Wealth International, Limited (trustprofessionals.com) : Where There's W.I.L., There's A Way

W.I.L. Offshore News Digest :: January 2009, Part 2

This Week’s Entries :


Where the smart offshore investment money should – and should not – go in the coming year.

Howard Rich has a regular column in the Caribbean Property Magazine e-zine called the Rich Report. From his kickoff column:

I am a commercial real estate investor and have been for almost 40 years. Most of my success has been in Manhattan, though in recent years I have spread my investments throughout the U.S.

So, why am I now moving my investments offshore -- and in this column inviting you to do the same? I think it was pretty well summed up in a recent interview CNN's Wolf Blitzer did with my fellow Manhattanite Donald Trump, a pretty shrewd real estate maven in his own right.

Blitzer asked Trump how the downturn in the U.S. real estate market was affecting his operation. Trump explained that other than a few projects in Manhattan and Florida, his investments are overseas. "The stuff on the world basis is unbelievable," he explained. "The world is doing very well" (which may also explain why he is building a $200 million luxury condo tower in Panama City).

Well, the truth is I checked out "the world," and I found that The Donald was right on target. International real estate is doing very well, thank you. My philosophy, as I will explain a little further down, is to get in early and cash out big. So, I have waded offshore. I am still testing the waters. But, I like what I am finding. And, if you are a serious investor who is interested in emerging markets, I invite you to join me.

So The Donald, and perhaps Mr. Rich, have probably lowered their sights a bit since the above was written in pre-crash April 2008. But you can see his orientation of looking at offshore real estate -- his focus to date has been on Latin America -- with an investor's eye. What attracts expats also tends to attract investment. You will be seeing more of Mr. Rich's writing on these pages, including some older columns we missed (first example is immediately below).

In that kickoff Rich Report, Howard offered brief summaries on "Three countries in Latin America have jumped out at me, and I am predicting potentially high returns in fairly short order." The countries were Nicaragua, Roatan Island (Honduras) and Brazil. Now he is back with more extended coverage of two countries that merit your attention, Honduras again and Columbia, and two worth avoiding, Venezuela and Ecuador. Rich lives in Honduras, so there may be some home team bias there ... or there may not be.

I am a little leery of predictions. For one thing, "prediction" sounds too much like "perdition." And far too many prognosticators go straight from the former to the latter. Like the Business Week scribe who in 1957 opined, "With over 50 foreign cars already on sale here, the Japanese auto industry is not likely to carve out a big slice of the U.S. market." Clearly, the U.S. Big Three automakers took that as an article of faith.

Nonetheless, it is January of a New Year, predictions are the order of the day, and "fools rush in where angels fear to tread." So, I am going to stick my neck out. I am going to give you four predictions as to where I think the smart offshore investment money should -- and should not -- go in the coming year. And if I am wrong, I will buy you a steaming cup of my favorite café con leche on the Sunday morning of your choice at the festive Plaza Dorrego near my home in Argentina.

Sound like a deal? Good, then let's get started -- after I give you my ground rules for the predictions I am about to make. If you are a "Rich Report Regular," you know that when I make a recommendation, I am talking about diving in, not dabbling. The Rich Report is for serious investors only. So, you need to know what goes into my decisions before you make yours.

First, please keep in mind that we are dealing strictly in the world of economics. And in my corner of that world, the coin of the realm is capitalism. Pure and simple. Politics are tossed to the side. And that means any country in which I recommend investing must first and foremost have a solid free market system.

As Ayn Rand wrote decades ago, "Capitalism demands the best of every man -- his rationality -- and rewards him accordingly. It leaves every man free to choose the work he likes, to specialize in it, to trade his product for the products of others, and to go as far on the road of achievement as his ability and ambition will carry him."

If you are the kind of business executive who believes in that, you are likely already studying Latin American real estate markets. And if you are not, I do not mean to be unkind, but you are probably too busy applying for your bailout to think about offshore investing anyway.

Second, I want you to at least have a passing knowledge of the four criteria I consider foremost when making my own offshore investments. If you have ever read Richard Branson's excellent autobiography, Losing My Virginity, you already know them -- because he laid them out with crystal clarity in the Epilogue: "If there's a good business plan that offers good value, limited downside, good people, and a good product, we go for it."

That may explain why Branson is now making major moves in Latin America in everything from bio-fuels to airlines. He likes to get in early and cash out big. So do I. And in my humble opinion, so should you.

So, let me predict where I think you will find it best to get in early in the coming year -- as well as where I personally recommend you might want to stay out of all together. I will give you one Latin American country I consider a "Hot Pick" and one other I consider a "Not Pick." And, I will even throw in an "Honorable" and "Dishonorable Mention" to boot. Then, in the words of the immortal words of Nathan Detroit, "You makes your choices and you takes your chances."

Let us start with the "Not Pick," so that we can end on a high note. These (the Not Pick and the Dishonorable Mention) are countries that -- if they continue on their present course -- likely will end up as little more than welfare states hell bent on bankrupting investors and rationing scarcity. If you feel charitable, send money. If not, say "Adios."

Top Not Pick: Venezuela -- The whole problem with investing in Venezuela in 2009 can be summed up in two words: Hugo Chavez.

No, not because Mr. Chavez considers George Bush "el Diablo" and pals around with Mahmoud Amadinejad. About half of the Hollywood glitterati would agree with el Presidente on Mr. Bush. And, as to Mr. Amadinejad, he and Sr. Chavez have much in common: They have both managed to parlay oil wealth into abject poverty. And that, in a nutshell is the problem Hugo Chavez presents for serious investors: He has destroyed a once-thriving economy -- and shows no signs of ending his egomaniacal assault until he has reduced that once-proud nation to Fourth World status.

In the name of full disclosure -- and just to demonstrate the arms-length, nothing-personal approach I take to offshore investing -- I should mention that six weeks before the 2002 coup attempt against Chavez, I bought stock in Venezuela's CANTV telephony giant. The stock doubled upon reports of the coup -- and then sunk back to where I bought it when the counter coup occurred. Which leads me to suggest that should investors get any reliable advance word of a takeover by the opposition, Venezuela could again be a very good buy. But, it is not now. Here is how Dr. Hugo J. Faria, Professor of Economics and Finance at the Instituto de Estudios Superiores de Administracion in Caracas, Venezuela, describes Mr. Chavez' effect on his country and its industrial base:
"Chavez has been a destabilizing force around the world, attempting to subvert democratic rule and capitalism and to establish the so-called Socialism of the Twenty-First Century in his own country and elsewhere. In Venezuela, the so-called Bolivarian Revolution in 2007 nationalized electricity companies, renationalized the largest fixed telephone company, and shut down a TV station with the broadest audience in the country."
Under Chavez, the inflation rate in Venezuela has reached 20%. Price controls have so severely impacted food supplies that Chavez has sent police patrols into grocery warehouses and mom-and-pop stores to search out what he terms "hoarders and speculators." And meat-packers are turning away cattle because government-imposed prices for meat are too low to even pay the cost of butchering and processing.

Now, with the price of oil tanking, Venezuela is not going to be the powerhouse it has tried to be the last few years. And with Chavez trying to do away with term limits on him and manipulating numbers in his last election (which even he now admits he lost) things do not look too promising.

Little wonder that the London Times recently reported:
"For the past eight years, rich Venezuelans have been trickling out of the country, spooked by the socialist bluster of their populist President, Hugo Chávez. But since being inaugurated for his third term in January, Mr Chávez's talk has begun turning into substance, with an evermore radical series of moves to transform Venezuela into the world's first '21st-century socialist state.' Now the super-rich are being joined by middle-class professionals and, increasingly, families."
Enough said. If the best people are leaving the worst person in charge, savvy investors should save their money by looking for somewhere else to invest.

Dishonorable Mention: Ecuador -- Ecuador is a stunningly beautiful country, with warm, friendly people, abundant natural resources -- and a government that veritably embodies Churchill's definition of socialism: "A philosophy of failure, the creed of ignorance, and the gospel of envy; its inherent virtue is the sharing of misery."

Lest that sounds too strong, here is how Ecuador's socialist President, Rafael Correa described investors who made the mistake of buying his country's global bonds -- and to whom he now refuses to pay $31 million in interest due: "I gave the order not to pay the interest and go into default. We know very well who we are up against -- real monsters." As bad as that is, the full story is even worse. Here is how the respected Investor's Business Daily described Mr. Correa's truculent declaration:

"The problem is President Rafael Correa. His aim is total state control. By defaulting, he is trying to end Ecuador's use of the dollar and shut down the private sector by depriving it of investment. Both bode ill for the country's future." Perhaps Enrique Alvarez, head of research for Latin America Financial Markets at IDEAglobal in New York, best summed up the situation: "They were already sort of headed into isolation. Now, they drawn shut the gate."

My prediction for Ecuador? To quote Rocky III's Clubber Lang: "Pain." In short, do not go there. The good people that still remain cannot make up for a burgeoning downside, devaluation, and a product gone awry.

Okay, enough of the bad news. Let's knock off the doom and gloom and look at the sunny side of the Caribbean shoreline. And there is plenty of it. Most countries in Latin America have transformed themselves into thriving, free-market economies where the real estate ROI in 2009 and the ensuing years will far surpass anything the Wall Street "paper chase" provides far into the next decade.

