W.I.L. Offshore News Digest :: January 2010

2010 PREDICTIONS: THE DAWNING OF A NEW AGE

“Go west young man” will be supplanted by “Go south young, old, rich, and poor alike.”

Carter Clews has been writing a regular piece in Caribbean Property and Lifestyles Magazine for a year now. His kickoff article was “Caribbean Retirement: The Times They Are a Changin’.” Subsequently his regular “Clews’ Views” column has highlighted desirable locations in the Caribbean and Latin America where one might actually want to live – not just visit. These locations comibine a reasonable cost of living, sufficient amenities, decent natural and cultural attractions, and nice enough weather.

Clews starts 2010, as he did 2009, with a general thought piece, predicting that this will be the year some kind of threshold gets passed with regard to migration of U.S. citizens southward, into the domain of his coverage. Whether this threshold is passed may in the end be subjective. The evidence marshalled and case made is certainly compelling enough.

It is the beginning of a new year, the traditional time for predictions. In my experience, the only safe New Year’s Prediction to make is the one that says you will not keep your New Year’s Resolutions. That one, you can take to the bank.

But, still, making predictions is a great parlor game. And since, as The Bard wrote, “the past is prologue,” it is fun – and occasionally even profitable – to try to divine which way the wind is blowing and the smart money is going in the year ahead. So, let’s give it a shot.

Now, as regular readers of my monthly column Clews’ Views know, my focus is strictly on Latin America and the Caribbean. It also focuses on “destinations” (places I think you might actually want to live) rather than, well, let us call them “glorifications” (the standard tourist traps we all want to visit).

And the fact is, there may never have been a year in recent history where the destinations in Latin America and the Caribbean have been any more enticing than they promise to be in 2010.

In fact, just last evening, I was advising a sharp young sales rep at my local Verizon outlet to take any money he now has – plus all that he can beg, borrow, and steal – and buy up any land he can possibly lay his hands on south of the Mexican-Guatemala border. I did not include Mexico in my recommendation, since the fellow did not appear to be a drug dealer.

Just to prove to you that I am putting my own money where my mouth is, the reason I was in Verizon in the first place was to purchase a brand new razzle-dazzle computer complete with full satellite internet access in preparation for my own move south. Trust me; I know when it is time to leave Dodge.

Simply put, there are three primary reasons for moving your money – and yourself – far south of the Rio Grande in the coming year. They are: Outmigration, Relocation, and Democratization. Together, in the coming year, they are going to begin shaping large tracts of Latin America and the Caribbean as the new citadel of individual freedom and economic prosperity.

Ironically, none other than Venezuela strongman Hugo Chavez succinctly predicted the region’s emergence in his infamous September 20, 2006, bloviation to the United Nations. No, not when he called George Bush “el Diablo” (though if anyone should be able to recognize Beelzebub on sight, one would think it would be Hugo).

Chavez’s prescience exhibited itself when he told the gathered diplomats, “A new, strong movement has been born, a movement of the south. We are men and women of the south.”

By “the south,” he meant Latin America and the Caribbean. And though in his case, he was right for all of the wrong reasons – having already driven out the innovators, driven off investors, and shut down democracy in his own country – he was right nonetheless. And in 2010, he, along with astute observers worldwide will see the sagacity of his succinct asseveration.

Now, please understand, the Outmigration, Relocation, and Democratization discussions that follow have little or nothing to do with whether one personally prefers socialism to capitalism or Marxism to laissez faire. We are not engaging in idle dialectics here. We are seriously considering where you may want to live and/or invest your hard-earned money.

In short, we are talking about the bottom dollar. Part of my job is to help protect and expand your resources. And that leaves no room for outraged screeds from antiquated hippies and the milk sweet refrains of kumbaya. So, let us take a serious look at what is probably going to occur in the coming year and where it is likely to happen.

(1) Outmigration – I have written about this at length in previous Clews’ Views columns, so there is no need to belabor the point: America’s Baby Boomers are going to move to Latin America and the Caribbean. The trickle has already begun. It will accelerate considerably in the year ahead.

Here is just one factor to consider – new to the mix, but highly salient: In 2009, Americans on Social Security received a 5.8% Cost of Living Adjustment (COLA) in their monthly checks. In 2010 – for the first time in more than three decades – they will receive 0%. As in – nothing, zero.

Here is how the Social Security Administration tersely explained its stiffing of the elderly: “With consumer prices down over the past year, monthly Social Security and Supplemental Security Income benefits will not automatically increase in 2010.”

And here is the catch: consumer prices were only “down over the past year” for the elderly if they did not eat, did not drive, did not heat or cool their homes, and did not go to the doctor. You see, the government includes none of the above in its calculation of consumer spending. Guess Nora Roberts is no longer America’s top fiction writer.

So what does this have to do with outmigration? Simply put: America’s 78,000,000 Baby Boomers – now retiring at a staggering rate of 10,000 a day – are quickly learning that they can no longer afford to live in the land of their birth. And, as evidenced by the COLA cut and impending government healthcare rationing, their government is not particularly crazy about having them here, either.

Even before the collapse of the U.S. economy, Ernst & Young issued a report laying out in the starkest terms possible that more than 60% of these “new” and “near” retirees will no longer be able to pay their monthly bills. And, frankly, there is not enough dog and cat food in country to keep them alive.

So, are they actually going to out-migrate from their native land? Well, according to a Zogby Poll published earlier this year, a full 10% of Americans say they are “already preparing” to leave the country.

The only question remaining, then, is where are the “out-migraters” going to go? Simply put, they are going to go to nearby countries where their retirement income can allow them to live in comfort and dignity as they enjoy the remainder of their lives.

The average Social Security income for retirees in 2009 was $1,153. For a couple, that comes to $2,306. And for just over $1,500 a month, you can live the Life of Riley with a twist of lime in countries like Honduras, Belize, Colombia, and even Argentina.

My prediction: Savvy Americans who invest in property in any of the above countries in 2010 will find their ROI skyrocketing over the next decade. And savvy Americans who move to those countries in early 2010 will save significant money over those who wait until the boom starts to follow the flock.

(2) Relocation – In years to come, 2010 will be looked back upon as the “Threshold Moment” of corporate relocation from the U.S. to Latin America. A Threshold Moment, scientists tell us, is that point at which the quantity of actions makes a qualitative difference.

My prediction: in 2010, the number of U.S. firms moving south will signal a historical shift of Western Hemisphere manufacturing and production.

The AFL-CIO – whose UAW affiliate should certainly know more than a little about driving jobs offshore – has been raising the red flag for years about the move of U.S. corporations to distant lands. Here is how its website frames the dire situation:

“Forrester Research predicts U.S. employers will move 3.4 million white-collar jobs and $136 billion in wages overseas by 2015. The outplacement firm Challenger, Gray and Christmas estimates the number of service-sector jobs moving overseas each year will hit 588,000 by 2005. A University of California report finds 14 million jobs are at risk of being sent offshore, and predicts job losses will exceed the Forrester study’s projections.”

Now, here is what is particularly fascinating, and for some, foreboding, about the AFL.

CIO’s figures: They all come from studies produced at least half a decade ago. And half a decade ago was not only well before the current U.S. recession/depression – it was also well before the current U.S. government began pursuing economic policies that have many major businesses closing shop and looking south.

Lest anyone doubt the severe impact of those policies on corporate America’s “movin’ on out” mindset, a quick read-through of a story published in the prestigious publication The Daily Editorialist will set the record straight. TDE is one of the most highly read publications among newspaper and magazine editors throughout the U.S. Here what it had to say in an article called “Atlas Shrugged”:

Chicago, Illinois, is 660 miles west of Washington, D.C. There, on Wednesday, November 11, 2009, a Power Point presentation was given that Barack Obama, Harry Reid, and Nancy Pelosi should have seen. In fact, so should every member of Congress. But, they didn’t. And that’s unfortunate.

Because on Wednesday, November 11, 2009, in Chicago, Illinois, Atlas shrugged.

The Power Point presentation was given by a gentleman named David Farr. He is the chairman and CEO of Emerson Electric Company. For those at the White House and in Congress who may not know, Emerson has more than 140,000 employees in 255 manufacturing locations worldwide. It had revenues of $20.9 billion in fiscal 2009. And it ranks 94th on the Fortune 500.

All of which is great news for Emerson Electric – but not such good news for Barack Obama’s, Harry Reid’s, and Nancy Pelosi’s America.

Because the Emerson Electric Company no longer wants any part of it.

Here’s how Chairman and CEO Farr put it just two weeks ago:

“The federal government is doing everything in its manpower and capability to destroy U.S. manufacturing ... I am not going to hire anybody in the United States. I’m moving. They are doing everything possible to destroy jobs ... We will continue to increase our international and emerging market presence.”

