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

W.I.L. Offshore News Digest :: October 2009, Part 4

This Week’s Entries :

BECOMING AN EXPAT: DO YOU HAVE WHAT IT TAKES?

You must really have a passion to want to abandon your current home in order to surrender to a new way of life in a new country. But then you have to get practical.

The Reverend Macarena Rose, featured frequently on these pages advocating on behalf of moving to Belize, has that rhetorical question for would-be expatriators. It is great to be all fired up about the prospect of a new life, leaving all your old troubles behind. But are you also able to take the setbacks, adjustments, and the inevitable broken illusions in stride? Ms. Rose did “plenty of research before” before making her own move. “ That has greatly helped me adjust easily and successfully to living here and starting my own business, as a single woman yet!”

So trust your passion ... but verify.

The Expat Dream Takes Hold

Do you have what it takes to become an expat? Part of the answer lies in you believing it – believing that you can succeed in an environment foreign to all of your life experiences. And, I am not referring to your perfect dream or fantasy land environment; I am talking about reality, because when you move to a new and foreign land you quickly become immersed in its reality, which believe me is 180 degrees from the place that you are leaving!

First off, you have to decide if you are a candidate to become an expat. Not everyone fits that mold, but one way to determine if you fit the profile and discover if an expat life should be part of your future is to take this little test ...

The Test
  1. Have you spent days at work trying to look like you are busy and productive – when you are actually fantasizing about becoming an expat!! (YES / NO)
  2. Are you staring at that computer screen with glazed eyes – but instead of seeing Excel spread sheets, you see yourself spreading your towel out on an exotic beach and an afternoon of blissful naps and naughty novels. (YES / NO)
  3. You think you are the next India/Indiana Jones on a mission to seek hidden relics in Mayan temples. Instead you are seeking new markets for the company. You give your sales pitch to the glazed eyes of potential customers – who are busy daydreaming about their own expat adventures. And thus, do not hear a word you say! (YES / NO)
  4. You dream about becoming a world famous botanist who will uncover new medicinal plants and new cures for mankind’s ills. Hey, that Nobel Prize might be next! (YES / NO)
Okay, that was all in good fun, but hopefully you get the point – you must really have a passion to want to abandon your current home in order to surrender to a new way of life in a new country.

That is exactly what happened to me and I found my passion to be Belize, which is such a unique and terrific country, and one you should take a serious look at as you evaluate the right place to make your expat dreams come true!

Expat On Your Mind

If you find yourself checking off even one “YES” on the test, it could be you are ready to explore more of living abroad.

You are not alone. Relocation abroad has become a very common syndrome in these financially insecure times when the thought of stretching your dollars makes you to want to stretch your life, too, and seek a way out. Who does not dream of becoming an escape artist and leaving it all behind for a saner life; a more satisfying and less stressful lifestyle you can easily afford. Imagine having something left over at the end of each month.

Who doesn’t want that!

No Rose-Colored Glasses Allowed

But fantasizing about becoming an expat is one thing – actually taking the steps to become one requires that you do your part beforehand. My recommendation is my mantra and it never changes ... do your homework.

We all love our rose-colored glasses and idealistic fantasies of what it is to live abroad. It is hard to let go of those glasses. But you must – for your own sake and well being. And believe me; you will actually feel better when you do.

Because when you decide to make that quantum leap to another culture, to go off to find another way of living on this earth, and to find one that is also affordable – it takes a lot of homework. So get ready to dive in to your research and to become involved in networking with those who have gone before you.

Like all potential expats, you have to research extensively and prepare yourself for not only the glorious thrills and perks of living abroad, and, yes, they are there waiting for you, but also you have to discover the down to earth realities of such a move. In that way you can gain the knowledge, facts and figures that will greatly help ensure a better experience for you and your loved ones. And, protect your wallet too!

You do not want any unpleasant surprises. By doing this all important groundwork beforehand and gathering reliable information, you will be prepared for the realities of becoming an expat.

My Own Challenges and Experience

Can I tell you again how unexpected my own journey to living in Belize was!! I was not even looking – it just happened, I had a chance to go for a visit, and I took it. It was done on a whim, a hunch and a sense that fate was giving me a push. That it was where I was supposed to be. There, Belize – it was as simple as that!

I could have ignored this opportunity. Instead, after doing my homework (there is that hint again), I chose to jump in with all my heart. And, included the kids and dogs as well!

Reflections of an Expat

I am so busy and happily immersed in this great new expat life, I do not even have time to step back and think about the life that came before. But, though I may have felt compelled to move to Belize, you can bet I did plenty of research before I did. That has greatly helped me adjust easily and successfully to living here and starting my own business, as a single woman yet! (That is another article in the future.)

I get asked all the time how I feel about being a genuine expat now. I can state honestly and with all my heart that I feel truly blessed to have Belize as my home and have made wonderful friendships here.

People are very curious about what I consider my greatest reward in being an expat. That is an easy question to answer. I have found the most satisfaction in following my heart to live in Belize. Instead of spending years wondering about it like so many people do, I took a chance on life, did my homework, too, and have never looked back.

What do I consider to be the biggest misconception about becoming an expat? Let me say it right up front – many folks leave their brain at the border. No doubt about it. But things are different in Belize and there are things you need to know and learn. That learning will stand you in very good stead and provide the basis for your successful and satisfying move to Belize.

I am always queried as to some of my favorite places here. And, I frequently answer – I love the pyramids and the barrier reef. There is so much to see and do in this glorious country, but those two places really grab my heart and thrill me every single time.

And if I am not traveling about, what is a favorite form of recreation? Oh, how I love to spend time with my friends. (And here, there is time to do it because it is a valued part of everyday life!) Also, I am delighted to be learning the local Creole language.

I am asked if there are “ugly Americans” in Belize. Yes, indeed. Some people move abroad and then want to change what they find in their new country. I consider this a very presumptuous attitude! I think part of my ease in adaptation here results from loving Belize just as it is, accepting it as it is, and wanting to leave it as it is.

People who are thinking about moving to Belize ask me where most expats congregate when they get here. Do they move all over the country or cluster in one area. I will say that expats tend to lean towards the San Ignacio area and San Pedro Island. Now, why would that be?

The San Ignacio area has ancient pyramids, stunning mountains, and the river for people to explore. San Ignacio is my home also and I love its beautiful scenery. I find it very calming. San Pedro Island is famed for its diving and fishing activities.

Of course, people want to know if expats are loners looking to leave civilization and its constraints behind, or are they joiners who want to immerse themselves in a new culture and new experiences and make new friends? In my experience, most expats are “joiners,” for sure.

Beware of Different Business Ethics Abroad

One of the first lessons of the newly arriving expat is to beware and BE AWARE that other countries do not necessarily practice business in the same way to which you are accustomed in the United States. They are usually not looking out for your interests. That is one of the reasons why my company has been so successful – we always looking out for the best interests of our customers.

My Personal Mission is to Provide Guidance

After I made my leap abroad and in to the expat life I so love now, I realized that on the ground guidance would have made our life much easier and the initial settling in process so much more simple. Nowhere do I find this assistance to be more important than when you move out of the U.S.A., make a decision to stay in a foreign country, and decide to buy property. So after I set up Rainforest Real Estate, I made it my personal mission in Belize to provide support, and honest, ethical real estate transactions in our beautiful country.

So no matter how I am contacted (in person, by telephone, or email) with questions and concerns, I do my absolute best to ensure top customer service. My team and I are now known for our superb customer service and we back up that reputation with our professionalism and by being dedicated to honest ethics.

Yes, we are winning awards here in Belize and in the United States and getting lots of press attention. We are very proud of our constant, everyday efforts to give our all to support our customers, who invariably become our friends.

ExPat Community Center

And by the way, we are here for you both BEFORE AND AFTER you make your land/home purchase in Belize – or, even if you do not. My company serves as a meeting place, a community center for expats before, during, and after sales. We are a friendly information exchange on many topics of concern including cultural questions and real estate issues.

Not only do we know wonderful places to eat, we enjoy sharing our knowledge of Belize and its unique history and culture. And we are proud to offer our extensive expertise in the field of real estate. It is also our company’s pleasure to continue our relationship with everyone we meet.

Comments From Other Expats

I am always interested in other people’s experiences and how they came to be expats and how they feel now about living life in another culture. There is a lot to be learned and gleaned from these expats. Perhaps you too like to hear such stories and I am including several of them in my future articles in Caribbean Property and Lifestyles Magazine, so keep an eye out for those.

OFFSHORE DOMICILE, RESIDENCY AND CITIZENSHIP

Domicile, Residency and Citizenship carries different legal implications, and are applied differently throughout the world.