Scotia Bank chief economist Warren Jestin predicts that the global economy will not even begin to recover until 2010. And even then, the revival will be "gradual and in some cases disappointing." Says he: "Slower growth in the developed world is the reality as we go into the next decade."

So, here is where your friendly Hot Pick prognosticator predicts your money will grow in the next decade -- if not rapidly, at least consistently. And, frequently in the double-digit-per-annum range.

Top Hot Pick: Honduras -- At present, there may be no other locale in the Caribbean that offers investors all the advantages of Honduras. It is close to the U.S. (only a 2-hour flight from Houston). It is has a long history of domestic tranquility (a solid democracy for nearly 30 years, it has never had a civil war). It boasts some of the lowest property prices in Central America. And the sun shines year round.

Need I say more? Well, I will anyway.

Costa Rica and Panama have both established themselves as dream destinations offering first-rate accommodations at Third World prices. But, there is one problem with both: They have been discovered. Every year, an increasing number of Americans -- particularly retirees -- buy property in one of those two countries either for rental returns or relocation. As a result, real estate prices, though still relatively low by U.S. standards have begun to rise. And the best bargains are long gone.

Not so with Honduras. Even on Roatan -- considered by many to be the most beautiful island in the Western Caribbean -- you can still buy an acre of beach view property for as little as $9,000. On the mainland, in beautiful La Ceiba, surrounded by rain forests and the turquoise Caribbean, a beachfront luxury condo can cost barely more than $100,000. In the mountainous regions of the lush inland, where quaint towns offer all of the tranquility of mid-20th Century America, a acre of land costs as little as $500 or $1,000. And the sun never sets on pleasant living.

Add to this a government that welcomes investment and rewards industry, and lure of this little-known, undervalued land becomes apparent. Foreigners who move to Honduras pay no income tax on earnings from outside the country. Premier medical care is easily available at a low cost, with a private hospital room running no more than $30 to $40 a day and a full physical with modern technology priced at under $200.

The Heritage Foundation rates "Freedom from Government" in Honduras at a stunning 82.3% -- well above the world average and better than 22 points above the U.S. The president of Honduras is limited to one 4-year term. The term of the current president, Manuel Zelaya, expires on January 27, 2010. And that bodes well for offshore investors. The person expected by many to succeed Zelaya, opposition party leader Jose Oswaldo, is a strong free market advocate, educated in the U.S., and firmly in the corner of those seeking to broaden the opportunities for offshore investors.

My prediction: By the middle of the next decade, Honduras will surpass Costa Rica and Panama as the top draw for expats and offshore investors. The property is undervalued with the downside risk being minuscule. The people are warm and friendly. And the political leadership is dedicated to providing an investment product second to none in the Caribbean Basin. That is a pretty tough combination to beat.

Honorable Mention: Colombia -- Mention Colombia to most people, and they immediately conjure up visions of Pablo Escobar and his Medellin cartel. Which is unfortunate -- since Escobar has been dead since 1993 and Medillin (with just 26 murders per 100,000 residents) is far safer now than Detroit (47), Baltimore (43) or even Washington, D.C. (31).

In fact, according to Interpol, "The rate for all index (violent) offenses combined [in 2000, the latest year available] was 464.22 for Colombia compared with 1709.88 for Japan and 4123.97 for the USA."

But, that is just the beginning of the story that reveals Colombia as one of the most desirable locales in Latin America. Colombia is a country with more than 400 miles of largely pristine seacoast. Its weather varies to suit your tastes -- from Bogota where the days and warm and the nights are cozy, to Cartagena where the sun beats down during the daylight hours and the sea breeze cools the evening air.

For an increasing number of tourists and retirees, in fact, it is Cartagena that provides an all but irresistible allure. Way back in 1976, my wife, 7-year-old son, and I visited Cartagena and saw rats on the beach. Needless to say, we left it to them. But, that was then, and this is now. And here is how the New York Times describes that beachfront resort now:
"The Colombia seaport of Cartagena has emerged as the belle of the ball. This tropical city on the Caribbean is pulsating like a salsa party, drawing well-heeled Latin Americans and European socialites to its restored colonial mansions, fancy fusion restaurants and Old-World-style plazas ... But this stunningly beautiful city also has its quiet side. White-sand beaches and crystal-clear water are just a short hop away."
Yet, even with all of this, a home in Cartagena can be purchased for as little as $30,000 to $50,000. The cost of living throughout Colombia is far less than half of what it is in the U.S. or Canada. And health insurance runs some $30 a month -- for a comprehensive policy. Key to the remarkable emergence of Colombia is the leadership of its free-market-oriented president, Alvaro Uribe, who enjoys a remarkable 90% approval rating. As Diarios Las Americas, one of the region's most popular newspapers, recently editorialized, "Anyone who in good faith analyzes the personality and the performance of the President of the Republic of Colombia, Alvaro Uribe Vélez, reaches the conclusion that he is a man with great moral responsibility who embodies all the requisites of a statesman, in the democratic sense of the concept."

The only chink I see in Uribe's armor is that in 2004, he gutted the country's one-term limit law in order to run again in 2006. That is never a good sign. Under the new 2-term limit, he cannot run again in 2010, and he appears intent upon honoring that commitment. I will keep an eye on that situation and keep Rich Report readers posted.

Bottom Line Prediction: Colombia, with an estimated 30,000 Americans already in residence there will, in the coming year see an exponential increase in interest and immigration. And those who buy in now will reap rich rewards for decades to come. That is it. I promised to rush in where angels fear to tread, and I think you will agree I have stomped around pretty heavily. Whether I am right on target or way off base remains to be seen. But, even at their worst, my predictions will not leave investors with a downside anywhere near as bad as the Big Three's. So, I urge you to check out the warm waters of the Caribbean for yourself. Because I have a feeling millions of other Americans will do the same in the decade ahead.


Here is an earlier report from Howard Rich, from last July, which we missed at the time. As he writes, his main beat is economics and investing, but "occasionally the two worlds collide." More than occasionally, actually.

The subject at hand has been well covered in these pages: the "exit tax" which was added to the "HEART" legislation passed last year. Mr. Rich adds his own take on the matter, and we fully concur with his conclusions.

When my wife, Andrea, asked me what this month's Rich Report was going to be about, I replied, "Politics." And she promptly threatened to pull the plug on my trusty laptop. Rightly so, I might add -- because this column is about economics, not politics.

Specifically, it is about offshore opportunities for serious investors -- or, "high net-worth individuals," as some people like to call them. That is the way I like it. That is the way you, my readers, like it. And that is the way we intend to keep it.

But, occasionally, the two worlds -- economics and politics -- collide. When they do, it is invariably because the latter has intruded upon the former -- to the decided detriment of everyone who works hard to pay their bills, from Main Street to Wall Street; down on the factory floor, or up in the executive suite.

And since my beat is economics, I am not going to sit idly by like Voltaire's Dr. Pangloss making believe that "all is for the best in the best of all possible worlds." Not when the salons in Washington, D.C. continue to treat serious investors like the Eighth Plague.

And that brings me to the "Heroes Earnings Assistance and Relief Tax Act of 2008." Just in case you missed it -- and the bill's sponsors would deeply resent it if you did -- the acronym is HEART. As in, "Anyone with a heart would vote for this bill." Move over Madison Avenue, the real slicksters are on Capitol Hill.

The bill's sponsors tell us that the purpose of the bill is "to provide tax relief to the men and women in our nation's armed services and others volunteering service on behalf of the United States, including Peace Corps volunteers and AmeriCorps volunteers." So far, so good.

Then, they add, the tax relief will be offset by a special punitive "tax reform that closed the tax loophole that allowed defense contractor KBR to avoid paying its fair share of taxes." For the uninitiated, the bill's proponents harbor deep-seated animosity towards a government contractor called KBR that used the current tax code to legally escape paying Medicare and Social Security. Hence, a special new law ostensibly to punish the wrong -- rather, make that right -- doers who henceforth, under HEART, will be converted into wrong doers.

I use the word "ostensibly" because, in fact, the real intent of the HEART Act is not just to punish KBR. That is only a happy by-product for the politicians. Nor is it really aimed at rewarding our fine service men and women who deserve all the tax breaks they can get, and more. Otherwise, the rewards provision could have been passed on its own by a quick voice vote and sent to the President months ago rather than being tucked into a convoluted tax measure.

No, the real purpose of the HEART Act is to sic the IRS on "certain high net-worth individuals" who dare to diversify their portfolios beyond U.S. borders. Specifically, its purpose is to inflict a confiscatory "exit tax" on expatriates (former U.S. citizens) who have had the gall to make money through savvy worldwide investments.

And it is a shot over the bow to every "high net-worth" American who still thinks his money is his own.

Now, please understand: The problem with the so-called HEART Act is not that it is Democrat or Republican, liberal or conservative, anarchist or jingoistic. Frankly, I can contend with all of those.

It is that it is a punitive attack upon honest, hardworking citizens who decide they want to exercise their right to leave America permanently and choose to take their own money with them. It violates the U.S. Constitution, recent rulings by the European Court of Justice, and the U.N. Charter. And, it is class warfare at its worst.