Lest anyone at either end of Pennsylvania Avenue missed the point, Farr was painstakingly explicit. According to the report in Manufacturing News:

“Farr notes that the federal government is damaging prospects for U.S. economic growth with a $1.41 trillion federal deficit (10 percent of GDP); $12 trillion in government debt that will grow to $20 billion in 10 years; a policy of printing money; a non-targeted $800-billion stimulus; bailouts for Wall Street and the automobile companies; the prospect for cap and trade legislation; a government takeover of health care to the tune of more than $1 trillion, increasing taxes and regulations; and a ‘lack of U.S. $ support’ for manufacturing.’

Manufacturing News also reports that those interested can view Farr’s full Power Point presentation on the Emerson Electric web site.

Unfortunately, it is safe to assume that ‘those interested’ will likely not include Messrs. Obama and Reid, or Madame Speaker. Which is why on Wednesday, November 11, 2009, in the “City of the Big Shoulders, Atlas shrugged his.”

It is true, that’s harsh. The Daily Editorialist clearly does not care for government policies that drive up deficits and bash business. But, then, neither does business. And that is why Emerson Electric is not alone in its decision to move its operations offshore, as the AFL-CIO loudly laments.

So, where are the companies going to relocate? Probably someplace where taxes are low, the government is friendly, regulations are not onerous, the workforce is not heavily unionized, the weather is good, and it will not cost an arm and a leg to ship goods back to the U.S.

Lest anyone doubt that perfectly describes countries south of the Mexico-Guatemala border, I have five words for you: Central America Free Trade Agreement. Passed in 2005, CAFTA virtually abolished U.S. tariffs on goods manufactured in Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and the Dominican Republic.

Taken together with the Caribbean Basin Initiative and the US-Caribbean Basin Trade Partnership Act, CAFTA made manufacturing goods in Latin America and shipping them north just about as cheap and easy for corporations as moving goods across state lines. And the Latin American countries, with their business and investment friendly policies, are making incoming corporations feel more than welcome.

So, what is the Swami’s prognostication for 2010? You can expect a myriad of other U.S. corporations to echo the words of Emerson’s David Farr: “I am not going to hire anybody in the United States. I’m moving.” They will primarily move to the CAFTA countries. And savvy investors should make their moves first.

(3) Democratization – The quixotic French philosopher, Christian mystic, and social activist Simone Weil observed that “Liberty, taking the word in its concrete sense, consists in the ability to choose.”

Accepting that definition, one would have to say that – contrary to popular misconceptions among the literati of the north – the majority of the people throughout Latin America and the Caribbean enjoy a remarkable degree of liberty. With the possible, glaring exceptions of Venezuela and Cuba, and, to a lesser degree as of this writing, Nicaragua and Bolivia, democracy is on the ascendancy.

According the Freedom House’s “Freedom in the World Index,” every country in the region is “Free,” or “Partly Free,” with the vast majority falling into the former category. And according to the Heritage Foundation’s “Index of Economic Freedom,” only seven countries in the region (out of a total of 29) are “Mostly Unfree;” only two (Cuba and Venezuela) are categorized as “Repressed.”

What is important in analyzing such ratings is that almost invariably, when a Latin American country receives a low score, the problem stems more from government corruption than individual oppression. And that is vitally important to those looking simply to live at liberty, with “the ability to choose.”

For example, on the Economic Freedom Index, Honduras receives a relatively low score of 58.7, making it 20th out of 29 in the region. Yet, it scores 20 points higher than the U.S. in Fiscal Freedom and Size of Government. So, it is not the abridgement of the individual’s right to keep the fruits of his or her own labor, or the long tentacles of an oppressive government, that creates the problem. Its corruption within the halls of government – on which Honduras scores a meager 25 – that drags it down.

In most Latin American and Caribbean countries the freedom to live un-fettered by draconian government rules, regulations, and restrictions has become an article of faith.

The fact is, in most Latin American and Caribbean countries the freedom to live un-fettered by draconian government rules, regulations, and restrictions has become an article of faith. Taxes at all levels, on all goods, fall far below the current U.S. level of 50%. Freedom of the press is sacrosanct. And the outstretched palm of the faceless bureaucrat is not an ever-present impediment to industry and innovation.

Why is all of this important in terms of smart money predictions for the coming year? It is important because something within the human soul gravitates towards freedom. America’s pilgrims did not cross the Atlantic in search of ignoble ease; they came to escape oppression. The pioneers moved west not to find creature comforts; they had the wanderlust to breathe free.

And so it will be in the coming year as in the U.S. taxes continue to rise, regulations explode, industries are put to the lash, and individuals increasingly find that they cannot adjust their own thermostat or visit their own doctor without the long hand of Big Government dictating their every move.

As that occurs – and as those who chafe at the regulatory yoke become more and more uneasy – the budding, uncomplicated, unfettered democracies of Latin America are going to become irresistibly enticing. “Go west young man” will be supplanted by “Go south young, old, rich, and poor alike.” And the New American Dream will be birthed in Honduras, Belize, Panama, Costa Rica, Chile, and Colombia – in the lands where the sun never sets on liberty, “in its concrete sense.”

So, there you have it. Those are my predictions for the coming year. The Year of Our Lord 2010 will be a time of major transition; it will mark the dawn not only of a new day, but of a new age.

The Outmigration, the Relocation, and the continued Democratization in to Latin America in the next 365 days will turn the tide of history because, in the words of the unlikely prophet, “A new, strong movement has been born, a movement of the south. We are [or, at least, will be] men and women of the south.”

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PURSUIT OF THE GOOD LIFE, BELIZE STYLE

Maybe it is time to bring your favorite fantasy to fruition.

The Reverend Macarena Rose was last featured in these pages in November. She moved from Florida to Belize six years ago. She currently owns and runs Rainforest Realty, and has become heavily involved in the community affairs of her adopted country.

The Rev. Rose is unabashed in her enthusiasm for Belize, and also not shy about promoting her business as a gateway for Belize immigrants and would-be immigrants. In this article she extolls the virtues of the town she lives in, San Ignacio, which certainly sounds like an attractive place. One small thing she does not bring up is the weather. With routine summer highs near 90°F and tropical humidity, it would seem like those who like cooler, drier weather should look elsewhere – probably away from the Caribbean coast. Admittedly 90°F in clean jungle air is different from 90°F amidst a smoggy sea of asphalt.

Happy New Year to One and All! I hope you have enjoyed a delightful holiday season with your loved ones. So, here we are in a wonderful New Year of possibilities – with those recent resolutions you made still fresh on your mind!

Did yours include one about becoming an expat? About making a long held dream come true? Could the moment have come, yet ...

Now, are you ready to do yourself a huge favor and explore the possibility of relocating to Belize. If your stress level in the U.S. continues to increase due to financial worries and/or a concern with quality of life in the fast lane – then maybe it is time to bring your favorite fantasy to fruition.

JUST DO IT. (But only after you have done your homework and checked things out!)

You know the one I mean! Yes, you too can join us here in Belize and become an expat in what many consider paradise. My personal motto has always been JUST DO IT. (But only after you have done your homework and checked things out!) Come to Belize and increase the power of your pocketbook and enjoyment of life while you decrease your stress and blood pressure readings!

So, how would you like to become my neighbor in San Ignacio. I would love to see you here and you are most welcome!! My company, Rainforest Realty, has outstanding properties available here right now for excellent prices – ones that you can truly afford. These are values you may not want to pass up.

My “new home town” of San Ignacio is a beautiful place to live. We are in the western part of the country. I know, I know. You are thinking but what about those gorgeous beaches on the east coast and all that clear blue water and those protected reefs so perfect for diving.

They are world famous and always there for you, but there is so much more to Belize. Who knew! And I would like to share some of magnificent inland Belize with you.

Of course, Rainforest Realty has superb listings on the coast in your price range and we are always happy to show them to you. I will be discussing them in the future, but I thought that here I would concentrate on San Ignacio and its surrounding area. They offer so much! Not just in good real estate buys at very affordable prices, but in the dreamy, ethereal aesthetics that are part of the allure of Belize.

Consider enticing jungle trails overhung with exotic vines, orchids and bromeliads. Let your imagination soar as your photograph and paint – and breathe in the clean air. Can you handle hearing the calls of toucans and parrots and many other animals every day (that you thought lived at the zoo in the U.S.)?

You have a good chance to spot many different types of animals and plants here. They are considered exotic in other parts of the world, but here – they are just part of your everyday world. From jaguars to the roaring howler monkey, their natural habitats are here in western Belize.

I love butterflies and what a joy most is to visit the Blue Morpho Butterfly Facility. And for you orchid lovers – don’t forget they grow wild and glorious here all year long.

Do scenic waterfalls that tumble down lush mountainsides thrill your heart? Mine, too. There are endless ones to be found here. And, how about the sport of caving? Belize is well known to serious cavers and the San Ignacio region has its share of huge cave systems – which are extensive throughout all of Belize.

Do you like to canoe and kayak? You have got plenty of company and plenty of rivers and waterways available inland. How about horseback riding? Birding? Biking? Hiking? This is an environment that provides it all.