Last week we featured a great article by international asset protection specialist David Tanzer, “U.S. Currency Controls vs. The Sovereign Individual.” Here he offers a synopsis on the legal differences among domicile, residence, and citizenship; and then finishes with an introduction to obtaining New Zealand citizenship.

The concept of domicile has repeatedly arisen on these pages in reference to “rich foreigners” living in Britain who pay minimal taxes (compared to regular British inmates little people citizens). In order to tempt jet setters, sports team owners and other assorted moguls to live in the UK and spread their cash around, the UK government offers a deal whereby you can be domiciled but not resident in the UK – which allows you to not be taxed on your foreign-sourced earnings. Naturally these non-resident domiciled people are targets for the envy-mongers who cry about how unfair that is, seemingly oblivious (probably well aware, but correctly banking on public ignorance) to the fact that if you do not put seed in the birdfeeder the birds will not come.

No such distinction as nonresident-domicile exists in the U.S. Once you spend a certain number of days per year within the United States you are a resident for tax purposes, end of story, and are taxed based on your worldwide income. What a deal. And if you are a U.S. citizen resident or domiciled abroad you still are taxed based on your worldwide income, mitigated by a standard deduction for living abroad and tax credits based on foreign taxes paid (where a tax treaty exists).

As Tanzer warns: “Too often I have seen expats completely ignore the tax aspect of an international move, getting hammered with double taxation, and some even returning to their home jurisdiction in frustration over the dual tax systems. ... If your goal is to begin anew a different life or invest outside of your home country, you have a world of options available to you. However, it does take some forethought to decide what you want to accomplish, spend some time doing your homework, make a plan, and then make the commitment to make it work.”

Domicile, Residency and Citizenship carries different legal implications, and are applied differently throughout the world. In this article we simplify some of the legalese so you can better understand what it means. And by way of example we explore immigration to New Zealand.

Here is the skinny on what you need to know before moving yourself offshore ... and – then some. First, understand there is a difference between domicile, residency and citizenship ... all with important legal and tax ramifications. Domicile is where you call home and live. Even with multiple places of abode, with equal time spent between them, only one will be called your domicile. Domicile can be determined “as a matter of fact,” or as a “legal fiction.” Your domicile gives rise to many legal issues, like rights upon divorce, death, inheritances, and more.

Residency has basically two faces: legal residency and tax residency.

Legal residency gives you a right to reside or spend time in a place or country. You can have legal residency in one or more countries at the same time. By contrast, when you travel as a visitor or tourist to another country, depending where you are going, you are granted a Visa or right to reside or visit that destination temporarily.

Those countries where Visa-free travel has not been negotiated by treaty require you to make a Visa application in advance for permission to come across the political boundaries for a permitted duration of stay. Depending on your purpose, i.e. business or tourism, the Visa can vary in length. These Visas are generally one to three months in length, but under special business or working classifications, I have seen them as long as one or two years.

Legal residency can also be obtained for longer durations of stay, for purposes of living in a country. A country looking to acquire a class of immigrants sets a standard or criteria for interested immigrants to migrate. For example, a typical situation would be a shortage of skilled or professional workers in a growing country looking to attract people with those skills and the entry requirements for those immigrants are relaxed.

And too, a common classification is the business or investor category Visa where an investor agrees to invest certain amounts of money for a minimum amount of time – or start a new business – in a certain category of investments or business in the host country.

Retired persons can have an advantage in one country looking to attract immigrants, or be a detriment in another country which is looking for younger, skilled workers that can contribute to their country’s growth. There are other classifications, and the entry requirements change – sometimes frequently – as targets are reached and new government goals are obtained.

Under legal residency, you obtain permission to stay for a set term.

Then, so long as you have been a good guest in the host country (i.e. stay out of legal problems and satisfy the residency requirements), after the initial term you would typically obtain permanent or indefinite residency. Think of the temporary residency as a “courtship” for you and your host country to get to know each other more intimately.

Then there is tax residency.

Tax residency is entirely different from legal residency and one is not necessarily dependent upon the other. Tax residency is generally defined as being acquired if you live within a country for a term which is more than a set number of days. Thereafter you become obligated to pay income taxes to the host country.

It is very common for countries to declare you a tax resident if you live 183 days or more in a calendar or running year. Tax residency becomes a very complex issue, as you have probably guessed. In most countries around the world – even if you are a citizen or permanent resident of that country – you would not be obligated to pay taxes unless you actually live in the country or earn income in the country for a set period of time. This is the general rule, worldwide.

And too, even if you are currently a tax resident you can move out of the country and no longer be considered a tax resident after a certain duration and be tax free from the former country ... but if you are a U.S. citizen, disregard this opportunity if you wish to leave America.

The USA is the rare exception where mobility and changing tax status is not a freedom ... no other country has such onerous and draconian tax laws.

Unfortunately, the USA is the rare exception where mobility and changing tax status is not a freedom ... no other country has such onerous and draconian tax laws as found in America.

Tax residency income tax obligations are designed to be lessened by certain tax provisions or through bi-lateral and multi-lateral tax treaties that countries enter into together to allow “tax free mobility” of its working citizens abroad. Unfortunately, this term is sometimes no more than an oxymoron, and the full benefit can be difficult to achieve at times.

Living in another country does not require citizenship, only a Visa for a short or long term residency in that country. Moreover, Visa requirements varies from country to country – it is always a moving target – but obtaining a Visa is the easiest way to move and live “offshore,” wherever that might be.

For example, in just one year New Zealand changed its pass mark requirements for obtaining a Visa 5 or 6 times, going from relatively easy to very difficult. As new immigration targets were made, and objectives reached, the pass marks changed. After you spend a certain amount of time as a resident, then you can become a citizen of New Zealand (see below for more details).

In general, countries define citizenship based on one’s descent, place of birth, marriage, and/or naturalization. That is, you might have a right to citizenship with a new country based upon one or more reasons. So there are various routes to obtaining a new citizenship. No one knows for sure how many Americans are also citizens of other lands, because neither the U.S. nor other governments keep track. Estimates range from 500,000 to over 5 million people.

About 40 million Americans are eligible for dual citizenship in another country, usually because of family ties. Legally, dual citizenship for U.S. citizens is clearly available. This right occurred in 1967 when the U.S. Supreme Court struck down U.S. laws forbidding dual citizenship.

And if you do obtain dual citizenship, with U.S. being one of your citizenships, then keep in mind that U.S. Federal Law requires, in general, that any U.S. citizen who is either leaving or entering the U.S. must be in possession of a valid U.S. passport. Certain exceptions to the U.S. passport requirement are spelled out in Section 53 of Title 22 of the Code of Federal Regulations.

The U.S. does not currently have official “exit controls” at its borders, but this too is evolving.

The U.S. does not currently have official “exit controls” at its borders, but this too is evolving. Needing to obtain DHS prior “permission” to enter or depart would constitute an exit control rule for all practical purposes, as far as I am concerned. However, the U.S. does have an official Exit Tax for expatriating Americans (visit Past Articles on our site for more information).

If your objective is to simply give up citizenship to stop paying U.S. taxes, this presents an entirely new and complicated set of issues.

For example, in the U.S. there are specific U.S. tax laws enacted over recent years to discourage (read prevent) U.S. citizens from expatriating for tax reasons. Previously, if your assets and/or income were over a certain level you could continue to pay income taxes on certain income into the future, but this too is evolving.

And too, watch out for the “Exit Tax” which continues on the agenda in Congress, even though the law was again revised in June 2008. Suffice it to say these are entirely new, complicated issues that may affect you, depending on assets and income ... but advance planning to work around the issues can help make your goal of moving offshore reachable.

For years we have used international trusts for asset protection (see our book How to Legally Protect Your Assets, new second edition for more information), but international trusts are also an excellent tool for pre-migration planning, before making a move to a new destination.

Once you make a move to a new country you have to consider the implications of paying taxes in your adopted homeland. When living in another country there are bilateral tax treaties to supposedly prevent you from paying double taxes on the same income. However, AMT (alternative minimum tax) creates some challenges to foreign tax credits.

Too often I have seen expats completely ignore the tax aspect of an international move, getting hammered with double taxation.

Too often I have seen expats completely ignore the tax aspect of an international move, getting hammered with double taxation, and some even returning to their home jurisdiction in frustration over the dual tax systems.

Is there a way for expatriating citizens to avoid the double tax problem? Yes.

(Hint: The best plans for avoiding these problems are often a pre-migration type trust ... these topics and more are covered in our book Offshore Living & Investing).

There is a spot waiting for you on the beach if you are committed to starting a new and exciting life.

If your goal is to begin anew a different life or invest outside of your home country, you have a world of options available to you. However, it does take some forethought to decide what you want to accomplish, spend some time doing your homework, make a plan, and then make the commitment to make it work. It is definitely worthwhile.

