNOW WHICH COUNTRIES HAVE A TAX TREATY WITH THE US?
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Visit the nice folks at the IRS directly to find out from them who has a tax sharing treaty (and who does not).  Some of our favorite destinations we discuss quite often are NOT on the list (thank you very much).  Some of the countries we talk about in terms of residency and citizenship, same thing (we thought you might like to know). 
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http://www.irs.gov/businesses/corporations/article/0,,id=96739,00.html
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NEW ARTICLES ON-LINE:
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Many clients have made the comment that some of the articles we have on-line are a bit dated.  Guilty as charged, I must admit, although our most current information of course can always be found in the newsletter section.  However, little by little we are getting some new information on-line and the following are some very recent articles for 2005:
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GLOBALIZATION, SCHIZOPHRENIA AND RELATED TOPICS:
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http://www.ascot-advisory.com/Globalization.htm
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EVERYTHING YOU WANTED TO KNOW ABOUT OFFSHORE BANKING - BUT DID NOT KNOW WHO TO ASK:
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http://www.ascot-advisory.com/Offshore_Banking.htm
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IS GOLD MAKING A COMEBACK?
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http://www.ascot-advisory.com/Gold.htm
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A SECOND PASSPORT OR SECOND CITIZENSHIP: WHY YOU NEED ONE NOW, AND FAST.
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http://www.ascot-advisory.com/Second_Passport.htm
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RUMORS ABOUT CRIME IN OTHER COUNTRIES:  Are Things Really That Bad in Some Other Places, OR Are Things Really That Bad Where You Are Now?
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http://www.ascot-advisory.com/Crime_Statistics.htm
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READERS WRITE IN:
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John:  There are some issues that concern me in America.  This is why I will soon be leaving, if possible!  The rumor is that the United States is rushing into Martial Law.  Martial Law is a police state.  All phones were tapped after 911.  I was always told that America was free!  I get so, tired of looking at the news, with all this corruption with police and the FBI.  It is like they own us and they can do anything to US citizens.  They even tried to ban food supplements, making it a crime to sell or distribute them.  Are we headed for the NEW WORLD ORDER!  The name of the ban is called CODEX and you can look up in your search web engine.  The sad thing about it is that, the EU want international Law for this to be approved.  This means Globalism!  ONE WORLD GOVERNMENT!  This is why I educated myself in common law and learned how to protect myself from these terrorcrats.  All of these United States are under what's called the uniform commercial code.  This code gives up our constitutional rights.  I have a book called the Creature from Jekylll Island, by Tedd Flynn.  It talks about how American was conceived and the banking cartel.  If you have not read this book, I recommend.  He has received threats on this life for writing this book and they have even tried to ban it.  The government tried to take my land a couple of years ago and I beat them in a court decision.  They did not want to go to court, because of fear that I would expose them and the code.  What would I expose?  According to them, the United States is bankrupt!  Of course, money is a commodity.  It has no intrinsic value, meaning that is no longer backed by gold or silver.  It is no longer backed by gold or silver, but our promise to pay it back.  What I am saying is that, whenever we sign court documents, traffic situations, or any legal instrument.  We should sign it UCC without prejudice 1-308.  This is the new code, because the old code was UCC 1-207, which was outdated and you can find all of this in a book called Anderson's Law the Uniform Commercial Code.  If we learn this, we can take by our country and some of the precious freedoms we have so foolishly given up! Warm Regards!
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EDITORS REPLY:  Thank you for the letter.  I am familiar with the book you mentioned and it is a very interesting read for anyone that wants to understand the creation of the US Federal Reserve.  Another more recent book on the subject is: Secrets of the Temple: How the Federal Reserve Runs the Country by William Greider.  Anyone that lived in the US during the 1980s and wants to know what happened to the US Economy, Why American Farmers and Business lost out to foreign manufacturers, and other dirty political secrets that average guy in the street has no idea about - should read the last four chapters of this book.