Here is how one of its sponsors boasts of his bill on his own website. You can almost see the vitriol against "high net-worth individuals" (that is right: the very people for whom this column is written) dripping from the sponsor's pen:
"The HEART ACT would revise tax rules on expatriation. American citizens and long-term U.S. residents are subject to tax on their worldwide income. Under current law, taxpayers can avoid taxes by renouncing their citizenship or terminating their residence. The Heart Act would tighten current law rules to ensure that certain high net-worth taxpayers cannot renounce their citizenship or terminate their residence in order to avoid U.S. taxes."

"Under this provision, high net-worth individuals would be treated as if they sold all of their property for its fair market value on the day before such individual expatriates or their residency would be terminated. The gain would be recognized to the extent that the aggregate gain recognized exceeds $600,000 (which will be adjusted for cost of living in the future)."
In short; If you want to leave this country, go right ahead -- but do not think you are taking your money with you.

Now, I have to tell you that this onerous form of confiscation is not without precedent. As former Congressman Robert Bauman warns in his excellent expose of the HEART Act, it echoes the notorious "departure taxes" that stripped Jews of their property before they were allowed to escape Nazi Germany.

More recently, it was one of Stalin's favorite tools for oppressing those fleeing the Soviet Union. In the early 1960s, it was Castro's mean-spirited method for dealing with those who chose to leave his "people's paradise." An in certain African totalitarian countries, it has long been de rigueur.

Yet, as bad as all of that is, for serious investors, it gets even worse. And, I think that some of those reading this column know what is coming.

In government programs, there is what my good friend Bill Wilson, the executive editor of the award-winning publication The Daily Editorialist, calls a "Ratchet Effect." In short, government programs only go in one direction -- from smaller to larger, from minutely invasive to totally pervasive. And that is the single greatest danger of the HEART Act.

If President Bush signs it into law (and the reason the "exit tax" was buried in non-germane legislation to help veterans was to force him to do so) ... and if it does not produce a maelstrom of protest from the investment community ... it is a significant escalation of the unbridled assault on "high net-worth individuals" who invest their money offshore.

It is an assault that actually started in earnest in May of 2006 with the signing into law of the Tax Increase Prevention and Reconciliation Act of 2005 (TIPARA). (There they go again with one of those warm and fuzzy titles for a piece of legislation that actually eviscerates its intended target -- the international investor). While attempting to give the appearance of the "prevention and reconciliation" of tax increases, TIPARA actually changed the IRS code to nearly quadruple the taxes on foreign earned income.

Here is how the respected journal Eurojuris International explained it:
"For example, an individual with US$100,000 of foreign earned income and housing exclusion and with US$20,000 in other taxable income (after deductions) would be subject to regular tax on that US$20,000 at the rate or rates applicable to taxable income in the range of US$100,000 to US$120,000.

Therefore instead of paying a tax of US$2,270 at rates of 10% on the first US$1,460 and 15% on the excess over US$1,460, the taxpayer pays US$5,003 at rates of 25% on the first US$19,950 and 33% on the excess over US$19,950. This is a big "boo". If the taxpayer is also subject to the AMT, the "boo" is bigger."
For three years running -- dating back to the passage of TIPARA -- the high-tax contingent in Congress inserted the exit tax into a variety of bills, only to have it stripped out in Senate-House conference committees. Then, this year, without the benefit of public hearings, it was sneaked into the bill by the Senate and House conferees themselves and eased to final passage with record-setting speed by a non-recorded voice vote. The President, of course, will sign it into law.

So, what is a serious investor to do? In this writer's opinion, you have three choices:
  1. You can dismiss the new law as just punishment for those who have the gall to renounce their citizenship;
  2. You can ignore it all together; or
  3. You can "read the handwriting on the wall" and realize that once the HEART Act finishes digesting its expat appetizer, this voracious monster will look around for its main course: "high net-worth individuals" who have not been smart enough to get their investments offshore before the final curtain falls.
The good news is, if you choose the latter course, you need only learn a few simple Spanish words for "offshore assets protection": Spanish words like "Costa Rica," "Panama," "Honduras," "Dominica," "Martinique," and ... well, I think you get the picture.

Before I bring this column to a close, you need to know "the rest of the story." The HEART Act's primary sponsor, whose website I quote above, is a gentleman you might have seen on the nightly news lately. His name is Barak Obama. His presumptive opponent in November, John McCain, also voted for the bill. And with that, this particular "high net-worth individual" is now going to pull the plug on a larger percentage of my domestic portfolio and further diversify beyond U.S. borders. Comprende? See you next month.


While it is differences in opinion which make a horse race, not everyone we have featured can be right about the "best" place to invest vis a vis Caribbean/Latin American property. Moreover, most opinion pieces that appear in such e-publications as Caribbean Property Magazine and EscapeArtist are written by people who already have some skin in the game, and thus have some promotional agenda. As these potential conflicts of interest are not hidden one can decide what discount factor to apply to the advice, and we assume our readers are up to that task.

All that said, here is a piece on Panama, the recipient of many investment dollars over the past decade -- think Donald Trump. The author is a senior member of a real estate business (a promotional blurb for which appears at the end of the article) which organizes and promotes Panama opportunities. There are thumbnails of several areas experiencing development in the small but heterogenous country.

The author's business, The USA Realty Group, claims to have a proprietary program which filters through internet searches to find where investor interest is likely to be realized. He says it indicates that Panama is the recipient of far more inquiries than any other country in the region. His move to Panama is recent enough, so he evidently has put his money where his mouth is. Or as Oscar Wilde might have put it: He seems to have had great confidence in the opinion of his program.

The author has an interesting background, in "real estate, sustainable green development, and film production. ... [His] roots in the sustainable green development industry include establishing an off-grid community in the northern San Francisco Bay area featuring solar power, grey waste management, development of irrigation systems, orchards and extensive organic gardens, and green construction, which included cabins made from recycled redwood, yurts utilizing sustainable design, and homes built with sustainably harvested materials." Hopefully that background translates into ecological integrity in the developments his group sponsors.

An alternative source for information on investing in Panama which we have visited in the intermediate past is the Panama Investor Blog. A quick look now indicates it is an effective antidote to rose-colored glasses vis a vis Panama.

The opportunity in Panama is multifaceted. Panama offers the buyer, investor, smart money, retiree, expat, and second home buyer a microclimate of niche opportunity for the highly selective and for those who desire to proliferate the concept of what it is like to be first.

In the last six months of global financial confusion, Panama "intelligizes" the investment opportunity and does so with respect to the local environment and sentiment of its people. There are several distinguished factors that separate Panama from the rest of the gang, and while a recovery of some kind is imminent, Panama is still very much in the beginning of the curve, not nearly close to the reaching its speculative potential and growth opportunity in real estate and beyond.

Selling real estate across Latin America, Mexico, and the Caribbean, our research provides analytics and user metrics [which have target destination of Panama that is eight times higher than anywhere else]. ... Now, this internet traffic provides a clear delineation of Traffic - > Phone Calls and Enquiries - > Visits - > Investment.

Panama is not a destination. It is a first world emerging nation with a stable economy defined by international banking and commerce, the Panama Canal and its recently designated $5.3 billion expansion project, and Free Trade Zone. All of which is complimented by a drastically augmented tourism industry.

As Panama has grown as an independent democratic republic, so has its first world infrastructure including well-maintained paved roads extending into the nether regions, inexpensive domestic flights providing daily transportation options across the country in about an hour's time or less, and modern waste management, sewage, city water, and fibre optics systems. Unlike its neighbors, Panama has benefited from painstaking and responsible city planning and growth placing infrastructure first, and tourism as an afterthought.

In a roundabout way, the growth and economics of Panama combine with unpatrolled stateliness to create the thriving tourism industry. Another unique feature of Panama is that there does not seem to be a level of disparity of hungry and starving people, nor a level of violent crime or resentment towards foreigners, or others who are wealthier, as is prevalent in other countries throughout the world.

Panama has no central banking system. We hear this mentioned when commenting on the investment opportunity in Panama, but what does this really mean? Panama offers the only banking in the world that has remained completely stable and afloat over a period where every other bank and banking system in the world has literally gone into crisis mode. Panama has never offered nor invested in subprime mortgages.

The Panamanian balboa is pegged to the U.S. dollar. Panama did take a pass on the deadly delights of central banking. Now as for the ultimate fate of the U.S. dollar ... we will not go there this time.

It means that each independent bank branch must do its own due diligence on an individual basis to determine its own conservative lending criteria. As such, Panama's money markets and financial institutions have not suffered, and the recovery time will be short lived and never slow to a negative growth point as in the United States. Funds are still available to both Panamanians and foreign nationals for the purchase of Panamanian real estate, and at competitive rates.


The microclimate of Pedasi on the tip of the Azueros Peninsula is something that is quite astounding. Disregarding the unparallel beauty, diversity of flora and fauna, and ample sunshine, what is occurring in this region of Panama should be on everyone's radar. What was once a sleepy coastal fishing village is emerging as the Hollywood of Panama.