Our family has thrived upon the new experiences and our children have opened their eyes to a whole new world beyond the narrow perspectives of where they began. I am proud to say our two daughters are truly citizens of the world.

I do not want to overwhelm you with details, but if some 200,000 Americans per year emigrate from the U.S. alone, so can you. The world population today is indeed increasingly mobile, notwithstanding new draconian laws to hinder the free movement of people and property.

So there you have it in a nutshell.

There is a spot waiting for you on the beach if you are committed to starting a new and exciting life. Perhaps your lifestyle would be enhanced with dual citizenship and a second passport ... a topic I intend to explore in later newsletters.

The Immigration Requirements for New Zealand

New Zealand is a great place to live, earn, retire, or invest. It is a relatively safe environment and is generally located under the political “radar” screen. I should know as our family proudly became New Zealand citizens in recent years.

This is a land of snow-capped mountains and great beaches. The “land down under” is a traveler’s paradise. And maybe best of all, when it is cold and snowy up north, the beaches are warm and filled with sizzling entertainment ... see below on how you can get in on the action and whether Newton and Copernicus were correct.

But along with its wild places and amazing wildlife, New Zealand also has friendly, English-speaking people, high quality services with low cost living, neighborly towns, vibrant cities, and homes to suit all pockets. New Zealand is also of great interest for residency leading to citizenship.

Right now New Zealand is looking for people who have the desire, skills and experience to make a difference to the country. In return, New Zealand offers opportunities to succeed and a lifestyle that makes it worthwhile.

But first you need to answer “yes” to the following questions:

1.) Are you healthy? 2.) Are you of good character? 3.) Do you have a high standard of English?

If so, please continue.

Importantly, the following categories and required qualifications for each pathway change from time-to-time so do not be disenchanted if you don’t qualify today. In one year alone I recall the pass-mark scoring system changing four or five times. And this past year three new Investor Categories were added, which is covered below.

Professional, Worker & Student Categories

One path into New Zealand is under various “Worker” categories. The Skilled Migrant category is an excellent route if you are suitably qualified and experienced.

The objective is that you would be making a contribution to an innovative and responsive New Zealand workforce, and in turn, help the economy achieve sustainable growth. If you have “get up and go” and the skills needed, you could be just what New Zealand is looking for.

Under the above category you must be under 56 and either have a tertiary or trade qualification, or at least two years work experience, or have been offered a job in New Zealand. Under The Work to Residence entry option you would be qualified in a highly specialized area or in a “demand field,” or have an exceptional talent in sports or the arts.

You first apply for a work permit under the work to residence category, as it allows you to work temporarily in New Zealand as a step towards gaining permanent residence.

To qualify under this category you must either have:
  1. A genuine offer of full-time, ongoing employment from a New Zealand accredited employer with a base salary of at least NZ$45,000 (US$33,750) per year, or
  2. Sponsorship from a New Zealand arts, culture or sporting organization, or
  3. A genuine offer of full-time, ongoing employment in an occupation on the Long Term Skilled Shortage List.
Under the above category you must also be under age 56 and hold appropriate full or provisional registration if required to practice in that occupation. Another option is to work in New Zealand for a particular event and then acquire a job offer from a New Zealand employer, or just stay on for a work experience. Working holidays, work experience or simply sampling life in New Zealand are all great reasons people go to New Zealand to work temporarily.

Also, if you are a student or trainee wanting to gain work experience in New Zealand or planning to work temporarily while joining your partner in New Zealand, there are other options.

New Zealand has agreements with over 20 countries (including the USA) which allow young people between 18 and 30 the opportunity to travel around New Zealand and work temporarily.

A working holiday is a great way to get a real taste of life in New Zealand.

Investor & Business Categories

And naturally, New Zealand welcomes people who would like to invest there. Investors from overseas can build new connections with the rest of the world and increase their understanding with cultures in the Australasian countries. In the past when applying under the Investor Category you needed NZ$2 million (approx US$1.5m) to invest for five years, have at least five years’ business experience, healthy, of good character, meet English language requirements, and be under age 55.

Of course the money to invest must be made up of funds you legally own and be transferable through the banking system. This past year a newly expanded Active Investor’s Category was implemented.

In general, there are three new programs added:
  1. Global Investor Category (NZ$20 million with no age restriction),
  2. Professional Investor Category (NZ$10 million with a maximum age of 64), and
  3. General Investor Category (NZ$2.5 million with a maximum age of 54).
You do not need to live full time in New Zealand under the new programs, but funds must be invested for four or more years. Or, you might desire to relocate your business to New Zealand and send a key employee to set it up. Or maybe you are the key employee of a business that is relocating to New Zealand. Alternatively, you might be interested in establishing a new business in New Zealand.

New Zealand appeals to foreign investors because it is a safe and stable country with a strong commercial outlook. Many parts of the world suffer economic, religious and political upheavals but New Zealand has a unique manner of embracing different lifestyles. Fortunately, New Zealand is also free of the turmoil experienced in other countries. And the code of business practice is generally straightforward and direct.

Importantly, New Zealand has a democratic political system, a free-market philosophy, and the economy continues to grow and get stronger than it has ever been. While New Zealand is geographically isolated from the rest of the world, this has many big advantages and it is the first country across the International Dateline to greet each new business day. With electronics and communications what they are today you are never far away.

All of this leads to harnessing good local and global business and investment opportunities. There are some definite rules and requirements that business investors have to meet when establishing a business in New Zealand, but at least you should understand these options are available.

There are also some other specialty categories for immigration into New Zealand and these and more are covered in Offshore Living and Investing.

And once you have obtained residency in New Zealand, like many other countries, you can then apply for citizenship. The required time frame for citizenship in New Zealand was recently changed from three to five years, but amazing how time flies when you are having fun living a quality lifestyle.

At our website there is New Zealand page designated solely to over 30 local government, business and banking contacts providing a wealth of information if you are interested in exploring more about New Zealand.

And as a reminder, as we have discussed in earlier newsletters, using an international trust not only has value as an asset protection planning technique while living at home, but also as a pre-migration planning tool ... so keep this in mind if planning a move offshore.

Now you have it.

While Domicile, Residency and Citizenship carry different legal implications and are applied differently throughout the world, you are now one up on the competition. Whether you explore immigration to New Zealand or elsewhere, having a good background of what it all means is a good start to protecting assets, and offshore living and investing.

Until next time ...

WHAT IT IS LIKE TO BE AN EXPAT IN ANTIGUA, GUATEMALA

Eighteen months into the move, and counting.

Earlier this month we posted a report from a couple who had recently moved to Antigua Guatemala. Here is another report on living in Antigua, from an expat who moved there 18 months ago. It gives a good sense of what life is like once one has adapted to the flow and cycles of living in a new place.

“Eighteen months into my move to Antigua, Guatemala,” writes Central America Correspondent Michael Paladin, “much of which has been spent traveling, I’m finally beginning to feel at home in my adopted country.” ...

I have felt a connection here from the beginning, thanks to the daily greetings from my neighbors and people I pass on the street, for example, but, lately, things have changed and for the better. I am having spontaneous conversations in Spanish, without even realizing it. The currency is recognizable to me now, and I can make change at the store even when I am under pressure with people waiting behind me in line. The newspapers are beginning to make sense, and I have learned which days to avoid at the bank because the lines are too long. I know where to go to find the nearest ATM from anywhere in town, and everywhere I go now, I encounter at least five or six people who call me by name.

I have come to know that, when certain items are available in the shops, I should stock up. I have always shopped on a daily basis, even when living in the United States, and I do so here. I walk 2 miles a day, carrying 20 pounds of groceries, and I have lost 20 pounds myself. I get the freshest of the fresh and the first pick at the meat counter. Could I save money by buying in bulk? I suppose so, but you have to decide what is important to you. I could shop more efficiently, but I do not care to. I can find everything I need day-to-day here in Antigua. For the unusual and the specific, it is a 30-minute drive to Guatemala City.

An important decision I had to make was whether or not to invest in buying a car. Owning a car means insurance, gas, and maintenance, plus worry about damages, parking, and traffic. Yes, having a car means you can travel whenever you want to the Big City to shop at the Big Store with the aisles of frantic shoppers and the mounds of paper towels, cereal, and other things you cannot live without in massive quantities. But I am not sure I see that as a benefit.

Owning a car also means you must understand the vagaries of the local traffic laws and that you must have all the papers, documents, and excuses handy when you are randomly stopped because you are white (and therefore obviously rich). You must learn the traffic routes and the times of day to choose one over another.

No thanks. I have decided owning a car as an expat is not for me. The result is that I have eliminated a big worry quotient (and, of course, expense).

How do I get around? In this town, you can call for a taxi to collect you at your door. The pizza and the sushi delivery people find me.