And now to those stunningly haunting Mayan ruins so close by where I live. Tourists love to journey here to experience them. You can do that to your heart’s content while living in San Ignacio or thereabouts. The beaches may be a beautiful place to meditate and contemplate Mother Nature, but so are the wilds of the jungle with its own wonderful and irresistible “vibe.”

To view these wondrous ancient ruins, to experience yourself among them, and ponder the fate of the Mayans is deeply moving and thought provoking. There is a wealth of intense spiritual journeys in the jungle. As you may know, archeological activities in this region are ongoing and more is being discovered and uncovered all the time. There are constant articles being written about new theories of Mayan development and history. If you go to the bookstore in the U.S., you will find articles on this topic in magazines.

Or, you can hear about it firsthand! You can be on the scene here discussing the latest finds with archeologists from all over the world. You can pick the brains of archeologists and find out what is going on, up close and personal.

There are several more excellent real estate listings, all very reasonably priced, which my company has available near San Ignacio. Come check these out and take the opportunity to explore Mayan ruins any time you feel like it.

I have been so excited to tell you about some of the wonderful real estate values available here in and around San Ignacio, but maybe I am getting ahead of myself. Let me back up a bit here and tell you more about San Ignacio itself, and why I think you would enjoy living here – just like me.

San Ignacio is situated on the banks of the Macal River and the Mopan River, about 72 miles west of Belize City (get out your map) and 22 miles west of the country’s capital of Belmopan. San Ignacio is a very convenient nine miles from the Guatemalan border (beyond which lie exquisite Mayan ruins).

San Ignacio is called Cayo locally, and that is how we refer to it. There is also a sister city of Santa Elena situated just across the Macal River. The Hawksworth Bridge joins them. It is the only suspension bridge in Belize; it has one lane and was built in 1949. These two towns in the western interior make up the second largest urban area in Belize.

It is so lovely here! I chose to live in San Ignacio because of the always stunning vistas of mountains, jungles and rivers. I also love the town market! You will know where to find me every Saturday picking out the choicest fruits, meats, vegetables, and crafts brought in by farmers from the surrounding towns. You will also see me busily chatting with my neighbors because going to market is a social event for the community. Come on over, grab a local brew, and join us!

The population in San Ignacio is largely Mestizo (Spanish Maya) and Kriol with some Lebanese and Mopan residents also. But remember, language is no barrier as English is the official language here. Interestingly, San Ignacio also boasts a fairly large Chinese group, most of who emigrated in the mid-20th century. And surprisingly, a sizable farming Mennonite community resides near San Ignacio also. The Mennonites are very much in evidence with their extensive selection of produce at the market. There are also smaller ethnic groups of Garifuna and East Indians.

According to the 2000 census, the combined population of these two towns was 16,400 people. As for local government, San Ignacio is currently presided over by a Mayor and Town Council. They are affiliated with the United Democratic Party (UDP).

Who lives here – besides me? Well, there are peace corps workers, archeologists, lots of U.S. retirees (looking to stretch their pensions), adventure seekers, and those like me – who visited and fell completely in love with Belize and packed up and moved in.

If you live in San Ignacio, you will become very familiar with Burns Avenue and its adjoining streets. Here is a busy, bustling area for you to walk in (and burn off some of those fat/sugar induced pounds from all that fast food in the U.S.!) – it is filled with shops, hotels, restaurants, bars. It is a very friendly, hospitable place to enjoy.

Belize is keen on education for its children. You will find three main colleges here. Sacred Heart College (Catholic) is the biggest and largest institution with both a high school and a junior college division. Eden Seventh Day Adventist High School and Saint Ignatius High School (Catholic) educate many students, also. Galen University opened its doors several years ago and is located at Central Farm, a couple of minutes away from San Ignacio.

If you require medical attention, the local facility is San Ignacio Hospital. San Ignacio and its surroundings are very popular with tourists. Some of the nearby local attractions include the ancient Mayan ruins of Caracol, Xunantunich, Cahal Pech, El Pilar, and Tikal (Guatemala, just over the border close by). For cavers, there is the cave Actun Tunichil Muknal. And for all you hikers and animal and plant enthusiasts, Mountain Pine Ridge Forest Reserve is right here. Then on to a visit to the Iguana Conservation Project, who does not love a baby iguana?

Belize has become a very popular destination for ecotourism also. It is not only tourists who come here to learn new practices. There are expats who choose Belize because of their feelings about ecology. Belize is not yet paved over!

Should you wish to visit and take a look-see at properties, one pleasing place to stay is the Cahal Pech Village Resort, very conveniently located in San Ignacio town, the heart of the Cayo District, approximately 75 miles west of Belize City. You can also use this hotel as a base to visit all the nearby archaeological parks, caves and nature reserves.

The resort is wonderfully situated above the Macal River Valley and has spectacular views of the rainforest and wildlife to be found there. But, of course, you can also visit all of our property listings online and email us anytime with your questions.

We love them! Rainforest Realty is your home away from home – whether you live in-country or not. We are here to serve you and are dedicated to your needs. We are a real estate enterprise, relocation experts, and serve as an informal community center for expats. We extend our hand of welcome to you 24/7. So take advantage of our ethics, expertise, and outstanding reputation and let us help you find the home of your dreams!

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CARMELITA: A NEW RURALISM, A SMART GROWTH SUSTAINABLE COMMUNITY

Based on “Smart Growth” and “Off-the Grid” principles.

Another paean to Belize, at least a specific place in Belize ... this one from Philip Hahn, who wrote a 3-part series last year on the country and people he has known there, here, here and here. Hahn’s first project in Belize was a planned coastal community, Orchid Bay. Now he is currently developing Carmelita, a “New Ruralism” (idea built up in the article) community located on the Belize River towards the western edge of the country – just across the river from San Ignacio (see immediately above).

The two most biologically diverse ecosystems in the world are rainforests and reefs and the tiny country of Belize has both. Since my first visit, this beautiful place, known as “Mother Nature’s Best Kept Secret,” has inspired me. It has also puzzled me. I do not understand how a peaceful English-speaking member of the British Commonwealth can sit virtually unnoticed in the sweet spot between the Caribbean and Central America.

That first trip to Belize was in 2003 when the real estate boom was in full swing in Florida and my residential design firm was designing hundreds of homes each year. So, naturally I first saw Belize as a Florida-like opportunity. As I researched and thought about all of the possibilities, I spent a lot of time talking to my wife’s family from Key West, Florida. I gained some very valuable insight from a family that goes back six generations in Key West.

I started thinking about my favorite places and I realized that they were quaint towns with unique character, culture and history. Of course, Key West is one of those places and so are St. Augustine, Florida and Apalachicola, Florida. It also made me realize that the places I tried to avoid were the sprawling metropolises like Miami, Orlando and Tampa.

I was very thankful at that point that Belize was still largely unknown and had not been overrun with development and tourist traps like so many other places in the Americas. After purchasing property in 2003, I began planning a community and broke ground in 2005. Known as Orchid Bay, it is well underway as a traditional town using Belizean historical and cultural references with nearly 50% of the community planned as Green Space. It has been a dream come true to see this charming new Caribbean town emerge from the forest.

As I mentioned in my opening, Belize is home to two incredible ecosystems. The Belize Barrier Reef is the largest in the Western Hemisphere and has been declared a World Heritage Site. Furthermore, nearly 40% of the country of Belize is in protected forest reserves and national parks. As a designer and developer in Belize, I recognize the importance of preserving these global resources.

Most people find out about Belize because of the reef or the Maya ruins deep in the rainforest. Many come for a one-of-a-kind vacation, others plan annual trips and some move to Belize for a great new lifestyle. Increasingly, the common thread amongst all of these folks is a quest for pristine environments and wholesome adventures. I refer to these attractions as the 4R’s of Belize: Reef, Ruins, Rainforests and Rivers. Incidentally, one of my Belizean friends recently told me that I left out an R, Rum, so, it’s now 4R’s + 1.

The small population (300,000) and vast protected areas have kept Belize beautiful and made it one of the top eco-tourist destinations in the world. With its abundant natural resources, Belize is perfectly positioned for a sustainable future. Gaining inspiration from this situation, I have begun work on a new community based on “Smart Growth” and “Off-the Grid” principles. It is called Carmelita and it sits in the fertile Belize River Valley in western Belize.

The property is comprised of 450 acres with rainforest on one side and the Belize River on the other. It has over a mile of river front and a spectacular view of the Maya Mountains. There are two neighboring communities; one is the riverfront village of Santa Familia and the other is the Mennonite town of Spanish Lookout. It is within this pastoral setting that Carmelita is being laid out as a New Ruralist community.

A village with plenty of room for organic gardens, micro-farms and community agriculture.