International celebrities such as Mel Gibson, Keith Richard, and Toby Maguire have recently purchased property there, as have other international high-net worth individuals, major international hotel investors and even royalty. The fact that individuals of this stature have come in early has transformed Pedasi into a destination that provides five star low density and growth in value development. Foreigners own most of the coastline here and there are only 5-star, high quality homes and hotels ... and nothing in between ... creating a certain kind of exclusivity, unlike some other regions of Panama.

The Padasi region is for the most discriminating -- those who want to be away from it all, as it offers privacy, yet it still has great access, excellent medical care and is in the cultural epicenter of Panama. Check out the Coasta Pedai Resort for an idea of the type of quality resorts in this area. And, I can recommend that everyone should visit the Azuero Peninsula for Carnival in February.

Bocas del Toro

It is quite easy to see the appeal of this Caribbean region of Panama. Along with the plethora of shaded blue and green water, it offers spectacular snorkelling, scuba, reefs, surfing, and boating.

Bocas is frequently rated as one of the best places to retire by many respected publications and in the past, it has benefited from this positive press. However, there is often a down side to positive publicity and in this case positive publicity has often caused Bocas to be plundered by detrimental real estate development. An excellent example of this is Red Frog, a development whose environmental impact permits have just been reneged ... again.

Note that a later article, which we posted here, the author "lovingly dismissed" Bocas del Toro as "Bogus del Toro". He does not clarify which part of Bocas he found unappealing, although that article's author ultimately decided the Caribbean was not for him and settled on the Pacific coast of Panama.

Conversely, there is Sunset Point, which is located adjacent to the Smithsonian Research Institute and has benefited from careful planning, preservation of the local environment (including active mangrove forestation), and from low density development. Sunset Point offers underground electric, and grey waste management, which combined, offers a tangible asset to the new wave of investor and second home buyer...representing a solid investment that one can feel good about making. The "feel good" aspect of this sort of potential purchase helps one arrive at a decision to buy, given the sentiment of the conservative nature that has resulted in the global investment climate.

Panama City

Commuting to Panama City from Los Angeles, I can see a skyline that is not only ever-changing it shadows that of my home city, one of the largest in the world. There is so much new construction, so many buildings and towers, and development projects ... how does one find the best one, the best deal, the best developer in a clearly defined buyers market? And, why buy in Panama City? This sort of purchase is for the investor.

Panama City offers a cash flow model, and despite the recent spur of inventory, throughout the rainy season/low season, it was nearly impossible to find a hotel room on a weeknight. There are hundreds of hotels in Panama City. [Metaphorically] digging deeper, what is the meaning of this -- the high international demand of being in Panama City?

In Panama City the real estate market is evolving with the times and providing the cash flow model of the Condo Hotel as a viable option from the likes of a Hotel Nikki, the first 6-star condo hotel in Panama. Also, the rental market is quite substantial because it is [serving] short term, mid-term, and long-term demand, left void by this 90% occupancy rate.

What makes one building better or worse than another? Well, let us take Grupo Los Pueblos as an example. It has the first active lifestyle community in the country, The Embassy Club,, located strategically adjacent to the U.S Embassy in Clayton. Clayton is a residential, suburban, master-planned, highly active community within the confines of Panama City which provides all the comforts of urban life at reach while being surrounded by metropolitan parks and distant city and Canal Views. Clayton is also an area where the land supply is scarce, and there are very strict zoning laws which facilitate its growing appreciation.

The Embassy Club has all its permits, planning, and documentation in place, and with a work force of close to 1000, units will be delivered shortly.

Chiriquí Highlands

The quaint mountain setting of the Chiriquí Highlands offers the rapidly growing communities of Boquete and Volcan, the quintessential mountain retreats, with distant ocean views compete with stunning views of the mountain, valleys, and rivers. The growth of Boquete occurred first and has spawned its sister town of Volcan, now in the very early stages of growth. Both are located adjacent to each other, separated by Volcan Baru, an inactive volcano that provides the highest elevation of Panama.

The climate provided by the quaint mountain setting is home to a very diverse plant and animal life including endangered orchid species, low amount of insects and a temperature of around 75 F degrees, with little variation year round. The extremely fertile soil gives way to the largest agricultural establishments in Panama, most notably coffee plantations.

The largest coffee plantation is operated by the Jansen family. The Jansen family has a master plan in the works to create a multi-billion dollar development to include shopping malls, movie theatres, a vast commercial center and a plethora of residences which will undoubtedly attract speculative interests on their way to completion.

As it stands now, Volcan and Boquete are two hours away from each other because there is no road to connect them directly, causing one to travel back to the coast, and drive up another road to reach Volcan. Fortunately, there is a paved road currently under construction, that is to be completed by mid-2009, which will create a direct route from Boquete to Volcan in 20 minutes time. Hence, both communities will be able to share amenities, restaurants, banking, golfing, and an air strip, etc.

While Boquete has grown first and some speculation [speculative gains?] has already been achieved, its growth has now slowed, but there still remains a demand from foreign real estate interest. Volcan is taking off due to highway construction and additional development plans. Volcan has the opportunity to learn from the mistakes of the rapid and new growth that occurred in Boquete, which will allow this towns to grow together in symbiosis.

Pacific Coast Developments

There are sporadic developments popping up along the Pacific Coast, about an hour from Panama City and beyond. All offer unique and spectacular master plans and finishing's, but upon further investigation, it is easy to discover that some that are in a class by themselves. For example, the extremely well funded Buenaventura offers a Jack Nicholas Signature golf course, and 2 km of pristine Pacific Ocean coastline. Some resort developments are located near rivers, which can be preferable to the ocean, for in some areas there may be riptides which present dangerous swimming conditions for your six year old.

Also, the ocean views in some areas are cloudier and less colorful than river side developments. It is also important to note that some of the older developed communities, in trying to attract a wider target of buyers, offer a flexibility to design/customize your own home, which often presents a lack of foresight in keeping with design integrity. For example, situations have occurred in some areas where a buyer has built their dream home, replete with ocean view, only to have a neighbour build a home later that blocks their ocean view.

I have presented the regions of Panama that are experiencing the most searches, enquiries and sales as driven by the global consumer market. The ramp up of this can be seen in the last six months, and can be expected to continue into the future.

Although we are currently experiencing the worst global financial situation of my lifetime, I can report that the malls around Panama City are bustling with people and commerce and the economy has grown 8.3% this past year to date, November 2008. And, the country continues to grow.

As a result of its infrastructure and careful planning, Panama can handle the growth and dramatic increase in tourism in a responsible manner and with style, as opposed to playing catch-up or having to compensate the integrity of the nation, or the environment, as have other regions of Latin and South America.

Having traveled the entire country extensively, I have eaten a multitude of cuisines, had meals on the fly, and drank water from the tap and all without illness or worry of illness. And, I can easily travel throughout this beautiful country due to the well maintained paved roads which provide access to even the most remote regions of Panamas. And, most important to me, both my money and my family are completely safe in Panama.

The article completes with a 5-paragraph marketing blurb on The USA Realty Group.


If 2008 was the year of the financial crisis, 2009 will be the year it got personal.

The basic financial fact that Americans have been collectively living beyond their means for a long time is now obvious to everyone. The means by which this was accomplished -- buy now/pay later on a massive scale, i.e., credit -- is getting challenged as an institution and basic M.O. at its very core.

Concommitant with the whole concept of credit is a vast quantity of supporting beliefs and enabling institutions. The beliefs and enablers are wobbling. Dan Denning suggests here that "2009 will be the year when a lot of previously and thoughtless held beliefs are discredited" -- thoughtless in the sense of accepted at face value without concious consideration, he means.

What the post-credit-mania world, a "credit depression," looks like in the real economy behind the great obfuscating money curtain remains to be worked out. We are fairly certain that much of the past decades' investments in retail space and consumer goods and services provision will have to be reconfigured into capital and export goods producing capital stock, some way or another. Meanwhile the politically connected losers in the transition will try to wiggle and squirm their way out of their predicaments at the expense of the rest of us, as always. The evidence is in the papers every day.

Denning here ruminates on how the cascading credit shrinkage will play out.

Here they come. At the end of 2008, all the social and personal signs of a real depression were absent. They are making themselves present now. The suicides, the frauds, the job losses ... they are all on the front pages of the papers now. If 2008 was the year of the financial crisis, 2009 will be the year it got personal.

We will borrow a term from a reader on the message board which seems apt. It is the credit depression. This amounts to a depression in the belief that tomorrow will be better than today. More on what this means economically in just a moment. But first, to the dictionary!

In Latin, a creditum is a loan or thing entrusted to another. The Latin for "to entrust" or "to believe" is "credere." The word "creed" also has similar origins, as you can see.

So a credit depression is a period when belief or trust in a set of ideas falls to new lows. The basic creed itself (for example, the idea of fiat money) might even be, ahem, discredited.

We would suggest that 2009 will be the year when a lot of previously and thoughtless held beliefs are discredited. Just ask Ramalinga Raju, the previous head of Satyam Computer Services (NYSE: SAY). Satyam is India's 4th-largest software export services firm.

Raju is the former head of Satyam because he quit last week after telling investors the company's profits had been falsely inflated for years. The stock price fell by nearly 80% after the lie was disclosed. He said about $1 billion of the company's so-called cash -- or 94% of the total on the books -- was a complete fabrication (from the Latin fabricare, to fashion or to build).