Furthermore, the public transportation options living here are good. Yes, I ride the chicken buses, but there are also shuttles, vans, min-vans, horse-drawn carriages, and luxury busses with TV, snacks, air-conditioning, and the best luggage handling you will ever encounter. They travel according to convenient schedules, and they are mucho inexpensive.

You can arrange for a personal driver. The best way is a recommendation from a friend. I have found two drivers this way; both are available on a day’s notice or less, both have great cars, and both are very reliable. I can give them a to-do or a shopping list and count on everything being taken care of. The cost is US$25 a run. If I use them once or twice a month, the costs associated with keeping a personal vehicle seem even more ridiculous. Plus, they are at the airport when I need them. Much easier than calling Uncle Bob or your ex-girlfriend.

It is nearly time for my monthly run into Guatemala City. My current short list of reasons to make the trip: take the watch in to the authorized store for a cleaning; go by Office Depot for screen cleaners for the laptop and a color cartridge for the printer; shop for a set of bar-b-que tools, maybe another reading lamp, and a mattress pad (something that has eluded me here in Antigua).

None of these things seem important today, though. I think I will take a walk to the library.

TITLE INSURANCE FOR THE PURCHASE OF OVERSEAS REAL ESTATE

In the international marketplace, you will encounter many types of title. Some, in fact, are not title at all.

The the “Wild West” real estate markets in the less developed world consider that everything you think you know about the arena is just wrong wrong. Having assiduously acquired an attitude of ignorance you will then start looking for competent and honest help to defend your interests. Start by hiring an independent attorney to represent you through the process, as opposed to one who also works for the property owner or agent. Then buy title insurance.

In the U.S. it is routine to purchase title insurance when buying a property. What you are really buying is a thorough title search – if that search is done correctly the likelihood of loss to the “insurer” is very small. The title insurance company will look for encumbrances like mortgage, tax and mechanics liens, and more obscure things like disputes over ownership which might muddy the property ownership waters.

Down south there is a whole other set of issues that can arise which cloud the title, including the possibility of being “sold” a property by someone who does not even own it. Yes, that happens. Bottom line is just buy title insurance, which is now widely available in Latin America. The insurance usually costs on the order of 0.5% of the property’s purchase price. As summarized in this piece, the insurance “protects your foreign property purchase against outstanding mortgages, liens, or litigation; it confirms and insures for easements, access, right-of-way, and underground utilities; and it authenticates the uninterrupted clean history of ownership.” And in the event of trouble, “it buys you the agency’s duty to defend.” Maybe duty is the wrong word. The insurance company is responsible for making you whole if there are losses, so let’s just say it becomes in its best interests to stand by your side.

“‘Fee simple’ is the title you want. That’s the full enchilada,” explained friend and obtaining-good-title-in-unregulated-and-emerging-markets expert Tuey Murdock to the group assembled for our Global Real Estate Profits Summit in Panama City last week.

In the international marketplace, you will encounter many other types of title. Some, in fact, are not title at all. That is, they do not amount to ownership. “Rights of possession,” for example, is not title. It does not mean you own the piece of property in question. You simply hold the right to use it.

Tuey has been working with First American Title for 35 years. I have been listening to her speak to groups like ours last week on the importance of insuring the title for any overseas real estate purchase you make for a dozen years at least, but I never tire of it. For Tuey’s talks are punctuated always with new and ever-more-unbelievable tales of just how wrong things can go when you buy real estate in certain markets and do not invest in a little insurance.

You cannot take things for granted the way you do back home in the developed world.

In the kinds of markets we recommend, you cannot take things for granted the way you do back home in the developed world. You cannot assume, for example, that the guy offering to sell you a house in fact owns the house. You cannot take the developer’s word that your access or right-of-way is guaranteed even though it crosses another man’s property. You cannot believe the real estate agent when he insists that rights of possession is as good as title or that, sure, you could build your home right on the beach, no problem.

Down here in the Lands of Mañanas and Fiestas, the promises flow along with the rum. The key to navigating these property markets is avoiding the liquor and turning a deaf ear to the assurances.

Property developers in these Wild West markets should be treated with skepticism, as should the promises they make about the land they are developing. Here is how this will go:

The developer in question will drive you out to his beach. There, at the shore, he will have erected a small clubhouse. Come in, have lunch, enjoy a drink, he will say. The fish is fresh. My guys caught it just offshore from our beach this morning. And the rum is local.

After you have eaten your fill, the developer will take you out in his 4X4 or maybe on horseback to explore the beach and the surrounding countryside.

As the sun is beginning to slip behind the horizon, and the ocean’s surface is glittering and dazzling, the sky behind it turning fire red and orange, the developer will begin to make his pitch.

“Look at that sunset,” he will urge. “This could be the view from your front porch. You could have a front-row seat for this show every evening.”

“Come on,” he will continue. “Let’s head back to the clubhouse. It’s time for some Sundown Rum Punch ...”

Do not so lose your balance that you marry the first beach that charms its way into your heart. Ask yourself, is this the beach you want to grow old with?

You are smitten. Who would not be? There is nothing wrong with appreciating what is being put on the table in front of you. The coasts of Nicaragua, Panama, Belize, and the Dominican Republic, for example, are special and extraordinarily beautiful. Seeing them for the first time can make you weak in the knees. The feeling can be something like falling in love. Don’t resist it. Allow yourself to savor it. But do not so lose your balance that you marry the first beach that charms its way into your heart. Ask yourself, is this the beach you want to grow old with?

Before you answer that question, understand what you are buying and make sure that, once you have made the purchase, you will indeed own what you think you own.

You want to be more careful shopping for real estate in another country, where the language, the customs, the culture, the way of doing business, and the property purchase process are all foreign, than you would be back home, not more cavalier. In the unregulated markets south of the Rio Grande, you do not have the safety nets you count on back home. What if, turns out, the guy offering to sell you a house is not the owner of that house? What if you do not discover this fact until after you have handed over payment? What is your recourse?

You must protect yourself, because no one else is standing by to protect or help you should something go wrong.

In truth, if you have not invested in title insurance, you likely do not have any. There is no Better Business Bureau, Department of Housing, district attorney’s office, or local congressman to contact for help, and people in the rest of the world do not sue each other the way we Americans do. You are not going to find an attorney in Nicaragua or Belize or anywhere else to take your case. You must protect yourself, because no one else is standing by to protect you or to help you make things right should something go wrong.

The best way to protect yourself is to engage your own attorney to represent you through the purchase process, one who works not for the seller, the agent, or the developer but for you. You want your own independent attorney whose agenda and loyalty are clear.

And you want to invest in title insurance. It costs, typically, 0.5% of the purchase price. ...

P.S. As Tuey explained last week, a title insurance policy protects your foreign property purchase against outstanding mortgages, liens, or litigation; it confirms and insures for easements, access, right-of-way, and underground utilities; and it authenticates the uninterrupted clean history of ownership.

Perhaps most important, it buys you the agency’s duty to defend. If any issue or dispute arises, the insurer is on the hook to defend your position at its own expense.

BANKING IN BELIZE

A true banking haven.

Belize has evidently partially escaped the OECD squeeze put on offshore banking havens ... for now. No more numbered accounts or hiding behind a legal structure – “know your customer” rules definitely apply – but no mention of a Tax Information Exchange Agreement is in place either (yet).

Equally interesting is how soundly run Belize banks are, behavior which is encouraged when depositors are not placated by being “insured” by a bankrupt government-run outfit like the FDIC. Belize banks are required to keep 24% of their assets in liquid form, which means that just about any run short of every single depositor showing up and demanding a withdrawl can be handled. And in practice mortgages are limited to 50% of the property’s value. This is not just sound banking practice but also limits the probability of a real estate bubble – assuming they stick to that ratio and foreign banks do not come crashing in with looser standards.

“Belize is a custom-made banking haven,” explained longtime friend (and Belize banker) Peter Zipper ...

With their Belize Act in 1981, the Brits built themselves a banking haven. They looked around at the top banking havens worldwide at the time and cherry-picked the best elements of the banking laws in each case. These elements were incorporated into the banking law for the about-to-become independent nation to be known as Belize.

Until that point, Belize had been British Honduras, a colony of the Crown.

“The constitution for this new country was based on the Canadian constitution. What does this mean?” Peter asked the crowd.

That means boring. Boring politics, boring everything. Not much to rock anybody’s boat.

As a result, in the nearly three decades since, Belize has managed to remain largely under the radar. Ambergris Caye drew some attention as the setting for TV’s “Temptation Island.” Otherwise, other than from global divers and sun-seekers, Belize has been really successful at attracting very little attention.

“I spent many of the first 27 years of my 30-year banking career in Europe,” Peter continued, working with Swiss banks, for example. We Swiss bankers back then would turn up our noses at the mention of “Belize banking.” Bank in Belize? Who would give their money to a Belize banker, we wanted to know. Bankers in Belize can’t count, can they?