My inspiration for Carmelita comes from many sources. One of which is the land itself, with its history, topography and location. My business partner and owner of the property is Daniel Silva, whose family has owned Carmelita Farm for generations. As the former Minister of Agriculture, Dan understands the land and environment of Belize. Therefore, he has requested that I create a plan that preserves the 150 acre rainforest (home to Howler Monkeys and native fruit trees) that occupies the north side of the property. His background and the history of the family farm have inspired me to design a new village with plenty of room for organic gardens, micro-farms and community agriculture.

The principles of New Ruralism are really resonating with people looking for an alternative to the rat race. The ability to independently generate electricity from the sun and produce a sustainable amount of food from a garden at affordable prices is finally here. For years the intrepid few have lived off-the-grid in remote locations, but, now it is a mainstream reality.

Carmelita is designed to combine new technologies, traditional gardening and classical design into a New Ruralism community of independent homes. Sibella Kraus, the author of A Call for New Ruralism says, “New Ruralism is a framework for creating a bridge between Sustainable Agriculture and New Urbanism.”

Carmelita is a modern approach to planning a traditional village. Classical influences from British and Spanish country estates provide timeless design references for cottages and villas surrounded by orchards, organic gardens and ponds.

The fertile land at Carmelita makes it the perfect setting for organic gardens and farm land that will provide residents with locally grown fresh produce. The abundant green spaces will have a variety of plants and landscapes such as fruit trees, vegetables, nut trees, butterfly gardens, flower beds and palm gardens. Residents can participate in community gardening or simply enjoy the produce baskets that will be delivered through the Home Owners Association.

I believe the success of a community is determined by the happiness of its residents. At Carmelita I have planned a New Ruralist village as the setting for owners and guests to enjoy a relaxing and fulfilling lifestyle. The lifestyle at Carmelita includes river, rainforest, rural and recreational activities.

The river is ideal for canoeing, fishing and swimming. Nestled at the edge of the rainforest, residents can enjoy hiking, bird watching and wildlife photography. The pastoral landscape is perfect for gardening, walking and horseback riding. The plan includes a community center, multiple parks and extensive greenways for various recreational uses. The overriding vision for Carmelita is that residents enjoy a relaxing and healthy lifestyle in a sustainable community.

Living a simple and sustainable life in Belize is not a new concept; I have met several expats that have been doing it for years. Carmelita is simply the first planned community of its kind in Belize. In fact, there are very few planned communities in the country. There are only two cities in the entire country and only a few towns; most of the population lives in small villages.

The fastest growing town in Belize is across the river from Carmelita. It is San Ignacio and along with Santa Elena is known as the twin towns. San Ignacio is known locally as Cayo, which means island or “key” in Spanish, because two rivers flow around the town to form an island. The rivers are the Macal and Mopan which meet just north of Carmelita to form the historic Belize River.

The rivers were the highways for the Maya who once flourished in the area known today as the Cayo District. History has come full circle and today the Cayo District is flourishing again. It is the breadbasket of Belize, the home to the nation’s capital (Belmopan), the host to one of the newest U.S. Embassies in the world, and surprisingly, the source of sweet crude oil recently discovered on a Mennonite farm.

With the resources of an entire country concentrated in one area, it is no wonder Cayo has become the fastest growing region of Belize and the ideal location for Carmelita.

Even with the growth in Cayo, it was apparent to me that for Carmelita to grow the price of home sites and homes has to be affordable. With the current global economy on a slow recovery path the “price-point” of real estate is perhaps the most important aspect of a buyer’s decision.

With a low basis in the land, nearby resources and an off-the-grid philosophy, home sites are priced from US$15,000 to US$55,000, depending on size and location. Additionally, an owner in Carmelita can purchase a small off-the-grid Garden Cottage for under $100,000.

The philosophy at Carmelita is simple, “Provide an affordable place for people to live a healthy, happy and independent lifestyle.”

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THE CARIBBEAN HOUSE OF THE FUTURE

The cost of leaving the electrical grid will fall to $4,500.

Household utility costs in the Caribbean are not cheap as a rule, especially electricity. This becomes a particular issue in the long warm season, when air conditioning might be desirable. The author of this article is a renewable energy consultant based in Grenada who is preparing to launch a slim radial axis wind turbine company which will allegedly offer revolutionary price/performance, and is working on a solar air conditioning system which will offer similarly significant economic benefits. Construction using prefabricated Insulated Concrete Form (ICF) blocks offers superior precision in the construction process and insulation afterwards. The “Caribbean House of the Future” will take advantage of these cost-saving, performance-enhancing technologies.

Energy saving is a hot topic these days with soaring electricity prices. In the Caribbean the cost of energy is one of the highest in the world. On the other hand, the conditions for renewable energy are extremely favorable: strong trade winds and abundant sunshine.

The question is if it is possible to use these resources in residences without compromising aesthetics such as concealed radial axis wind turbines, while also focusing on roof integrated solar water heaters and how to build for better insulation. The good news is that, when integrated in the design, these energy saving measures are not expensive.

Energy saving when building a residence in the Caribbean (but this also applies to many other places) essentially boils down to three main areas:

1. Wind energy
2. Solar energy
3. Insulation

Utility Grade Wind Energy

Whereas the world is introducing utility scale wind projects in an increasing pace, the Caribbean lags behind. The opportunity to realize savings of up to 50% on fuel costs is obviously not considered important by utilities and governments, resulting in sky high electricity prices, among the highest in the world. Now the oil price hovers around $70 a barrel, but once the world economy improves there is little doubt that the oil price will be on the rise.

In the summer of 2008, when oil prices peaked at almost double this level, everybody panicked. Utilities hastily looked to place wind farms, consumers demonstrated, or even rioted in some islands, protesting against the high cost of electricity. After the September 2008 meltdown of the stock market, the oil price fell sharply to end at $ 0 a barrel in December 2008.

That put the decision makers in a deep sleep, unfortunately. Now that the oil price is on the rise again the interest is slowly getting back but is not translated into action yet. Do we need another crisis to sparkle the interest? To governments and utilities reading this article: I am a wind energy consultant and can assist you exploring and evaluating wind park options; it is an absolutely feasible option.

Residential Wind Energy

Residential windmills have been around for decades. They became popular in remote areas where no grid power was available. But in the mainstream market two factors limited their acceptance: price and aesthetics. In urban environments a third, and dominant, factor limited urban wind energy even more – the permits and zoning requirements. These factors limited the use of windmills to primarily rural environments.

After the 2008 energy crisis, many manufacturers all over the world recognized that urban wind energy would become an attractive market and developed products. At this time there are hundreds of companies offering residential wind energy solutions. By itself this is a hopeful trend, showing that the industry has confidence in consumer demand.

This also caused a trend to reduce pricing that will make residential wind energy economically viable for markets with high energy cost – such as the Caribbean. Expect substantially reduced pricing, i.e., a 2 kW wind turbine that produces most of the energy needs of an average family, without a/c, will go down from currently above 10,000 US$ to around 4,500 US$. That will slash the payback time in half – or four to six years depending on the wind conditions.

There are two mainstream types of wind turbines:

(1) The traditional axial axis wind turbine, which require mounting on a tower well above buildings that block the wind. Their efficiency has been improved over the years and in terms of price per kilowatt hour (kWh or unit) they currently lead the pack.

They typically need one simple to do maintenance session per year. There is, however, one big disadvantage: When you place a tower in your garden the neighbours also have to enjoy the look of your energy saver. While the building permit requirements and zoning regulations in the Caribbean are by far not as strict as in most of the Western hemisphere, this may come sooner or later.

(2) Radial axis wind turbine, although not a new invention, are still the new kid on the block. The majority of the new companies that entered the market recently are offering radial axis wind turbines. There are a number of reasons hereto:

1. Radial axis wind turbines can work at lower kick in speeds and can therefore be mounted at lower heights. As lower heights also mean less wind, and therefore less yield, this seems a disadvantage but it opens the door at least.
2. Typically they are rated between 0.3 and 0.4 kW/m², so a 2 kW radial axis wind turbine can measure 2.40 m x 2.40 m (8 x 8 ft). That is not small but when mounted on top of a garage roof or a gazebo in the garden it would not be as offensive as the radial axis wind turbine on top of the tower.
3. Radial axis wind turbines have significantly less noise than their axial brothers, especially the ones with (expensive and therefore less applied) ceramic bearings. This is a significant advantage as you would not want to hear more than a whispering sound when you sit in the garden.
4. Radial axis wind turbines look better; not in the least because hundreds of companies worked on the looks. For the residential market this is certainly a big issue.
5. Most are designed to require little or no maintenance during their service life of 20 to 25 years but like the axial axes wind turbines may require a fairly inexpensive mid-life revision when placed in a coastal climate such as the Caribbean. Radial axis wind turbines with ceramic bearings are especially suitable for the Caribbean conditions whereas traditional greased ball bearings will likely require regular replacement.

Concluding, from a yield (lowest cost per kWh (unit) point of view, the traditional axial axis wind turbines are the winner, but from an aesthetic and noise point of view the radial axis wind turbines win big. And as these are the main issues in a residential environment the market – and the suppliers – voted for radial axis wind turbines.