Now we are finding out how much of modern commerce and economic activity has been built on a lie. That is why etymologies are so useful. The names of things and what we actually call them tell us something about their nature (if they are aptly named). In these days of 24/7 news and digital media, we drift away from the origin of things and have little time to question where they came from. ...

In any event, the credit depression is upon us. Raju, Madoff, Adolf Merckle ... these are just the poster boys for the crisis. The collapse in real asset values and real wealth is going to cost a lot of people a lot more. But then you have heard that before from us, so we will not dwell on it.

In Australia you will not find a lot of obvious signs that the credit depression is upon us. After all, the National Australia Bank used the Rudd government's guarantee of bank debt to raise $3.5 billion from U.S. investors yesterday (January 12). ANZ has managed to borrow $3.7 billion as well. In fact, according to Eric Johnston in today's Age, Aussie banks have used the guarantee to secure over $37 billion funding.

But what does this really mean? "Secure funding" is just another way of saying "borrow money." To the extent that the money is raised overseas, it is both good and bad. It is good if you believe it shows that foreign lenders trust the Aussie government guarantee and loan the banks money.

It is bad, however, in that Australia banks are importing capital from foreign lenders. Capital is an increasingly scarce resource these days. And though the banks have been able to borrow, it has been at higher rates than this time last year. How much of the foreign-sourced capital is going to make it back to Australian borrowers (both business and household?) Hmmm.

And what about the retail economy? November retail sales figures were better than expected. But according to Steve Scott in today's Financial Review, once you strip out food sales from the figures, it was actually the worst November on record for retail sales. Ouch.

"How bad do you think it will get," asked a friend in an e-mail yesterday. Our friend has a Master's Degree in Classics (Latin and Greek). We know that when he starts wondering what is going on in the economy there are probably a lot of other people starting to sit up and question their basic economic beliefs too. Here is what we told him.
"First, our long national love affair with debt is over. When you first fall in love, you are happy to ignore all the little blemishes, faults, and habits that later drive you insane. The dependence on revolving credit, home equity lines of credit, and zero percent financing did not seem like a bad thing as long as people had steady incomes and could pay the interest.

"But now, asset values are falling ... but the principal on the debt remains. People will shake themselves vigorously and wake up to the credit depression we live in. They will learn to live within, or even below, their means. Wherever that level is, it is a lot lower than today. The upside is that it is probably more natural and relaxing and less stressful. Stress kills the brain. So people may be poorer and hungrier. But some of them may actually be happier. Not all, mind you.

"Second, as people dial back their spending and consumption habits, it sends ripples throughout the economy. For example, tomorrow's jobs figure in the U.S. will likely be the worst in 60 years. Over 700,000 Americans will have lost their jobs in December. This is on top of 400,000 in November.

"A million people axed in two months. Job losses result in fewer incomes, and incomes are the source of business profits. As jobs and incomes fall, so do business profits, and thus business hiring. A feedback loop.

"Plus, in these kinds of times, people save more and spend less. In an economy based on consumption (not production) lower levels of spending are bad for stocks and jobs. The government will try to fix this by giving people more money to spend. But the problem is not with people. It is with the model. An economy structurally oriented to consumption is not one that produces real wealth or long-term capital assets. It just produces people who have debts they cannot pay, albeit in a house with a nice TV and great digital programming.

"As household and business consumption (spending) fall, the government, under the banner of Keynes, will take to the field en masse. The armies of Fed money will be deployed, street by street, to patrol the economy in little platoons of stimulation. The ammunition for these armies will come from either Japanese or Chinese savers (via bond purchases) or from nowhere (the Fed creating more money).

"Either way, the result seems unambiguously bad. If borrowed, the stimulus money must be repaid, and presumably at increasingly higher rates of interest the more rapidly America's fiscal position erodes. Either way, with interest expense already nearly 10% of the Federal budget, you can expect it to rise when the U.S. government has to pay interest on a trillion dollars of new borrowing.

"To meet these interest payments, the government is going to have to raise taxes or cut spending. Of course that is hard to do when you are deliberately spending more to begin with. If spending is going to be cut, it would have to be from Defense, or Social Security and Medicare/Medicaid benefits (raising the retirement age, means testing benefits).

"But even with more borrowing and higher taxes, it is likely the Fed is going to have to simply print new money to conduct its unconventional monetary policy. Money supply will grow. And what does that really mean? Inflation. Much higher inflation. Rising prices for everyday goods like food and fuel and clothes.

"Inflation is also a huge tax on savers and those who live on a fixed income. You know, the prudent people who saved for their own retirement. Inflation accelerates the depletion rate of their accumulated savings by steadily reducing purchasing power. $10,000 saved in 1970 ain't what it used to be. This should be good for gold, however.

"As inflation punishes those living on a fixed income, it will also push them closer to needing some sort of government aid. This in turn raises the percentage of federal spending going to Social Security and Medicare and Medicaid. It is a transfer of old age and pension provisions from the private sector to the public sector.

"But can America really afford it? Clearly not, which more than sucks for people who have lived their whole adult lives believing they would be able to retire comfortably through a combination of a diversified portfolio and a supplementary check from the Social Security Administration.

"It is looking more and more like the entire project of spending a quarter of your adult productive life idle and living off the income generated from your assets (houses, stocks, savings) is ... well ... dead. It simply ain't gonna happen for most people. And by most, we are talking 99%. People will work longer, harder, and leave leaner and meaner than they ever thought they would have to.

"The rest of the world will not be ready to continue funding America's desire to live beyond its means. Why would Chinese and Japanese savers continue to invest in U.S. bonds and notes (effectively keeping U.S. interest rates low AND loaning Uncle Sam the money he needs to keep the promises he has made?)

"In a world where investors are focused only on annual rates of return on their capital, you could argue that global savers would pour money into the U.S. government bond market now and until the cows come home. It is the safest bet in the world.

"But that is not the world we live in anymore. In the world in which we live -- the one with a credit depression -- capital (accumulated savings ... or surplus income from your hard work) is a scarce and jealously guarded asset. You have to reckon people will be more worried about the return OF their capital than the return ON their capital.

"All of which means America's days of borrowing at low rates of interest from the rest of the world in order to build an economy based on buying things ... are over. So you should find a job with a real skill that people are willing to pay for. Get your money out of stocks (though they will bounce in the next few months probably). Look for a home you can really live in and want to own (and aren not trying to flip). But generally, your greatest assets will probably be your real skills that can be traded for goods or services (and not financial instruments you hold in a portfolio). It will be hard for people to live off income generated from financial assets ... mostly because those assets are going to keep falling in real terms for quite a while.

"So that is how bad it could be. But human beings are hardy and resourceful. We will find a way to put food on the table. Speaking of which, it's lunch time! Gotta go!"


2008 company formations off 20% from 2007.

The BVI are one of the most popular jurisdictions for incorporating IBCs. Company formations were noticeably down last year over the year before, but 2008 was still the 3rd best year ever. Blame is place on the global economic downturn, rather than the increasingly vicious anti-offshore campaigns for the OECD et al.

The government of the British Virgin islands is reporting a slowdown in the growth of new incorporations in the financial services sector but there is optimism about the future.

Premier and Minister for Finance Ralph O'Neal made the disclosure as he responded to a question posed by the Leader of the Opposition during the third sitting of the second session of the First House of Assembly of the Virgin Islands.

O'Neal said while "2007 was a year of unprecedented growth with approximately 75,000 new companies formed, 2008 was not as robust as new incorporations were down 20% at the end of the year."

While the full magnitude of the impact of the global economic down turn on the BVI's financial services industry is still to be assessed, the Premier said "2008 was a year of little or no growth in financial services."

However the Premier believes there is reason for optimism. "Preliminary analysis suggests that the Registry is poised to record its third best year to date in respect of new incorporations and revenue for the corresponding period has not fallen as sharply," O'Neal told the House.

The Premier revealed that captive insurance and mutual funds are likely to be most affected by the global economic downturn.

He stated that "the [Financial Services] Commission has already seen evidence of this in the increased number of requests by funds for voluntary cancellation and by notification of suspensions of redemptions as well as a downturn in the number of new applications for recognition."

Based on this, the Premier hinted at the possibility of "minimal growth in these types of structures particularly in the first half of this New Year."

The global economic climate also appears to have impacted the tourism industry. Preliminary statistics for 2008 show a decline in stay-over arrivals. "At this time, only information for overnight visits has been completed, and this provisional data up to October 2008, indicates a decrease in overnight tourist arrivals of approximately 22 percent from the same period in 2007," O'Neal said.

Financial services and tourism represent the twin pillars upon which the economy of the BVI is based and Government said it stands committed to ensuring the survival of these industries, which are essentially the engines of growth propelling the development of the Territory.


The latest twist on eminent domain: Seize someone’s property, and if he cries foul, sue him.

Overt theft of private property by governments, the rich getting richer on the backs of the less well-off, abuse of legal process ... eminent domain procedure and battles have all of these. Now if the people who are being robbed fight back they can get sued for just speaking out. The real issue is the ridiculous "just-us" system in the U.S. Expect plenty of outrage by those whose being robbed, and lots of mealy-mouthed bobbing and weaving by those who benefit. Do not expect the system itself to be challenged, or even fingered.