In the last 36 months the global banking industry has been turned on its head. Very few “banking havens” deserve the description right now. Belize is an exception.

Three years ago, I retired from the Euro-bank I had been working for. Retirement’s not so much fun, I realized after about two days. When I thought about returning to work, I considered not the opportunities in Europe, but those on this side of the world, in the Americas.

That is looking like a smart move right now. In the 36 months since I moved from the banking industry in Europe to the one in Belize, the global banking industry has been turned on its head.

Used to be, the mention of “banking” brought places like Switzerland or Austria to mind. This paradigm has collapsed. There are dozens of “banking havens” around the world. The truth is, though, that very few of them deserve the description right now. Belize is an exception. Belize is a true banking haven.

Why? Two reasons.

First, bank secrecy. Belize maintains it. Anyone in the Belize banking industry who violates the country’s bank secrecy laws goes to jail for a minimum of 18 months. Trust me. You do not want to spend 18 months in a Belize jail.

How has Belize managed to maintain its bank secrecy position while other better-known jurisdictions have all but abandoned the idea?

That is it, precisely. Belize is little-known. Remember, this country has kept its head down. No one pays it any attention, and Belize is keen to keep it that way.

The second reason Belize stands out among the world’s bank havens right now is liquidity.

Used to be, when I started talking about bank liquidity at a conference like this one, I would notice people begin to nod off. Some would even head for the door. Nobody had any interest in the idea.

I notice, though, today, you all seem wide awake. Thanks to recent events, bank liquidity has become a hot, sexy topic.

Banks in Belize maintain liquidity rates of 24%. A quarter out of every dollar in a Belize bank must be liquid. They lend only 50% loan-to-value for mortgages.

Current liquidity among banks around the world is 0.7%. This is lower than in the 1930s.

That is the average worldwide. What is the situation in Belize?

Banks in this country maintain liquidity rates of 24%. This standard is mandated by the Belize government. A quarter out of every dollar in a Belize bank must be liquid. If a bank falls below this level of liquidity, the government can take the keys and close the bank.

How did Belize bankers fare during the recent banking crisis? We sat back and smiled. We knew we did not have anything to worry about, and, in fact, not a single Belize bank has failed.

Belize banks maintain an extraordinarily high standard of liquidity, and they lend only 50% loan-to-value for mortgages. That is how Belize banks stay healthy.

It is not only banks in this country that are healthy right now. The Belize economy in general is doing very well. Growth rates over the last six years have averaged 6% a year. Inflation is 1.4%. An economist will tell you that this is the sweet spot, exactly where an economy wants to be. And Belize has been able to stay within this range for six years.

Finance, ecotourism and oil ... yes, oil.

Belize’s three main industries are finance (banking, trust companies, etc.), ecotourism, and oil. Yes, oil, which has been discovered off the coast in volumes that appear to be as great as those off the coast of Texas. Drilling is under way ... in a way so as to preserve the ecosystem of the shore and the reef. No oil platforms out in the ocean.

You can open a bank account at my bank in Belize with zero dollars. Why? Because we, like all Belize banks, are focused on attracting small- to medium-sized investors. We are not going after mega-clients. Mega-clients attract attention. Remember, Belize is a low-key jurisdiction, happy to stay off the world’s radar.

That is not to say we are ready to open an account for any shyster who comes along. The days of sewage banking are over. The banks that threw off a stench in places like Panama and Belize, are gone. No more numbered accounts. We need your name and your address (not a P.O. Box).

And we are going to ask you how you made the money you are depositing. We need to know our clients. We need something to fill in the blank on the application form. This helps to protect fellow account-holders, as well as the bank.

Remember, Belize speaks English. So your account manager is an English-speaker. And Belize is in Mountain Time. You do not have to get up at Midnight to have a conversation with your banker.

Americans and Canadians can open either a personal account or what is called a structure account. This is the preferred option. It is an account formed for you by someone else that is not in your personal name but in the name of a structure – a trust, a company, or a foundation, for example.

Once you are offshore, you want to do as little in your own name as possible. Put everything possible in the name of a structure.

You do not have to come to Belize to open your account. In most jurisdictions, including Panama, you must appear in the bank in person to fill out the forms, sit through the interviews, and sign on the dotted line. Not so in Belize. You do not ever have to step foot in the country if you don’t want to.

But I would suggest you come have a look. You will find yourself in familiar company. This is where the Baby Boomers are headed. They are coming our way in growing numbers. Walk down the street on Ambergris Caye, and you hear the music the Boomers all around – the Beatles, the Rolling Stones, Janis Joplin ...

These folks had a great time in the 1960s ... then they became the most boring people on the planet. They made a lot of money ... and now they are looking to reclaim their lives. They are finding their way, in retirement, to places like Belize ... where they are listening to their music again, growing their hair long again, and spending their days stoned again ...

I am joking about that last bit. But my point is that Belize has what a lot of people in North America are looking for right now.

It has also got the most appealing banking industry in the world right now. ...

P.S. “What about crime in Belize?” Peter asked the group. “I’ll put the question out there before one of you puts it to me.”

My firsthand experience is that there is not much of it. You hear scary stories in the international press, but I am telling you what I know from my own experience spending time in this little country. I am not worried. The people of Belize are very religious (50% Catholic, 50% Protestant). You are more likely to be blessed (as I am again and again every day) than you are to find yourself in a dangerous situation.

PROFTING FROM TURMOIL IN THAILAND

Each crises, whether a coup or the eventual demise of the King, is a buying opportunity.

Simon Black believes there exists value and opportunity in the Thai investment market. A recent stock and currency selloff stemming from rumors of the aged king’s imminent death provided, says Black, yet another in a series of regularly recurring opportunities to buy into the country which follow any “crisis.” In the end, “once Thailand gets back to the business of doing business, markets will once again recover and investors can feel very smart for taking the risk.”

He has ruled through 12 U.S. Presidents, a string of military dictatorships, several coups, and a historic transition to democracy. At 81 years of age, King Bhumibol of Thailand has really seen it all.

Despite his essentially ceremonial position, King Bhumibol is revered, almost worshiped, by his people – not like other constitutional monarchies where the royal family is merely a rubber stamp soap opera.

He has used his extreme influence on several occasions during his reign to intervene in many of Thailand’s crises, which seem to occur every other Tuesday when there is a coup or ingredients for violent protest.

In 2003, for example, after an idiotic Thai actress sparked an international incident with neighboring Cambodia, angry Cambodians burned the Thai embassy in Phnom Penh to the ground. Naturally, an enraged Thai mob gathered in the streets to storm the Cambodian embassy in Bangkok ... but Bhumibol intervened, requesting calm and that the people disperse. They obeyed like dutiful subjects.

I do not really understand what makes one human being subjugate himself to another human being – to bow and curtsy and protect as inviolable even mere photographs of a monarch ... yes, in Thailand, not only are insults to the King punishable by imprisonment, insults to his image are as well – by up to 30 years.

The “king culture” is so deeply inculcated in Thai society that his death would have an enormous impact on the country and its economy. Two weeks ago, when rumors began circulating that the King was on his deathbed, Thai equities were rocked, falling 10.7% in just two days. Bond yields rose. Thailand’s currency, the baht, fell against major currencies.

The rumors turned out to be false, but the market’s reactions gave an indication of what will happen when the King’s reign finally comes to an end: Investors view a Thailand without Bhumibol with the same level of risk as a Thailand in crisis without an elected government (1992, 2005-2006, 2008).

Each of these crises, whether a coup or the eventual demise of the King, is a buying opportunity. There is no change to the long-term value of Thai equities or local assets due to political turmoil – as Thailand’s recent history shows, the country always rises from the chaos relatively quickly, and the markets recover accordingly.

In the case of this month’s health rumors, Thai markets recovered in about three days. The King made a public appearance to assure everyone that he is very much alive, and the Thai SET Index settled pretty close to its pre-rumor level.

When the King actually does pass away, it will be difficult to tell how long Thailand will be in “chaos” – perhaps hours, days, or a few weeks at the most, similar to how the entire Catholic world waits with baited breath for the College of the Cardinals to burn white smoke after the passing of a Pope.

Regardless of the duration, though, it will undoubtedly be a buying opportunity; once Thailand gets back to the business of doing business, markets will once again recover and investors can feel very smart for taking the risk.

In all fairness, the timing on these things is impossible to predict. Despite his advanced age and long list of existing medical conditions, King Bhumibol could end up being like Pope John Paul II was – very old, very decrepit, but seemingly able to last forever ... and we will all be talking about him 10-years from now in the same way.

Statistically speaking, though, this is highly unlikely ... and that is why I am headed to Bangkok next week where I will put boots on the ground to uncover some of the country’s best investments.