As a result, the axial models are primarily sold by manufacturers who traditionally made them and keep doing that, while the radial axis wind turbines are primarily offered by the new kids on the block.

Many of the radial axis wind turbines now come from China, where the government offered incentives to companies developing green energy products. This is the main reason why I predict a price war around the middle of 2010, when production quantities will soar.

...

Solar Energy

In Barbados, one of the most prosperous Caribbean islands, there are 32,000 solar water heaters installed for a total of 280,000 inhabitants (please forgive me if the figures are out of date). That roughly means that one of every two households owns a solar water heater. And each of them is right; the investment is a wise choice.

The only disadvantage of solar water heaters is the aesthetics. Mounted on some buildings they may look a bit pompous and this cannot be avoided. It still makes economic sense to place them on existing buildings as there is no choice at the moment. However, for new construction it is a different story. A new breed of Solar Water Heaters is coming up by the end of 2010 – one that is designed for integration in to the roof design. And more good news is that it will be economical and aesthetically pleasing.

While solar water heaters, like radial axis wind turbines, offer an attractive payback time of four to six years, most architects are not aware of the new trend to integrate solar water heaters into the roof design.

PV (photo-voltaic) systems are not a mainstream option for the Caribbean at this time. Without subsidies, as exist in Europe and North America, they are just too expensive. Installation would typically mean that the cost of electricity would be higher than the grid option unless you would not consider interests. This may well change in the future with new technologies though. However, solar PV systems remain well suited for remote applications with limited power requirements.

Integration of solar water heaters in the design of a residence

In designing the “Caribbean House of the Future” it would be great if architects and solar water heater manufacturers would join forces and jointly come up with a design that is both economical and aesthetic. There is no doubt about the feasibility – it just “needs to be done.” ...

Insulation: the most neglected issue in designing a residence

You have discussed the integration of wind energy and solar water heater with your architect and managed to find a great solution. But now you wish to have air conditioning. A/C is known to quadruple utility bills. When you have an existing residence all I can tell you is to keep a/c on just for a few hours before retiring, otherwise the utility bill will frighten you, to put it mildly ...

But for new construction there is an option – use ICF blocks. I wish I knew about this before constructing my villa resort as this is the key to energy-friendly construction.

ICF blocks also solve a typical Caribbean problem: “The walls are not straight.” Because the pre-fabricated blocks fit tightly into each other they do not leave room for errors. They build up like Lego blocks. And it speeds up the building process enormously.

ICF blocks look like concrete blocks, but are bigger and consist of polystyrene foam. They are filled with steel, both horizontally and vertically, and are then filled with concrete. As they are larger, they hold more concrete. The resulting building is stronger, has a very high insulation value, and easily allows adding in water and electricity pipes. For the Caribbean, this is the way to go. It is faster, cheaper, and stronger while you get a well insulated residence. I wish I knew ...

Solar Air Conditioning

Before retiring most people like to put on the a/c for an hour or so; the room would stay comfortably cool for the night. The typical “Caribbean house of the future” as described above would certainly allow this lifestyle without the associated high electricity bill.

Another new kid on the block, one that will definitely revolutionize the a/c industry, especially for hot climates, is solar a/c. In air conditioning, there are two dominant requirements: dehumidification and cooling. Both can be achieved with the help of the sun! The first trick is to pass humid outside air over common, solid desiccants (like silica gel) which will draw moisture from the air. Hot, concentrated outside air can then be used to regenerate the desiccant by means of evaporation.

Cooling the air is a known technology: use heat exchangers, which is the base of the current class of solar a/c’s. They cool the air but do not take out the moisture and therefore still require traditional a/c to dehumidify (aka hybrid solar a/c). Combining the two technologies (desiccants reconditioned by hot air and heat exchangers) is the key to get the solar a/c of the future.

Hopefully I have given you some great ideas and alternative energy source information to use in the building of your Caribbean dream home. If I can provide any additional detail please drop me an email as I love to hear from Caribbean Property and Lifestyles Magazine readers.

Read the source article.

U.S. LESS FREE THAN LITHUANIA, HUNGARY AND MALTA?

Blame much of it on the Patriot Act.

The fact that many Americans feel less free these days is not surprising. In the name of fighting terrorism whatever remnant due process and Constitutional protections were left have been overrun. Of course many would say that the loss of freedom is justified or necessary given the danger, but that is not the issue addressed here. Not free is not free.

In calculating their “Quality of Living” index this year, International Living ranked the U.S. #43 on the freedom sub-index. The U.S. got an overall rank of #7; those ranked higher were all Western European countries.

According to the 2010 Quality of Living Index published by InternationalLiving.com the U.S. is less free than Lithuania, Hungary, Malta and 42 other countries.

Out of a possible 100 points, the U.S. gets a score of 92, behind countries like Slovenia, Puerto Rico, Micronesia, and Estonia. [They must tread Puerto Rico as if it were a country.]

How is it possible that the Land of the Free and the Home of the Brave ranks lower than Chile and Panama in the category of Freedom?

“You can blame much of it on the Patriot Act,” says Dan Prescher, Special Projects Editor at International Living. “Freedom is a hard thing to measure, so perception figures heavily into the Freedom ranking of the Index. And since the passage of the Patriot Act, many Americans have the feeling that their basic rights and freedoms, especially the right to privacy and the freedom from unwarranted searches and seizures, have been drastically reduced.”

Prescher says that, although the specific provisions of the Patriot Act are unclear to most Americans, there is a sense that the Act gives the government wide powers to limit personal freedoms in the name of fighting terror.

“Since the passage of the Patriot Act,” says Prescher, “no one is really sure what the government can and can’t do. Everyone figures the government is secretly tapping the phones, reading the email, and examining the bank the accounts of suspected terrorists, And in the fight against terror, Americans may be happy with that.

“But there is also the question of what’s to stop them from doing the same to you or anyone else for some unknown reason? How would you even know if they were reading your email or tracking your cell phone calls? You really wouldn’t ... which makes for a general feeling of insecurity and uncertainty.”

Prescher added that travel alerts and security measures have added to the feeling of loss of freedom in the U.S.

“When you go to the airport for a flight to visit granny and nearly have to strip naked or have your privates x-rayed to get through the security checkpoint, you can put your feeling of personal privacy and freedom right into the bin with your no-bigger-than 3.4 ounce bottles of liquids in your clear, no-larger-than-one-quart-zip-lock bag.

“And if security officials decide to take your computer without telling you why and keep it as long as it takes to go through everything on it, which really is legal now, your feeling of personal freedom can really take a nosedive.”

Prescher says the Freedom rating for the U.S. has nothing to do with whether or not the measures of the Patriot Act are justified in the fight against terrorism in the U.S.

“We couldn’t and wouldn’t try to answer the question of how you balance freedom and security,” says Prescher. “We simply put together a non-scientific overview of the quality of life in a number of categories that we feel might be important to Americans who are thinking of living abroad for whatever reason.”

Find complete rankings of the 194 countries of the International Living 2010 Quality of Life Index here.

Read the source article.

HONG KONG: SOME COMMON MISCONCEPTIONS ABOUT TAX

Hong Kong residents who move away and settle in another country can get a nasty shock on their tax bill.

The hypothetical protagonist in this story is a person moving from Hong Kong, where taxes are low, to some high-tax jurisdiction like the U.S. or U.K. He or she is likely to be shocked by the increase in his or her tax bill. And all the old tricks involving holding assets in offshore structures of some sort are no longer available. So one can only be prepared and try to mitigate the impact, and shock, using the few devices still available – if one insists on moving to one of those high-tax countries. A wordy and rambling but bottom-line good overview of the general situation.

Hong Kong has a very lenient system of taxation. The rates are low and tax is charged only on income which has a Hong Kong source. Capital gains are not subject to tax and there is no inheritance tax or estate duty. Very few developed countries offer such a lenient system. There are places which charge no tax whatsoever. Residents of the Bahamas, Turks & Caicos Islands, Monaco and other small island states charge no tax whatsoever but living there is challenging and facilities are limited. In other areas of the world such as Gibraltar it is possible to reside on the basis that you will pay a maximum amount of tax of £22,000 per year irrespective of your worldwide income. A great deal but again living conditions are not to everybody’s taste.

Somewhere between 75% and 80% of a UK tax resident’s income goes back to the government!

If you move away from Hong Kong, and many do on retirement or after the end of their contracts, you are likely to face a different system of taxation with much higher rates. The most popular destinations are the U.S., Canada, Australia and the UK. All of these places charge their residents tax on their worldwide income at rates of 30% upwards and make it very difficult to shield income and capital gains from tax by the use of offshore structures and their like. In fact, the income and capital gains tax rate is not the end of the story. We recently conducted a little exercise to try and work out how much of a typical high-rate taxpayer’s income was returned to the government by a UK tax resident. There are breaks for those who are not domiciled in the UK but not living there but if you are both resident and domiciled then you pay tax at the higher rate of 40%, national insurance normally adds another 10% on employed income leaving approximately 50%. Then the government takes another slice on your expenditure. Alcohol, tobacco, fuel and other items have government duty built in. Add in road tax on a car, congestion charges, rates on your house and other items which make up the expenditure of an average resident and then VAT at 14% on everything that you spend and it can be calculated that somewhere between 75% and 80% of your income goes back to the government. It is an horrendous figure.