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In addition, I am also very familiar with the Uniform Commercial Code as well.  What can I say?  My only critique is that I have seen many people who seemingly did have the law on their side, but lost out to the folks with the guns and keys to the jail cell.  Being right does not mean you will prevail IF the people on the other side are not really interested in the rule of law.  Meaning, they of course do say so in theory, but the practice is another matter, when it comes to situations whereby you are correct (and they not).  So, as a general philosophy of mine, I say leave peacefully and on good terms.  There is no point picking a fight you probably cannot win, so why give yourself the aggravation?  If they want to run the place into the ground, good luck to them (and let them have it).
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On the issue of Marshall Law, I am not a deep believer in some of the conspiracy theories floating around, although some of these people do ask some valid questions.  However, if you want to take a step back and look at the situation logically, with an objective eye, then one can say there certainly are some possibilities (but again, difficult to say for sure).  For example, what is the best way for politicians to get their approval ratings up and also get the publics mind off of local problems, such as the economy or whatever?  The answer is to start a war.  This has been a tactic used by politicians for thousands of years.  Using an example of another country in recent memory or rather a government that used this tactic - was the ruling military junta in Argentina not too many years back, that got involved a war started with Great Britain over the Falkland Islands.  Why?  I have been to the Falkland Islands and it is cold, damp place filled with peat bogs (moss) and roughly2000 people (and probably that many penguins as well).  The only industry, and very limited at that, is fishing and a scattering of sheep herding.  What the heck would Argentina want with the place?  Not much really is my guess, other than to divert attention and get the population to rally around the flag.  Argentina today is of course a democracy, and the approval rating of the military junta of course plummeted when they lost the war (and thus the people clamored for a change in government).  In addition, Argentina has fairly good diplomatic relations with the UK today as I suspect the British Government understood clearly what was going on (and do not blame the people or the current democratic government accordingly).  However, it is incredible how political leaders can so easily manipulate the general public at times, and who suffers?  Who looses his or her life?
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In any event, there are many things that governments do, or events that take place, which require you to take a step back and see things from another angle.  Also, it is sad but true, that the crowd often never questions certain actions because they are frightened, cannot see things clearly, or they want some leader to step in and save them (and as a result, are often willing to accept almost anything, including loss of liberty in the process).  If you think about it, how in the world is it possible that hardly a peep came from the American public when former US President Roosevelt confiscated all the private gold in 1933?  The answer from most people was they did not care because they did not have any gold (but some people did have gold, which was legally earned private property).  It is the principal of the thing really more so than anything else.  Better stated, the idea of a government simply seizing the assets of private citizens, and in a democracy no less?  Today of course we have a somewhat similar issue in terms of eminent domain and the seizure of private property (for the public good of course, we have to emphasis for the public good even though the situation today is the transfer of property to a private developer in order to generate higher property tax revenues, and not for the purpose of a road, public school, etc.).
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The problem of course is where you are along the food chain in all of this.  If you are broke, have no money, and are one of the vast multitudes with economic problems, chances are you will be in agreement with some of these things.  Of course, on the other hand, if you are someone that did not get yourself into debt, invested in gold, real estate or other assets and generally has attempted to plan for the safe welfare of your family - maybe you are a or will be a very tempting target?  History does have a funny way of repeating itself - does it not?  