If you want to take a position in Thailand, you can buy the currency through an online FOREX platform like GFT Forex, or you can purchase equities in the Thai market through Hong Kong based BOOM Securities.

CHRISTIANITY AND IP

Paul Green authored our post on “practical internet privacy” back in August. That usefulness of that article caused us to look at what else Mr. Green had authored. We found this interesting rumination on doing the right thing, so to speak, regarding the alleged rights of intellectual property (IP) holders, as filtered through his Christian set of values.

Want to know that the Bible and Jesus really said about the State and taxes? Read on.

Some time ago, I had to decide whether or not to use a friend’s original copy of Windows on a used computer. As a Christian, I actually had to pray, "Lord, what do I do?"

I resolved that particular internal dilemma in the short term, when I realized the computer had originally been bought with Windows. So effectively I was just reinstalling what had already been paid for. That was as far as my conscience would go then, but I started to examine the whole issue:

Imagine the scenario if the person who first invented the wheel lived under a patent/copyright regime like ours. So, for 25 years plus, he is the only one who can make wheels. Anyone else has to pay him for a license.

No matter how bad his business plan or his wheels are, unless he is a complete imbecile, one thing we can be sure of is that by the time 25 years are up, he is going to be running the biggest business on planet earth. Big enough, probably, to influence politicians enough to add another 25 years to the patent monopoly.

You can imagine everyone as this man’s slave, because no one can do much without paying him. Yet, rather than blaming the copyright/patent system, some people report unregistered wheels and call for more government regulation, maybe even price controls, on the monopoly. Few can see anything other than a “dog eat dog world of dangerous wheels” if ever the system was “unregulated” and besides, hundreds of thousands of people are employed in the “industry.”

“Pirated” wheels are everywhere, of course, as people need them. The news corporations, whose printing or airwave monopolies are granted in similar manner, report regularly that people have been killed by “dangerous pirated wheels,” that they are a menace to society and a threat to the “legitimate” economy. Believing this, most of these “pirates” have vaguely guilty consciences, half believing themselves to be thieves while throwing up a few weak excuses. Many decent people with clear (but also ill-informed) consciences and limited means, just walk everywhere. There are calls for the government to provide these people with wheels to make “society more just.” There has been some delay however, due to a related lobbying corruption scandal involving affiliates of the Wheel Maker set to benefit from the resulting government contracts.

As we imagine this scenario, I wonder how many would join me in hoping that there would be at least some, with clear consciences, who see right through the whole scam and make just as many wheels as they want and share or sell them freely to their friends?

Think about it. Do you really believe that every wheel became the moral or “intellectual” property of the inventor?

It was there all the time in God’s creation – the “inventor” just discovered it. Certainly of course, any wheels he made himself were his own. But if one was purchased, in the absence of a special agreement, or even if a wheel was just visually observed – would there be anything wrong with duplicating wheels with one’s own materials?

The real advantage the wheel inventor had was being first. He could have made some money just from that. If he was also a good wheelwright, maybe he could be in big demand. But he certainly should not have been able to build a global monster corporation all because the force of the state backed his monopoly.

Now let us get up to date:

When a CD is purchased, money is put down and a product is received. I submit that there is no proper lease/non-distribution agreement. If there was, it would indeed be dishonest to violate an agreement voluntarily entered into.

A key moral issue here is the legitimacy of any agreement.

Most governments recognize something called “constructive notice.” For example, this means that if a business sticks “LLC” or “Ltd.” after its name and you become a customer or supplier, you are taken to have agreed that the owners can dodge their debts to you (“limited liability”) if it asks the government for permission (declares bankruptcy, etc.). There may be other reasons, but to incorporate for this reason is an immoral choice made by the owners to join in this alliance with the State. It is perfectly possible to operate without incorporation and there are good-sized businesses which do not. In the U.S. at least, churches are free to operate without incorporation also and an increasing number do so.

Another form of “constructive notice” is the small print that comes with a product like a CD. Does this constitute a real agreement?

Of course not – it is one-sided. You could equally write “sold, absolutely” on your own sales receipt and call that an agreement. On the internet, the same goes for “click here to accept terms.” With no less moral legitimacy you could, prior to purchase, send an e-mail stating your terms and that if they did not prevent the transaction, take it as agreed to.

It is perfectly acceptable in private business to enter into proper, signed or verbal, nondisclosure agreements. Software enhancements are often done in this way. But mass sellers do not require this, it would hit mass sales and it is practically impossible to obtain agreements preventing purchaser’s friends or third-parties accessing and copying software or music/video.

Instead, everything is turned on its head through this government monopoly grant called “copyright.” It is entirely involuntary. We are forced into an agreement, like it or not. But it is a lie: You never did agree not to copy.

This is the basis of a big-business/big-government alliance that affects many areas of life and business. It is one pillar of our modern hierarchical corporate state – along with forced limited liability, monopoly central banking (huge loans to favored corporations with money created from thin air), zoning, “eminent domain,” land use control and of course taxes, regulations and mandates. These and other factors have created the trend of big business getting bigger along with its ally, big government.

Economically and politically this is “fascism.” Contrary to socialist PR, fascism is not the opposite of socialism. Superficially, socialists do point out the errors of big business. However their solution is not liberty, but merging everything into one mega monopoly corporation in the vain idolatrous hope that it will not behave like one, if it is renamed “government.” One corporation to rule them all is not the solution to corporate abuse.

So now let us look at another key moral issue at stake: If I sold you an item without a special agreement, is that not final? Does it not belong to you, rather than the government or to me? Certainly it does and you would have every right to do with it as you please. At a minimum, I would expect a sharp rebuke if I tried to control what you do with it afterward.

This is why encryption keys, serial numbers and hardware/dongle dependency for mass-market software, while permissible of themselves, are invariably a manifestation of an unfree market. It goes against the nature of things that can be easily duplicated. A business model that does not take into account the reality that, with a click of a mouse (or at most a few lines of code) data can be duplicated, is just not sound. It inevitably involves threatening customers that the government will act against them, should they decide to investigate the software code of their purchase, or make any changes to (i.e., “crack”) the program they have purchased or been given.

Sellers are on a more solid moral foundation when selling subscriptions for support, upgrades and enhancements from one convenient, reliable, up to date and virus-free source. Just like the Linux operating system vendors, some of whom are running moderately sized profitable businesses. As a reaction to the UNfree, proprietary legal environment, this software functions under a license called the Gnu Public License. This and also the Creative Commons license effectively turns the law back on itself. This is a most commendable development which ensures users’ legal right to copy, share and improve freely. It is also true that the hostile legal environment can limit market discipline, with mixed motives among often voluntary programmers, i.e., not always just to satisfy users.

But if a seller does go the “proprietary” route (acting as if it owned the data on other’s computers) and the software gets hacked/cracked (as it surely will), it really is their own fault. They are then left to hope the majority (sometimes a 10-1 plus majority) who are cracked software users feel satisfied, scared or guilty enough to send some money or make a purchase anyway. But if a seller tries to put users under surveillance by requiring personal details they really have no business with; or forces them to seek permission every time they upgrade their computer – users are going to resist all the more.

Is it really right to blame hackers/crackers, who are not committing some actual harm like stealing money from an account or damaging a system? If it is simply duplicating software and bypassing serial numbers, are they not merely adjusting code on their own computers and sharing it with others? It is true there are some criminal and morally confused elements among hackers. But so it is with any unjust law – call to mind Prohibition in the U.S.A. – this attracted criminal elements as well as ordinary people.

Even supporters of “intellectual property” become especially annoyed by the obnoxious, tyrannical coercion of the government/corporate monopoly and the fascist police state methods required to enforce the granted monopoly. To give recent examples: putting Internet users under surveillance; demanding private records from ISPs; then threatening or prosecuting 12-year-old girls on the “evidence,” and setting up anonymous “rat on your neighbor” call lines.

The moral discussion of “intellectual property” often brings up the word “stealing.” More recently, corporate fascists have claimed “file sharing is communism.”

They are speaking based on present copyright law – which varies from country to country. The big news these people need is – government is not God. Remember also that “democracy” gave us Hitler – so a majority vote does not represent the perfect “will of God” either.

If we believe in private property then we must accept that what is ours is so absolutely, to modify, share or do with as we wish – whether it is bought and paid for, or is given by someone who owns it. Furthermore, if someone chooses to make music publicly available through a radio or computer – without first getting a valid personal, voluntary agreement – then morally it is our choice what we do with it, including recording and sharing. Nobody forced them to make it publicly available on a radio station or the Internet

If they do not want anyone to copy it, let them keep it in the privacy of their own studio. This is exactly how concerts and cinemas operate and is one answer to the concern as to how artists can make money. Public appearances do generate big money for artists. For artists, the wider their recordings are distributed, the better known they become and the more people will likely attend a concert.