It is possible to spend a reasonable amount of time in each of these countries without becoming tax resident but it is easy to overstay your welcome and get caught, and keeping careful count of your days and avoiding a simple overstay is not the end of the story. For example, in the UK, you would not generally become tax resident unless you spent over half the year in the UK but you will become tax resident if you spend and aggregate of 360 days in the country over any 4 year period. Thus it would be possible to be there 180 days in year 1 and year 2 but then a single day spent in the country in years 3 or 4 would trigger a retrospective tax residency from the day you arrived. Other countries consider you tax resident if that country is your primary residence or center of main economic and family activity. So unless it is possible to point to somewhere else where you actually live then you can be considered tax resident without spending the minimum required number of days there. Once you become tax resident then different rules apply on losing tax residency. Again using the UK as an example the general advice is that you cannot shed your UK tax residency without spending one complete tax year out of the country and then avoiding going back for the number of days noted above.

Tax laws now look through most offshore structures and treat the underlying income as belonging to the taxpayer and assume he is receiving that income and tax accordingly even if in fact he is not.

Many use offshore structures to shield their income and capital gains from tax once they become tax resident but anti-avoidance rules now look through most of these structures and treat the underlying income rolling up within a trust or company offshore as belonging to the taxpayer and assume he is receiving that income and tax accordingly even if in fact he is not. Previously many have set up these noncompliant structures and assume that the confidentiality afforded offshore will protect them, but there is an accelerating process in place whereby the onshore country is able to obtain information from anywhere in the world about who is behind a particular structure.

Recent examples of this can be seen in the UK where UK banks have been forced by HMRC to reveal details of all UK residents who hold accounts with them in their offshore branches. HMRC estimate that there are 500,000 such accounts and they are currently offering a second chance for those who have had such accounts and not declared the income in them to come clean, pay reduced penalties and start afresh. Many are expected to take up that opportunity, encouraged by the threat that if they do not then they could face penalties of up to 100% and criminal prosecution. The U.S. is likewise forcing Swiss banks to reveal details of U.S. account holders. Liechtenstein has recently been forced to sign tax cooperation agreements which will force it to reveal details of foreign account holders upon request. Recently one of the employees of a major Liechtenstein bank sold stolen information about foreign account holders to the tax authorities of both Germany and the UK. My legal study suggested that it was quite illegal to receive stolen goods but clearly the normal rules of law do not apply when a government is involved.

What I wrote about in an earlier piece [is that] all Offshore Financial Centers (OFCs) are being forced to sign tax information exchange agreements which give the right to onshore countries to obtain details about ownership of hitherto confidential structures set up in their jurisdiction, and pass those to the local onshore revenue authority. The EU has forced its member states and territories under their control to automatically pass details of any bank account held by a resident of another EU state back to the country of his residence. Switzerland is being forced to sign up to this initiative. So, for example, a resident of Germany who has a bank account in Cayman Islands which generates income which might be taxable, automatically has details of that account and the income generated by it passed back by the Cayman Island institution to the German tax authorities.

For residents of Hong Kong who move away and settle in another country this can all come as a nasty shock. And a nasty tax bill.

The days of hiding money in secret accounts or structures is now well and truly gone.

Many simply do not realize the additional tax cost of moving to another country as well as the additional living cost. Many also do not realize that the days of hiding money in secret accounts or structures is now well and truly gone and attempts to do so are only likely to increase the tax which would follow from having the details of that structure or account revealed and then having to pay penalties on top of the tax which would normally be payable on income and capital gains lodged there.

Another commonly held misconception is that the remittance of the money to your new country has any effect whatsoever on its taxation. If you have accumulated money while in Hong Kong or elsewhere and then move to a new country it matters not one bit whether or not you bring that money into the country or not. If it has already been taxed before you became a resident of your new country then it is not taxable once you are there, but if you leave it offshore then the income generated on the capital sum is taxable irrespective of whether you spend it in that country, bring it into the country or whatever else you do with it.

Careful planning is everything. Before you move to your new country there are structures which you can set up which will be effective in mitigating or avoiding tax. Insurance structures work particularly well for most countries but a carefully tailored policy which allows you freedom to invest in what you wish and do not limit you to a list of mutual funds with high entry and annual charges is necessary. Those structures work because your asset becomes the insurance policy rather than the assets in which the insurance premium is invested. As most, if not all, developed countries allow individuals to roll up income and capital gains within an insurance structure with tax only being payable once the money is taken out.

Attempts to control an offshore structure from onshore is problematical.

Attempts to control an offshore structure from onshore is problematical though. Most countries consider that any offshore structure which is managed and controlled from within their jurisdiction becomes tax resident in their jurisdiction and subject to tax there. For example, a BVI company which has directors based in the UK is considered by the UK HMRC to be tax resident there and therefore taxable on its worldwide income at the usual rates of UK corporate tax. So in this case it is not the individual who is taxable on the underlying income, although he may also suffer that tax, but it is the company itself which is liable to UK corporation tax by virtue of its management and control being in the UK. So any person who is going to become UK tax resident and has offshore companies can no longer act as director and must appoint professionals to act in his place and actually manage and control that company on his behalf. Attempts to control the activities of the directors means that whoever is controlling them is the actual controller of the company and therefore the same rule applies so it is not enough just to arrange the appointment of “nominee” directors, who do as they are told. Control has to be given up.

So, if you come to retirement or to the end of your contract and you are going to move countries then a careful examination of the relevant tax laws applicable in your new country is an absolute necessity if you are to avoid some very nasty tax consequences. A review of existing structures is a must as is consideration of what new structure should be put in place to avoid the worst aspects of the tax system of your new country of residence.

Read the source article.

OECD BACKS USE OF STOLEN DATA TO CATCH TAX CHEATS

Stealing is fine when we do it, says OECD.

Murder, kidnapping, extortion, fraud and theft are all crimes ... except when done by governments. Then it is not only OK, but routine. Effective anti-offshore initiatives of the past couple of years were catalyzed by thieves selling data stolen from banks to governments. The governments would like to see more of that action. After all, the return on investment is in the stratosphere.

The Organization for Economic Cooperation and Development, at the forefront of a crackdown on tax evasion, will not object to governments using stolen bank data to track down tax cheats in offshore centers.

The global hunt for tax evaders, high on the G20 agenda in the financial crisis, has toughened up after Germany and France accepted data stolen from banks in Liechtenstein and Switzerland to track down undeclared money in these tax havens.

A recent case involving French tax authorities obtaining stolen client information from HSBCafs private bank in Geneva sparked a diplomatic row with Switzerland and led Berne to freeze negotiations for a new bilateral tax agreement.

“What we don’t condone is taxpayers who do not comply with their obligations,” Jeffrey Owens, who heads the OECD’s tax division, told reporters ... when asked whether the organisation condoned the use of stolen data by governments.

And we don’t condone smarmy hypocrisy emanating from government actors, but we do not have sufficient firepower to enforce our views, even if we wanted to waste the time.

“If you have to get information from informants or other means, that is just the way of making sure that these citizens are not able to shift the tax burden ... onto honest taxpayers.”

In other words, the ends justify the means, morality be damned.

Private banks in Switzerland, which manages trillions of dollars of offshore wealth, have been lobbying the Swiss government to introduce clauses banning the use of stolen bank data in a raft of tax cooperation treaties it is negotiating.

But these efforts may fail to move many Western governments while they are trying to tackle big deficits built up during the financial crisis.

“If you look around the OECD area, almost all our member countries are prepared in fact to take information from a variety of sources,” he added as he unveiled the organization’s progress report on the fight against tax evasion.

Monitoring Continues, Delaware a Problem

Since starting to survey offshore jurisdictions on April 2, 2009, the OECD has removed 18 countries, including Switzerland, Liechtenstein and Luxembourg, from a so-called “grey list” of nations that did not offer sufficient tax transparency.

Still, 17 countries do not fall in line and could face sanctions. These include smaller centres such as Andorra, Belize and Grenada but also larger countries such as Malaysia and the Philippines.

The monitoring will continue, and even the U.S., which has been at the forefront of the tax evasion battle by aggressively taking on Swiss wealth manager UBS, will be scrutinized.

Even though the U.S. has committed to strict tax transparency standards in more than 60 treaties, non-profit organization the Tax Justice Network rated the U.S. state of Delaware as the world’s most secretive jurisdiction.

If the raging collectists at Tax Justice Network finger Delaware then that is high recommendation for Delaware. Delaware should send TJN a note of thanks.