As if seizing private property were not enough, municipal bureaucrats and real estate developers are now suing to silence anyone who gets in their way. In Clarksville, Tennessee developers Richard Swift and Wayne Wilkinson claim they were defamed by a citizens group that opposes their city-sponsored plan to seize hundreds of homes and businesses. They are seeking $500,000 in damages. In St. Louis the city grabbed 24 buildings owned by a housing ministry called Sanctuary in the Ordinary, cited the group for illegally displaying a mural ("End Eminent Domain Abuse"), then denied its application for a sign permit. Sanctuary has sued the city for abridging freedom of speech.

In January a jury trial began in the defamation suit brought by Dallas oil heir and real estate developer Hiram Walker Royall against Wright Gore III, whose family runs shrimp wholesaler Western Seafood in Freeport, Texas. In 2002 Freeport wooed Royall with a plan to turn his family's land into a boating marina. Royall kicked in $750,000 worth of land. The city, which shares a building with a bank owned by Royall's extended family, lent $6 million for 25 years at 4.84%. All very cozy -- except that Royall also wanted a 300-foot ribbon of land owned by Western Seafood, a $30-million-a-year business. Royall offered $270,000. The Gores figured they would need $1.3 million to reconfigure operations. In 2004 the city moved to grab the land under eminent domain (and pay a court-approved price), then turn it over to Royall.

The Gores sued Freeport in federal district court to block the seizure. The city sued the Gores in state court. Wright Gore took his cause public, renting billboards, handing out leaflets and launching a provocative Web site. Then came the defamation suit. Royall, 38, "has experienced mental anguish and loss of business reputation," says his attorney Patrick Zummo. Royall -- whose great-grandfather cofounded Humble Oil, now part of ExxonMobil -- will not talk. In a 2008 deposition he claimed Gore's attacks were "designed to ... make people think that I am just a rich jerk." Gore, 35, whose family has spent $700,000 defending itself, is not so reticent. "Walker Royall is a bully and a thug and a coward," he says.

The fracas attracted Carla Main, an editor at the National Law Journal. In 2007 she published Bulldozed: "Kelo," Eminent Domain and the American Lust for Land. The book alleges sweetheart deals between Royall and city officials plotting to get the Gores' land any way possible. Kelo was the homeowner in the famous 2005 case of Kelo v. City of New London, wherein the U.S. Supreme Court ruled a city can condemn private land and hand it over to developers. Royall filed a defamation suit against Main, her publisher, a legal prof who wrote a blurb for the book, a reviewer and two newspaper companies.

The Gores won the federal and state suits by 2007. The city's cases against them remain on appeal. Litigation continues on Royall's suit against Main. As for Royall's joust with Gore? It was settled mid-January. The Gores' insurance companies shelled out some $300,000, having extracted a promise from Royall (who is halfway through building the marina) never to go after their land again. Says Gore: "I cannot, have not and will not apologize to him."


Making New Years resolutions is not a proven technique for goal achievement success. Instead try this set of ideas from entrepreneur, coach and public speaker Arvind Devalia, author of Get the Life you Love and Live It and Personal Social Responsibility. Some of the advice may seem rah-rahish or hokey, but to dismiss it on account of this would be cheap cynicism. There are plenty of ideas and people who are worthy of your cynicism. People who cheerfully try to make the world a better place by persuasion rather than force are not among them.

2009 is now here and it is time to start planning for this New Year. Just what do you want from the coming year? How sure are you to achieve your New Year resolutions?

Getting a fresh start with the New Year is an artificial custom -- you can begin to get the life you love and live it at any time you choose. But let the first couple of weeks of January 2009 be the starting point for a new you. Envision yourself at the end of the year and describe at least 3 achievements you would like to have achieved to make you feel that 2009 had been a successful one.

Maybe this year you are going to find work that you love. Or you may want to excel even more at the job you love. How about getting a good balance between your work and leisure time? What about galvanising your financial situation? How about finding and committing to a dream relationship?

How can you make the most of your life through the so-called credit crunch?

Get motivated right now to make the most of 2009 and indeed the rest of your life. Believe in yourself. Know that you can do and have anything you want. Ooze with self belief and others too will believe in you. Go all out for it in 2009!

Here are some tips to help you achieve your goals and to make 2009 your best year ever.

1.) Spend some quality time on your own and reflect on your goals in all areas of your life -- short, medium and long term. Write these down -- you increase your chances of materializing them, once written down. Be very specific, and as descriptive as you can.

2.) Write down your three main goals in big bold letters and hang up next to your bedside, in the kitchen, by your PC, etc. Having them visible like this keeps in the forefront of your mind exactly what you need to achieve by when, and what you must do to make it happen.

3.) Identify quickly the key steps in the first three months of 2009 to move you towards your goals. Make the steps realistic for the time frame, but ones that stretch you at the same time. Track your progress on a regular basis, maybe on a daily, weekly or monthly basis.

4.) Create an action plan and take regular action. Start today and if possible, start right away. Take that first step -- you will immediately generate a lot of enthusiasm and confidence in this and other areas of your life. Do not wait around to be inspired -- just get on with doing things, even if it is a small step and that will lead to further steps.

5.) Look at your life in a new way. For example, plan to make all the money you need in 2009 within the first six months. Develop a new theme for the year such as making it "debt free" or "most chilled out ever". At the same time, ensure you give yourself enough nurturing time -- book your holidays right now and plan to spend quality weekends with your loved ones.

6.) Let go of things that drain you. Look at those situations, places, people or anything else that drain your energy, and eliminate them gradually.

7.) Establish a support team around you. Make yourself accountable to someone who resonates with your goals and will support you in achieving them. Find like minded people - and develop powerful, supportive and energising relationships. This may require you to upgrade your friends and build new relationships.

8.) Learn from your role models. Emulate those who have already achieved what you are aspiring to. Apply their lessons and principles to yourself, and thereby fast track your achievements in 2009.

9.) Spruce up your image. Look at everything about you such as your clothes, haircut and other things about your personal brand. Start giving the impression of being successful and you will be during the course of 2009.

10.) Keep your cool and chill out. You may get overwhelmed at times and find that there is just not sufficient time for everything. Review your commitments and priorities and refocus on the most important steps.

11.) Celebrate your successes. Acknowledge yourself and know that you are doing really well. Reward and pamper yourself. Choose to celebrate in the best way for you.

12.) Find ways to excel and to improve yourself. There are numerous self help resources around you such as books, magazines, websites and so on. Make 2009 the year that you evolve, grow and fulfil your potential.

Most importantly remember at all times to be kind and gentle with yourself in 2008. Have patience and let your life unfold like a budding flower. Laugh a lot -- after all life is meant to be fun. Develop a sense of humour and do not take life so seriously.

It is never too late or too early to have a great year. Start 2009 the way you want to carry on during the rest of the year.

I wish you all a fabulous New Year. Make 2009 your best year ever. Get the life you love and live it -- you know you deserve it.

Here are my final words for you to inspire you in 2009 -- and for the rest of your life:
Remember that your life counts -- and make it count. You are unique. There is no one like you on this planet. Never has been and never will be.

Do not sell your self short. Do not sell the world short. This is your life -- love it, live it. One life, one chance -- grab it.

Get the life you love -- and live it."


In the kickoff Offshore News Digest of 2009 we included a post from the Lifehack website on their most popular, judging by quantity of comments, technology articles from 2008. Here is their list of the 80 best "lifehacks" of 2008, period.

And so we arrive yet again at the end of another year. 2008 was at best a mixed bag -- while the world was electrified by the U.S. election and its promise of change, the global economy was shaken to its core as a decade of financial mismanagement and willful blindness finally caught up with us. Gas prices spiked, leading us all to ask some difficult questions about sustainability, efficiency, and consumption -- and then plummeted, leaving us feeling somewhat relieved, but baffled by the unpredictability of it all.

As we roll into 2009, there is an atmosphere of suspenseful anticipation, of hope mixed with not a little uncertainty. Companies are streamlining to prepare for the worst, even as entrepreneurs look ahead to new opportunities. Overall, it seems that now is a time for shaking off the dust, clearing away the debris of the past, and looking towards the future.

Here at Lifehack, we have always followed a path of cautious optimism. Plan for the worst, but work for the best! 2008 has seen the arrival of a host of new contributors, as well as two new contributing editors, Thursday Bram and Joel Falconer. Together, we have continued to bring you the best tips, advice, and recommendations across the field of productivity, helping with everything from managing your to-do list to managing your career.

Here, then, are the best posts of 2008, selected according to their popularity and the amount of discussion they generated both here on the site and across the blogosphere. Contained in these posts is a healthy dose of the wisdom, direction, and skill you need to move forward into a successful 2009!