Also, if voluntary contributions can work well for many subway “buskers” and street musicians, there is no reason this cannot work for other musicians. Low cost downloads and CDs are another option, especially considering that a CD can be produced for pennies. Why would anyone want an MP3 copy if a high-quality original is cheap?

Yet, those in favor of intellectual property constantly trumpet, as the supposed moral high ground, that the big idea is to save the “entertainment industry.” But what is really so good about a few huge corporations owning most of the media; elite media bosses choosing what is available to view or listen to; and a few big superstars. Below this artificial corporate hierarchy are the vast majority of musicians and artists. No matter how good they are, they are on the bottom because they have not been chosen by the elite. The only dream of many is the remote chance, like winning a lottery, that they will be chosen. In the present corporate hierarchical pyramid system, everyone is spoon fed by and controlled from the top.

Some people want to live and make a living in this environment and others just do not realize that this is not a normal state of affairs. Some, who may have climbed a way up the corporate wage-slave ladder, or depend on one of the corporations in some way, may hate what I am saying, because it is an immediate term threat. But when big media giants downsize, this is good not bad: the tentacles are unwinding and more “slaves” are released to do something more productive – like maybe start their own business or make their own music. Let us all start looking at the big picture and let things “rip.”

I had one very satisfied customer whose computer I had just repaired who turned sour on me after the train of conversation led to these matters. He was a ‘70s producer who now frittered away his time on fanciful projects while living on residual income from a few hits back then ...

Popular support can free up the system, and millions of file sharers are doing just that. The more things adapt to this free market, the more ordinary artists can find free market ways to earn money – if they are good enough. Aside from live concerts, once prices come down to a reasonable level, original CDs or fast convenient downloads will sell like hot cakes and there may be little demand for “piracy,” so-called. Music lovers can have much more music for their money. Compared to current output, standards and trends could only improve. Large media giants would be obsolete and the artists could all make more money in accordance with how much they are enjoyed, without the oppressive middlemen.

What does the Bible say about intellectual “property”? Nothing. It does, however, say a lot against the power of the State.

Finally, we have been talking about morality a lot, so what does the Bible say about intellectual “property”?

The answer is ... nothing.

That is, you will not find any scripture, Old or New Testament, referring to “intellectual property.” You will find a lot against the power of the State, however. I recommend a thorough, slow reading of 1 Samuel Chapter 8 and beyond to start with. This will show you that government is not God’s idea at all. According to this chapter, it is idolatry and slavery, tolerated by God rather than endorsed and given a strict limit of toleration at 10% of surplus. Governments today are close to 50% and in some cases beyond.

Those who love rules, regulations and generally directing other people’s affairs, should think about whether they are willing to use violent force against people who do not want such direction. Or in the case of artists, against their customers, who may wish to do as they choose with that they have purchased.

That is the nature of government – violence. Cannot see that? Then, as a totally innocent person, try publicly ignoring a minor bureaucratic order you disapprove of and are satisfied is unsound and unjust. Then ignore the court that fines you. Then resist officers coming to take your goods. Finally, resist the police who come with guns. ... Get the point now?

Normal people would not personally use violent force against others who do not follow their whims, ideas and opinions. Nor would they personally invade a person’s house, armed to the teeth, and demand money – even in the name of assisting a poor person they profess to “care” about (i.e., the “social justice” doctrine). Christians then, should stop supporting, voting and campaigning for a gang to do it for them. They should not be accomplices and in “covenant” with such people – including politicians. A good start would be to avoid mainstream media documentaries, debates and “news” advocating one person’s “expert” opinion being imposed on another by force and/or through another person’s money being confiscated.

The threat of violence and the force of the State (if the State is to exist at all – there was none for 450 years under the Old Testament ideal – see Acts 13:1921) is to be reserved for actual wrongdoers, not to control the innocent. This limitation is always mentioned in the major New Testament references to civil rulers. Politicians and rulers are not authorized to decide what is right and wrong – that comes from God alone. Nor do they have the God-given authority of a parent over a child or a master over a slave.

That doctrine, once again widely held, used to be called the “divine right of kings.” Both the English and especially the American revolutions were fought over it – and thank God it was then defeated. But, unlike early church teaching, many of today’s Christians claim we should obey rulers totally; that the State is effectively a manifestation of God in the flesh – unless and until the government actually makes us do something wrong (as they understand it). This might be a doctrine for a slave on a plantation, but not for free people made in the image of God to “reign in life as kings through ... Jesus Christ” (Romans 5:17). We are told plainly “do not yield yourselves as slaves to men” (1 Corinthians 7:23) and that, “the rulers of the ungodly lord it over them ... but it shall not be so among you” (Luke 22:25). The whole book of Galatians is dedicated to the concept that even the God-given rules and regulations of the Old Testament were temporary and now obsolete, how much more the secular/pagan rules of modern governments.

Romans chapter 13 was abused by Hitler to neutralize Christian resistance and was written on the floor of the totalitarian Roman tax collection offices. I recommend reading that most misquoted of scriptures again several times, prayerfully. If it is not clear to you what a “wrongdoer” is, go and read the Ten Commandments – you will find them in Exodus 20. Where do Christians get the idea they can decide right and wrong for themselves, or worse, ask corrupt politicians to decide? What has right and wrong to do with wearing seatbelts, obeying speed limits or thousands of other rules and regulations and why do so many support the use of force against the innocent in these ways?

Romans says there is “no authority except God’s” – that is, if it is not God’s law it has no proper authority (but we should be prudent ... for the Lord’s sake and our own ...) Only in so far as the state is punishing an actual wrongdoer should we support (including by taxation) any action from our conscience rather than just prudently comply due to the threat of official “wrath.”

Regarding prudence in the face of an immediate tax demand, Jesus enlightened his disciples when He said in Matthew 17:26 “the children of the king don’t have to pay taxes ... but we don’t want to make these tax collectors angry ... pay the tax for you and me.”

It is a reflection on the state of churches in this area that this scripture is almost unheard of in comparison to the “render unto Caesar” passage. Had Jesus, in that passage, said in public what He said privately to His disciples in Matthew 17, He would have faced Roman charges of treason or sedition. In fact, He was later accused of tax resistance (Luke 23:2). Instead, His words cleverly invited the hearers to choose between the Roman-deified Caesar (Government) and the true God. What He certainly did not say is the modern church interpretation – that Caesar can decide how much is his and anyone who does not pay is a thief.

Having considered these scriptures, then consider patents and copyright. You will see they are nothing more than using the threat of State violence to control property that is rightfully under the domain of another. I invite you to change your mind on these things ... Repent!

A DAY AT THE KNOCKOFF MARKET

And while we are on the subject of IP ...

A trip to Shanghai’s Pacific Digital Plaza – “if it has an on/off switch, you can buy it at Pacific Digital Plaza” – by Simon Black sets off a rumination on the subject of intellectual property rights by him.

The whole notion of patenting ideas, as with software patents, is a travesty. Patents themselves are government granted monopolies which only exist as statutory constructions backed up by guns. Chinese “knockoff” manafacturers are out of reach of western patent holders’ agents with their guns. One can readily witness the outcome in China: innovative products for cheap.

Thanks to an unexpected computer crash, I have spent the majority of my day trolling around one of Shanghai’s infamous technology marketplaces, where just about everything you see is a knock-off. From my condo in Shanghai’s Pudong district, it is about a 15 minute metro ride to “Pacific Digital Plaza,” which ironically is just a stone’s throw from Best Buy. The building is five floors of wall-to-wall electronics – if it has an on/off switch, you can buy it at Pacific Digital Plaza.

The first thing you notice is the smell ... there are no smoking bans in Chinese public areas, and as the government is heavily invested in the tobacco industry through a state-owned monopoly, it is unlikely that they will be rolling out an anti-smoking campaign until an acceptable substitute is found.

The general rule of thumb is, the more “Chinese” a location, the more people you will find smoking indoors. This includes restaurants, and it is quite shocking to westerners who are accustomed to being able to eat a steak without sucking down someone else’s exhaust fumes.

On the other hand, if you are a smoker and tired of the endless battle against your personal vice, China is probably your paradise. The second thing you notice about the “fake” technology market is the bustle ... even in the middle of day during the workweek, the floors are packed with patrons wheeling and dealing their way to a new LCD television, espresso machine, or Macbook Pro.

Like all governments, I am sure the Chinese lie about their macroeconomic indicators – but when you witness the sheer volume of transactions that take place in black and gray markets like this one, 8% GDP growth does not seem so far-fetched.

Wandering around the maze of vendors (which included several stunning women bearing loads of mobile phone accessories), you cannot help but contemplate the nature of intellectual property rights.

Chinese factories are responsible for a huge chunk of global technology manufacturing, which includes both internal components and finished goods ... consequently these “knock-offs” are generally comprised of exactly the same parts and labor as the name brand.