“There is a discussion going on within the U.S. ... There are a number of bills that have been put forward to address this issue, so I am sure it is an issue that will eventually be addressed,” Owens said

Read the source article.

UBS WHISTLE-BLOWER FIGHTS BACK

In a widely publicized case, covered in numerous postings in these pages, former UBS banker Bradley Birkenfeld cooperated with the U.S. Department of Justice and helped blow open a UBS – Switzerland’s largest bank – scheme to illegally aid U.S. persons in evading taxes and reporting requirements. For his contributions Birkenfeld received a “reduced sentence” of 40 months. He thinks that is unfairly high.

In a letter to the U.S. Attorney General, Birkenfeld’s attorneys writes: “We are also deeply troubled by an apparent double standard applied to UBS, UBS clients and Mr. Birkenfeld. The top officials from UBS, who are responsible for planning and initiating the scheme Mr. Birkenfeld revealed, have escaped all criminal liability.”

Note to the attorneys: Of course there is a double standard. The top UBS officials are big-fish insiders. The rules that apply to little people like Mr. Birkenfeld do not apply to them. Birkenfeld is no longer of any use to them (or the U.S. DoJ), so who cares about him? He only got off as lightly as he did in order not to discourage future whistle-blowers.

Former UBS banker Bradley Birkenfeld is seeking a U.S. Department of Justice review of his 40-month sentence in a widely publicized case involving client assets hidden in Switzerland.

Birkenfeld’s attorneys disclosed ... that they sent a letter in December to U.S. Attorney General Eric Holder, saying that Birkenfeld was being unfairly punished even though he was a whistleblower. ...

U.S. District Judge William Zloch handed down the sentence in Fort Lauderdale last August after Birkenfeld pleaded guilty to conspiring to defraud the U.S.

According to court documents and statements made in court, Birkenfeld helped billionaire real estate developer Igor Olenicoff evade paying $7.2 million in taxes by helping conceal $200 million of assets hidden in Switzerland and Liechtenstein.

Birkenfeld worked as a private banker in Geneva, Switzerland, for Zurich-based UBS AG, one of the country’s largest banks. Olenicoff, the president and owner of Olen Properties Corp., pleaded guilty in December 2007 to filing a false tax return for tax year 2002 related to foreign bank accounts he failed to disclose to the IRS.

The letter from Birkenfeld’s attorneys reads: “As you know, Mr. Birkenfeld exposed a multibillion-dollar offshore tax fraud scheme organized by the Swiss bank UBS. His important contributions were recognized in letters submitted to the Justice Department by representatives from the IRS, the Securities and Exchange Commission, the chairman of the Senate Permanent Subcommittee on Investigations, and leading public interest organizations.”

The letter states the banker disclosed information about Olenicoff during testimony before the Senate staff on October 11, long before the Justice Department began prosecuting Birkenfeld.

“We are also deeply troubled by an apparent double standard applied to UBS, UBS clients and Mr. Birkenfeld,” the letter states. “The top officials from UBS, who are responsible for planning and initiating the scheme Mr. Birkenfeld revealed, have escaped all criminal liability. In fact, one of the top managers of UBS, who supervised the entire illegal offshore scheme, was arrested by the Justice Department, but was then released and permitted to return to Switzerland. Moreover, the thousands of individuals who for years willfully profited from the UBS scheme were not prosecuted and, in most cases, were offered full immunity from prosecution in exchange for their cooperation.”

During the court proceedings, Birkenfeld admitted that he and others advised U.S. clients to place cash and valuables in Swiss safety deposit boxes; purchase jewels, artwork and luxury items using the funds in their Swiss bank account while overseas; misrepresent the receipt of funds from the Swiss bank account in the U.S. as loans from the Swiss bank; destroy all offshore banking records existing in the U.S.; utilize Swiss bank credit cards that they claimed could not be discovered by U.S. authorities; and file false U.S. individual income tax returns that omitted income earned by their clients and fraudulently misrepresented that their clients did not have an interest in and signature authority over accounts held offshore.

Read the source article.

THE FIRST 10 FREE APPS TO INSTALL ON A NEW WINDOWS PC

Here is a great set of suggestions on how to outfit a new PC for free with just about every non-specialized application you need. The author references the “portable” version of one of his recommendations, but fails to point out available portable versions in other cases. We are particularly partial to portable installations, because they do not clutter up your machine’s file system or Registry at all. Decide you do not need the program? Just wipe out the installation folder and contents. No contribution to accumulated operating system “cruft,” which inexorably slows down your PC over time.

Our comments are interspersed.

It is about that time for me again: My desktop is a couple years part its prime and my laptop just died (no display, no hard drive activity, no WiFi, and a recent history of turning off suddenly for no good reason – those are all bad signs, right?), which means the near future holds a new PC for me. Which means a blank slate on which to impose my computer-using will.

Setting up a new computer goes through five stages:

• Denial: I have got a new computer. Nothing can go wrong now!
• Anger: No, I don’t want to subscribe to AOL. No, I don’t want Norton updates. No, I don’t want a 60-day trial of Office 2007. There are HOW MANY security updates?!
• Bargaining: I would do anything to be able to use this thing!
• Depression: I have been uninstalling Norton components for 17 hours now. If I have to restart the PC one more time, I swear I will kill myself. ... All I want to do is update Twitter!
• Acceptance: OK, let’s install some good stuff now!

Once you have installed all the updates, uninstalled all the crapware, entered your WiFi password, and set your screensaver, it is time to make that shiny new PC do stuff, and for me the doing starts with installing a pretty fixed list of free applications.

1.) Panda Cloud Antivirus

If you did the right thing and uninstalled Norton or McAfee (the two antivirus programs PC manufacturers get paid big bucks to include on their machines), the Windows Security Center will be bugging you about your system being unprotected. So, first order of business is to install a new antivirus. I used to use the free AVG Antivirus, but I have found that at some point – in every version of AVG I have used – it stops updating automatically. So a few months ago I decided to try Panda’s free Cloud Antivirus, and I have been very happy: updates happen in the background, files and problems are quietly taken care of, and it only ever bugs me if it needs my attention to decide what to do about a detected virus. This is the antivirus I have installed on all my family’s PCs, too, since it runs virtually undetected.

2.) Firefox

IE8 is a big improvement over previous incarnations of Internet Explorer, but so is a husband who only beats you once a week instead of every day. Frankly, I have had enough of IE. It is still packed with the same annoyances as always, and its neat new features are so dense and obscure I do not think anyone will make much use of them any time soon.

Firefox, on the other hand, is by now like a comfortable pair of shoes – it works well, it makes sense, and it is getting better and better. Sure, it takes up about a Godzilla-byte of memory, but other than that, it is Good Software. And of course, it is vastly extensible, making it not just a browser for me but a research tool (with the addition of plugins for Evernote and Zotero) and webmastering tool (with Scribefire and FireFTP plugins). The only real downside is that every update seems to break every extension – but at least it has extensions!

Firefox, Portable Edition is available here.

3.) OpenOffice.org

I own a copy of Office 2007 Pro (I got it free at an industry event) but I still install OpenOffice.org. (The dot-org is part of the software’s name, for reasons known only to the demons who inhabit the 6th level of software marketing Hell.) The free productivity suite includes a word processor, spreadsheet, presentation creator, database, and graphics editor – everything just about anyone needs to get work done. Some things it does better than MS Office, like handling bibliographic citations. Most things it does just as well. And it is some $400 less than the comparable version of MS Office.

OpenOffice.org Portable is available here. (The dot-org part of the name was probably added to avoid a Microsoft trademark infringement claim.)

4.) Thunderbird

Although Microsoft’s Outlook Express got a new name and a facelift in Vista, it remains the same piece of cr-... er, software it is always been, with all its limitations. Outlook is great for businesses, but it is overkill for most people – and can bog down even powerful systems. Mozilla’s Thunderbird occupies the “just right” chair, offering an interface similar to the Outlook/Outlook Express interface and plenty of power. Plus, like Firefox, you can customize its functionality with a wide range of plugins.

Thunderbird, Portable Edition is available here. GPG encryption capability can be easily added to Thunderbird, which makes encrypting your exchanged emails a normal part of your send/receive workflow.

5.) Picasa

You might have thought I would have said “The GIMP” for a free graphics editor, but most people do not need that kind of power. For organizing snapshots and applying the occasional red-eye reduction, color or contrast adjustment, and novelty effect, I like Picasa. The interface is easy to use, it integrates easily with Google’s web-based Picasa Web Albums service, allowing me to easily share photos or groups of photos, and it does basic photo editing tasks well.

The GIMP (portable version available here) is indeed probably overkill for the tasks described, and its default interface is decidedly nonstandard (there is an add-on which rearranges the interface, to a degree, to that of Photoshop), but if you don’t care to fall into the Google embrace you might consider RealWorld Paint.COM or Pixia. For vector graphics work there is the very powerful Inkscape, whose portable version is here.