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What does this have to do with your comments?  Well, what would most people think or say if men with somewhat mysterious black military uniforms (with automatic rifles at the ready) were all of a sudden placed on major US city street corners, in airports, train stations, and so on - twenty five years ago?  Why is this accepted today without question, and worse, the suspension of certain civil liberties as well?  If it were done 25 years ago, the public would be outraged and in fact reminded of some small country ruled by a military strongman (also whereby the American public and the politicians would clamor and complain about it, trying to put pressure to bring about democratic change in such a country).  The reason is of course that the American public has been lulled into accepting this situation in the US because they are told the nation is at war and this is necessary for their own safety.  Maybe so, and then again maybe there is another motive?  It does seem a bit strange that almost the entire US military is in Iraq, and of course Marshall Law pretty much the scenario there, yet the bad guys still mange to keep on keeping on (so, if they cannot control Iraq how are they going to control Detroit??)  On another point, the one country that prides itself at being the most sophisticated, wealthiest, and best organized in the world cannot control its own borders.  It is the case they are really so inept or is the case that they really do not WANT to for some other reasons?  These are all questions you have to think about and answer for yourself.  However, getting back to the specific topic, someone had asked me one time - How does a termite eat a tree?  The correct answer is, one bite at a time very slowly (and hardly noticed hour by hour), until the tree is suddenly gone ten years later.  The parallel question might be asked - How does a government get citizens to accept loss of liberty and other themes in a currently free society?  The answer is little by little, until one day you wake up and the ball game has changed while you were watching it take place the entire time, but never noticed.  Who really knows what the long-term scenario or game plan really is?  But, on the same token, the other question remains: What are some of the likely answers or possibilities knowing what you do know at the moment?
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There are other countries for sure that have the same sort of problems with certain things, such as social security.  Looking at Panama (which has a similar issue in terms of insolvency of the social welfare system) - what happened when the government in Panama finally put the gavel down very recently and said, OK we are now raising your taxes, cutting benefits and extending the retirement age?  The answer is the younger people went ballistic and I am not talking about the uneducated unemployed either, but rather the university students.  They rioted, broke automobile windows in terms of cars parked on the street at the time, and attempted to storm the government office buildings as well.  So, is this a sampling of things to come in the US (and they are getting ready for it?) or just an isolated incident taking a place in a so-called unruly banana republic?  In the least, perhaps something to think about and perhaps there are more questions than answers - for the moment anyway.                            
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ANOTHER READER WRITES:
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Dear Sir: I have been a reader of your pub for some time now.  Would you comment on a unique informal banking system the Dominicans have for pooling money together and taking turns using it. It is called the san or something like that.  It is on the honor basis and I think the Japanese also have a similar system.  I think we could emulate it as a thrift basis here in the US.
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EDITORS REPLY:  There is a sort of informal system like this, and the Chinese often do the same thing as well, especially the immigrant communities that find themselves either locked out or even intimidated by traditional banking.  I could not say for sure if this is a great idea or not, but it does seem to work if managed properly.  Although, I would say too it seems to be a system of informal pooled lending and borrowing that has its true basis in TRUST and INTEGRITY among all the participants.  Which is to say, each participant is bound to each other morally to some extent. 
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ANOTHER READER WRITES:
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Hey John, I have e-mailed in the distant past regarding your overseas accounts and the wonderful interest rates they offer. I was recently in contact with a bank in Dominican Republic who said they offer rates of about 2% at this time. I think you mentioned in the past that they offer lower rates at this time but I thought better rates than that. Have things changed that much? Could you please update me again about the expected interest rates for DR or any of your other foreign banks?  Also, being a Canadian resident could you tell me what the taxation implications would be?
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EDITORS REPLY:  Well, on the last item first, I do know that the Canadian Government has started to mimic some of the things going on in the US, and one of them of course is the requirement that a Canadian declare non Canadian accounts or investments.  On the other hand, the one thing Canadians still have going for them (which Americans do not) is that Canadian citizens can declare themselves non-resident in Canada for taxation purposes IF they can demonstrate legal residency elsewhere.  So, Canadians can obtain a direct taxation benefit should they desire to live or retire outside of Canada. Americans of course are technically required to pay tribute no matter where they are living or earning their income, and why so many Americans often enough do decide to renounce US citizenship.
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We have covered the topic of banking and interest rates in the Dominican Republic before, but in order to update some of the newer readers I will do so again.  Generally speaking, local interest rates for deposits in Pesos have always been quite high (20 percent or more) and in US Dollar as well (up to 12 percent a few years back).  There were a number of legitimate reasons for this, and prior to the year 2000 inflation was certainly held steady in the single digits.  So, if you were earning say 18 percent in Pesos, while inflation was running at 6 percent, you had a net real return of about 12 percent on your money (tax-free).  If you were earning interest in US DollarS, then perhaps even better because you did not have the currency exchange risk.