Thus, the general reputation that these products are all of poor quality and design is an inaccurate stereotype. Sure, there are a lot of low quality manufacturers out there – though I would argue that there are poorly manufactured goods in legitimate retail outlets all over the world.

Chinese knock-off producers are, at the end of the day, businessmen trying to turn a profit. After all, the vast majority of their customers are locals. (I was one of 3 westerners in the building today out of thousands of other patrons.) Producers who routinely manufacture products of questionable quality develop that reputation and soon go out of business.

On the contrary, many producers have ingeniously reverse-engineered popular electronics and redesigned them to include a host of fantastic features – like the new $90 iPhone look-alike that comes with dual SIM cards and a built-in TV tuner.

For these manufacturers, their approach towards intellectual property rights is similar to the software industry’s “open source” movement, in which source code is freely available for anyone to improve upon. Google is a strong proponent of open source projects and has released over 1 million lines of code under this free license.

Chinese technology manufacturers view it as rather stodgy for western companies to build a business model around sitting on their existing patents.

Chinese technology manufacturers know that they must constantly be innovating in order to create value and stay competitive; they view it as rather stodgy for western companies to build a business model around sitting on their existing patents.

Benjamin Franklin, who never patented any of his inventions, said in his autobiography, “... as we enjoy great advantages from the inventions of others, we should be glad of an opportunity to serve others by any invention of ours; and this we should do freely and generously.”

While Franklin’s tone is a bit altruistic, his statement is practical and true; after all, the greatest discoveries and advances of modern science are based upon the works of great minds from the past ... and last time I checked, no one is paying any royalties to the estates of Isaac Newton and Pythagoras.

To be clear, I am against outright theft in which a manufacturer or vendor adds no value; I am also (naturally) unopposed to those who profit from their ideas and information.

I believe, however, that ideas are the greatest endowment of mankind; they should be set free to be improved upon by others, not locked away in a government bureaucracy.

I think these Chinese innovators have the right concept.

SHORT TAKES

History of Caribbean Art

Spotlight Haiti

This article is titled “History of Caribbean Art, Part One.” It appeared this past March. We have yet to see Part Two (perhaps we missed it), but we agree that “To understand the people of the Caribbean region one has to understand their history and culture.”

To understand the people of the Caribbean region one has to understand their history and culture. Every island has a unique cultural identity that has been shaped by the European colonialists, the African heritage of slaves, and the enduring legacies of the native Indian tribes.

And as well, the Caribbean lifestyle and culture is unquestionably a product of its lush tropical setting. Its literature, music, architecture, attitudes and customs have all, in some way, been shaped by its physical landscape, climate and the influence of the sea.

Throughout the Caribbean, the air is filled with music, you will find someone dancing on the corner and there is always art. Some is framed and shown in galleries, some drawn on walls much like graffit, but at a more creative level, and some art you will only find by searching out the lone artists painting away on the beach, by the river or in the rainforest. With beautiful scenery all around, it is easy to see why one would be tempted to take brush in hand and give art a try.

The popularity of Caribbean music and dance have brought both to the world stage, and as well, many local artists are well-known throughout the Caribbean, their art sought out by many.

Caribbean artists are breaking onto the world art scene, too, bringing with them a unique vision of the world based on the bright colors and beautiful cultures of the islands.

Art and artists have been part of the Caribbean since the time of Columbus. And although each island has its own set of well-known artists there are a few islands, such as Haiti, Cuba and Jamaica, where art is a major part of the cultural fiber.

This series takes a look at the history, growth and art of a few such nations, beginning with Haiti.

Colonia, Uruguay: Colonial Living at a Bargain Price

Colonia is one of Uruguay’s real treasures. In fact, I would rank Colonia at the top of Uruguay’s list for a year-round, quality lifestyle at an affordable price. Located on the banks of Rio de la Plata (just across from Buenos Aires), it is a friendly riverside town that draws people from the world over.

What has always attracted me (and most visitors) to Colonia has been its historic center, known as Barrio Histórico. Founded by the Portuguese in the 1680s, Colonia’s Barrio Histórico is one of the best examples of restored and preserved Portuguese colonial architecture that you will ever see.

Antique, period homes surround the central plaza, with interiors that are still graced with rustic stone floors and heavy grey-stone walls. The rooms are small and sometimes cell-like, as was the style of that time. In many cases, you can see where the Portuguese used one style of stonework on the house – up to a level of about seven feet – and then the Spanish used another style, many years later, order to make the houses taller.

Unlike most resort areas of Uruguay, Colonia “never closes.” Even in the dead of winter – in July – you will see good number of visitors strolling its cobblestoned streets, enjoying the high-end restaurants, classy boutiques, sidewalk cafes and shady parks. It is a good place to operate a rental property, a tourism-related business, or a B&B.

Colonia is a place where you will still see antique cars along the streets, going back to the 1930s ... as you will in much of Uruguay’s interior. And I was surprised to find that most of them have current license plates, and are used by people as their primary vehicle, rather than a Sunday showpiece.

I try to get here at least once per year, and find the four-hour drive from my home in Punta del Este to be well worth it. I liked Colonia since the first time I saw it.

But while researching the Uruguay Owner’s Manual, I found something this time that I have not seen in years: A property in Barrio Histórico selling for around $100,000 ... in a neighborhood where prices can run up to five times that much for a colonial-period home. Prices here have gone up about 300% since 2004.

This was an 1,100-square-foot house which has never been remodeled from its original structure and finishings. It has three bedrooms, two baths and is located close to the center of Barrio Histórico. But although it is in the historical center, it is not a true colonial-period home. It is too new ... but it is an affordable foot in the door to this UNESCO World Heritage Site. The asking price is $105,000.

An even-better opportunity in Barrio Histórico is a 1,500-square-foot gem located right next to the yacht basin. It has two bedrooms, a single bath and a large, lazy front porch covered with bougainvillea, for the asking price of $150,000. This one costs a bit more than the first, but I like the location better, in the heart of Barrio Histórico.

I found these properties exciting, having watched prices climb rapidly over the last few years. This year may indeed be the last chance to get that second home in this historic setting without spending a fortune.

Mortgage Service Providers Would Rather Take a Home than Work with the Owner ... But You Can Beat Them

That is what the incentive structure rewards.

According to the National Consumer Law Center, the rules of the game let mortgage service providers make more money foreclosing on a home than helping homeowners modify their loan terms.

If you were a mortgage service provider, which would you do?

In most foreclosures, it is the homeowner, lender, or investor that takes, the hit, says Diane E. Thompson of the NCLC. But mortgage service companies who typically manage the mortgage and collect the payments, do not lose at all. Thompson says that modifying a loan usually costs the mortgage service provider something, but they can actually make money on a foreclosure.

According to Thompson, mortgage service providers recover all their expenses in the event of a foreclosure on a securitized mortgage. Because more than 2/3 of all mortgages since 2005 are securitized, mortgage services providers are first in line to collect, even ahead of investors. On the other hand, the rules for recovery of expenses if a loan is modified or restructured are not so clear, so the incentive is to foreclose and take the sure money.

However, for most Americans buying real estate abroad, foreclosure never becomes an issue since most deals are cash.

Historically low prices for real estate in countries such as Ecuador, Argentina, Mexico, Belize and elsewhere make it possible to purchase a home for cash or to secure direct financing with sellers or developers.

California Woman’s Health Care Nightmare – Waking Up with Shirt Soaked in Blood “Not an Emergency”

Sensational nature of this newsclip aside, we do not think the insurance company was totally out of line. But – big “but” – in a country with a rational healthcare system an emergency room visit would have cost an order of magnitude less.

Think the U.S. health care system isn’t broken? How is this for a health care nightmare.

One morning last April, Rosalinda Miran-Ramirez woke up with her shirt soaked in blood. Her husband rushed her to the emergency room at Seton Medical Center in Daly City, California.

Doctors found a bleeding tumor in her left breast. A biopsy showed the tumor to be benign, much to Miran-Ramirez’s relief. But her relief was short lived. Three months later her insurance company, Blue Shield of California HMO, sent her a bill for the emergency room visit totaling $2,791. The company determined that Miran-Ramirez “reasonably should have known that an emergency did not exist.”

She appealed, saying that when she woke up covered with blood she could not have known the cause and was reasonably certain it was an emergency. Blue Shield again denied her claim, saying that she had not been in “any acute distress.”

Miran-Ramirez said that in her home country of the Philippines, such a health care nightmare would never happen and people would not be hit with a $3,000 bill for a valid emergency room visit.

In fact, many Americans are moving to other countries to avoid the kind of health care nightmare that Miran-Ramirez is going through. In many places around the world, quality health care is much cheaper than in the U.S.