6.) Skype

In class yesterday I mentioned Skype and a student asked “What’s Skype?” Only 2 of 10 students had heard of it! Oh, man – get Skype!!! Skype is a voice-over-Internet system that works, and works well. Voice or video calls to other Skype users are free, no matter where they are and where you are. The optional SkypeIn and SkypeOut services let you accept calls from and make calls to regular phones (landlines or mobile) for very reasonable rates – I think I pay about $60 a year for the complete package, which gives me unlimited calls anywhere in the U.S. and Canada, unlimited incoming calls at my own phone number in my area code, and of course voice mail. I use it all the time, too, to interview sources for articles – and back when I was doing Lifehack Live, I used it occasionally to record my podcasts (using the CallGraph plugin, a free Skype call recorder).

Skype Portable available here.

7.) VLC Media Player

While it lacks the style and pizzazz of iTunes or Windows Media Player, VLC has those other media players beat hands-down for one good reason: It plays everything. Oddball video formats, open source audio codecs, Flash videos – whatever you have, chances are, VLC plays it. It has other features, too, but I never use them. For me, VLC is simply the must-have video player. There is a portable version that can be run off a flash drive, too, which is handy for me since I often want to show videos in class and I am not sure the machine provided will have the right codecs.

8.) Handbrake

You want to put videos on your portable media player, you get Handbrake. It is that simple. Handbrake is easy to use (a lot of video transcoding software forces you to deal with all sorts of questions about muxing, bitrates, and so on; Handbrake has a bunch of presets, although more advanced control is there if you need it). Handbrake works with DVDs or video on your hard drive, so whatever the source, you can likely get it onto your Zune (or even iPod if you are one of the few that owns one). (OK, give a guy a break – it’s funny!)

9.) Digsby or Pidgin

What instant messaging network is everyone you would ever want to chat with on? Wait, you mean, they are not all on the same network? Where do you live, reality?!

If you do live in reality and your friends, family, and other contacts are scattered across several different IM networks, you will want to install either Digsby or Pidgin, both of which are fine IM clients that hook up to most of the available IM networks. I use Digsby, because I like the way I can theme the interface (with big, chunky text for my old eyes!), and because it includes Facebook support, which Pidgin does not (but Pidgin works with a lot of networks Digsby does not support – it is a question of which ones you want or need to use). In both, you can log into all your IM networks at the same time, and see all your contacts regardless of which network they are on.

Pidgin Portable is available here. There is a Pidgin plug-in, Pidgin-Encrypt, which securely (4096 bit key option) and transparently encrypts your instant messages.

10.) CDBurnerXP

CDBurnerXP is neither limited to burning CDs not limited to systems running Windows XP. Go figure. Anyway, it burns CDs and DVDs, including Blu-Ray and HD-DVD discs, ISOs and other disc images – heck, it even supports LightScribe! A great substitute for expensive (and notoriously bug-prone) Nero and Roxio suites if neither came with your computer.

Once I have installed those 10 apps, I have got a pretty good system set up, and I am ready to get to work. What about you? What free software is at the top of your list when you are setting up a new system? Let us know in the comments.

To this list we would add Foxit Reader – portable version available here – a lightweight and more secure PDF file reader alternative to Adobe’s bloated Acrobat Reader. Go to the Portable App directory for a complete list of portable installation programs, all of them free.

Gizmo’s Freeware Reviews is an excellent starting point for a general inquiry into the best freeware that is available out there. There is even a Best Free Portable Apps section now.

Read the source article.

SHORT TAKES

10,000 British Admit to Offshore Tax Dodge

Fewer than expected Brits took advantage of the most recent amnesty offered by HM Revenue & Customs to those who have hid offshore income.

HM Revenue & Customs said 1,100 people came forward on Monday [January 4] to qualify for reduce penalties as the midnight deadline neared.

But a source said the 10,000 figure included those using a separate amnesty for accounts held in Liechtenstein.

The total is below estimates from accountants. PricewaterhouseCoopers thought around 13,000 people would admit they had tax, interest and fines to pay going back up to 20 years.

By applying for the amnesty many have capped the fines they face to 10% of the total tax due. Those that did not come forward now face penalties of up to 100%, and the potentially being named and shamed. HMRC has details of offshore accounts held by UK residents with over 300 banks.

A spokesman for HMRC said: “There was a big last minute surge. People are still welcome to come forward. The 10% is off the table but there will still get a better deal than if we catch up with them.”

Officials had hoped the amnesty would raise £500 million and form the latest “line in the sand” in its efforts to clamp down on tax evasion.

But Stephen Camm, tax partner from PWC, said the Revenue was now looking at raising less than £135 million.

Read the source article.

Taxing Times for the Private Banking Industry

Pressure on “tax havens” has led to net money outflows at a number of institutions.

A.M. Best, credit-rating organization for financial institutions, believes the offshore private banking business model has suffered material, long-term damage due to the sustained war on “tax havens.” While stronger institutions remain viable, for others the longer-term credit profile may have been damaged by the strain on earnings.

Having weathered the credit crunch with relative ease, the offshore private banking industry has recently met a very different set of obstacles as a global crackdown on tax evasion has led to heavy pressure being exerted on so called “tax havens.” A.M. Best Co. has therefore assessed what short- or long-term damage may have been done to the creditworthiness of the private banking institutions (PBIs) domiciled in offshore financial centres (OFCs). This report concentrates on four key European jurisdictions: Switzerland, Liechtenstein, Andorra and San Marino.

• To varying degrees of severity, the new wave of international pressure has generated net new money outflows at a number of institutions.
• The outflow of assets poses the risks of liquidity shortages in the short term and erosion of profitability in the longer term, and each of these risks carries the further risk of reputational damage.
• The jurisdictions considered in this report have shown varying levels of sensitivity to pressures, and A.M. Best has material concerns regarding San Marino’s banking industry.
• The experience of individual PBIs also has varied considerably.
• A.M. Best believes the offshore private banking business model has suffered material, long-term damage, but this model remains sustainable. Institutions with stronger brands and franchises remain well placed for growth, whilst for others, the longer-term credit profile may have been damaged by the strain on earnings.
• A.M. Best considers an increase in onshore expansion and heightened merger and acquisition activity as highly likely.

Read the source article.

An In Depth Review of: The Primal Blueprint by Mark Sisson

Many may have heard at least a reference in passing to the so-called “caveman diet.” The basic idea is to eat how our distant, pre-agricultural revolution, ancestors ate. Our bodies, evolved over countless millennia have changed very little since those times, and the 10,000 years since the transition from hunting and gathering communities and bands to agriculture-based settlements has been nowhere near enough time for our bodies to adapt to the diet revolution. Meat, vegetables and fruit are good. Grains in any significant quantity are out. They were a very small part of the “caveman” diet and our bodies are not capable of handling them in quantity. Some theorize that much modern disease, in particular the obesity epidemic, stems from overconsumption of grains.

Some have run with the idea of mimicking the caveman diet and taken it to adapting, as best as is possible, the whole caveman lifestyle. The Primal Blueprint, by Mark Sisson, is one introduction to this extended concept. The reviewer here finds the book to be a “true first in the field of nutrition, and perhaps ‘lifestyle’.” At Amazon 83% of the reviews are 5-star and 94% are 4-star or higher – pretty favorable. Naturally there are a some skeptics, most of whom do not seem to have actually tried applying the book’s ideas. Which does not mean the skeptics are wrong.

I would like to kick start this review of The Primal Blueprint by saying that there was a feeling of relief upon completing it. The practical information and understanding Mark Sisson has compiled into this book is a true first in the field of nutrition, and perhaps “lifestyle” as well.

As it stands, this is my number one pick for understanding proper nutrition – a spot on my roster that has previously been left empty – to my dismay.

Hence if you have checked out the resources section lately you will find a handful of books, that together, painted a decent picture of my views on nutrition and exercise. Individually, they all fell short in the field of nutrition.

Even the popular Paleo Diet by Loren Cordain fell short in a few (critical) areas – namely saturated fat and cholesterol intake.

Mark not only trounces those false dangers supported by conventional wisdom, but ventures beyond and creates a comprehensive book on “Primal Living” as he calls it – meaning the book does not just “fix” what was in The Paleo Diet, its scope is far greater.

The table of contents is as follows (titles somewhat abbreviated)

• Welcome from Mark
• Introduction: What is Going on Here?
• Chapter 1: The Ten Primal Blueprint Laws
• Chapter 2: Grok and Korg- From Indigenous to Digital: One Giant Step (Backward) for Mankind
• Chapter 3: The Primal Blueprint Eating Philosophy
• Chapter 4: Primal Blueprint Law #1: Eat Lots of Plants and Animals
• Chapter 5: Primal Blueprint Law #2: Avoid Poisonous Things
• Chapter 6: The Primal Blueprint Exercise Laws
• Chapter 7: The Primal Blueprint Lifestyle Laws
• Chapter 8: A Primal Approach To Weight Loss
• Chapter 9: Conclusion

Read the source article.

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