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This stability did change with the previous government of 2000-2004, whereby Dominicans witnessed a tremendous devaluation of the currency (from about 20 to 1 versus the US Dollar up to about 52 to 1) and inflation rates as high as 50 percent.  For foreigners with US Dollars or Euros, the country went on sale and became even less expensive for them, where as the local Dominican middle-class were caught between a rock and a hard place (as the middle class always are with run away inflation).
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In any event, the new current government, which took power in August of 2004, has made the reduction or elimination of inflation and economic stability the number one priority.  And, within one year, it is impressive to note they have gotten the inflation rate down to ZERO and the Peso has strengthened versus the US Dollar as well (exchange rate now is about 32 to 1).  However, with reduction of inflation rates and a more stable exchange rate, the government noticed that no one was buying new homes or investing in terms of business expansion.  The reason was - why would you bother when you were getting say 25 percent or more tax-free in Pesos?  Better stated, for many, if was probably a better idea to keep the money in the bank, earn the interest, and either rent or in the case of a business owner, not invest in business expansion (as a business owner you would need to get a return far in excess of 25 percent tax-free to make it worth your while). So, as a result of all this, the local banks had too much money on deposit, and the Dominican Central Bank decided to try and push interest rates down in order to discourage this excess in bank deposits (and encourage business investment or real estate activity).  The positive side of this policy has been that real estate activity has increased dramatically since then, and new housing starts are up as well.  The down side of course has been the lower interest rates, even for US Dollar deposits.  However, right now we are at a crossroads to some extent.  We mentioned in other newsletters that interest rates in the US will be going up because of the new pressures for inflation.  This means that slowly but surely you should start to see bank interest rates creeping up in the US.  This will put some pressure on US Dollar deposit rates outside of the US as well in terms of competition for these very same funds.  In addition, with regard to the Dominican Republic, local banks have recently started to announce slight interest rate increase as well, indicating that the lop-sided or excess deposits have now worked their way out of the banking system.  So, going forward, I would expect to see interest rates in the DR start to inch back up, albeit slowly and non-dramatically.
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The reasons why you might want to consider establishing banking or investment account has to do with much more than just interest.  However, in all fairness, every investor is looking to get the best or highest rate of return on his or her money, and the truth is, as different countries move through various economic cycles, there certainly are many who try to switch funds accordingly.  But aside from seeking out returns, a bank or investment account offers some degree of asset protection (having funds secured away in another country) plus offers the opportunity to participate in returns not found at home.  Many clients do maintain accounts in the Dominican Republic, Panama, Austria, Singapore, Hong Kong and so on, for the very reason that they can move between these different markets as interest rates become more appealing in one versus the other. 
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ANOTHER READER WRITES:
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Regarding a recent article we wrote for the Escape From America E-Zone titled: THE CONCIOUSNESS OF AN EXPATRIATE - the following person writes:  I agree with you 100%. I am glad there are other people with the same mindset. You cannot fight these big corporations that are going to ruin this country so might as well live in bliss elsewhere.
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EDITORS REPLY:  Well, it is not that I am in any way, shape or form anti-business nor do I have any, shall we say, socialist viewpoints about corporations either.  On the contrary, I consider myself to be a TRUE Libertarian with respect to many things, and this includes the belief in the free market, capitalism, private property rights, less government not more, and so on.  Which is to say, it is often thought that the American Libertarian movement especially is somehow oriented to the left politically speaking, but nothing could be farther from the truth.  The reason this stereotype exists really comes from the late 1960s and early 1970s when the US Libertarian Party aligned themselves with anti-Vietnam war protestors and people such as Ralph Nader, who had similar goals or interests regarding very specific individual issues at the time.  But the truth is, True Libertarians would probably make Ronald Reagan look a bit liberal on a number of issues. 