  1. How to Build Credibility on the Web
    14 ways to make sure that your voice is the one people pay attention to among the anonymous masses on the Web. (Dustin M. Wax)
  2. 7 Little Tricks To Speak In Public With No Fear
    Most people are terrified of speaking in public. With these tips, you do not have to be. (Mohamad Zaki)
  3. How to win Arguments - Dos, Doníts and Sneaky Tactics
    Helpful tips to come out on top when it matters. (Paul Sloane)
  4. The Value of Writing Well
    Improve your writing skills to make yourself a better thinker, a more compelling speaker, and all-around better person. (Dustin M. Wax)
  5. Be Heard. Speak Plainly.
    Tips on making yourself clear -- and persuasive. (Dustin M. Wax)
  6. How to Write in 140 Characters or Less
    The future of writing is Twitter. Here is how to make yourself understood in today is micro-media. (Dustin M. Wax)
  7. How to Write (in a thousand words or less)
    17 tips to help make you a better writer. (Dustin M. Wax)
  8. The Ultimate Writing Productivity Resource
    Software, web apps, websites, and other essential resources every writer should know about. (Dustin M. Wax)
  9. How to Write a Business Letter That Gets Results
    Writing a business letter is more than just following the right format -- though that helps, too. Here is some advice on how to nail your business correspondence. (Dustin M. Wax)
  10. 10 Tips for More Effective PowerPoint Presentations
    Everyone hates PowerPoint presentations, but they will not hate yours if you follow these tips. (Dustin M. Wax)

To be continued in the next OS News Digest ...


Building redundance into your personal productivity technology redundantly.

The modern world relies an awful lot on complex systems performing reliably on demand. What about when all the stuff that is supposed to arrive "just in time" is suddenly not there? Be aware that if you move overseas to some less than fully developed country you may well be dealing with a situation where what you are used to taking for granted is no longer automatically there.

If you get freaked out when your electricity goes down for more than 15 minutes you ought to consider the suggestions here, which come under the general categories of having alternative access to critical information which would be inaccessible if the power or other critical piece of infrastructure goes down, and having an alternative way to perform critical functions if a piece of essential technology malfunctions.

Your computer crashes. It will not start up again. What do you do? Nothing productive. The morning is wasted, the technician comes and tells you that you need a new hard drive, and your afternoon is gone too while you go shopping for a new one.

There are a million variations of this scenario. We put ourselves in a precarious position when we rely totally and completely on technology to maintain our productivity systems and execute the tasks we set for ourselves with them. Technology gives personal productivity steroids; everything's faster. Most of us can type faster than we write and using email as a form of day-to-day communication allows us to drastically reduce the number of disruptive conversations and phone calls we receive each day. So we learn to rely on technology, so much so that when it fails -- and it does -- we can be left speechless when asked the old question, what is the next action?

Two years ago I was in such a position. My task management system was a text file stored locally on my computer. A computer that failed with disturbing regularity. It would not have mattered if I stored my task management system in a Google Doc. At the time I did not have another computer, nor an iPhone, and anyway, what if Google Docs went down?

We need to learn to rely less on technology. And I do not mean we should ditch our computers as the hub of our productivity system, but we need redundancy. Redundancy for the system, and redundancy for the situation.

Redundancy for the System

Redundant systems are systems that ensure that a problem with any single component does not cause problems for other components or the system as a whole. This is usually done by doubling up on components; either the same component in a different place (such as off-site backups), or simply the same component in a different medium that is unrelated to the first.

So you could keep copies of your task list on two computers and ensure they are always up to date in case one of them goes down. You could depend on Time Machine (if you are on a Mac) to provide this sort of redundancy for you, or keep a copy in Gmail or Google Docs, or best yet (if not somewhat obsessive), all of the above. Or, you could write the list down on paper and email a copy of your computer's list to your phone.

When it comes to computer-based systems, synchronization between multiple devices is a good start. But it is also a good idea to keep a copy that does not rely on electrons. Your power could go out for hours (the same day you forgot to charge your laptop and phone the night before). Anything can happen with these solutions, whereas if you have written or printed things out, the system is a lot less fickle. Someone you live with could accidentally throw your task list out or your house could burn down (in which case the last thing on your mind will be whether your task list is okay) but it is much less likely you will lose access to both your online and offline copies at once.

Redundancy for the Situation

The other problem with relying on technology too much has to do with execution. Even if you have got your task list on a piece of paper once the power goes off, what do you do? Nothing, if you have not planned for it. One of the excellent tools that many productivity systems provide are some sort of variation of GTD's Contexts, and they are useful in exactly this sort of situation (among others).

In almost any project, there is usually some task that can be done without the help of a computer -- even if using a computer would, under normal circumstances, be the best way to go about it. The idea is that if you have got your contexts set up properly, when you do not have access to a computer, you use a context set up for offline work. No Internet connection, switch out of your @internet context and into something else. If you have got a fair bit that can be done offline, just make an @offline context and switch to it when you need it. You can use multiple contexts on a single task, too. If your work should be done on a computer but can be done without one, you could attach an additional @offline or @nopower context that works as a secondary to the task's usual context.

It is mostly a matter of personal taste as to how you set your system up to adapt to unexpected changes, but the bottom line is that you should plan ahead for these situations and be ready to go with a list of things that can be done in the meantime.

Contexts is about having a productivity system to include and suit the environment you are in and the tools you have available. Consider technological failure of any kind as just another environment. Planning ahead for something to go wrong is not being pedantic, it is smart, and it has even got a name in the public relations world: crisis management. Any good public relations team will have a plan in place for a crisis so that if anything happens, they can move straight into action. There is no reason you cannot do this with personal productivity.

It is much easier for us than it is for PR guys. During your weekly review, while you set up new tasks, just scan through your list, and slap a context on anything that can be done offline. Easy -- takes a minute or two longer than your weekly review usually does. You could go weeks or months without using it, but it will be well worth it when the time for technical failure comes. Instead of having your sense of the day's work set off course by this "disaster" and sitting there with a confused expression, you will be back up and running in no time. That is what redundant systems are all about.


Might it be the case that the inside of Windows has not changed very much because there is nothing to invent in operating systems?

We are among the many critics of Microsoft and its Windows operating system (e.g., see here), even as we mostly use Windows for day-to-day operations due to heavy reliance on certain Windows-only applications we are reluctant to part ways with. With market acceptance of Windows Vista apparently terminally muted, Microsoft has all but thrown in the towel on Vista and promised a new version -- Windows 7 -- which demonstrates they do not have a totally tin ear.

We have seen quite a few favorable reviews of alpha/beta versions of the new operating system, such as "more XP than Vista" (that works for us), one of which we have posted below. Improvement or not, a legitimate question is whether Microsoft (and Apple, the Linux and BSD coders, et al) should concentrate on making the underlying code more efficient, less buggy, and more secure rather than trying to convince us that what is not really broken needs fixing. Forbes technology writer Lee Gomes put that question to Linux kernel benevolent dictator for life Linus Torvalds.

Thanks to technological progress, including but not limited to faster and cheaper storage, OS writers have to do more than refine their past work. As the Gomes points out, with its code visible for all to see, Linux takes a "show me" approach with all its would-be improvements versus Microsoft's "trust me" approach. "Trust, but verify" is not an option with Microsoft.

Historians of science will tell you that the moment someone complains there is nothing left to invent, an explosion of creativity will surely follow. It is fate's way of reminding us that there is always something just over the knowledge horizon.

Which is why I decided to tread lightly with Windows 7, the new version of Windows released for a free trial earlier this month. It seemed less a new operating system than a new user interface, as if a car company was selling last year's car but with a new dashboard. Most of the commentary about Windows 7 involved its new "taskbar" at the bottom of the screen. It is the sort of feature that can wow in a demo but often does not wear well in day-to-day usage.

It is hard to know if there is anything new in the guts of Windows, because it is closed to outside inspection. To the extent Microsoft talks about it, the company is skimpy on the technical details but heavy on the marketing. (Please note, Mac fans, that Apple is not too different in this regard.)

Might it be the case that the inside of Windows has not changed very much because there is nothing left to invent in operating systems? I decided to ask the one person on the planet who is responsible for a big operating system and who will talk about it in complete technical detail: Linus Torvalds, the 39-year-old Obi-Wan Kenobi of the free Linux operating system.

His answer to the question of whether anything in 2009 can really be new: No. But also, yes.

"It is quite hard to make a big difference in an OS, since the OS itself is not supposed to be doing much," he says. "It is supposed to be this interface between applications and the hardware, and since people have been using computers and operating systems for a long time, there is seldom a whole lot of new things that are worth doing. Many fundamental OS issues were mature technology decades ago. That is one reason you will find Microsoft and Apple competing in the looks department."

Change, though, has come to Linux and other operating systems. But it has come on little cat feet, often prompted by changes in hardware. One example is storage. Disk drives are getting huge, and while they remain relatively slow, they are often supplemented with speedy flash RAM. Small, hypertechnical changes are needed in the Linux kernel to deal with each of those new components. Changes like this: "Data structures that map the extent of blocks, rather than enumerating each block mapping individually," explains Torvalds, though of course you probably already knew that.

It is much the same for an aspect of Linux in which Torvalds takes great technical pride: the way the operating system provides support for a computer with hundreds, or even thousands, of microprocessors. "There are bottlenecks, and the devil is always in the exact details of what you are doing, but on the whole we really do very well," he says.

Torvalds spends all his time concentrating on the "boring but important" parts of Linux, which in its base state does not even have a user interface, though of course quick, popular ones, such as the Gnome and KDE, are readily available. While he is doubtful of its value, Torvalds boasts that Linux does desktop bling with the best of them.

None of this is to suggest -- Torvalds certainly does not -- that Windows programmers are not engrossed in these very same technical issues. But the contrast in styles could not be starker.

Since it is open for all to see, Linux takes a "show me" attitude to its improvements. They are visible, in all their boring technical splendor. (They also, we now know as a result of several preposterous lawsuits being rejected by the courts, do not contain code stolen from anyone else.) The logic of Linux's slow, steady construction of a solid technical edifice can be plainly traced.

Windows, by contrast, says, "Trust me." Which is often hard to do because, to an outsider, software development at Microsoft seems to lurch from one crisis to the next. Too often you get the sense you are being asked to buy a new product solely to fix the problems you had with the last one.

Windows 7 is months, maybe years, away from being released, and Microsoft still has plenty of time to explain its virtues to the world, as well as why the software will be worth however many hundreds of dollars the company will be asking for it. As (mainly) a Windows user, I will be listening carefully. I will pass along to Obi-Wan anything the Windows guys have to say.

Even in Test Form, Windows 7 Leaves Vista in the Dust

This will be a big year for new operating systems. Apple plans a new version of its Macintosh operating system, to be called Snow Leopard. Palm plans an all-new smart phone operating system called Palm WebOS. But the new release that will affect more users than any other will be Windows 7, the latest major edition of Microsoft's dominant platform.

Microsoft has not announced an official release date for Windows 7, but I would be surprised if it was not available to consumers by this fall. The company has just released the first public beta, or test, version of the software, and I have been trying it out on two laptops. One is a Lenovo ThinkPad lent me by Microsoft with Windows 7 already installed, and the other is my own Sony Vaio, which I upgraded to Windows 7 from Windows Vista.

I will not be doing a full, detailed review of Windows 7 until it is released in final form, but here is a preview of some of the main features of this new operating system and some of my initial impressions. In general, I have found Windows 7 a pleasure to use. There are a few drawbacks, but my preliminary verdict on Windows 7 is positive.

Even in beta form, with some features incomplete or imperfect, Windows 7 is, in my view, much better than Vista, whose sluggishness, annoying nag screens, and incompatibilities have caused many users to shun it. It is also a serious competitor, in features and ease of use, for Apple's current Leopard operating system. (I cannot say yet how it will compare with Apple's planned new release, as I have not tried the latter.)

In many respects, Windows 7 is not a radical shift from Vista, but is more of an attempt to fix Vista's main flaws. It shares the same underlying architecture, and retains graphical touches like translucent Window borders. But it introduces some key new navigation and ease-of-use features, plus scores of small usability and performance improvements -- too many to list here.

The flashiest departure in Windows 7, and one that may eventually redefine how people use computers, is its multitouch screen navigation. Best known on Apple's iPhone, this system allows you to use your fingers to directly reposition, resize, and flip through objects on a screen, such as windows and photos. ...

But even if your current or future PC lacks a touch screen, Windows 7 will have plenty of other benefits. The most important may be speed. In my tests, even the beta version of Windows 7 was dramatically faster than Vista at such tasks as starting up the computer, waking it from sleep and launching programs.

And this speed boost was not only apparent in the preconfigured machine from Microsoft, but on my own Sony, which had been a dog using Vista, even after I tried to streamline its software. Of course, these speed gains may be compromised by the computer makers, if they add lots of junky software to the machines. Windows 7 is also likely to run well on much more modest hardware configurations than Vista needed.

The familiar Windows taskbar is more customizable and useful in Windows 7. The program icons are larger, and can be "pinned" anywhere along the taskbar for easy, repeated use. There are also "jump lists" that pop out from the icons in the taskbar and start menu, showing frequently used or recent actions. ...

Windows 7 also cuts down on annoying warnings and nag screens. Microsoft notifications have been consolidated in a single icon at the right of the taskbar, and you can now decide under what circumstances Windows will warn you before taking certain actions.

Compatibility with hardware and software, which was a problem in Vista, seems far better in Windows 7 -- even in the beta. I tried a wide variety of hardware, including printers, Web cams, external hard disks and cameras, and nearly all worked fine.

I also successfully installed and used popular programs from Microsoft's rivals, such as Mozilla Firefox, Adobe Reader, Apple's iTunes, and Google's Picasa. All worked properly, even though none was designed for Windows 7.

But there are some downsides to Windows 7. First, you will only be able to directly upgrade Vista computers to the new version. People still using Windows XP will need to perform a more cumbersome multistep process. Microsoft is working on a method to help XP owners preserve all their data during this process.

Second, Windows 7 will eliminate some familiar bundled programs from Windows. Vista's Mail, Calendar, Photo Gallery, Movie Maker, and Address Book programs are being removed. To get similar basic, free, programs, you will have to download them from Microsoft's Windows Live service, or use alternatives from other companies. Microsoft defends this move as supporting consumer choice and better coordination with Web services, but it does remove out-of-the-box functionality from Windows.

Still, even in its preliminary form, Windows 7 looks very promising, and could well help expunge the bad reputation of Vista.


Never Cheat a Cheater

Billionaire Igor Olenicoff claims UBS and advisers misled him.

Getting hired help to follow orders can be hard, even if you are a billionaire like Igor Olenicoff. He is the Orange County, California real estate mogul who pleaded guilty in 2007 to a felony and paid $52 million in back federal taxes, interest and civil fraud penalties to settle charges he hid offshore accounts from the IRS. Olenicoff, who avoided jail, is now cooperating in a criminal investigation into whether Swiss bank giant UBS helped thousands of other well-heeled Americans hide assets and evade U.S. taxes.

Olenicoff has other work for the legal profession. In an amended civil lawsuit seeking $500 million from UBS and 29 others, Olenicoff claims, among other things, that the defendants, led by ex-UBS private banker Bradley Birkenfeld (who has pleaded guilty to tax conspiracy), violated Olenicoff's explicit instructions in 2001 to invest his $200 million-plus of offshore assets conservatively in solid, publicly traded shares and bank-issued debt. After Birkenfeld left UBS, taking the Olenicoff portfolio with him, some of Olenicoff's money was used to buy what the lawsuit describes as dodgy illiquid stocks that have since collapsed. Defendants admit no liability.

Olenicoff says in filings that he learned about these specific holdings only after he moved assets back to the U.S. in 2008 as part of his tax plea. The lesson for investors: It is hard to keep a close eye on money managers operating offshore, especially when you are busy looking over your shoulder for the IRS.

Luxembourg Decries French Madoff Claims

Never miss an opportunity to tar Luxembourg is the motto of the high-tax EU states who do not like Luxembourg's penchant to defend its financial services industry by fighting for client privacy, and things like that.

Luxembourg hit back ... at French suggestions that the Grand Duchy's more flexible interpretation of European Union financial regulations had contributed to investors' losses in the $50 billion Madoff scandal, saying Paris did not know what it was saying. Luc Frieden, treasury and justice minister, told the Financial Times that the French government had made the claims "without properly informing itself."

He added that he saw no pressing need to reinforce Europe-wide protection for investors in investment funds, although Luxembourg would support such an initiative if the need were clearly demonstrated.

Christine Lagarde, French finance minister ... sent a letter to Charlie McCreevy, EU internal market commissioner, and Jean-Claude Juncker, Luxembourg's prime minister, calling for an overhaul of European rules on investment funds.

Ms. Lagarde suggested Luxembourg and some other member states had applied EU rules much more loosely than France. The letter was prompted by mounting anger in France over the role of the Luxembourg arm of UBS, which delegated some custodian responsibilities for its two Madoff feeder funds.

The Swiss bank is facing at least two lawsuits in Luxembourg from angry French investors, including one filed by the securities house Oddo et Cie.

Caribbean Nations Hit Hard by U.S. Recession

Hardest hit are those nations most bound to the U.S., such as the Bahamas and Jamaica.

Caribbean nations are trying to blunt the impact of the U.S. recession on their small economies by boosting tourism marketing, lining up credit overseas and pooling their limited resources.

But the islands already are seeing a slump in foreign investment, slower economic growth and dropping tourist arrivals, with 2009 likely to bring even tougher times, participants said at the annual Miami Conference on the Caribbean this week. That is bad news for South Florida exporters, who depend on the Caribbean as a steady market, and for millions of U.S. residents with Caribbean roots, who fear family and friends abroad could lose jobs and see crime spike. The fallout varies widely among islands in the world's most tourism-dependent region.

Hardest hit are those nations most bound to the U.S. economy, such as the Bahamas, which depends largely on U.S. tourists, or Jamaica, a debt-strapped nation that needs lots of dollars to pay bills. Nations like Barbados, with little debt and many European visitors, face fewer difficulties, panelists said. Oil importers, such as the Dominican Republic, enjoy some relief from falling energy prices. But oil exporters, such as Trinidad & Tobago, are seeing revenues slide and cutting spending, speakers said.

In Jamaica, economic growth has been virtually wiped out already, with growth estimates reduced from 3% to 0.5% for the fiscal year ending March 31st. That is despite new hotels, more visitors and increased tourism marketing.

Caribbean leaders said it is tough to blunt the fallout when no one knows how long the U.S. crisis will be or how deep.