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In any event, I see a number of problems currently in the US and I also see NO concern on the part of anyone to solve them either.  The US is facing some very serious changes and problems in terms of its own economy, cost of living, employment trends, levels of debt, inflation, and so on.  But I think that is not the real concern or problem.  The very serious problem in terms of politics is the disconnection of many individual citizens from the governing and political process.  A recent survey was done involving university students under the age of 25.  The results found that this age group had the highest apathy and lowest voter turn out of all other age groups, and also in comparison to the last 30 years as well. Meaning, if the younger generation coming up feels they have no voice in the political process, and that why should they bother? - Then this is both sad and very dangerous as well.  Sad in the sense that they have come to this conclusion and dangerous in the sense that the politicians will really run amok in the future.  In other words, you have always had certain special interest groups trying to influence legislation, tax rates and whatever else throughout history.  Eighty years ago, former US President Herbert Hoover said that American Business is the business of America (or something to that effect).  So, even then, you had corporations and business trying to exert political influence on many issues of concern to them, and this is very normal in any country.  However, the balancing act that existed in the past was individual citizens countering this with their own concerns as well.
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IF apathy has gotten to such a point today that individuals feel they need not even bother raise their voice or make the effort, then the only voice left standing or being heard will be the other minority voices, namely the corporations (and others who have both the organization skills and the money).  These groups, by the way, have actually increased their political activism over the years.  In fact, the reason they have increased their own political activities is because they have gotten such positive results from their efforts.  For example, we have a case today whereby corporate income taxes are at the lowest level they have been in decades, and whereby the tax code has been tweaked to allow for deductions for outsourcing and other related matters.  Personally, I would like to see zero income taxes for everyone, but if there is going to be this kind of tax, it should be the case that it is equal and fair across the board.  Stated another way, I personally believe the current political process TODAY is such that corporate or business interests have the floor, and the majority of individual middle class citizens do not (one being sacrificed for the other in terms of taxation policy especially).  Then again, it is not the fault of the corporations and anyone else that has an agenda, but rather the fault of many average Americans who have emotionally and otherwise disconnected themselves.  The problem with that is, when you allow someone else to make the decisions or alone influence policy, they are going to almost always do so with their own benefit in mind - not yours.
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With all that said, I am now going to proclaim something that might seem like it is direct contrast.  Meaning, I hate to say it, but I think the younger generation from the survey mentioned has a point, and I can fully understand them also.  If citizens have developed such a level of apathy (which I think they have), then what chance do you as one individual have trying to rage against the machine (so to speak).  Look at the article mentioned above regarding Delphi.  How many Americans are shocked and really concerned about the broader implications?  I would say not many.  How many people are asking the correct questions these days when they read that the US has had possibly the highest number of personal bankruptcies (in 2003) in the nations entire history - and that 2005 might even top that?  Pension problems of private firms eventually will become a pension problem of the taxpayers (you, in terms of higher taxes later on) via the Pension Benefit Guaranty Corporation (PBGC), which itself was reported as being insolvent recently.  How many people really are looking at these things, and asking by whom and how are these problems going to be solved?  These things are all SYMPTOMS of a larger issue or broader trend that is not going away.
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Why is it that most people (and politicians) are not concerned about curing the problem or disease?  The disease is there and we know this because we keep seeing the symptoms day in and out, year by year.  Maybe the politicians ARE aware of the problems and they are trying to keep their mouth shut, plus figure out how to prevent a national riot when the time comes for a critical reckoning.  An academic from Washington told me recently: All these expatriates are trying to make a political statement by leaving.  A political statement, I asked?  The folks in Washington have been making economic decisions for the last thirty years and none seem to have been too beneficial for the average citizen.  The Gross National Product of the US in 2005 is estimated at about US$11 Trillion Dollars.  The US Government National Debt is over US$8 Trillion Dollars.  The debt represents 75% of the annual gross national production of the country.  Do you have any idea what this means?  Former Federal Reserve Chairman Paul Volcker had a fit when the national debt in the 1980s reached the post wartime high of 60 percent of GNP.  Now it is 75 percent.  You think expatriation is a political statement?  How about saying this is a - I do NOT want to go broke statement?  How about, let me out of this lunatic asylum and cancel my membership card statement?  Politics has nothing to do with it, and personal economic survival does.        
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Regarding the Pension Benefit Guaranty Corporation (PBGC):
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Economic Report: Is US pension system in crisis?
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With Delphi filing for bankruptcy the United States pension system could be in crisis. United Airlines earlier this year shifted their pension "burden" on to the Pension Benefit Guaranty Corporation and Delta, Northwest and Delphi are all expected to do the same. The PBGC is already running a massive 23 billion deficit. When a plan is turned over to the PBGC federal law limits the pension payments to less than $46,000. A pension that was $100,000 could essentially be sliced in half.
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http://www.laborradio.org/node/1646
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In any event, sorry about the long diatribe, but I am passionate I suppose about these things.  Can you tell?  However, I often feel like I watching a movie involving a run away train, heading for a cliff.  The conductor has bailed out ten miles back, jumping into a hay field to break his fall.  The dopey passengers are sitting in their seats calmly drinking their tea, without a clue as to what is about to happen to them.  Or stated another way, I feel like I am watching a movie about Jim Jones and all those people that foolishly followed that man and drank the poisoned cool-aid at the end.  I feel like I am sitting here yelling at the people on the television screen  (as if they could hear me) - Do not drink the cool-aid, run away - run away.  In any event, this is the reason I personally decided to expatriate, and also why I write about these topics as well.  Critics will tell you not to worry, that the politicians will never let social security fail or anything else for that matter.  I agree to some extent, but then the logical question is how?  By raising your own personal taxes as a middle-class individual, by running the money press like mad day and night - or by both?  Either solution is not acceptable, and not really a solution at all.  By the way, there is a real possibility that Ben Bernanke will become the new Federal Reserve chairman when Greenspan retires in 2006.  This is the very same guy that said not too long ago, no need to worry, the Fed operates the printing presses and they can just print more money.  Come again Ben?  In my opinion, this already is a clear indication of the road they will take to resolve these problems - namely inflation (rather than trying to reduce spending, reduce the deficit and probably not raise taxes too much, as that would be political suicide).  Perhaps choosing inflation over something else (tax increases) is the lesser of two evils, but an evil just the same - especially for the middle-class, younger people just starting out that have no real estate or assets to allow them to keep pace, and people on a fixed income.
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They say genius and insanity are not that far apart from each other, mentally that is.  Either I am a genius or an insane idiot.  Only time will prove this out.  However, for the time being, in my mind, the numbers just do not add up.  So, unless something dramatically changes, I will continue to believe it would be best to either get off the train, or in the least, not to drink the cool-aid.                              
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ANOTHER READER WRITES (Same Topic):
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John - I wanted to commend you on your article.  I am an Ivy-league trained pediatrician who became also a cancer patient and survivor who found the current medical economic situation in the USA so fundamentally off track that we moved to France where my husband has residency as well. This was due to quality of life issues and a sense of a real decay of the USA 's decency and contradictions. I have written and spoken to medical audiences about how the medical system's decay is symbolic of a much greater shift in societal values and priorities, which are not reprehensive of America's founding visions. Alas, your article crystallized things from an economic perspective I do not have. I am forwarding this article to others who will also appreciate the clarity and research you presented. I do not know much about tax shelters etc but will study it- actually do not have much to shelter.
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EDITORS REPLY:  Thank you for your letter and for taking the time to write.  I think part of the problem is that most people do not understand what is going on really, economically and politically.  Which is to say, they do not understand how decisions made at the nations Central Bank will affect them personally or certain political decisions for that matter as well.  Too often we think, as the meager average mortals we are lead to believe that we are - that complex issues regarding economics and governing should be left to the experts - but what if the experts are lunatics?  Even worse, what if the experts have their own agenda or are pandering to someone other than ourselves in the decision making process?  Many Americans do not understand what road the US is currently on and has been on for past twenty-five years.  In addition, they do not realize just whom made certain decisions and why.  If they did, the average person would be (and should be) steaming mad.
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